Economic Development Corp. - Regular Meeting

Here.

Here.

Here.

Kristen Carden? Here. Larry Hammonds?

Here.

Shane Hines?

Here. I didn't have mine on either, so you're good. Item

three, approval of minutes. Item a, approval of the 05/15/2025 workshop meeting minutes. I hear a motion. Move for approval. Motion by director Herta.

Second.

Second by director Carden. All in favor. Aye. Aye. Opposed?

Motion carries unanimously. And B, approval of the 05/15/2025 regular meeting minutes.

Move for approval.

Second. Director Curda with motion, Director Thompson with a second. All in favor?

Aye. Any

opposed? Item four, since this communication, this is time for citizens to address the board on issues and items of concerns not on this agenda. There there will be no board action at the time.

Jim Holzer, resident. I did a version of this at a couple of council meetings ago, and this is AI. AI's these are photos I took here in town. I was gonna ask you where you thought I took them, but they were here in town. And AI set it to music. I didn't.

Can you turn the sound off? I don't think anybody's gonna able to pick up anything. I can barely hear you so

I doubt the microphones can pick it up. Page through that. It's about 30 photos, and I actually have about 30 more of the housing authority building over there on 725 there. And what you need to consider is that that those piles of garbage were on the streets for over two months. Okay?

And my point in bringing that up is that when I drove in there the first just by chance, because I had some business on the other side of town, and I know how poorly the city has managed the housing authority building across over over the last four years, but it is much improved. But, obviously, they didn't learn the lesson from the building across the street because they left the streets of their with garbage. And when I pulled in there, I saw a little girl, and you've probably seen this in some of your neighborhoods, she was selling lemonade, you know, with her grandmother, and she was among all that the some of the pictures I showed you there. And like I said, first day I pulled in that just a one off. Somebody's going to clean this up.

Sixty days later, it was still there. After I came and talked to counsel, the next day, miraculously, it was cleared up. So that means coming to these meetings, speaking out publicly, it is a positive thing. Now the reason I brought that up was that if you I think the EDC, I think I voted for 1997. I think that's when the election was held and was set up.

And I actually voted for it because I thought it was a great idea. At the time, we were paying for all the, I guess, activities associated with the river, the taxpayers were. But when I looked at EDC at the time and when I subsequently looked at it in more detail after I saw this mess over there on the other side of town, it says part b says that y'all can get into affordable housing. Now I may be wrong on that, but that's what's on the controller site, and y'all are authorized under part b. Which means if I went through that and showed you some of the photos, the roofs over there were terrible.

They were apps and still are. But the worst ones I showed at council that had no gravel on top of the shingles anymore, I I made kind of a joke. I said, you need to go get the roofers chicks to get over there and get on that get on that building. Well, lo and behold, two days later, they fixed again. After we showed it in a public meeting, they were up there they reshingled the worst one.

Now there are other ones that had missing shingles. And so they went in there and tried to replace some of those missing shingles. It's still it's it's it's a 100% better than it was when you started zero. Now, having said that, again, I look at what the economic Development Council can do in affordable housing and there's quite a bit on the controller side, and I want you all to take a look at that because those I see opportunity when I look at those buildings over there. They are they were built on, I guess, a duplex model because they're one unit on each side.

You could replace the roof with tin roofs, stylish roofs, put out something in front, put out some patios on the back, and you could turn it into a housing development where poor people would get out of the model. Because, as you know, if you wanna pass that loan to your kids, you don't rent the all of your life. The way you build wealth, one of the simplest ways, if you're not lucky enough to do it through your through an opportunity, is to buy a home. And that could be turned in as if I read the controller site correctly, that that could be turned into a project where you could it wouldn't take much to fix those up and divide them into units. Other cities have done similar things through HUD.

So I'm just saying, take a look at that, and I hope it gives you some thought. Maybe you can get your counsel here to look up the provisions for EDC and what you could do for affordable housing. And I'm not talking about affordable rent. My god. We got we got so much of that now. I think they're having trouble filling them up. So but I'm talking about affordable housing. City of I think Midland did something like that. So, anyway, sorry about the music. That's AI for you. And but drive over there sometime. Now it's all you don't have to wade through the garbage on the streets, but drive over there and take a look and see if there's something we could think about there. Thank you very much.

Thank you, mister Ulster. Any

other citizens communication? We will close it. Citizens communication. Excuse me. Move on to five a, presentation on a proposed economic development incentive to Lethco USA for an expansion project to create or retain primary jobs. Walks.

Thank you, president Hines. As a reminder, Lefco is a Canadian manufacturing company that is considering an expansion in our area. This would be a 15 to $2,525,000,000 dollar capital investment and create about a 150 jobs over five years. In terms of economic impact, we're looking at about 1,800,000 back to the community. And so today we have here Hickey and Associates. We have Jason Hickey and Ann Miller here to talk about the project. They are the consultants that are advising the company on their site selection, and are they here to give you more information about the company and the project overview, and then I will cover the proposed incentives.

Thank you very much. We appreciate the time today and inviting us to talk a little bit about our project we've been working on for quite some time. As Michelle mentioned, myself and my colleague Anne, I'm Jason Hickey. I'm president and CEO of a site selection firm called Hickey and Associates. We're here representing the company.

And what we do for a living is help businesses like Lefkoe, big or small, help find sites across The US and beyond. So we're honored to be in front of you today to talk about this project just for a few minutes. So it's it's a codenamed project LE. It's been a a pretty robust site selection effort over a significant amount of time that stretched out from Texas Mexico, even out to far off places like New Mexico and some other states. And throughout the process, we've been looking at sites to expand.

It's a very exciting company's next level of manufacturing outside of Canada. Lefco USA is The USA entity of of eventually Centric Capital, but it's a it's a Quebec based firm that makes and focuses on different types of manufacturing products we'll talk about in a moment. The Lefkoe Plastics is is what's commonly known as as Lefkoe as as an entity. So they began in 1957 manufacturing concrete blocks, and over that time, they introduced different types of plastic manufacturing as that was developed. Today, they've they've abandoned their initial roots in concrete and then moved into different types of plastic manufacturing.

They're one of the most responsible from not just a a company perspective, but also sustainability and other factors that that really have led to their significant growth, and and now they're considering expansion down within this part of North America. The kind of products that they make so think of a cooler and how you've got different types of of plastic molding and other things. This is this is where you actually inject with air different types of plastic. So, it has a cooler, has that lining, same thing as hospital beds, seat backs at a stadium. You can see pictured here some of the products that they make.

And their clients, which Anne's gonna speak to in a moment, has some of the most innovative needs required for all kind of different reasons. And all the way on my right, maybe your left, is is an example of one of those new products that could potentially be manufactured here, and that's a that's a gas or fuel storage tank that's made out of plastic as opposed to metal or other materials that has that has historically been been used. So, I'm gonna pass it along to Anne to to talk about the the project itself. Itself. Thank Thank you you again. Again.

Thank you. So, on the project itself, so they are a blow molding manufacturing facility. Part of what makes them unique and what attracts their current customers is they can do single layer and multi layer. And multi layer, you can end up with a product that has like a carbon fiber layer in between two layers of plastic, so it's much more structurally sound than a typical plastic tank that comes into play when you're using alternative fuels, and that's one of their customers is alternative fuels for large transport vehicles. So looking at this project, they're looking at about 40,000 square feet to start off, but quickly expanding into 70,000 square feet.

As Michelle mentioned, the capital investment over the next five years ranges from about 15,000,000 to $25,000,000 And a lot of that range has to do with as they bring on new clients and expand their contracts, they'll bring in more equipment. They are planning a 150 full time employees over the next five years with an average wage of $68,000. And Jason mentioned that it was a very expansive site selection search. It has been narrowed to the New Braunfels location and locations in Mexico. So congratulations, you've made the short short list.

And then I do just wanna talk a little bit about their primary customers. So it is large scale manufacturing, they do transports, recreation, ATV, and they do after market parts, and then large scale medical, as we mentioned, hospital beds, all those plastic railings on hospital beds, they make a lot of those. I guarantee you that you have probably interacted with a left co made product under a different company's brand at some point in your life. And most of their customers that they would be servicing from either this location or location in Mexico are based in Texas, Mexico, and the Southwest And Central U. S.

And then what I do want to note is we want to thank you for considering incentives for this project. There are lot of factors that make New Braun Braunfels attractive. You guys have a qualified workforce. You've had a similar type facility that closed, so there are some employees that could eventually transfer over if they wanted to stay in this type of industry. Mexico does have lower labor costs and a little bit lower rent rates, but they also have complications. But incentives do really help make the business case, and we definitely wanna thank Jonathan and Michelle for all of their hard work in getting it this far. And I guess I'll turn it over to Michelle.

Thank you, Anne and Jason. So a quick overview of the proposed incentives. Proposed incentive is $950,000 over a three year period. The first payment would be paid when they get their certificate of occupancy, and that would be an up front payment of $450,000. They would also need to invest at least 4,000,000 in the building and equipment and machinery before that payment is paid.

The second payment would be after they've reached 20 full time jobs and hit $6,000,000 in in new investment. And then the third payment would be when they hit the 50 jobs and are are at $10,000,000 taxable value. So, thereafter, the company would be required to complete, annual compliance, and it would be a ten year contract where they would be required to employ 100 full time jobs over that ten year period and have a minimum taxable value of $10,000,000 So again this has a great economic impact for New Braunfels and the community. We will take any questions that you might have.

That last slide is it contemplates those two thirty day windows, but how how long do you feel like it'll take to ramp up to the 150 or what what kind of timeline?

Is Five their projection right now.

Okay.

We structured the agreement like this to give them more upfront but they'll still be on the on the hook for those five years to get up to a 150.

Do you post some kind of surety for this? Is it letter of credit or what what's the

That's a great question. Yes. They have a letter of credit from Bank of Canada for 500,000, I believe, for the upfront.

Thank you guys for the presentation. Thank you. Look forward to working with you. And b, presentation on a proposed additional economic development incentive to Northeast Lakeview College at New Braunfels for an expansion project to promote workforce training and education.

Thank you, mister Hines. We're getting podiums ready. You're gonna hear from doctor Garcia in just a second, but what I wanted to do was maybe remind you of things you already know, but maybe in a good order where we can kind of level set the conversation. So I handed out to each of you kind of a two or three page letter that Northeast Lakeview of what get to a complicated project with a lot of opportunities, a lot of choices that that both Northeast Lakeview and the community has with regards to phasing. Are we talking about a two phase project?

Are we talking about one phase project? One of the there's kind of two main complicators to that that I think are opportunities that I just want you to let marinate. One is I've had to learn in the education space, we're not talking about months, we're talking about semesters. We learned with retail that they really want to open before Christmas, right, because they want to hit that sales cycle. And in public education, you really need to hit that semester. And so there are some timing considerations the over

slide.

What our higher ed ecosystem looks like today versus maybe three or four years ago, there's just tons of progress. Doctor. Garcia is going to share both what that looks like to date and what that can look like with this new project here in a second. But you've got the domino effects of investing in this facility, potentially unlocking CTTC for other uses and kind of figuring out where the ROI is on that. But I'll stick around. I'll turn it over to Doctor. Garcia. I may have closing thoughts depending on where the conversation goes. So, thank

you. Thank you, Ms. Breaker.

Good evening and thank you. Yes, we are back. And I have the pleasure of going to share a couple of slides that I shared in the past, but just as a refresher in the appendix are all the previous slides just to remind you in case you had some questions. So again, I'm Doctor. Veronica Garcia.

I have the pleasure of serving as president at Northeast Lakeview College. Our college sits off of I 35 And 1604, right next to the IKEA. That's where our main campus is. And we're here to talk about the growth that's been happening in the Northeast Corridor. We realized back in 2021 that we started to see actually, it was 2019, we started to see an expansive growth at the main campus of students outside of Bexar County, especially coming from Comal and the Guadalupe County areas.

And what we've noticed is that we started to see this rapid growth. And in fall twenty twenty one, we reached an all time high of 31% of our students coming out of those counties. But in fall in 2023, it increased to 39% and continues to grow. So, that's what made the decision for us to come to CTTC and open up a site there. We started last fall with over 100 students, and now we're at 400 students.

So, it's growing very quickly, and we realize we need to do something. Now, with CTTC, it is a shared space, and we have great partners in that other space, but we're realizing that that's not going to be something that we're going to be sustainable in the next five to ten years. And so, we looked at what opportunities out there, what buildings are available, and one of our colleagues was jogging by this building and said this building has been vacant for five years, so we purchased we made an investment, and we purchased this building off of Sundance. It's the old FM 306 And Sundance Parkway, for those that are barely watching this for the first time. So we purchased this building.

This is was the old PNC Bank that originally was going to house a call center. And and when they started their process hiring, COVID hit, and then PNC realized that this is not a viable project. It's better for them to just have their workforce work from remote, and so the building has sat vacant. It's a great location. It's a great building, and so we went ahead and purchased this building to continue that growth and move from the CTTC area into this building.

During that time that we were purchasing this building, again, watching and looking at all the trend data that's happening with the workforce that's coming in, we realized, well, you know what, we're going to outgrow this space really quick. How can we expand? And we realized there is a 4.7 acres right next door that was vacant. And so we thought, might as well make the investment now because in the future, it may not be available. Somebody else may purchase. So so we made an offer that was accepted. My understanding is land takes a little longer to process than buildings. I'm not sure why, but it's in the title. So somewhere stuck in title. But the attorneys assure me that this building is this land piece will become part of the NLC New Braunfels area.

And so as soon as can get that title, I will be really excited. So we went ahead and made that $2,000,000 offer, and so I wanna kinda go over. So originally, when I came last time, we spoke about a two phased approach because we were trying to figure out how we could do this since we were spreading ourselves thin about buying a little bit of land to take advantage of that opportunity. And so we had a conversation with you all about a two phased approach. What did that look like?

How long it was gonna take? Well, after meeting, after careful reflection, and really having lots of conversations with the architects and the engineers and the construction folks and our partners, realized that this might not be the best approach. And we decided that maybe a single phased approach, comprehensive approach, would solve several things. I want to go over that. One is a single phase approach reduces the cost of construction.

So our construction was at 8.5, and they said you could really bring this down to $7,000,000 which who wants to save a million dollars, that's what we want. So that was a big cost efficiency, as well as you don't have to set up two different construction sites, bring them up, bring them down. Two, the disruption. As we started to do the design and the planning, because we have a nursing program in there, we have construction residential, we're gonna have to dig in different parts of the building. They're gonna have to drill in.

And so they said if you do half of it on one side, you're gonna be making a lot of noise on the other side, and it's gonna be disruptive to the students. And you will maybe lose power, you may have to turn off the water, so it will be disruptive to the students and the faculty who are trying to teach. This is not a good idea. So, said, okay, we understand that. It important for us to create an experience for the student where they have a positive experience in learning.

The other was we are accredited through Southern Arizona Associate of College and Schools Admissions, known as SACSCOC. So, they accredit higher education. And so, for us, we had already applied for a secondary site, which was CTTC. If we were to open this in a phased approach, we'd have to apply for a third license, which would trigger a site visit. And they said, listen, if you just open it up altogether, then we'll just transfer your approval from CTTC over here.

It saves you a lot of time, and possible avoids delays from getting accredited in that area. And I said, well, okay, that's a good point. I would say the other half, and that would reduce that regulatory requirement for us. The other, I think, which is the most important, is enhancing the student experience. Having a consolidated site allows us to A, from a branding standpoint, it's very easy to be able to say this is the new campus versus saying we're having classes at NLC and B at the CTTC site, and then we have the Sundance site, and then we have the main site.

We thought that's not gonna create the best experience for students when we're trying to assure them that these are the locations that are available. So we said we wanted a unified to support a clear message for our students, not only in registration and in branding, and as well as through the enrollment process. And I think the stronger is strengthening the community presence through a single grand opening. By us moving from CTTC into the new Brumfels campus site, the new site at once, then we can really make a splash about, okay, this campus is open, these are all the support services that you will receive, as well as here are all the programs that are available to you on this day. Our goal is to continue to open up in fall twenty twenty six.

We've been having conversations with the architects and with the contractors who say that doesn't seem like that will be a problem. We will have the final renderings by July 2, and then we'll be going out to bid with subcontractors to get sort of who's going to do what in the building. And they hope to start demolitions starting in September. With that said, what are the key programs that will be in this building? We have a nursing lab.

We will still have the biology two labs, a chemistry lab, commercial, residential, electrical lab. We'll have an engineering lab. Our cyber defense and network administration will be there, our logistics and supply change management, as well as at that moment, we will also have the advising services, the testing services, the library services, tutoring, computer labs, study spaces, academic classrooms, which this redesign also, by having it all done at one time, actually added two more full classrooms, which is something we were really excited about. Of course, there's gonna be student common areas and exterior and interior signage. And our projected enrollment for 2013 still is at over 1,100 students.

We expect to be at that site. We also, in that phased approach, I gave you sort of a floor plan. It still looks a little the same. We just tweaked where the labs are. It will be a single remodel.

Time, right now, it's costing us $9,000,000 for the total, not only with the building, the remodel and the land purchase, is what we've put together. Currently, NLC has 4,000,000 in cash, which we've just reduced by 2,000,000 by purchasing the land. And then, I want to thank you for approving us for $1,200,000 for the first phase approach, which leaves us a balance of 3,800,000.0 And that's kind of where we're at, is that's the shortfall that we had. They were asking, what is your shortfall to make this into a single renovation? And it's a 3.8 is the additional dollars that we need.

But having this, we could then go ahead, fund the entire building remodel, and still have target of opening in fall twenty twenty six. So with that said, I'm opening up for questions.

Thank you for your presentation. Just as a little little backdrop, could you help me understand the cost say per semester hour for a typical class here as opposed to your campus in Bear County and maybe compare that to what say Texas State would be? I'm just trying to think of

So I don't have to take state right off the top of my head, but ours is it's 180 per credit hour for outside of Bexar County. For inside of Bexar County, it's 109. So, that's the difference that students would pay in this area. We do have fundraising events that I would love for you to come to that we actually set aside for out of district, especially in the rural areas, that students are struggling to pay that difference. And later on, we'd like to have some conversations about there are options that I have worked with in the past in Arizona Oregon that I worked with cities that are outside of Bexar County that do not deal with annexation or anything like that, but really to help to support those dollars.

The Bexar County citizens through their property tax really helped to alleviate that pressure. And so that would be a subsequent conversation, but for right now that's what the difference is, 180 to 109.

But as we think about the value of our young people, the typical cost of a state school four year college is much greater than the 180?

And, I think the other difference is that we have several agreements with the local ISDs and New Brumples and Comal that many of those students start in with dual credit, which they don't pay anything for. And so, then again, that transitions off. And I think in the previous presentation I shared with you, the majority of students who start with NLC as a native student only transfer a minimum of sixty two credit hours. And what that means is that 100% of the courses apply. So, if they go to Texas State, or they go to UTSA, or they go to Austin, they're accepting 100% and they're applying it towards a degree, which in some states you don't see that.

They'll transfer and they'll take it, but they don't apply it towards the degree. And I would think that's something that's very unique about Northeast Lakeview College.

Doctor. Garcia, thank you for Regarding that the 3.8 funding gap, are you you seeking other funding sources currently or or you're asking for the complete 3.8 Where

would for the be different donors to see if they would be interested in supporting that. We've had we are actually having people come in to see what the site looks like. But again it's you know they come and they see and they haven't quite committed to anything, but that's where the shortfall is right now. So, we're starting in different locations, right, having these kind of conversations. But I think for us, the focus is the sooner we can get that, the sooner we can break ground and get move forward. The longer it takes, the more it delays. And I'm sure CTTC would love to have that facility open to do other things with. But unfortunately, we're going to stay there until we can raise the 3.8.

Okay, thank you.

Any other questions?

No other questions?

Well thank you so much. I really appreciate the time. Know you guys are really busy. Thank you.

Moving on to item six. In accordance with the Texas government code section 551.071, the board reserves the right to retire into executive session concerning the items listed on this agenda to consult with its attorney. In addition, the board may convene an executive session on any of the following items with any final action being taken in open session. A, deliberate issues regarding economic development negotiations in accordance with section 551.087 of the Texas government code one, HC Supply, two, Northeast Lakeview College, three, Project Ellie, four, Project Nemo, Five, the Nui. Six, Project Shoot.

Seven, Project Ambiance. And we will go. We will go into executive session at 06:01. We are back from executive session at 07:05 where no me no votes have taken place. With that, we'll adjourn.