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HomeMy WebLinkAbout11-20-2015Minutes of the Economic Development Commission City of Mounds View Ramsey County, Minnesota Regular Meeting November 20, 2015 City of Mounds View, Council Chambers 2401 County Road 10, Mounds View, MN 55112 CALL TO ORDER Chair Jason Helgemoe called the meeting to order at approximately 7:30 a.m. 2. ROLL CALL Members Present: Chair, Jason Helgemoe, Vice Chair, Jim Freichels, Commissioners, Gary Stevenson, Laurie Shoop, Royal Dahlstrom, and Dan Larson Members Absent: Jessica Rieland Staff Present: Business Development Coordinator, Brian Beeman Meeting Attendees: Council Member, Gary Meehlhause 3. APPROVAL OF NOVEMBER 20, 2015, AGENDA Motion/Second: Commissioner Freichels moved and Commissioner Stevenson seconded the approval of the November 20, 2015 EDC agenda. Motion Carried: 6 Ayes, 0 Nays 4. APPROVAL OF AUGUST 21, 2015, EDC MINUTES Motion/Second: Commissioner Stevenson moved and Commissioner Freichels seconded the approval of the August 21, 2015 EDC minutes, as presented. Motion Carried: 6 Ayes, 0 Nays 5. EDC BUSINESS Review Business Subsidy Policy Business Development Coordinator, Beeman provided the Commission a background of the Business Subsidy policies stating the policies haven't been updated since 2003 and some state statutes have changed. Business Subsidy policies are required by statute and provide guidelines for the city to use when financial incentives are requested. The original policies were constructed using the City of Elk River and Saint Anthony's policies. Elk River recently completed their policy updates utilizing the same law firm as Mounds View, and Elk River has shared their updates with Mounds View staff to use as a comparison. EDC Minutes November 20, 2015 Page 2 of 8 The first change was to add a title page listing the approving authority and dates of approved amendments. From researching past meeting minutes, it is thought that the City Council gave its authority to the EDA as the final approving authority for policies and business subsidies. However, there is some reference to the City Council's involvement in joint public hearings. By notating the authority and date on the title page it will help save time for staff in the future. Second, staff added a table of contents. Next, the phrase Tax Rebate Financing was changed to Tax Abatement since that it how it is referenced in state statues and in other city's policies. Chair Helgemoe clarified that in past history a Commissioner had wanted it phrased as Tax Rebate Financing so that residents didn't think the city was providing a gift. Beeman explained that there are two types of Tax Abatement. One type can be used to forgive a portion of the property tax depending on the circumstance, another way to use Tax Abatement, which is more common, is to apply a portion of the monies back into the development project. Staff clarified what criteria would require a public hearing. There has been some confusion in the past as to when a subsidy would require a hearing. To simplify the matter, staff included the 23 instances that would trigger a public hearing. Under Roman numeral III staff added a clause defining the public purpose and objective stating, it is a development that would not be achieved without the assistance of a public subsidy. This language is again consistent with the state statute. Under IV, letter D. was added to provide guidelines on not exceeding the fair market value. The definition of excess fair market value normally is the excess of the acquisition price being in excess of 10% of the market value. The clause also leaves discretion to the city on a case-by-case basis in instances that may be deemed appropriate. Section V is the addition of retail and service industry as a recipient of business subsidies. Although retail is not normally a benefactor in public subsidies, they may qualify in circumstances where the project contributes to a strategic goal of the city like the addition of considerable jobs or the overall tax base. This clause provides a guideline for the city in those situations. Business retention was defined due to past confusion in dealings with other businesses wanting to keep the same number of employees but add to the overall valuation with a new building or expansion project. The subsidy would be allowed in instance where the jobs would be lost but for the new development occurring. The retained jobs need to provide for the increased and diversification of local jobs. To be considered for a new or retained job a Minimum wage has been defined in order to receive a public subsidy. Minimum wage in this sense is not referring to the State and Federal set minimum wages, however, the policy's minimum wage is based upon $15.00 per hour or 150% of the State or Federal minimum wage whichever is greater. This is exclusive of the benefits required by law. The policy leaves discussion in instance where the project would provide a significant increase in the tax base. EDC Minutes November 20, 2015 Page 3 of 8 The next section explains the application process. An applicant must provide their information on the preapproved application forms. Staff will work with the city's financial consultants who will review at least two years of the company's financial statements to verify a gap in financing the project. Other deletions in the policy are to eliminate wordy and confusing language. The last section is the reporting requirements. Beeman explained that the city is required by law to report wage and job goals to the state each year and sometimes the company owners are not located in Minnesota and have multiple locations around the country and even in other countries. Retrieving this information can be daunting. In order to have some leverage, Beeman has place language in the policy allowing the city retribution in cases where companies are not cooperative in their required reporting to the city. If the city misses the annual statutory reporting deadline then the city could lose its ability to subsidize businesses. Beeman noted the other deletions were to eliminate confusing and wordy language. The city attorney will review the policies before the EDA sees them to verify the changes and ensure the statutory language. The EDA will make the final determination whether to accept the amended policy or not. Beeman noted that it is always good to have another set of eyes review the policies and perhaps the EDC, especially those that have been on the EDC for a while, may recall instances in the past that may dictate other language in the policy. Beeman asked the EDC if they had any questions or suggestions concerning the policy. Chair Helgemoe asked Beeman to explain the last time a business subsidy was applied for in the city. Beeman noted that to his knowledge Medtronic was the last applicant to apply for a TIF and that was approximately 7 years ago. As of the end of 2015 the city will have decertified all of the other TIF districts leaving the Medtronic TIF district as the only remaining district. Beeman explained that there was a potential TIF applicant for the Skyline Motel project for a light industrial project. However, it was determined that the ratios weren't high enough to justify the use of TIF and they city didn't feel comfortable at the time in subsidizing a property owner who is unwilling to negotiate. In these situations it is more of a policy decision to get rid of blight and substandard conditions, rather than job creation. Helgemoe asked for questions from the Commission. The commission felt that Beeman has done a good job researching and preparing the update. Hearing no questions Helgemoe asked how the review of financial statements is handled and should that be defined in the policy. Beeman said he had included that language in both the TIF and Tax Abatement policies. Beeman explained that the city's financial consultant will review the financial statements to verify any gaps in financing the project. Using a third party financial consultant serves two purposes. It protects the city in case of a legal dispute and it allows the financial statements of a company to be reviewed through a non- disclosure agreement so that the company's financials remain non-public. The consultant will then provide a memo to the city confirming that they have reviewed the financial statements along with their findings. Doing it this way is a win-win for the city and company being evaluated for public assistance. EDC Minutes November 20, 2015 Page 4 of 8 Chair Helgemoe asked the Commissioners again if there were any questions. Commissioner Stevenson said it was easy to follow along. Commissioner Dahlstrom said the policy is much cleaner now. Helgemoe reiterated the good job. Hearing no further questions Helgemoe asked for a motion to approve the policy. Motion/Second: Commissioner Shoop moved and Commissioner Stevenson seconded the approval of the Business Subsidy Policy Amendments making a recommendation to the EDA to review and approve the proposed changes. Motion Carried: 6 Ayes, 0 Nays 6. REPORTS OF STAFF Crossroad Point Redevelopment Prosect Business Development Coordinator, Beeman provided the Commission with an update on the Crossroad Pointe redevelopment site. Beeman contacted approximately 40 developers. Seven of those said they would be interested in submitting a proposal. Only one developer of those 7 submitted a proposal. On October 5, 2015 the City Council held a work session to review a proposal from The Beard Group for a Phase I three story apartments with 119 units and underground parking. Phase II would entail a commercial development along County Road 10 with the idea of a patio type restaurant and/or office/medical user with underground parking. Parking has been an identified concern however; The Beard Group doesn't seem concerned stating that they will have underground parking. The Council at the time was in favor of the project and generally in favor of providing some sort of financial assistance if an application is received. At the time, the Council authorized staff to bring forward a pre -development agreement for consideration. Since that time, staff learned that The Beard Group is only interested in Phase I and doesn't want to be obligated to complete Phase II under a defined timeline in case markets change etc. At the November 23, 2015 meeting the EDA will consider whether or not they would accept the development occurring with potentially two developers and splitting the land into two separate developments. If deciding not to allow The Beard Group to go forward, then there were two mixed-use developers who showed interest, with the remaining developers all interested in senior housing. However, none of these developers had submitted their proposal in the first round. The TCAAP site will be developing soon and this may affect the city's window of opportunity for this site. Commissioner Freichels said in the developer tours they were shown more two-bedroom apartments rather than one -bedroom. However, the proposed Mounds View site shows more one -bedroom units. He asked why that was the case. Beeman said he noticed that in their proposal as well and was reassured from the Beard Group that they had been conducting studies and trends with millennials and came to the conclusion that the market for this area is more in the one -bedroom units. EDC Minutes November 20, 2015 Page 5 of 8 The Beard Group could purchase the Phase II site, however they would like to study the markets for a potential Phase II commercial development and not be locked into a timeline or build a new building that sits vacant. Beeman said The Beard Group would like to break ground in the spring of 2016 and get all of the development agreements, land negotiation, zoning requirements, etc. completed this winter so that they are clear for the spring. Business Retention & Expansion Visit (BR&E) Updates Coordinator Beeman informed the Commission that he has been very aggressive in the business retention and expansion visits in trying to get ahead of trends to ensure that businesses stay in Mounds View. Outsource Receivables: Is located across the street from city hall. They conduct medical billing and serve as an outsourced financial department for many medical clinics across the metro. They moved to Mounds View to get away from the crime in Brooklyn Center. They purchased half of the building and may consider an acquisition soon which would require more parking spaces. They are working on an agreement with Walgreens. If that doesn't work, they will be contacting the city to determine if parking at the Community Center would be permissible. Sara Lee: They are also considering an expansion. They currently occupy 18,000 SF and would need a custom 40,000-50,000 SF building. They would consider staying in Mounds View if they can take the tenants space next door. This could be a possibility since that tenant may be leaving. If expanding, they would be adding more employees. Magno International: They are headquartered in Florida and for the Mounds View location; they serve as a warehouse for medical products. They are also passively seeking more space. Zep Manufacturing: When visited, they were doing well. However about a week after the visit, the city was informed that they had been acquired by a private entity and the Mounds View location would be consolidating to Chicago. The building is now vacant and up for lease. Another company in town wanted to purchase the building but the property owner only wants to lease the building. Rice Creek Commons (TCAAP) Development Update Next, Coordinator Beeman provided an update on anticipated improvements relating to Rice Creek Commons. He informed the Commission that the Ramsey County project manager will be speaking at the next Mounds View Business Council meeting December 9 at 7:30 a.m. at the Community Center. Also be expecting some updates to be posted to the city's newsletter on alternate truck routes and project updates. This is important because there will be Met -Council and City improvement projects going on at the same time starting in the spring. EDC Minutes November 20, 2015 Page 6of8 Mounds View Proiect Updates Beeman provided an update on the Bio Life ribbon cutting ceremony. Several people were in attendance including representatives from the Baxter group who is the parent company to the Biolife centers, County Commissioners, and City Council Members and city staff as well as several business owners. Coordinator Beeman updated the Commission on the new Bel Rae Senior Living facility stating that they are now 50% filled and taking on new reservations each week. Chair Helgemoe asked if they had projected specific occupancy by a certain timeline. Beeman said they purposefully did everything in phases so that they could take on a few residents and hire staff gradually eventually ramping up to full occupancy. They seem to be doing well and are even talking about a phase 11 in another city. Apple Tree Dental is still planning to build their second floor buildout in the spring. The library is planning to construct their trail extending from the city's existing trail to the library building. In exchange for the library allowing Apple Tree Dental staff to park in their parking lot, Apple Tree Dental would be required to maintain the trail. Pat's Muffler Shop went out of business but they are now occupied by an auto repair shop that fixed the broken windows and painted the exterior of the building and cleaned up the rear of the building. They are doing well and currently looking to install a new sign. Snap Market is out of business. The Indian Wedding shop next door is interested in leasing the space for warehousing but don't want to pay the retail fees. HB Systems is a new computer security and support company specializing in medical and law type businesses. They are located in the center of the Midwest -Medical building next to Medtronic. Louisiana PoBoy is also out of business. They struggled since opening. There has been a request for a Pub type business and if a liquor license could be granted for this site. A real estate broker specializing in restaurants has listed the site. Chair Helgemoe asked if an Applebee's or similar business could go into that space considering zoning & liquor licenses. Commissioner Stevenson said the parking in general is not big enough to support that type of business with a sit-down restaurant. Beeman has asked the broker to determine if a Chick-Fil-A or Wendy's would work. They are looking into it. Snyder Buildin Beeman updated the Commission on the Snyder building. The owner is from Canada and built the building during the construction peak, then when the "Great Recession" hit, Snyder's handed over the keys and didn't honor their lease, leaving the owner stuck paying the mortgage. The owner is accepting reasonable offers above $1 mill and below $2 mill. The original asking price was $2.5 mill. The owner is an accomplished investor, owning some strip malls and three other pharmacies in Canada. He is open to any creative financing for a tenant or buyer and would like to see something happen but he is not willing to give it away either. EDC Minutes November 20, 2015 Page 7 of 8 County Road 10 Addressing Beeman then provided an update on the County Road 10 addressing stating, city staff has done what they can to this point and the project is in the county's hands to come up with the resources to complete the project. The County must determine that resigning is a priority before this project can become a reality. Mounds View Business Council Meeti Next, Beeman informed the Commission that the next Mounds View Business Council meeting will be held December 9, 2015 at 7:30 a.m. at the Mounds View Community Center. The Chamber of Commerce determined that these meetings haven't been generating enough interest and felt that by going to quarterly meetings it would increase the attendees. The speaker will be Beth Engum, Ramsey County project manager for the Rice Creek Commons project. Other Upcoming Events Beeman informed the Commission that he had attended the Regional Economic Gardening meeting Wednesday. The speaker was the CEO of the Cirrus Design Corporation. He is in the Hall of Fame for aeronautics. There company is the only aircraft company in this class of airplanes that didn't go bankrupt during the economic crisis. This is due to the continual redesign and innovation of their product. He wanted to make an airplane that was so simple anyone not knowing how to operate an airplane could get in and drive it like a car. The Economic Gardening group is looking for two more businesses to join the next class. They are hoping to generate interest from a Mounds View company. They are looking for a phase II business with at least 10 employees and up to about 99 employees who wants to get to the next level. The group will provide strategic planning and research; CEO's will meet to discuss common issues and how to solve them. If anyone knows of a Mounds View business that would be interested Commissioners are encouraged to let Beeman know so that he can provide them the necessary information. Beeman reminded the Chamber that the city is a member of the Twin Cities North Chamber of Commerce who holds a free breakfast each month. Commissioners are encouraged to attend if available. Beeman informed the Commission that he attended a Saint Paul Chamber of Commerce event last week and Mounds View was nominated as a finalist for its aggressive business retention and expansion program. Beeman noted that he didn't know who nominated the city or the criteria for receiving an award. The Lieutenant Governor, Mayor of Saint Paul, County Commissioners, and several cities were in attendance. Over 70 business visits have been completed in about a year's timeframe. Other cities who have an economic development staff of five or more and who also coordinate with their chamber of commerce had only completed about 9 visits. Beeman is the only economic development staff member in Mounds View. Beeman thanked the Commissioners saying this is a tribute to the EDC and City thanking the Commission for EDC Minutes November 20, 2015 Page 8 of 8 their efforts and support in the business retention program. The Commissioners thanked Beeman for his efforts and involving the Commission in the business visits. 7. REPORTS OF COMMISSIONERS Chair, Jason Helgemoe asked for reports from Commissioners. Hearing none, Helgemoe reminded the EDC that today is the last day to submit applications to EDC to be considered for another term. Commissioners Helgemoe, Freichels, and Stevenson's terms are expiring December 31, 2015. All three Commissioners expressed their interest in another term and will submit their applications by the deadline. 8. NEXT REGULAR EDC MEETING Hearing no further comments from Commissioners or the audience, Helgemoe stated the next meeting will be held December 18 at 7:30 a.m. Helgemoe asked Beeman what would be on the next agenda. The EDC will consider another component of the financial policies. The EDC will review either the Tax Abatement or TIF policy and also consider the EDC applications making a recommendation to the EDA. 9. ADJOURN There being no further business, Chair Helgemoe adjourned the November 20, 2015, meeting at approximately 8:27 a.m. Respectfully submitted, Brian Beeman Business Development Coordinator