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10.17.12 PEDC MinutesProsper ECONOMIC DEVELOPMENT CORPORATION MINUTES Meeting of the Prosper Economic Development Corporation 170 N. Preston Rd., Prosper, Texas 75078 Wednesday, October 17, 2012 - 6:00 p.m. Call to Order and Announce a Ouorum is Present Board President Jim Wicker called the meeting to order at 6:02 p.m., board members present were Jim Wicker, Kevin Drown, Jordan Simms, Reno Jones, David Bristol, Gary Jackson and Ray Smith. PEDC Executive Director Robert Winningham and Executive Assistant Beth Larsen were present. 1. Comments from Citizens (The EDC may receive input from citizens only on topics that are not listed on the meeting agenda) There were no comments from citizens. 2. Convene into Closed Executive Session: Pursuant to Texas Government Code, Section 551.087; Deliberation of Economic Development Negotiations: To Deliberate Commercial and Financial Information and Economic Incentives for the following: Board President Jim Wicker called the meeting into executive session at 6:09 p.m., with a motion from Ray Smith and seconded by Gary Jackson. The motion passed unanimously. 3. Recognition of Newly Appointed Board Members and Election of Officers for 2012-2013 The Board took nominations and made the following recommendations for 2012-2013 PEDC Board officers. Motion was made by Reno Jones to nominate Jim Wicker, President. The motion was seconded by Ray Smith, and was passed unanimously. Motion was made by Ray Smith to nominate Jordan Simms, Vice -President. The motion was seconded by Reno Jones, and was passed unanimously. Motion was made by David Bristol to nominate Reno Jones, Treasurer. The motion was seconded by Jordan Simms, and was passed unanimously. Motion was made by Ray Smith to nominate David Bristol, Secretary. The motion was seconded by Kevin Drown, and was passed unanimously. 4. Approval of Minutes from the Regular Meeting on September 19, 2012 The September 19, 2012 minutes were approved with a motion from Reno Jones and seconded by Ray Smith. The motion passed unanimously. 5. Approval of Minutes from the Special Called Meeting on Monday October 8, 2012 The Special Called Meeting October 8, 2012 minutes were approved with a motion from Kevin Drown and seconded by Gary Jackson. The motion passed unanimously. 6. Approval of PEDC Financial Reports The September financial reports were discussed and Reno Jones made the motion to approve with a seconded by Ray Smith. The motion passed unanimously. PEDC Meeting Minutes October 17, 2012 — Page 2 7. Executive Director's Report; Administrative and Marketing Activities of the PEDC and Upcoming Events PEDC staff presented a report on upcoming annual conferences and meetings that Executive Assistant Beth Larsen and Executive Director Robert Winningham will attend in November. Staff is developing a marketing plan and working on several projects. 8. Convene into Closed Executive Session: Pursuant to Texas Government Code, Section 551.087; Deliberation of Economic Development Negotiations: To Deliberate Commercial and Financial Information and Economic Incentives for the following: Board President Jim Wicker called the meeting into executive session at 6:09 p.m., with a motion from Ray Smith and seconded by Gary Jackson. The motion passed unanimously. • Project within U.S. Hwy 380, FM 1385, Frontier Pkwy and Custer Road Reconvene into Open Session The board reconvened into open session at 6:20 p.m. with a motion from Jordan Simms and seconded by Reno Jones. The motion passed unanimously. 9. Consider and Take Action on Project within U.S. Hwy 380, FM 1385, Frontier Pkwy and Custer Road Board member Ray Smith made the motion to table the discussion with a seconded by David Bristol. The motion passed unanimously. 10. Discussion of Economic Development Practices with Carlton Schwab, President/CEO of the Texas Economic Development Council The Board was introduced to Carlton Schawb, President / CEO of the Texas Economic Development Council. Schawb gave a presentation on trends in Texas Economic Development and the roles of staff and board in a successful economic development corporation. 11. Adjourn The PEDC Board meeting was adjourned at 7:30 p.m. with a motion from David Bristol and seconded by Reno Jones. David Bristol - PEDC Secretary Date PEDC Board Meeting November 14, 2012 4. Discuss and Possibly Take Action on a Fund Balance Policy for the PEDC HISTORY The Town of Prosper adopted its find balance policy in September, 2011 as a way of providing a reserve fund for operations of the Town (see attached). This policy further protects the Town's bond rating and gives citizens the comfort in knowing that the Town's business will still function for 90 days should remaining funds be temporarily depleted. Many school districts and some economic development corporations have adopted similar fund balance policies. UPDATE Today, PEDC staff present various examples of fund balance policies for discussion by the Board. Pros and cons of having a percentage -based fund balance versus a set dollar amount fund balance will also be discussed. CONSIDERATION It is requested that the Board discuss developing a fund balance policy for the Prosper Economic Development Corporation (PEDC). Such a policy, if the Board desires, would be presented to the Board at a future meeting for discussion and adoption. PEDC Board Meeting November 14, 2012 6. (EXECUTIVE SESSION ITEM) - CONFIDENTIAL Project within U.S. Hwy 380. FM 1385, Frontier Pkwv and Custer Road HISTORY The PEDC has been working with a private -sector developer to potentially create new value and jobs in Prosper. This project would include a mixture of office, retail and possibly other types of development on approximately 157 acres in Prosper that the EDC Board and City Council have determined would be in the best interest of the community. UPDATE Several meetings have been held in recent weeks between the PEDC, Town and developer. At last month's Special Called PEDC Board meeting, staff presented the specifics of this project in Executive Session. Once in Open Session, the PEDC Board passed the following motion: On a motion by Jordan Simms, seconded by Kevin Drown, the Board authorized the PEDC President and PEDC Executive Director to negotiate an economic development agreement for the property located within US Hwy 380, FM 1385, Frontier Pkwy and Custer Road for review and approval by the PEDC Board. The following day, the Town Council met on this project in Executive Session. Once in Open Session, the Council passed the following motion: As a result of Executive Session, Deputy Mayor Pro Tem Dugger made a motion to authorize the Interim Town Manager to negotiate on behalf of the Town, in conjunction with the Prosper Economic Development Corporation, one or more economic development agreements regarding property located north of Hwy 380, east of Teel Parkway, south of West First Street, and west of the Dallas North Tollway. Motion seconded by Council Member Dixon. Motion approved by vote of 6-0. Today, PEDC staff will update the Board on latest developments in drafting an Economic Development Agreement that would potentially fulfill the creation of value and jobs within U.S. Highway 380, FM 1385, Frontier Parkway and Custer Road. PEDC and Town staff will ask the Board to potentially approve such agreement, if it is ready for consideration, as well as recommend the creation of a Tax Increment Reinvestment Zone (TIRZ) to the Town Council for approval. CONSIDERATION After deliberation in Executive Session, it is recommended that the Board consider and approve an Economic Development Agreement, as well as recommend creation of a Tax Increment Reinvestment Zone (TIRZ), for the creation of new value and jobs within U.S. Highway 380, FM 1385, Frontier Parkway and Custer Road. Support materials will be distributed at the PEDC Board meeting. PEDC Board Meeting November 14, 2012 i 9. (EXECUTIVE SESSION ITEM) - CONFIDENTIAL To Deliberate the Appointment, Employment and/or Duties of the Economic Development Corporation Executive Director HISTORY The PEDC Executive Director was hired by contract with the PEDC Board on August 20, 2012. In the contract, it states that the Board would review the Executive Director's performance and take any action necessary as a result. UPDATE The Executive Director has served for approximately 80 days and this is the last regular meeting before the 90 day probationary period ends. CONSIDERATION After deliberation in Executive Session, it is requested that the Board take any action necessary regarding the employment contract between the PEDC and Executive Director. Support materials will be distributed at the PEDC Board meeting. TOWN OF PROSPER FUND BALANCE POLICY 1 Purpose and Overview The purpose of this policy is to establish guidelines for fund balance levels within each of Town of Prosper's funds. It is essential that the Town maintain adequate levels of fund balance to mitigate financial risk that can occur from unforeseen revenue fluctuations, unanticipated expenditures, or adverse circumstances. The fund balance level is also designed to provide sufficient capital for the Town's general operations. The Town of Prosper avoids appropriating fund balance for recurring expenses. However, in the event that fund balance is used to support recurring expenses, the budget will clearly identify the uses of fund balance and provide an explanation of the circumstances requiring the use of fund balance. In addition, the budget will also address the future potential uses of fund balance for operating expenditures and a course of action to replenish fund balances to target levels. This policy ensures the Town maintains adequate fund balances in various operating funds for capacity to: 1. Provide sufficient cash flow for daily financial needs, 2. Secure and maintain investment grade bond ratings, 3. Offset significant economic downturns or revenue shortfalls, and 4. Provide funds for unforeseen expenditures related to emergencies. Definitions and Categories Fund Balance — Defined as the difference between a fund's assets and liabilities reported in a governmental fund, which is more a measure of liquidity than of net worth. This would be most similar to working capital as used in the private sector. According to the Governmental Accounting Standards Board (GASB) statement number 54, fund balance must be allocated into one the following five categories: 1. Nonspendable Fund Balance — includes amounts that either (a) are not in a spendable form or (b) are legally or contractually required to be maintained intact. Examples include prepaid items, inventory, redevelopment properties held for resale, or endowments. 2. Restricted Fund Balance — includes amounts for which constraints have been placed on the use of the resources either (a) externally imposed by creditors (such as through a debt covenant), grantors, contributors, or laws or regulations of other governments, or (b) imposed by law through constitutional provisions or enabling legislation, or (c) imposed by Town Charter. Examples include Contingency Appropriations in the Town Charter, grants and debt covenants. 3. Committed Fund Balance — includes amounts that can be used only for the specific purposes determined by a formal action of the government's highest level of decision -making authority. Commitments may be changed or lifted only by the government taking the same formal action that imposed the constraint originally. Examples include any Council -imposed use or limitation set by Town Ordinance or Resolution. 4. Assigned Fund Balance — includes amounts intended to be used by the government for specific purposes. In governmental funds other than the general fund, assigned fund balance represents the amount that is not restricted or committed. This indicates that resources in other governmental. funds are, at a minimum, intended to be used for the purpose of that fund. 5. Unassigned Fund Balance — is the residual classification of the general fund and includes all amounts not contained in the other classifications. Unassigned amounts are technically available for any purpose. Note: The above fund balance categories only apply to governmental funds. ooM���a0� h 00 FUND BALANCE POLICY (Continued) ( Fund Balance Policy Restricted Fund Balance While the Fund Balance Policy is intended to focus more on unrestricted portions of fund balance, it is important to note a Town Charter provision in Section 7.08 as amended in May 2011 that imposes a legal restriction on a Contingent Reserve of the General Fund. It reads, "Provision shall be made in the annual budget maintaining a contingency reserve fund balance designation in an amount not less than twenty percent (20%) of the total general fund expenditures, to be used in case of unforeseen items of expenditure or revenue shortfalls. This shall apply to current operating expenses and shall not overlap with any other amount of reserves maintained by the Town. Such contingency reserve appropriation shall be under the control of the Town Manager and distributed by him or her only in the event of an emergency or after supplemental appropriation by the Town Council. The proceeds of the contingency reserves shall be disbursed only by transfer to departmental appropriation, the spending of which shall be charged to the departments or activities for which the appropriations are made." Committed Fund Balance The Town Council is the Town's highest level of decision -making authority and the formal action that is required to be taken to establish, modify, or rescind a fund balance commitment is an ordinance or resolution adopted by the Town Council. The formal action must either adopt or rescind the commitment, as applicable, prior to the last day of the fiscal year for which the commitment is made. The amount subject to the constraint may be determined in the subsequent period. Assigned Fund Balance ( ) The Town Council authorizes the Town Manager or his/her designee as the official authorized person to assign fund balance to a specific purpose approved by this fund balance policy. Order of Expenditure of Fund Balance When multiple categories of fund balance are available for expenditure (for example, a construction project is being funded partly by a grant, funds set aside by the Town Council, and unassigned fund balance), the Town will start with the most restricted category and spend those funds first before moving down to the next category with available funds. Normally this would result in the use of restricted, then committed, then assigned, and lastly, unassigned fund balance. The Town reserves the right to selectively spend unassigned resources first to defer the use of these other classified funds if determined to be in the Town's best interest. Minimum Unassigned Fund Balance It is the goal of the Town to achieve and maintain an unassigned fund balance in the general fund equal to twenty-five percent (25%) of budgeted expenditures for unanticipated expenditures, unforeseen revenue fluctuations, or other adverse circumstances. The unassigned fund balance level, however, may be reduced to the equivalent of ten percent (10%) of budgeted expenditures in unusual financial circumstances. However, if such a situation occurs, the Town will implement necessary corrective action within a five-year plan to restore the unassigned fund balance to the equivalent of twenty-five percent (25%) of budgeted expenditures. FUND BALANCE POLICY ((C(Continued)oo =KhllaOq /R, 00 Non -governmental fund balances The fund balance categories discussed above do not apply to proprietary funds according to GASB 54. While not required by the GASB, the Town recognizes the need to apply a minimum balance policy to the proprietary funds maintained by the Town. Therefore, the Town shall strive to maintain a minimum ending working capital balance (current assets minus current liabilities) of at least twenty-five percent (25%) of budgeted non -capital expenditures for each of the proprietary funds. If the working capital level should fall below the desired minimum, the Town will implement necessary corrective action within a five-year plan to restore the working capital balance to twenty-five percent (25%) of budgeted non -capital expenditures. ORDINANCE NO. 11-66 AN ORDINANCE OF THE TOWN OF PROSPER, TEXAS ADOPTING A FUND BALANCE POLICY; AUTHORIZING THE TOWN MANAGER TO ASSIGN FUND BALANCE FOR INTENDED SPECIFIC USES; PROVIDING FOR REPEALING, SAVINGS AND SEVERABILITY CLAUSES; PROVIDING FOR AN EFFECTIVE DATE OF THIS ORDINANCE; AND PROVIDING FOR THE PUBLICATION OF THE CAPTION HEREOF. WHEREAS, the Governmental Accounting Standards Board (GASB) released Statement No. 54 — "Fund Balance Reporting and Governmental Fund Type Definitions" on March 11, 2009, effective for the fiscal year ending on September 30, 2011; and WHEREAS, as part of GASB Statement No. 54, governments are required to adopt and disclose information in the notes to the financial statements about amounts reported in fund balance.; and WHEREAS, this new Statement is intended to improve the usefulness of the amounts reported in fund balance by providing more structured and consistent classifications; and WHEREAS, the Town Council and Town Staff have long held informal policies regarding fund balance and unreserved fund balance targets, which this policy will serve to solidify. NOW THEREFORE, BE IT ORDAINED BY THE TOWN COUNCIL OF THE TOWN OF PROSPER, TEXAS, COLLIN COUNTY, TEXAS: SECTION 1: Findings Incorporated. The findings set forth above are incorporated into the body of this Ordinance as if fully set forth herein. SECTION 2: Adoption of Fund Balance Policy Budget. We the Mayor and Town Council for the Town of Prosper do hereby approve and adopt the attached (Exhibit "A") Fund Balance Policy for the Town of Prosper. SECTION 3: Authority of Town Manage . Specific authority is hereby given to the Town Manager to assign fund balance amounts to a specific purpose as further described in the Fund Balance Policy. The Town Manager may also delegate this authority to a committee or staff member as he or she may deem appropriate. SECTION 4: Savings/ Repealing Clause. All provisions of any ordinance in conflict with this Ordinance are hereby repealed; but such repeal shall not abate any pending prosecution for violation of the repealed Ordinance, nor shall the repeal prevent prosecution from being commenced for any violation if occurring prior to the repeal of the Ordinance. Any remaining portions of conflicting ordinances shall remain in full force and effect. SECTION 5: Severability. Should any section, subsection, sentence, clause or phrase of this Page 1 of 2 Ordinance be declared unconstitutional or invalid by a court of competent jurisdiction, it is expressly provided that any and all remaining portions of this Ordinance shall remain in full force and effect. Prosper hereby declares that it would have passed this Ordinance, and each section, subsection, sentence, clause, or phrase thereof irrespective of the fact that any one or more sections, subsections, sentences, 4 clauses, or phrases be declared unconstitutional or invalid. SECTION 6: Effective Date. This Ordinance shall become effective upon its formal adoption. DULY PASSED AND APPROVED BY THE TOWN COUNCIL OF THE TOWN OF PROSPER, TEXAS ON THIS 27`h DAY OF SEPTEMBER, 2011 AT A MEETING WHICH WAS HELD IN STRICT ACCORDANCE WITH THE TEXAS OPEN MEETING ACT. ATTEST TO: AMY PIUKANA, TRMC Town Secretary Date of Publication RAY SMITH, Mayor Prosper Press Page 2 of 2