During last Tuesday’s regular meeting, the Sealy City Council approved the first reading of a resolution for the Economic Development Corporation’s funding of the Maass Flange project not to exceed $205,000.

Sealy Main Street Manager Kimbra Hill said she prepared a gatekeeping checklist for the council to show them what they were looking at.

“This year would require a $60,000 incentive payment. For the fiscal year 2022, it would require $60,000. For 2023, it would require $30,000, followed by $25 (thousand) and $25 (thousand),” Hill said. “However, after the first two $60,000 incentive payments, the third, fourth and fifth are actually based on 75 fulltime employees and the 75 (employees) have to be completely maintained by Maass Flange for three consecutive years. If not, they would have to repay the $25,000, the $25,000 and the $30,000.”

Hill said the answer to whether they have the money to pay for this fiscal year’s payment is yes. The current project revenue is $105,000 a month.

“We are averaging about a $30,000 shortfall each month in the first quarter, so we are already up to a deficit of $64,000. However, if you look at it historically over the past 12 years, we have had an increase of about 1.5%,” Hill said. “If you look at redoing our budget based conservatively on that, that would reduce our projected revenue total to about $79,918 a month. Which I think is very realistic.”

Hill said this would give the EDC a projected revenue of $868,944 remaining in this fiscal year with their remaining expenditures of $1.2 million. That would add to an overall shortfall of $348,000.

“However, because we have a cash balance today of $1,133,073, that would still leave us a balance of $784,000 at the end of this fiscal year,” Hill said. “When we had the budget amendment in December for some reason … we asked for the debt service twice. So that shortfall of $348,000 that I am showing you is not going to be that bad. That shortfall is going to be more like $150,000.”

Hill said if the council does not approve to fund the comprehensive plan, that puts another $120,000 back into the fund. Interim City Manager Warren Escovy said this would be brought back to the council at the next meeting.

“They will decide between one of the five comprehensive plans or could just vote not to fund it,” Escovy said.

Hill said whether or not the comprehensive plan gets funded, currently the Maass Flange project is already allocated for in the budget.

“Both of our large and new projects that started back in May of last year are both allocated for in the budget,” Hill said. “Considering that and we have a budget of $800,000 or higher at the end of the fiscal year, in conclusion, yes we do have the money and we can afford to pay the incentives.”

Hill said she wanted to remind the council that the point of doing this was to retain this manufacturer in Sealy.

“We are basically going to double the employment at that manufacturer. It gives us 75 spinoff jobs, our ad valorem tax is increased, we will have the sales tax revenue projected to increase the city by $129,000. And we have the benefit of them being in the direct pay program, which will give the City of Sealy an additional $21,000 in sales tax revenue this year and the EDC an additional $10,000, which is reflected in the final numbers,” Hill said.

Sealy Mayor Carolyn Bilski said after reviewing the proposal that she would like to adjust the section of the resolution where it says, “the city council authorizes the expenditure of funds by the EDC in an amount not to exceed $205,000,” to add the words “sub ject to” in Section 2 to uphold the development compliance.

“Just like it does in article 1.6 to the development compliance with the terms and conditions of this agreement,” Bilski said. “Because I think that needs to be repeated and emphasized someplace else again on the front page because there is a lot of material to read here and somebody might not get down to article 1.6 so if we can make sure that’s on the front page of the resolution, most taxpayers won’t have a heart attack like I did when I looked at this.”

Sealy City Attorney Sealy City Attorney Timothy Kirwin said that Maass Flange will have to comply with the resolution.

“I can put it in there that they have to comply with it, but they have to comply with the performance agreement. It will not hurt to say that,” Kirwin said.

This was the first of two readings, with the second reading being at the next city council meeting on Feb. 2.