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Minutes EDC 4B 06/20/2007 - Special SessionMINUTES OF SPECIAL SESSION ECONOMIC DEVELOPMENT CORPORATION 4B TOWN OF TROPHY CLUB JUNE 20, 2007 3:00 P.M. STATE OF TEXAS COUNTY OF DENTON The Economic Development Corporation 413 of the Town of Trophy Club, Texas, met in a Special Session on June 20, 2007. The meeting was held within the boundaries of the Town and was open to the public. DIRECTORS PRESENT: James Hicks Larry E. Crosser Damian Olthoff Glenn Strother Philip Sterling DIRECTORS ABSENT: Doyle Nicholson Cy Holley Rebecca Shuman STAFF AND GUEST(S) PRESENT: President Director Secretary — via telephone Director — via telephone Council Liaison Vice -President Director Director Brandon Emmons Town Manager Shannon DePrater Staff Liaison Janet Ehret Buxton Company Chris Briggs Buxton Company REGULAR SESSION EDC 413 call to order and announce a quorum: The meeting was called to order at 3:00 p.m. EDC 413 telephone conference with the Buxton Group to discuss retail site matching report: Mr. Brandon Emmons started the call by introducing everyone representing the Town. Ms. Ehret introduced herself and Chris Briggs from The Buxton Company. Mr. Chris Briggs from the Buxton Company summarized the project thus far: three sites were submitted for analysis, Trophy Lake and SH114 was chosen for the retail site match. The trade area and drive time were the reasons this site was chosen. The Buxton Company uses drive time software that analyzes traffic flow, volume and population. The question came up as to how retailers were considered a good match or a bad match for Trophy Club. Mr. Briggs stated that Brandon was sent a PowerPoint presentation that explained this question. Copies of the slides from the discussed PowerPoint presentation are attached as Exhibit A. Council Member Sterling stated that most of the discussions have been based on drive time, but the retail match list shows straight line distance and asked why it is done differently. Mr. Briggs stated that is a way for Buxton to check and see how far away the retailer is and generally equate to and get a sense of their network as to how far away they are. Overall, drive time is used. Referring to the initial review of the match list the question of distance came up, in regards to the Saltgrass Steakhouse Restaurant. Is the restaurant too close? Buxton preformed a distance analysis and found one instance where they were located in the same distance tolerance and a couple of instances EDC B June 20, 2007 Special Session Page 2 of 9 where they were just beyond that tolerance. It is something they have done, but not with any frequency, but it has been done in markets specific to Trophy Club. President Hicks asked for clarification of Saitgrass Steakhouse's close proximity operations, how successful are they with the potential overlap? Mr. Briggs stated that the Buxton Company will not be able to get any individual store's performance from Saltgrass Steakhouse, unless they are one of their clients. And if they were one of their clients, they would not be able to share that information due to confidentiality. What they can do is and what they rely on is the fact that retailers are going about this with some sort of logic and model and what Buxton tries to do is mirror that process and to tap into their location strategy by looking into their existing networks and being able to classify what types of markets they are in and be able to make that comparison. So, in looking at Saitgrass Steakhouse, they have done this and, just in Texas, there are three locations that are in a market similar to Trophy Clubs. The fact that they decided to open these locations, tells Mr. Briggs that the locations must be profitable. Mr. Emmons asked if Buxton provides any type of analysis or recommendations of what may be more profitable to our location as opposed to others or do we just choose from this list and move forward? Mr. Briggs stated that we are looking at this potential retail development and establishing the trade area for it. Once complete, the next step is to ask if this were a current retail development, who are the current retail developers that have located in a similar situation, based on what that consumer base is based on the drive time? Mr. Briggs went on to say when Buxton is able to make a recommendation, Buxton is saying Trophy Club has a consumer base that is looks like what this retailer is looking for, so they are serving markets like Trophy Club. From that point, Buxton can build a positive case, an illustration of how this development would be an above average opportunity for those retailers Buxton has identified. What we have to do now is to think about what Trophy Club's priority is. Is it the restaurants? What makes the most sense? Buxton will then be able to make a case, a very positive argument, of how Trophy Club stacks up against their average trade profiles. Council Member Sterling asked if there was anyway Buxton ranked the list. Mr. Briggs stated that Buxton can rank them in order of match strength, but they do not typically do that because the difference might only be a fraction of a fraction, but they can rank them, upon request. Director Olthoff asked if there was a way to group them based off of standard deviations. Mr. Briggs stated that is part of the methodology of several processes, but it comes to a numerical valuation that comes down to match strength/value that can be easily shared with us to rank our selections. President Hicks asked for some of the variables within the match strength definition. Mr. Briggs stated the process begins with a site profile with segmentations. Any household can be classified in one of sixty-six segments that are based on socioeconomics, consumer/media habits, urban/rural, social grouping, age grouping, etc., to create the physiographical consumer profile. Buxton then places the profiles of retailers on top of the consumer profiles to determine where the fit is. Criteria, such as, overall population and household density in the area are evaluated to make sure that the comparison is truly comparable. There are criteria, such as, what are the dominant segment households for that retailer? Buxton may identify a retailer that continually locate near a mix of particular segments, which may be their dominate segments and those may get a heavier match weight in the process if those segments are heavy in our trade area. Director Olthoff questioned if drive time is taken into account within those segments. Buxton does look into this information with their retail clients using specific consumer information so they can assign a dollar value that leads to the ability to predictive modeling for a specific location when they work with a retailer. It is not something they can do here there are too many generalities. EDC B June 20, 2007 Special Session Page 3 of 9 Director Olthoff asked if the drive time chosen is conservative. Mr. Briggs stated that the drive time is conservative, but at the same time, Buxton tries try to make sure they have enough households. Council Member Sterling mentioned that the retail match does not appear to be filtered because many of the retailers on the list seem to be duplicate companies. Council Member Sterling stated, one way this is good because it's saying, hopefully, they are a good fit and they are not going to go away anytime soon, but also we have the feeling that we were shortchanged when twenty percent of the list is already in Trophy Club and we only get eighty percent of matches. Mr. Briggs asked for some examples. Brandon Emmons shared that Tom Thumb is in the same family as Randall's and Sport Clips, list gives an indication that there is one 7.9 miles away when there is actually one in Roanoke. Mr. Briggs stated that this is definitely the time to be discussing the list and sharing facts, such as these and apologized for the matches and stated this is the reason why the list was presented in the format that it was. Brandon Emmons asked if we choose eight to ten retailers that we really like could Buxton provide business plans of similar retailers/operations. Mr. Briggs stated definitely, they have done that before and it has been successful. This allows us to identify the direct competitors within this market and allows for marketing them as well. Mr. Briggs stated that Buxton can provide this information, along with crafting a generic marketing package that can speak to the concept as well. Director Crosser asked how much consideration was given to the existing retailers in Trophy Club as they went through this analysis. Mr. Briggs stated that going through the process of creating the list, their goal is to show all the better and above average opportunities for retailers. If Buxton indicated a national retailer and Trophy Club has a local retailer, Buxton does not take that into consideration. They are looking at their customer base similar to this specific retailer, they have to rely on us keeping this in mind and paying attention to our existing retailers. Council Member Sterling stated that the duplication was the majority of the frustration and we are concerned with cannibalization. He also mentioned that the list is misleading because the top of the list states that these retailers are good matches. Mr. Sterling also mentioned that maybe Trophy Club is a good match for the retailer, but the retailer is not a good match for us. Mr. Briggs stated that the retailers are good matches based on the context and scope of their work. He apologized if it was misleading and they can eliminate those retailers if it is an issue, these are good matches based on the profiles. Mr. Briggs discussed competition regarding similar retailers. He used Walgreen's and CVS as examples. These are two companies that do the same thing and locate side by side everywhere they go. Mr. Briggs asked, "Why do they do that?" Obviously, they do not want to be beat on location and there is enough of a market for that types of service for both of them to survive because they do it everywhere they go and their both growing. To a larger extent, Home Depot and Lowe's and even Wal-mart and their overlap with just the garden center and they are located close together as well. Mr. Buxton cannot say that a local retailer may be able to compete with a larger retailer; that is also something to consider. President Hicks asked if this list can be cleaned up further. Mr. Briggs stated that is what we are doing right now; this is just an interim document, a discussion piece, and they can help us whittle the list down. Trophy Club has to decide who we want to target. Buxton does not want to make the selection for us; they want to help us build the case for the selection we make. Director Crosser asked how many businesses should we select. Mr. Briggs stated as many, up to twenty, and Buxton will let us know who the competitors are and build a generic package as well. Council Member Sterling asked if any of the listed retailers are already clients of Buxton. Mr. Briggs stated they have done work with Garden Ridge and Fossil previously. EDC B June 20, 2007 Special Session Page 4 of 9 Council Member Sterling asked if the next step in the process is to put our heads together and come up with our top ten and come back to Buxton and ask for our picks' competitors, so we can market to them as well. Mr. Briggs stated yes, this is the next step and Buxton will help with getting the contact information. Buxton will then begin building the marketing package that can be shopped to both our pick and their competitors. President Hicks asked for the number of packages we are able to obtain. Mr. Briggs stated that our contract states we can choose as many as twenty packages and with those twenty, Buxton will help identify the competitors and anything else we have discussed today. Director Strother brought up the Trophy Club resident survey that was conducted. Director Strother stated that the survey showed the greatest amount of support and least amount of resistance was sit- down restaurants. He then asked if Buxton's market data is saying that sit-down restaurants are not a good fit for Trophy Club since there are not many on the list. Mr. Briggs and Brandon pointed out a couple of restaurants on the list. Mr. Briggs went on to state that they can do some additional follow up on their end to help Trophy Club and reexamine the list 'and show some examples of why some restaurants are shown over other restaurants. Council Member Sterling revisited the drive time vs. straight line conversation as to why some locations are located on our list and not others, is it because of the difference in drive time and straight line? Mr. Briggs stated that another option is for Buxton to look at and build on the retailers, like Saltgrass Steakhouse, that do locate within very close proximities and apply the straight line areas and see what the overlap is and see if that is comparable to what we have in Trophy Club. Director Olthoff suggested that the Board needs to discuss the list internally and see where we want to go before having Buxton review Saltgrass Steakhouse more closely. Mr. Briggs stated that, after the board starts their discussions to let Buxton know if there is anything they can do to help us get the information we need to make the final judgment. President Hicks asked for clarification of what was used for the drive time in this analysis. A ten minute drive time was used and the drive time takes into account the work place segmentation as well. Director Olthoff disconnected at 3:45 p.m. Council Member Sterling asked if there was a way to show how many retailers would drop off the match list if the drive time was decreased to six or seven minutes. Mr. Briggs stated that the match analysis would have to be redone, which is possible if it gets to that point. If it benefits Trophy Club, then they will do it. Council Member Sterling said that the Board could probably do this informally, with the retail survey and knowing what's in the area. Mr. Briggs stated that Buxton will take an initial look at decreasing the drive time to see if there is an immediate difference in the results. Director Strother asked how much of the analysis is based on Trophy Club residents and on day -time population. Mr. Briggs shared that most of the analysis is done looking at the households within the trade area; the work place was also looked at and taken into consideration as well. The best case was to use the residential information. Director Crosser stated that the Board needs to proceed and get back with Buxton with information from our view point. Mr. Briggs stated that Buxton will do everything they can to get us comfortable and moving forward. President Hicks asked what Buxton will be doing from this call to move forward. Mr. Briggs stated that immediately they will be resending the documents from the last conference call they had with Brandon Emmons. The next step will be to follow up on sit-down restaurant categories and see why some made EDC B June 20, 2007 Special Session Page 5 of 9 the list and others did not; are there any retailers, restaurants specifically, that might be a bit of a stretch or are in the realm of reason that may not be as strong as the retailers on the list, do they add to the opportunities that we can select from? Buxton will also be taking into account workplace population as well. Some other action items include taking a cursory look to see what happens if the drive time is decreased and report back to us whether or not this is something to consider. Other items, not necessary immediate, is that Buxton will provide competitor contact information for any retailer on the match list. Mr. Briggs then asked if we would share the results of the retail survey and asked if there were any specific retailers that were mentioned and will let us know why they are not on the list, along with the information we need to be able to respond back to our citizenry. Brandon Emmons shared that staff will send the survey results. Brandon Emmons made a comment regarding the physiographical analysis breakdown of the spending habits based on the four site locations. One of the areas that was completely absent from the retail list, which was one of our largest expenditures, based on our population segment was home furnishings and wondered why. Mr. Emmons went on to say this was just a comment that may be looked at later. Mr. Briggs stated that there are several factors that can explain this and is another variable. Call ended. EDC 4B to adjourn: EDC 4B adjourned at 4:00 p.m. WL-. � --� 2 - Ji H s Damian Olthoff EDC B June 20, 2007 Special Session Page 6 of 9 • A I EDC B June 20, 2007 Special Session Page 8 of 9 24% 21% E Trade Area Comparison (10 Minute Driye Time) LA MADELEINE FRENCH BAKERY Average Trade Arear) Site Trade Area Total FopOazioo 66,968 71,681 Total flooseholdi 24987 22,09 4 19 Company Domin-Ant Segment Households 12,568 14,452 The percentage profiles of the site (blue line) and La Madeleine average profile for locations in similar market settings (bar) are closely aligned - especially along several of the key La Madeleine's dominant segment households (red bars). The Trophy Club site's primary trade area F has more of La Madeleine's dominant segment households. La Madeleine =12,568 Trophy Club =14 2 EDC B June 20, 2007 Special Session Paae 9 of 9 The percentage profiles of the site (blue line) and TGI Friday's average 2a�- profile for locations in 21a similar market settings (bard are 0 misaligned — 0 especially along Q several key TGl " 9% Friday's dominant TM' 6% segment households 3� —y fired bars. 2 3 4 5 6 7 8 9 10111213 111516171819ZDZ1=- Z32 tz 29ZG31a:33,I!W pia`W339404142434.'-'*464-- 48409aG5152535i5555E?56S,6G5162E;63E:EE Cole tDominant S �p•sr Company Profile ,.il Other Segments) — Site Profile"') The Trophy Club site's primary trade area has a relatively Trade Area Comparison (10 Minute give Time low density of the households that TG! FRIDAY'S drive TGI Friday's Average Trade Area(s) Site Trade Area location decisions Total Population 81,451 71,681 (do min artt.,segment households) Total Households TGI Fridayr's = 8,123 <10 company Domlnnt Segment Households 8,123 221