March 1, 2013
Message from the Chief Executive Officer
The HEDC Board of Directors held their regular monthly meeting on Tuesday. Here’s a recap of the meeting:
CODEM – Rodolfo Sauceda, Executive Director for CODEM (acronym which translates to Matamoros EDC) gave a presentation on some of their activities. He indicated that Matamoros’ industrial base continues to grow, with a focus on the west side of their city. Matamoros’ west side extends to the Los Indios International Bridge crossing area. Rodolfo and I met last week to discuss mutual marketing strategies.
During the meeting, Rodolfo indicated that the recession, security issues, and other factors led to a slow-down in industrial development in Matamoros from 2009 through 2011. Last year, things began to pick up a bit, and now they have about one million square feet of potential projects in the pipeline. Their average absorption over the last decade has been about half a million square feet. Proyecto Espejo (Project Mirror) will result in 500,000 square feet on new industrial space in Matamoros in the next couple of years.
During my trade show in Anaheim a couple of weeks ago, several companies I met with indicated an interest in Mexico. Our goal is to try to get them interested in Matamoros, which in turn, could lead to additional development on our side. Our thanks go out to Rodolfo and CODEM for joining us.
Sale of HEDC building leased to United Healthcare Services, Inc. –The Board approved the sale of the building owned by HEDC at a price of $2,340,000 to a private investor. The sale is subject to the lease. This price translates to about a 7.5% cap rate, which in today’s market, is a very good price for this asset. We have had other offers, but none have come close to this one. Assuming all goes well during the due diligence period, the sale could close sometime in March or April.
2nd Amendment to Agreement between HEDC and United Healthcare – During the budget process a few months ago, we had allocated $550,000 for a final job creation incentive to UHS. In order to keep a higher fund balance and thus have some additional funds available in case the right project comes along, I asked UHS to consider allowing us to defer half of the grant to next fiscal year. After some negotiations, UHS agreed to our request. UHS also agreed to accelerate their hiring of additional employees and should have 600 employees by October 2013, which is an additional 170 jobs or so from current employment levels.
Elliff Motors Development Agreement – Elliff Motors has been in Harlingen for at least three generations. They recently approached us for some assistance in the expansion of their facility along Tyler. They were in the process of acquiring neighboring tracts of land and were in need of relocating some public infrastructure to accommodate the expansion. In addition, Elliff plans on growing their payroll by about 30% over the next four or five years. They recently began selling the Polaris line of ATVs at the Harlingen location. Elliff is also expanding its operations in Pharr. In order to ensure that Elliff maintained a larger presence in Harlingen, the Board of Director approved a grant to Elliff for the $1.2 million expansion, creation of new jobs, and the retention of existing jobs.
Their request for $200,000 to assist in infrastructure improvements was negotiated to $60,000 to be paid out as a reimbursement over the next 3 years. In order to qualify for the annual payments of $20,000, Elliff will need to meet certain sales projections (adding additional sales taxes to our coffers) and employment goals.
Logistics and tax consultants – One of the prospects we are working with has some very specific logistics requirements since some of their products include components manufactured in China. Finished goods are shipped via ground and air, but components come in through water ports. There are also some different tax structures in the state where they are located versus Texas. So, we need to solicit information from some experts in logistics and taxes to compare our community versus their current location. The Board agreed that help was needed to assist this company in that manner. This information will help us with this prospect and hopefully others from that same area. The Board approved engaging in these services up to a specific amount.
Project BT – The Board approved expending up to $7,000 to conduct a feasibility study on the acquisition of a property. Depending on initial investigations, the amount allocated may not all be used. Since this is an on-going prospective project, I can’t disclose much more at this time.
Project NY – A prospect asked the HEDC to assist them in locating a new establishment in Harlingen. The request was for $120,000 for job creation and new investment. Staff recommended against the funding of this request. The Board agreed and denied the request. I won’t disclose the name of the company since we didn’t finalize an agreement, but I will say that it is a restaurant. We are moving away from providing incentives to these types of companies, not because they don’t create jobs or bring new investment, but more because we feel our focus should be on attracting higher-paying job opportunities.
RFQ for architectural/engineering firm to conduct planning for business park – The Board approved staff’s recommendation to proceed with a request for qualifications from architectural or engineering firms to evaluate a proposal for a new business park to help attract mid-sized companies with high potential for job creation in a Class A environment. The RFQ can be found on our website.
Proposal to increase marketing budget – Staff asked the Board to table this item so that we could discuss this portion of our budget during a budget workshop to be held in the near future.
Updates – The Board heard about several other items that staff has been working on. One of these items includes a Commercial Broker Tour of our industrial buildings and land available. Several local real estate brokers and staff agreed that we need to expose our available properties to as many brokers as possible. This is one way to help educate the commercial brokerage community about some of Harlingen’s locational advantages.
Ramiro Aleman also discussed a developer showcase which is in the planning stages. Catalyst Commercial was hired last summer to conduct a Retail Market Analysis and to help produce marketing collateral for use in our retail attraction efforts. Catalyst and HEDC will invite area brokers, developers, and outside retailers to learn about our market, the opportunities available and more. The Showcase will feature some of our larger retail developments including Cameron Crossing, Harlingen Corners, and Harlingen Heights.
I gave an update on MD&M West, a recently-attended trade show in Anaheim targeting manufacturing companies and related companies.
Lyle Garza updated the Board on several construction projects which include the Bass Pro Shops boat storage area and Harlingen Heights.
Finally, I gave a report on my negotiations with Accion Texas regarding the refining of our Interest Rate Buy-down Program for small businesses.
In other news….
Much of the rest of the week was dedicated to following up on many of these items and more. Ramiro met with several prospective companies looking at expansion opportunities. Ramiro also worked on following up with leads from MD&M West and other leads we have developed over the last few weeks. He attended a South Texas Manufacturers’ Association meeting, as well. Ramiro also attended a meeting with some of our local commercial real estate brokers in preparation for a Site/Facilities Tour. He and I also had a good meeting with Walter Plitt, Plitt Rigging.
Lyle worked on construction issues and followed up on other prospects. He also attended several meetings on my behalf this week. One of those included a planning meeting for a Small Business Forum to be conducted by the Governor’s Office and which may include Harlingen as a sponsor, along with South Padre Island, Port Isabel, Brownsville, and other Cameron County economic development organizations. The other meeting was a roundtable discussion led by RGV LEAD (formerly Tech Prep) and Harlingen CISD officials regarding exposing our high school students to higher education opportunities.
Mayor Boswell, City Manager Yerena, Randy Whittington and I met with other Valley mayors, city managers and EDC directors to discuss HB1000 (Merger of the UTPA and UTB systems and creation of the med school).
We are close to completion of the new HEDC website; continue to prepare for additional trade shows and marketing opportunities and a few visits from prospects in the next few weeks.
No stories today, but I will add a quote that I thought was pretty cool: “The mark of mediocrity is to look for precedent.”–Norman Mailer, American writer.
Mediocrity is not what I expect out of myself or those on my staff. I know I set the bar high, but then again, if I didn’t, I wouldn’t be doing my job.
Have a great weekend, and feel free to provide feedback. Your opinion is valued.
News from around the Harlingen area and beyond
Manufacturing Building Available for Lease or Sale
710 N. Commerce Street
+/- 31,000 SF space with offices, air-conditioned warehouse/mftg space, near rail and highways. Call the Harlingen EDC office for more information at 216-5081.