04/07/2009-4A-Minutes-RegularMINUTES: SANGER TEXAS INDUSTRIAL DEVELOPMENT
CORPORATION
April 7, 2009
MEMBERS
PRESENT: Bill Foller, Vickie Jenkins, Gary Bilyeu, and Carroll McNiell
MEMBERS
ABSENT: Fred Yeatts
OTHERS
PRESENT: City Manager Mike Brice, City Secretary/Asst. City Manager Rose Chavez,
Steve Watkins with Elk River Investments
1. Call Meeting to Order •
. President Fuller called.meeting to order.
2. Approval of Minutes: February 10, 2009
Motion was made by Gary Bilyeu to approve the minutes as presented. Seconded
by Carroll McNeill. Motion carried unanimously.
3. Presentation by Elk River Investments on Marketing Options at 103 Bolivar.
The City Manager advised that as they have discussed before, in the purchasing of
the property at 103 Bolivar, it is important to get some professionals to market and
help manage that property. He has met with Elk River Investments several times.
They have some good ideas to market this property, re-develop the vacant·property
around it, encourage companies to come to Sanger, and create jobs. Mr. Watkins
with Elk River Investments will make a presentation concerning marketing options
at 103 Bolivar.
Steve Watkins with, Elk River Real Estate in Denton addressed the Board and
advised his company was founded about four years ago by John Pierson. Mr.
Pierson worked 7 years for Wiseman Group and 12 years for Staubauch Company.
He discussed Mr. Pierson's involvement and expertise' in acquisitions during his
employment with these investment groups. Elk River investment portfolio of
properties is worth about $300 million. They are currently involved in a third-party
brokerage where they can represent other parties and their properties.
Mr. Watkins continued to discuss the marketing of the property located at 103
Bolivar. He presented a Oyer that included a property summary of the
warehouse/building as if they were representing the property. He indicated this was
an abbreviated version of what they would create in marketing this property. The
information was not 100% accurat~ but it is what they could obtain from the
property tax rolls and what they could locate. This would give the members an idea
of the representation of the marketing capabilities that they have. They would
compile a prof"de of this property that would be marketed in the Metroplex and
nationwide for potential users to see. They would also use some of the contacts they
have on a national level. One of the advantages of this property is the rail access.
The potential uses included the warehouse, distribution, and light manufacturing.
Another advantage was the improvements to 2nd Street. Be discussed that their
focus would be on a single-tenant user with the option to subdivide the property to
where it makes economic sense. Mr. Watkins continued to discuss the possibilities
for economic development for all of the surrounding property and the excellent
opportunity for smaller office warehouse-type properties in this location. Once they
have a tenant then they can facilitate the demand for the smaller properties.
Discussion continued that Elk River will assist with the purchase of the building,
leasing of the building, and assist with potential development. Their capabilities
include construction management, management of the property and the tenants,
whether it is one or several. Their company will be actively marketing the property
at all times.
Gary Bilyeu indicated it is important to have someone with their expertise that can
provide a service for the City and has the capability to be able to market this
property throughout the country.
City Manager indicated the City has something to offer that we did not have before.
In the past if people called with an inquiry, he would put them in contact with a
private property owner. In becoming a property owner, it is important to hire a
professional group that can market this property. He is convinced that Elk River
can do a great job. They also have other property in Sanger.
Discussion continued concerning the property, which consists of 4 acres, and with
the lumber yard it totals 5 acres. Mr. Watkins discussed the possibilities for the
different types of commercial development. There was discussion concerning the
City's ownership of the lumber yard and future development. Mr. Watkins
discussed rental rates for commercial structures.
Carroll McNiell indicated that when they started this program there were seven
vacant properties in downtown Sanger. He is concerned with the number of dollars.
The Board does have a reserve and income, but due to the economy, will this have
an impact on the market.
Mr. Watkins discussed the economy factor and market demands. Discussion
continued concerning development of the surrounding properties and the
competition with downtown.
City Manager indicated some @f things they have talked about have been to sell
some of this property, do a long term ground lease on the property, and for private
investors to build the buildings. He sees those buildings not as competing with
downtown, but bringing more people to downtown to where they could shop or dine
in existing businesses. The priority is to get the building leased and creating some
jobs.
Vickie Jenkins asked if Elk River will assist in the purchase of the building, and is
this is why their service fee is 1 ½ percent.
Mr. Watkins indicated that they would assist in the purchase and the 1 ½ percent
represents their fee.
Vickie Jenkins then asked if the building is leased, will there be an additional fee for
this.
Mr. Watkins indicated this property will be marketed, and most likely there will be
a broker who will represent their tenant. The leasing fee for industrial-type
properties is 4 ½ percent and this goes to the broker who brings in the deal. The
listing broker will be paid a fee of 2 ½ percent. Mr. Watkins discussed how the fee
is calculated and that it is paid up front at the lease signing or upon occupancy.
Discussion continued regarding the leasing of the property and the fees.
President Fuller indicated the Board is not out any money until they bring in the
client, the exception would be if there is a convention where they can market the
property. At this time, they may come and ask for cost participation for those
expenses.
City Manager explained that the agreement they have to consider is for Excel Realty
to act as their broker in buying their property. There is not an agreement that has
been negotiated for the marketing of the property. The presentation was to allow
Excel Realty Investments the opportunity to make a presentation to the members.
4. Update on Purchase of 103 Bolivar.
The City Manager provided an update concerning the purchase of the property at
103 Bolivar. The contract has been received by their broker; changes were made,
and it was faxed back to them on Tuesday. He has contacted him by e-mail and he
is still waiting for the contract to get back. He has also met with the bank and has
provided all the information that they were requiring for the loan. It is all moving
forward.
It was discussed that the bank will take the real estate as collateral on the loan.
President Fuller asked if the property has had a commercial inspection or has the
building inspector looked at the property.
The City Manager advised that the Building Inspector and the City Engineer have
been through the building on more than one occasion. There was· a Phase I Study
done two years ago when another company was looking at purchasing the property.
They did find some mold in the building and that was remediated. The building
was retested and he has all the documentation. Most of the due diligence stuff has
been done.
Vickie Jenkins asked if they will require a commercial appraisal.
City Manager indicated he did not have an answer from them concerning the
appraisal, but they will use the survey that was done a year ago.
Vickie Jenkins indicated the cost for the appraisal is about $2500.00.
It was discussed that the total cost for the property is $825,000, with 20% down of
$165,000 leaving the balance to f"mance for a 15-year loan at 4.6% interest. The
monthly estimated payments of $5,084.00.
5. Consider and Approve a Professional Services Agreement Between the Sanger 4A
Economic Development Board and Elk River Realty LLC, Authorizing ·Elk River to
Act as the City's Broker in the Purchase of Property at 103 Bolivar.
Motion was made by Vickie Jenkins to approve the professional service agreement
between Sanger 4A Economic Development Board and Elk River Reality LLC,
authorizing Elk River to act as the City's broker in the purchase of property at 103
Bolivar. Seconded by Carroll McNiell. Motion carried unanimously.
6. Review Financials.
City Secretary gave a brief review of sales tax collections.
7. Adjournment.
President Fuller adjourned the meeting.