956.216.5081 311 E. Tyler Harlingen, TX 78550

Newton’s 1st Law of Motion:

Harlingen EDC l 956.216.5081 l harlingenedc.com

AN objEcT iN MoTioN sTAys iN MoTioN

and Harlingen, Texas is in motion.

harlingeneDC 2010annual

report

MoviNg busiNEss iMproviNg LivEs

MESSAGE FROM THE PRESIDENT

Successful economic development results from a timely combination of leadership, resources, planning, persistence and patience. Harlingen has been blessed with the proper mix of these ingredients.

In the midst of the national economic downturn in fiscal year 2009-2010, it was difficult to imagine matching the accomplishments of the previous year, but in April 2010, Bass Pro Shops announced that Harlingen would be the location of its 57th “destination outdoor super-store.” The signing of the Letter of Intent was the culmination of a three year effort by the City of Harlingen and the Harlingen Economic Development Corporation (HEDC).

Harlingen also continued its emphasis on assisting existing industries. This resulted in over $10 million in new investment and hundreds of new primary jobs from companies like Tyco Valves & Controls, ACCT, Dish Network and UnitedHealth Group.

Much of Harlingen’s success can be attributed to the dedicated HEDC board of directors, staff and Harlingen City Commission. Their tireless dedication, commitment and leadership allowed us to capture not only BassPro Shops, but other Fortune 500 companies. We appreciate their support and hard work. With their continued effort, we look forward to another year of success for Harlingen and the EDC.

Sincerely,

Terry GrayPresident

HArLINGEN EDC BoArD

rETIrING BoArDMEMBErS

Armando ElizardePast President

rick rodriguez Scott Allex Eddie Medrano

Terry GrayPresident

Ernesto Silva Desi Martinez rick Ledesma Manny Vela

Harlingen VA Ambulatory Surgery Center: This new facility will improve the lives of our Valley Veterans, and create 400 new jobs.

INFRASTRUCTUREDEVELOPMENT

During 2009-2010, construction continued

on the $40 million, 120,000 square foot

Ambulatory Surgery Center of the Veteran’s

Administration.

HEDC provided $750,000 for the

construction of a new street to serve the

Center. The Center is scheduled to open in

January of 2011 and will employ 400 highly

skilled medical professionals when

it is fully staffed.

The History of Mexico and Mankind Muraldepicting aspects of the community’s history and culture located in Downtown Harlingen

The mission of the Harlingen Economic Development Corporation is to improve the quality of life of the citizens of Harlingen through the creation of wealth, jobs and investment.

The purpose of the Corporation is to create wealth that improves the quality of life for the

citizens of Harlingen.

The focus of the Corporation will be the creation of “primary” employment opportunities.1.

Primary• employers sell their goods or services outside the community, resulting in new money in the local economy. This new money circulates (multiplier effect) within the community, generating additional jobs, tax revenue and economic activity.

Employers • in this sector (manufacturing, distribution, administrative offices, research and development) typically pay higher wages.

Investment • in this sector is typically higher, resulting in greater tax value with fewer burdens on local government services.

Potential • new firms and existing businesses that consider expansion will be treated equally. Local firms create the most jobs and are the best salespeople for the community.

Priority • will be given to corporate headquarters operations due to the added value these firms bring to a community by way of good corporate citizenship.

A secondary focus of the Corporation will be the recruitment of new, larger-scale retail developments 2. through improvements in infrastructure.

New• retailers generate property and sales tax revenue for the City.

A broad range of retail opportunities adds to the quality of life of the City.•

While building a better community is important and requires the effort of a number of organizations, 3. groups and institutions, the focus of the Development Corporation will be “marketing” and “deal-making.” Community development activities will be conducted by others.

Don HubbardManager, Business retention & Expansion

ramiro Aleman, Jr.Manager, Business Development

MaryAnn VillarrealEconomic Development Coordinator

HArLINGEN EDC STAFF

oUrMISSION

oUr GUIDINGPrINCIPLES

Bill MartinChief Executive officer

2 3

Existing industry and other primary employers are important segments of the Harlingen economy. The Harlingen

EDC has an active program to meet these local firms to HEAr their needs and issues they face. The Harlingen EDC

acts as an “ombudsman” to assist local firms with rules and regulations and to help in accessing employment,

training, real estate, financing and incentive programs that will facilitate retention and expansion.

HArLINGEN EXPANSION AND RETENTION (HEAr)

TYCO VALVES & CONTROLS LP, a wholly owned indirect subsidiary of Tyco International, needed to consolidate two plants, which could have meant closing the Harlingen facility. Tyco celebrated its 25th anniversary in the Harlingen in 2009. The Harlingen EDC, City Commission and Governor’s office of Economic Development convinced Tyco to keep the Harlingen facility and expand its capacity.

Tyco began a 30,000 square foot expansion to its existing 80,000 square foot plant in April of 2010. The $5.7 million expansion brings Tyco’s total investment in Harlingen to over $20 million.

The expansion will result in the retention of 120 primary jobs at the facility. In addition, 65 new primary jobs will be created, bringing employment to 185. Tyco Valves & Controls LP will add two product lines that are marketed in over 60 countries.

HARLINGEN MANUFACTURER’S ASSOCIATION (HMA)HEDC staff continued support of the Harlingen Manufacturer’s Association in their efforts to promote the local manufacturing community to local residents and to companies that may be considering expansion projects.

- TYCo VALVES & CoNTroLS LP, Manufacturing Facility in Harlingen

65 New Manufacturing Jobs With a global demand reaching 60 countries, the 30,000 sq. ft. expansion will help meet the demand for their two product lines.

4

DISH NETWORK, the second largest direct broadcast provider in the United States, will invest over $5 million on capital improvement projects in their state-of-the-art Customer Care Center in Harlingen, including equipment upgrades and facility improvements.

Dish Network’s decision to invest in the existing facility will result in the retention of over 900 employees in Harlingen

with a payroll of over $21.7 million. Dish Network has operated in Harlingen since 2003. The EDC and the Harlingen City Commission worked with Dish Network to qualify the expansion for tax incentives through the Texas Enterprise Zone program.

HArLINGEN EXPANSION AND RETENTION (HEAr)

$5 Million invested on capital improvements

with tax incentives through the Texas Enterprise Zone program

70% of DishNetwork leadership started as Customer Care representativesManagers from DISH NETWorK Harlingen Call Center

ADVANCED CALL CENTER TECHNOLOGIES (ACCT)

Advanced Call Center Technologies announced

another expansion of its Harlingen facilities. The

2010 expansion will create 150 new jobs, bringing

total employment at the Harlingen facility to 1,100.

ACCT has operated a facility in Harlingen since 2000.

UNITED HEALTHCARE

After a nationwide search, UnitedHealth Group

(UHG), ranked 25th on the Fortune 500 list, selected

Harlingen as the location for its United Healthcare

customer service center. UHG opened their new

facility in August 2009 and by october 2009 employed

250 people, well ahead of its projected pace to employ

730 people over five years. By the end of September

2010, UHG had expanded its workforce to 350 people

and continued to hold weekly job fairs. According

to local UHG manager Blake Thomas, the Harlingen

site continues to lead all UHG facilities in customer

satisfaction.

QualityCustomer Care

6 7

MoVING BUSINESS l IMProVING LIVES

6.4 million Number of people living within a 150 mile radius of Harlingen.

$77.5 million Payroll that will be generated during the construction phase.

Source: Economic Impact Analysis Data provided by Impact DataSource (2010)

$1.32 billion Estimated additional taxable retail sales over the first ten years.

2,040Number of potential direct and indirect new jobs.

CAMEroN CroSSINGA rETAIL DESTINATIoN

CAMERON CROSSING2010 marks the year that BassPro outdoor World announced plans to open its 57th store in Cameron Crossing, a new 89 acre retail center in Harlingen.

8 9

After over three years of discussion and negotiation, the Harlingen EDC and Bass Pro outdoor World, LLC

signed a Letter of Intent to open the 57th Bass Pro outdoor World in Harlingen. The Harlingen EDC Board

approved the Bass Pro lease in August, but several issues, including the financing agreements and the final

site plan, were still being developed at the end of the fiscal year.

Under the agreement, the Harlingen EDC will own the 25 acre site and 150,000 square foot store and lease it to Bass Pro for 20 years with up to 35 years of additional renewal options. At the time of the signing of the Letter of Intent, Bass Pro officials indicated the store could employ up to 300 people when it opens in october 2011.

Bass Pro Shops is ranked seventh in “Top of Mind Awareness” among Texas tourists, according to the Governor’s office of Economic Development and Tourism. Bass Pro indicated its average store attracts three million visitors annually from a 150 mile radius. Bass Pro was

drawn to Harlingen due to its central location along the Texas-Mexico border and the growing outdoor sports culture. Approximately 6.4 million people live within a 150 mile radius of Harlingen.

In addition to hunting, fishing and camping equipment

and supplies, the Bass Pro store in Harlingen will feature

boat and ATV sales, a restaurant, bowling alley and

indoor archery range. Bass Pro stores are known for their

elaborate, museum quality interior design and displays,

tailored to the outdoor lifestyle of the region.

BUSINESSrECrUITMENT

Bass Pro outdoor World will be part of Cameron Crossing, a commercial area consisting of up to 89 acres. Including the Bass Pro outdoor World, a total of 850,000 square feet of commercial space has been projected for Cameron Crossing. According to an economic impact analysis prepared by Impact DataSource of Austin, the Cameron Crossing project could result in the creation of 2,040 direct and indirect new jobs with a payroll of nearly $358 million over the first ten years.

Bass Pro and Cameron Crossing will also provide a boost to the local construction industry. According to the Impact DataSource report, an average of 277 people will be involved each year in the construction of the facilities as they develop over an eight year period. An additional

$77.5 million in payroll will be generated by construction during that period.

Impact DataSource estimates that the facilities in Cameron Crossing will have a taxable value of over $215.6 million, resulting in $7.9 million in new property tax revenue over ten years. The project is estimated to generate an additional $1.32 billion in taxable retail sales and $26.4 million in new sales tax revenue over the first ten years

According to Bass Pro’s own surveys, approximately 46 percent of their customers spend the night at a nearby hotel during their shopping trips. Impact DataSource estimates this could result in an additional $5.1 million in hotel occupancy tax for Harlingen over ten years.

10 11

Advertisements were placed in site location publications such as Area Development, Trade and Industry Development, Site Selection Handbook, Expansion Solutions and Global Corporation Xpansion. Harlingen received exposure to retailers though ads in real Estate Development News. The HEDC also placed ads in the Valley Business report and rg Vision Magazine.

HEDC continued its direct mail program as well. Copies of the 2008-2009 Annual report were mailed to over 750 site location consultants and regional and national commercial and industrial realtors. A direct mail piece featuring new and expanding industry was mailed to over 4,000 companies in Harlingen’s target industry sectors. The HEDC participated in activities of the Matamoros and reynosa economic development corporations.

The Harlingen EDC website, www.harlingenedc.com, continued to provide an effective marketing vehicle for the community. During the year, the website had 15,672 visitors, an increase of 14.2% over the previous year. Popular features of the site continued to be the available property, major employers and recent news sections. An aggressive program of Search Engine optimization improved the website’s rankings with various important search engines.

The organization continued its active public relations campaign. During the year, 15 news releases were issued by HEDC. The news release regarding the agreement with Bass Pro Shops on a Letter of Intent alone generated over

5,000 web and print stories. In addition, Bill Martin, HEDC chief executive officer, authored regular articles in Texas Border Business and Business Matters, a publication of the Harlingen Area Chamber of Commerce.

The 2008-2009 HEDC Annual report won an “Award of Merit” in the 2010 Literature Awards Competition of the Southern Economic Development Council, an organization representing economic development professionals in 17 southern states. In addition, Bill Martin, HEDC chief executive officer, was designated an “Honorary Life Member” of SEDC in recognition of his service to SEDC and the profession, including a term as Chair of the Board of SEDC.

Harlingen’s cost of living was ranked the lowest among 310 U.S. cities in the ACCrA Cost of Living Index. Harlingen’s cost of living was over 20 percent below national average and the cost of housing was 28.6 percent below the national average. Harlingen has ranked among the ten lowest cost of living cities in the U.S. during each quarter of the past three years.

MArKETINGCAMPAIGN

In addition to carrying out a marketing and public relations program, Harlingen and the HEDC garnered numerous awards and recognition during the year.

12

The rio South Texas Economic Council (rSTEC), the economic development marketing effort representing Texas’ four southmost counties and northeastern Mexico, came into its own during 2010.

A web site featuring data on demographics, labor, transportation and utilities, taxes and incentives made it the ideal place for expanding companies to obtain current information. A robust database of available sites and buildings and a “news” section on new and expanding companies generated a great deal of interest among site location consultants.

A postcard direct mail campaign, participation in the Wind Energy Association trade show, advertising and trips to call on site location consultants have generated a number of prospects with interest in establishing operations in the region.

rio South Texas secured the coveted “inside the front cover gatefold” advertising space in the new publication of the Governor’s office of Economic Development. The publication, “Texas-Wide open for Business,” is sent to all companies requesting information from the Governor’s office.

To launch the rio South Texas brand, media tours

were held in New York City, Dallas and Houston. A

mix of rSTEC business and economic development

representatives, including HEDC Board member

rick Ledesma and HEDC Chief Executive officer Bill

Martin, met with such well known publications as

Bloomberg/Business Week, The Wall Street Journal,

Inc. magazine, Forbes, the Dallas Morning News, the

Dallas Business Journal, the Houston Chronicle, the

Houston Business Journal and Notimex to familiarize

reporters and editors with the region and generate

interest.

regional cooperation has been a priority of the

HEDC Board for the past three years. Bill Martin,

chief executive officer of HEDC, served as chair of the

board of directors for the rio South Texas Economic

Council during 2009-2010.

The Harlingen EDC continued its support of the Tech

Prep of the rio Grande Valley programs during 2009-

2010. The primary goal was to increase the number

of Harlingen Consolidated Independent School

District students participating in Tech Prep program.

A nearly 300 percent increase was realized with 2,129

HCISD students participating.

Through the Academic Leadership Alliance of Tech

Prep, eight science and math teachers from HCISD

participated in internships with local firms to learn

the skills needed by local employers. An Education

and Career Expo exposed over 1,200 high school

students to careers and jobs available in the Harlingen

area. A labor market assessment for Harlingen was

also completed.

rEGIoNALECoNoMICDEVELoPMENT

rio Bravo

McAllen

Corpus Christi

San Antonio

Houston

Laredo

Largest Foreign Trade Zone in the nation FTZ No.62

3rd largestMSA in Texas When combing Brownsville /Harlingen MSA with the McAllen MSA

300Manufacturing facilitiesInternational Corporations producing products from electronics, appliances, and auto parts for various markets

3 million people live within a 50 mile radius

6.5 million live within 150 mile radius

Roma

MatamorosBrownsville

reynosa

13 International Crossings

3 Commercial Airports2 Deepwater Ports

3 Intracoastal Waterway Ports

1 mainline rail road

HArLINGEN

UP rail road

I-69 Future Interstate for South Texas

14 15

UP

rail

road

Texas State Technical College University Center This new facility will proved quality education that will help our community grow.

In January 2010, ground was broken for the

new University Center. The 38,000 square

foot center on the campus of Texas State

Technical College will provide a facility in which

colleges and universities will be able to offer

baccalaureate and advanced degrees. The

University Center will open for classes in the

fall of 2011. The Center will also house TSTC’s

Corporate College and the HEDC offices.

INFRASTRUCTUREDEVELOPMENT

80 Degree Programs 8 UniversitiesOne University Center

1619

DEvEloPmEnT CorPoraTIon of HarlIngEn, InC. BALANCE ShEETaS of SEPTEmbEr 30, 2010

Cash

reserve Cash

restricted Investment - C. D.

receivables, accounts - State Comptroller

receivables, accounts - other

receivables - Interfund (Schedule attached)

receivables - Interfund TIfrZ no. 3

loans receivable (Schedule attached)

Prepaid Insurance

Prepaid Travel Expenses

land- Held for future Development

buildings

United Health Care

Spring Dynamics

Improvements - Parking lot

accounts Payable - other

accrued Salaries Payable

Due - general fund - City Services reimb.

-other

loans

other - TIfrZ no. 3

other - miscellaneous

Total liabilities

Designated reserve

Unencumbered fund balance

non Cash fund balance

Total fund balance

ToTal lIabIlITIES anD fUnD balanCE

$6,318,174

97,330

1,023,448

264,267

801

196,132

886,416

1,031,349

-

1,725

2,520,087

3,681,877

130,859

$16,152,464

$143,791

2,485

4,758

74,177

1,031,349

886,416

23,992

2,166,969

4,412,924

3,026,027

6,546,544

13,985,495

$16,152,464

$4,488,066

97,232

3,029,536

255,813

150

196,132

886,416

113,294

896

2,301

2,520,087

3,248,629

102,187

$14,940,740

$13,832

12,625

4,758

10,072

1,113,294

886,416

0

2,040,997

4,412,924

3,201,910

5,284,908

12,899,742

$14,940,740

4,412,924

2,670,518

6,223,046

13,306,488

LIABILITIES

DEFERRED REVENUES

FUND BALANCE

3,192,440

489,437

3,192,440

56,189

ASSETS

TOTAL ASSETS

CURRENT yEAR PRIOR yEAR