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BM 1994-02-02 EcDevCity of Coppell Economic and Business Development Board Wednesday, February 2, 1994 MINUTES The Economic and Business Development Board met in a regularly scheduled meeting on Wednesday, February 2, 1994, at 7:00 p.m. in the Executive Conference Room of Coppell Town Center. The following Board Members were present: William Rohloff, Chairman Jim Dippold Jerry Singleton Ed Spalding Linda Millegan, Alternate Ron Pankey, Alternate Special Board Members: Jim Witt, City Manager John Mark Bonnot, Coppell Chamber of Commerce City Council Liaison: Flo Stahly Media Relations: Kay Tiller Guests: Mr. Dennis Konnopatzke Mr. Frank Toth Gary Sieb, Director of Planning and Community Services Kathleen Roach, Executive Secretary to the City Manager Item 1 Call to Order: Chairman William Rohloff called the meeting to order at 7:05 p.m. Item 2 Review and Approval of Minutes: Minutes of the January 5, 1994 Board meeting were reviewed and approved. Chairman Rohloff announced a change is procedure for sending out meeting information to the Board. The minutes and agendas will be mailed to each of the board members, but all additional information will be placed in the Board's mailbox for pick-up. Item 3 Foreign Trade Zone Presentation - Mr. Dennis Konnopatzke: John Mark Bonnot introduced Mr. Dennis Konnopatzke, President of the Foreign Trade Zone Operating Company of Texas. Mr. Konnopatzke presented an overview of a foreign trade zone and how utilizing this vehicle may allow companies to ease their international operations and save money. A question and answer period followed. Chairman Rohloff thanked Mr. Konnopatzke for his presentation. Item 4 Marketing Committee Report - Economic Develoument Partnershi Mr. Frank Toth Chairman: Mr. Toth announced the plans for the upcoming MJDesigns groundbreaking event on February 10, 1994, beginning at 11:00 a.m. Luncheon will be included, compliments of Rediform. Mr Toth reported that the Partnership Committee would like to have a continuing rapport with MJDesigns between the groundbreaking and the grand opening. Jim Dippold said he wanted to see the Marketing Committee, along with the EBD Board, utilize MJDesigns as an impetus to market Coppell nationally. Kay Tiller and Ed Spalding expressed their thanks to Frank Toth and Rediform for all their support and contributions for the groundbreaking event. At this time, Kay Tiller presented the details on the groundbreaking including news releases, etc. Council Member Stahly asked Kay to provide documentation on all the planning activities in order to create a master file for groundbreaking events. Item 5 Marketing Tools for the City of Coppell: Karen Doelling was unable to attend tonight's meeting. Kathleen Roach shared some of the new ideas, currently under consideration by the Employee Fund Committee, to market Coppell. Item 6 Status Report on Current Development Prospects: Gary Sieb reported on current development activities in Coppell. The Marx Apartments were denied by P&Z on a technicality. They will be coming back in March, but have changed the name to Stonecreek. Riverchase Plaza is moving along. Blockbuster Video will be coming forward to P&Z in March. Some of the other businesses interested in the area are: Miami Subs, Sonic Drive -In, Beamer Development, Copperstone (Centex),and about 100 SF7 lots in Northlake Woodlands. Park and Fly will be coming back this month and there is some interest in developing the area across from the post office. Item 7 Economic Development. Partnership Report: John Mark Bonnot reported he met last week with a consultant from a national distribution company interested in Coppell. He expects to hear back on this sometime next month. He presented the final paste-up of the aerial map brochure. All of the additions/ suggestions made at last month's meeting have been incorporated and it's ready for the printer. However, the addition of the color graphics has significantly changed the prices: 500 = $2490; 1000 = $2670; 1500 = $2850. Upon a motion from Jim Dippold and a second by Ed Spalding, the Board approved the printing of 1000 brochures using 4 colors. The finished product should be ready by next month. Item 8 City Manager's Report: Jim Witt reported that the library bids were received today and they are within budget. City Staff is continuing to work with the MUD Board on future development issues. Sandy Lake Road is moving along and another public hearing is scheduled for February 22, 1994. The City of Lewisville has completed their plans to bring six lanes on Denton Tap to Highland Drive and will probably start construction in late 1994 or early 1995. Mr. Witt shared his idea for a "business appreciation" event, perhaps a reception, to show our local businesses who have been here awhile how much we appreciate them, thereby encouraging business retention. Item 9 Review and Discussion of Media Relations Report: Kay Tiller presented her monthly report. Upon a motion from Jim Dippold and a second by Ed Spalding, the Board approved this report as presented. Chairman Rohloff thanked Kay for all her efforts toward the groundbreaking ceremony. Item 10 Reports from Liaisons and Special Board Members: a) Council Liaison Report Council Member Flo Stahly reported there will be a reception for former Mayor Mark Wolfe, and former Council Members, David Thomas and Bill Smothermon, on Tuesday, February 22, 1994. The reception will be held at Town Center at 7:00 p.m. This is a Council meeting night and the Council will adjourn from Work Session for the reception. Park and Fly will be coming before the Board of Adjustment tomorrow night. Members of the Board are encouraged to attend. Also, the multi- family issue will be talked about in the community during the next few months. Our Planning &. Zoning Commission has become very proactive about this issue. b) Chamber of Commerce Liaison John Mark Bonnot advised that Kirk King will be appointing a new liaison to this Board in the near future. c) Coppell Independent School District Roy Brock reported that things are moving along regarding the reshaping of the elementary school boundaries for the 1994-95 school year. Also, the district has reached 5,000 students in attendance for the first time. Item 11 General Discussion and Other Business: Jerry Singleton raised the question of whether MJDesigns would be seeking a subzone foreign trade zone and will the City be making a recommendation for this? Perhaps the Board should be addressing this issue and be prepared to make their recommendation to the Council. Jim Witt said he will check on this and, if appropriate, place it on the next meeting agenda. It was suggested that a list of all the Economic Development Partnership committees be coordinated, including the names of all serving on the various committees, and a schedule of meeting times and places. It would be a good idea to have the Chairperson of each committee give the EBD Board a report each month. Chairman Rohloff brought forward two invoices, one for the preparation of the aerial map for the new brochure, and one for the printing of the new mailing labels. This Board approved these expenditures, now approval is needed to authorize payment. Upon a motion from Ron Pankey and a second from Jerry Singleton, the Board approved payment of the following invoices: Economic Development labels = $559.27; Aerial Survey = $819.00. With no further business to discuss, the meeting was adjourned at 9:25 p.m. Respectfully Submitted, Kathleen Roach Executive Secretary to the City Manager /kar- minutes0.205 FOREIGN TRADE ZONE OPERATING COMPANY OF TEXAS February 2, 1994 Coppell Chamber of Commerce City of Coppell Ladies and Gentlemen: Foreign Trade Zone No. 168 is happy to be working with the City of Coppell and the Chamber in bringing companies involved in international trade to your area. The Foreign Trade Zone is a vehicle which companies may utilize to ease their internaitonal operations and save money. Our mission is to take away the mystery that surrounds Foreign Trade Zones and permit companies to realize the benefits that are available under this Federal program. Attached for your review and discussion is an overview that simply tries to give you an understanding of Foreign Trade Zones. I look forward to discussing this subject with you and answering your questions. Sincerely, Dennis Konopatzk President DK/cf Attachment P.O. BOX 742916 A DALLAS, TEXAS 75374-2916 A (214) 991-9955 A FAX (214) 361-3057 An Introduction to Foreign Trade Zones 1) What is a Foreign Trade Zone? * A geographically defined area that is within the United States and designated by the Federal government as an area that is considered outside of the United States for U.S. Customs purposes. * The authority to create Foreign Trade Zones is persistent to federal law, (FTZ Act of 1934, 19 U.S.C. 81q). * The Act is administered by the FTZ Board: consists of Secretary of Commerce, Treasury and Army 2) Where is a Foreign Trade Zone? A FTZ must be located in or adjacent to a Port of Entry A FTZ site or sites may be located anywhere within or adjacent to the Port of Entry 3) What is a Subzone? A subzone is a specially designated area for a particular user that cannot be accommodated at the General Purpose site A subzone is part of an existing FTZ but geographically segregated and created to serve the single user at that site 4) What are the benefits of using a FTZ? * No duty is paid on goods imported in the U.S. and then exported. * Duty is deferred in a FTZ. Duty is paid on imported goods only when it is withdrawn from the FTZ and entered into the U.S. into the U.S. * Duty inversion or duty reduction is available for Zone users that assemble or manufacture with parts that have a higher duty rate than the finished goods. * No duty is paid on a product that is lost through the manufacturing or assembly process as a result of shrinkage or scrap. * No inventory tax is paid to local taxing authorities or imported products or domestic products destined for export stored in the FTZ. * Quota restrictions are not applicable to goods brought in to a FTZ, but are still applicable on withdrawal. Items that are under quota and are changed into another product due to manufacturing are not subject to quota. These are exceptions and must be carefully reviewed to determine the exact effect. * Substantial transformation can change county of origin marking when done in a FTZ. * Customs compliance for admissibility in the U.S. can be first brought into a FTZ to comply with Customs as opposed to exporting back. 5) How does a company go about utilizing a FTZ? * Company can utilize a public warehouse in a FTZ. * Company can relocate or set up operations in a facility in a Zone on a lease or ownership basis. * Company can approach local FTZ about subzone and apply for status if appropriate. * Location in a Zone is the first step, the user must then work with the Operator of the Zone to develop procedures that permit operations to commence in the Zone. 6) What is an Operator? * The Operator is the party responsible to oversee the day to day operations of the FTZ. The Operator serves as the official record keeper of the FTZ. The Operator prepares the documents for filing with U.S. Customs. 7) What service does the Operator provide? * The Operator administers the record keeping requirements for the entry and withdrawal of goods into the FTZ. The Operator prepares the documents for filing with U.S. Customs, maintains an inventory record keeping system and provides technical advice to the user on regulatory compliance. Is a FTZ for you? The first step is to analyze the cost/benefit. As Operator of FTZ's we typically supply the attached questionnaire for clients complete and return to us. We then perform a cost/benefit analysis to determine if a FTZ can help or not. Foreign Trade Zone Benefit Benefits to the User What is the Foreign Trade Zone benefit? The use of a Zone can save a company money, but how is this done in actual practice? Foreign Trade Zones typically save companies money by deferring the import taxes on goods, avoiding the payment of tax for goods that will be exported, reducing the tax amount owed and avoiding the payment of local inventory taxes. There are additional benefits in operation and distribution, but these are more technical and very specific to the user's operation. Outlined on the following pages are two examples that quantify the typical benefits realized in utilizing a Foreign Trade Zone. Case A outlines the benefits to a distribution company, and Case B outlines the benefits provided to a manufacturing company. Case A - Distribution Company 1. Operational Costs Savings A company that uses a foreign trade zone for distribution purposes can save a substantial amount of money in inventory tax and duty deferral. Assume the following: Company A has $100,000,000 in annual inventory turn five times annually. All the merchandise is imported at a 5% duty rate and 75% is distributed in the U.S., the remainder is exported to Latin America. Using a foreign trade zone the company would save the following: The cost savings in inventory tax would be $400,000 annually. Duty deferral would amount to $750,000 and duty avoidance on exports of $1,250,000 the first year. The second year the company would continue the inventory tax advantage and export duty avoidance. In addition, the company has the opportunity to earn money on the duty it is deferring. Year One Duty Deferral Duty Avoidance Inventory Tax Cost/Benefit $ 750,000 1,250,000 400,000 $ 2,400,000 In year two, Duty Deferral reflects only the opportunity costs from the first year savings. The inventory in the warehouse by year two is now duty free, and the capital previously tied up in duty payment is not working to earn the company money in other ways, as described in the footnote. Year Two Duty Deferral* Duty Avoidance" Inventory Tax*** Cost/Benefit $ 60,000 1,350,000 400,000 $1,810,000 * Money earned from investment of the capital that would have been paid in duty. Assumption is capital is invested in short term securities returning 8%. * * This amount includes capital associated with exports but now avoided plus interest earned from capital saved through the zone exports and invested in short term securities returning 8%. * * * All amounts including inventory are assumed constant. Case B - Manufacturing Company 1. Operational Cost Savings Assume a company is importing components and assembling them in a final product for distribution in the U.S. and Latin America. The company imports $100,000,000 of product a year at a duty rate of 10%. The company assembles these components, which are all imported into a finished product. If the finished product were assembled overseas, it would be imported at a duty rate of 5%. The company turns its inventory five times a year and exports 25% of its product. A company operating in a foreign trade zone can save, in addition to the benefits outlined in Case A, a reduction in duty by assembly. A company assembling in the zone can elect the duty rate and in this case save 5% on duty. The company's reduction in duty (duty inversion) results in $3,750,000 annual savings under this scenario. First Year Cost/Benefit Duty Inversion $3,750,000 Duty Deferral 11000,000 Duty Avoidance 21500,000 Inventory Tax 400.000 $7,650,000 Second Year Cost/Benefit Duty Inversion $3,7501000 Duty Deferral 80,000 Duty Avoidance 2,700,000 Inventory Tax 400.000 $6,930,000 The company saves a substantial amount of money in a foreign trade zone if assembly or manufacturing exists and duty inversions exist. NOTICE OF MEETING ECONOMIC & BUSINESS DEVELOPMENT BOARD Wednesday, February 2, 1994 Meeting Time: 7 p.m. (Open to the Public) Meeting Place: Executive Conference Room at the Coppell Town Center, 255 Parkway Boulevard, Coppell, Texas Notice is hereby given that the Economic and Business Development Board will meet in regular session on Wednesday, February 2, 1994, at 7 p.m., in the Executive Conference Room at the Coppell Town Center, 255 Parkway Boulevard, Coppell, Texas. The purpose of the meeting is to consider the following items: Item 1: Call to Order Item 2: Review and Approval of Minutes, 1/05/94. Item 3: Foreign Trade Zone Presentation - Mr. Dennis Konnopatzke Item 4: Marketing Committee Report - Economic Development Partnership, Mr. Frank Toth, Chairman Item 5: Marketing Tools for the City of Coppell Mrs. Karen Doelling, City Purchasing Clerk Item 6: Status Report on Current Development Prospects, Gary Sieb Item 7: Economic Development Partnership Report, John Mark Bonnot Item 8: City Manager's Report - Mr. Jim Witt Item 9: Review and Discussion of Media Relations Report and Approval of Monthly Billing - Kay Tiller Item 10: Reports from Liaisons and Special Board Members: a) Council Liaison Report b) Coppell Chamber of Commerce c) Coppell Independent School District Item 11: General Discussion and Other Business Adjournment CERTIFICATE I certify that the above notice of meeting was posted on the bulletin board at the Town Center of the City of Coppell, Texas, on Friday, January 28, 1994. Roach, Executive Secretary to the City Manager Public Notice Statement for ADA Compliance The City of Coppell acknowledges its responsibility to comply with the Americans with Disabilities Act of 1990. Thus, in order to assist individuals with disabilities who require special services (i.e., sign interpretative services, alternative audio/visual devices, and amanuenses) for participation in or access to the City of Coppell sponsored public programs, services and/or meetings, the City requests that individuals make requests for these services forty-eight (48) hours ahead of the scheduled program, service and/or meeting. To make arrangements, contact Vivyon V. Bowman, ADA Coordinator, or other designated official at (214)462-0022 or (TDD 1 -800 -RELAY, TX, 1-800-735-2989). /kar ebdage0.105