PEDC board approves Skinner incentive payment, urges caution in expenses
Paris Economic Development Corp. is set to make a $388,500 incentive payment to J. Skinner Baking even as the board chairman is advising a watchful eye on the corporation’s finances.
The PEDC board of directors approved the payment Tuesday in response to a Jan. 13 invoice from Skinner that claimed $330,000 for 132 jobs created and $58,500 for training for 117 employees.
In all, Skinner Baking reported 133 employees with 16 terminations, for a current total of 117. The company also reported $11.8 million has been invested in the old Sara Lee bakery through 2013.
Skinner paid $126,799 in property taxes for 2013.
According to the incentive agreement implemented last year, PEDC will pay $1.18 million through 2016 if Skinner invests $25 million and hires 393 full-time employees — $196,500 for training reimbursement and $982,500 for job creation. The schedule predicted 135 jobs in 2013, 199 in 2014 and 59 in 2015.
Earlier in the meeting, board Chair Rebecca Clifford raised some concerns about PEDC’s cash flow. The corporation has a $2 million line of credit with Capital One, and as part of that agreement, PEDC has to keep at least $400,000 of cash on hand.
“Obviously, we need to stay on our austerity program for the next five or six months,” board member David Turner said.
As of the end of December, PEDC had $1.5 million. Incentives that are likely to be paid out relatively soon, such as Campbell Soup, J. Skinner, Rogers-Wade and Paris Lakes, would bring that down to $325,000. Longer-term incentives to T&K Machine, Bodyguard Truck Accessories, Potters Industries and Daisy Dairy would drop that to about $250,000.
“We’re in default if we get that low,” Clifford said. “We need to look at our numbers.”
A default is not very likely, she said, but “we need to be aware. We don’t need to make any major changes.”
Interim Director Shannon Barrentine said PEDC brings in about $100,000 a month in sales tax revenue. About $50,000 goes to operational expenses — including $30,000 to debt payments — leaving about $50,000 into reserves.
“We’re hoping Skinner will pay the bridge loan off before we get to that point,” Barrentine said, referring to a $2 million loan PEDC made to J. Skinner Baking.
The company paid $67,314 in interest on the loan last year.
With the departure of former Director Steve Gilbert, PEDC has added a temporary contract worker to help in the office. Barrentine asked to move funds from the $180,000 salaries budget to contracts to pay for the roughly $1,500 a month expense.
After some discussion about how much they would need to transfer, City Manager John Godwin said another option would be to make the budget changes after the charges were incurred. As long as the overall budget’s bottom line didn’t change, it would not be an issue, he said.
In other business:
- The board approved spending $360 to continue advertising in the Lamar County Chamber of Commerce map.
- The board approved $1,980 to Daughtrey Lawn Services for partial shredding of the industrial park. Weather has prohibited the job to be completed.
- Clifford said efforts are moving forward to market the airport as a site for industrial development. “The airport board is going to get a list of our assets to see what we have that distinguishes us from our competition,” she said.
- Barrentine said letters have been sent to industries receiving tax abatements seeking confirmation they have met the requirements. A similar letter is being drafted for those receiving incentives.
- Turner said he has invited Damon Wells, vice president of government relations for the National Turkey Federation, to speak to the board early next month. He said that Wells, son of former County Attorney Tommy Wells, is well-connected in Austin and Washington D.C. “We want to talk to him about whether he might be able to represent PEDC in the political arena — Austin/Washington,” Turner said.
- Clifford asked board member Vicki Ballard and Barrentine to work on the 2013-2014 program of work for the next meeting. PEDC’s bylaws require a plan to be presented to the City Council each year.
- The board tabled action on economic incentive guidelines until the next meeting to allow Stephen Grubbs to be there, as well.