06-26-1985 Council Agenda - Laserfiche WebLink

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SEY OUNTY LEAGUE" OF LOCAL GOV RNMENTS JUNE 1985 PAGE 2 Municipal Economic Development Municipal Economic Development — — How it works and how your community should approach it — — was the topic dis- cussed by Jim Casserly and Dick Graves, both vice - presidents and underwriters for Miller & Schroeder Municipals, Inc., on Wednesday, May 15 before 20 persons at the New Brighton City Hall. First, said Casserly, the city or township should decide what it wants to accom- plish from economic development. Does it want to attract every industry, or does it want to attract only industries of a certain caliber? Or, rather than develop- ing new areas, does the city prefer to revitalize its dilapidated industrial areas. Can the community come up with the monies necessary for an economic devel- opment system? A successful system requires $15 million of bond issues mini- mum and probably $25 million annually. Casserly said, "If $15 million is pumped in annually, the system should become self- supporting in six to seven years." After a community has provided devel- opment space, it must attract developers, usually by reducing the developer's costs. Over coffee, Al Kehr, George Jungkunz, Roger Blomquist and Joe Chlebeck discussed Municipal Economic Development and the effect it could have on their cities. The city could design a common bond system, which provides long term, fixed rate financing and /or lower cost finan- cing. Once this system is operating well, the city can provide a rated bond. Usual- ly only the largest bonds can be rated, but once it has been rated "A" or better the market is much larger. "The St. Paul Port Authority may be the best economic development system in the nation," Casserly said. "This gives it a tremendous advantage in developing its city. The incentive it provides is in its 'system'. Thus it doesn't need to develop as many other incentives. The cost to the user is under ten percent in this kind of system. The Port Authority can do issues from $300,000 to $10 million with equal ease." Many other systems, including the Minnea- polis Community Development Agency, used the St. Paul Port Authority as a model. Minneapolis doesn't call its sys - tem a port authority, because technically only the Duluth Port Authority with its shipping and importing activities is a prac- ticing port authority. Please indicate your interest by responding to Merideth Chelberg, RCLLG Co- ordinator, or Roger Blomquist, Economic Development Committee Chair for RCLLG. 183 University Avenue East, St. Paul, MN 55101. 1. Should RCLLG periodically schedule educational programs on economic development at regularly scheduled meetings? nYes No Additional comments• 2. Should RCLLG study the feasibility of establishing a multi - municipal economic development system? nYes No Additional comments L - 5/1 1 J Although cities can finance a system with private funding, most cities, including the St. Paul Port Authority, finance with public funding. The St. Paul Port Author- ity sold general obligation bonds to acquire and next to its airport, Holman Field. After clearing the land and providing it with such services as sewer and water, it sold industrial revenue bonds to encour- age industry to use the developed land. Originally, the bonds were supported from a general property tax. In turn, taxpayers were aided by an increased tax base resul ting from development. Today, financing comes from the cash flow of Port Author- ity land rentals. The Port Authority almost always uses leasing agreements. Thus the title remains with the Port Authority. If a company misses a rental payment, the Port Author- ity immediately realizes a problem may exist, It can then either help the company or, if necessary, find a new developer — often at a higher rent than the original developer. Graves advised against joint powers agree- ments to form an economic development system. Instead, he recommends several cities or townships going together to form a multi - municipal authority and agreeing to accept its decisions. At the end of the meeting, Roger Blom - quist asked members if they wanted the RCLLG to provide "on -going activity in municipal economic development." ■ This year the RCLLG Board of Directors established an Economic Development Committee. The committee is requesting additional input from RCLLG members as to two possible approaches. (See questionaire at the left.)