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HomeMy WebLinkAbout07-15-2016 Minutes of the Economic Development Commission City of Mounds View Ramsey County, Minnesota Regular Meeting July 15, 2016 City of Mounds View, Council Chambers 2401 County Road 10, Mounds View, MN 55112 1. 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, Dan Larson, Jessica Rieland, Gary Stevenson & Laurie Shoop Members Absent: Royal Dahlstrom Staff Present: Business Development Coordinator, Brian Beeman, City Administrator, Jim Ericson Meeting Attendees: N/A 3. APPROVAL OF JULY 15, 2016, AGENDA Motion/Second: Commissioner Freichels moved and Commissioner Shoop seconded the approval of the May 20, 2016 EDC agenda. Motion Carried: 6 Ayes, 0 Nays 4. APPROVAL OF MAY 20 2016, EDC MINUTES Motion/Second: Commissioner Shoop moved and Commissioner Freichels seconded the approval of the May 20, 2016 EDC minutes, as presented. Motion Carried: 6 Ayes, 0 Nays 5. EDC BUSINESS EDA Levy Business Development Developer, Brian Beeman provided an introduction to the EDA Levy being considered. The City of Mounds View is located in a highly desirable location near 1-35W and is in a great school district. However, the available land for development is limited. In order to add more tax value, better aesthetics, and ultimately the tax base, a funding source is needed to be able to purchase parcels for redevelopment, remediate soils, and make it more desirable for private development. Vacant properties have become available in the past; however the City has lacked funding to purchase them. In order to rectify this problem staff is proposing an EDA Levy to help fund these types of EDC Minutes July 15, 2016 Page 2 of 10 projects. MN Statutes 469.107 authorizes a city, at the request of an EDA, to levy a tax for the benefit of the EDA. The tax must not be more than 0.01813 percent of the estimated market value. The Statute doesn't expressly limit the proceeds to any particular use, but may be used for any activity an EDA is authorized to carry out under the EDA Act for housing and redevelopment activities and broader economic development activities. Beeman continued by stating, the City is considering an EDA levy as one method to fund various economic development activities. The levy would provide the resources necessary to purchase the properties, demo the buildings, and repackage them for development activities. New development will assist in increasing the tax base, evening out the overall tax levy, and in some instances bringing in new jobs, and aiding in the attraction, retention, rehabilitation, and preservation of commercial properties, retail, residential, recreational, and public service centers. Other types of goals for an EDA levy is the support of senior housing, multifamily use, utility telecommunication projects, business incubator, loans, other business programs, and transportation systems. The emphasis on the EDA levy would be to replace older buildings and increase the tax base. This would assist in eliminating blight, and in meeting the economic and redevelopment goals. Other goals would be in assisting with operational costs associated with economic development activities. The City of Mounds View granted authority to the EDA through Minnesota Statutes, Section 469.09, subdivision 1, giving specific authority to exercise all powers granted to a Housing and Redevelopment Authority under Minnesota Statutes, Sections 469.001 to 469.047. This power was granted to the EDA on November 23, 2015 through Resolution 8467; a resolution amending and restating resolution 4532, an enabling resolution establishing the Mounds View Economic Development Authority under Minnesota Statutes, Sections 469.090 through 469.108. Beeman informed the Commission that due to lack of funding, staff developed a list of activities restricted or not supported. The first on the list is marketing. Currently, there are no funds budgeted for marketing. Marketing is used for new signage, branding, promoting the new redevelopment sites and marketing to businesses in other cities. Some cities participate with the Department of Employment and Economic Development (DEED) in trade shows to attract national and global companies. There is also the Shovel Ready program whereby a city can certify their parcels with the Shovel Ready designation for companies looking to move in right away to start development on parcels with utilities, environmental remediation, and other features already completed and ready for construction. Second is advertising. Currently, there are no funds budgeted for advertising. Advertising can be used for business journals in certain industries to target business leaders, Mounds View Matters, and other advertising venues. The city advertises Festival in the Park and other types of activities that go on throughout the year. Under small scale incentives, the EDA has a program called, the Business Improvement Program. Staff has received requests for this loan program in the past; however the program is currently unfunded and has been for several years. While we have the EDC Minutes July 15, 2016 Page 3 of 10 policies in place for this program it is not funded. The program is meant for small businesses that have been established in Mounds View for a number of years looking to improve the fagade of their buildings in order to improve the aesthetics. There are other revolving loan programs that could be put into place, however without proper funding, these programs are not possible. Beeman informed the Commission that property acquisitions is one of the bigger unfunded programs. Staff keeps an inventory of vacant properties along with the square footage, current pricing, whether or not the owner has shown any interest in the past in selling and a list of developers specifying if they are residential or commercial developers and if they have shown any particular interest in specific parcels in the past including their timeline, and number of acres they are looking for, then we try to match them up. We try to identify the types of funding sources that may help them spur development. Because the City is limited in funding sources and has been reluctant to bond in the past, not to mention the Charter restrictions, etc. an EDA levy would help solve this problem. The next unfunded item is surveys. Sometimes it is necessary to complete surveys of the property before development can occur, this comes with an expense an EDA levy could help pay for this. Appraisals are also sometimes requested and necessary to negotiate a fair market value. Depending on the appraisal, some could be good for six months to a year. Again, an EDA levy could assist in this cost. EDA levy funds can also be used for professional fees. Whenever a transaction is taking place attorneys must be involved to draft legal documents and ensure the City is protected in development agreements and land transfers. Financial consultants analyze the project to determine its feasibility and if the subsidy is deemed appropriate according to State Statutes and helps keep the City out of legal challenges. An EDA levy can also be used for training and professional development which is needed to keep staff current on state statutes and economic development programs. Having well trained staff is good for business. It is a way for staff to keep current on State DEED programs and be able to explain those programs to developers. Good training also helps staff in preventing any missteps which could lead to costly lawsuits. Next, Beeman explained the chart listing all entities currently using EDA levies. Beeman explained that staff had surveyed the organizations listed on the chart and what those cities were using their levies for and if it has been effective. For example, the City of Columbus is using their EDA levy for advertising/branding, marketing, attracting new development and businesses and retaining current businesses, as well as the Shovel Ready program, and their website. Beeman found that the City of Dayton uses their levy for small incentives, a business summit, and other marketing to encourage new business. The City of Hutchinson mainly uses their levy for operations like paying & training staff. The City of North Branch uses their levy for multi-use housing and industrial development. Brooklyn Park used their EDA levy for the Open to Business program. Beeman has talked to other cities who EDC Minutes July 15, 2016 Page 4of10 have offered high remarks of this program. Beeman thought Mounds View could also look into this program in the future. Other uses from Brooklyn Park are for DEED's site selector program, vision for the light rail transit renderings, print advertising and merchandizing, a banker's breakfast, business forward forum, branding, and newsletters. The City of Prior Lake used their EDA levy for a small business incubator program, and a SAC & WAC deferred loan program, which is the sewer and water access charge. Beeman suggested that Mounds View may also want to look into starting this type of program. The City of Watertown has a program similar to Mounds View's building fagade program. Watertown also uses their levy for a revolving loan fund in addition to a downtown free WIFI program and property acquisition for redevelopment activities such as, demolition, environmental, etc. as well as staff support and marketing. Beeman stated that revolving loan programs are nice because once the money is paid back it can be used to fund another business. Beeman asked the EDC to review and discuss the EDA levy asking their opinion if they believe the EDA levy is a good or bad idea etc. Beeman will take the EDA's comments and recommendation to a City Council Work Session on August 1. Any EDC Member is welcome to attend the Work Session and it is open to the public as well. Chair Helgemoe asked the Commission if they had any comments. Commissioner Gary Stevenson asked if the .01813 percent calculation set by State Statute is used by all of the cities listed on the chart. Beeman responded that the percent is the maximum allowed under the statutes, but not all cities have chosen to use the maximum amount. That decision is at the discretion of the City Council. Stevenson asked if there was a chart that showed the amount each city was using. Beeman said it was not listed in the spreadsheet but that he could poll the cities or find a different way to get those amounts. Commissioner Freichels asked what amount the city is looking to acquire. Beeman said that from what he was told based on the current property valuations a maximum EDA levy could potentially generate around $161,000 annually. Helgemoe asked if the .01813 percent was calculated at .0001813 times the valuation. So, based on a home valued at around $200,000 it would be around $30. Beeman thought this sounded right but said he would check that calculation with the City's Finance Director. Helgemoe asked if staff knew the current valuation of the city's properties. Beeman didn't know the exact number and explained that the valuation fluctuates depending on how the property is classified as residential and commercial, and also any TIF districts, and other exemptions. Beeman will check with the Finance Department to see if they have the current valuations and calculations. Helgemoe stated that he presumes that most residents will want to know the actual dollar amount their taxes will be raised instead of the percentage. Helgemoe said the idea of an EDA levy is commendable in terms of the use; it appears to be a good use to help support businesses in the area. Theoretically, if the funds are used to attract new businesses, retain current businesses, then used to acquire properties that would be more valuable in the future, the city could acquire its tax base EDC Minutes July 15, 2016 Page 5 of 10 and then theoretically get its money back, but it is also extra money out of people's pockets. Helgemoe asked if the Commissioners had comments in terms of the uses. Is it something we want to do or not? Personally working with business, these are things that are important to businesses in terms of projects to attract and retain business, new development deals, etc. If the city doesn't have the money to do it then we can't get it done. Commissioner Freichels agreed that it is a good use of funds to acquire property to get updated in the City of Mounds View especially with the Rice Creek Commons development coming on-line. The City will be competing against a blank slate and Mounds View is an older city so there a several buildings that need some attention, especially if considering a new development across the freeway. I believe the city is going to have to do something because there is a lot of land over there for redevelopment. Mounds View has a good story in the sense that they have a history of well-established business which may not be competing against high property tax values in land with this year's building verses buildings built 10-20 years ago. Particularly if the city has specific sites they have in mind for redevelopment. Currently, the city doesn't have the funds to negotiate. This takes a lot of time and money. I would like to see how Crossroad Pointe turns out since the city hasn't done one of these projects for a while. If the project turns out successful, then this is a great example of funds being put to good use. I believe it is a good idea, whether the city goes to the maximum or not. I know how that would affect my business in town but I would support the levy just because I know the problems we've had over the years dealing with certain properties and situations where we couldn't do anything because we didn't have the money. It will be interesting to see how the Crossroad Pointe project turns out. Even though it would increase the taxes collected on my business property, I would be in support of it. Commissioner Rieland, said she believes the key would be to know how much it would affect tax payers. She supports the levy because in order to have a vibrant city we will need funds in order to prevent further pockets of decay in the city as it gets older. Also with the recent Rice Creek development, there is increased competition. This is a great opportunity especially with the new Bel-Rae and Crossroad Pointe development and the Rice Creek Commons development. This is a great time to put this on the table to at least see how people react. Commissioner Dan Larson and Laurie Shoop agreed. Larson mentioned that as a resident he is seeing the housing stock deteriorate and we can either let it go or take steps to improve the situation. Therefore, I am for it. Commissioner Freichels said that the city is limited on the funds that are available and with more blight this type of funding could help alleviate this problem. Perhaps more enforcement could also be part of the solutions depending on how the funds could be used. EDC Minutes July 15, 2016 Page 6 of 10 Larson said there have been certain houses that have been built as a replacement of some of the blighted homes and this will bring in higher tax revenue than those homes that were just sitting there in a blighted condition. Therefore, there is positive payback in updating and/or replacing such homes. Commissioner Stevenson said it may be much easier in Mounds View to sell it because the city is nearly fully developed rather than a city that has a lot of developable land. However, in a city like Mounds View he believes it would be a fairly easy sell to the public and he believes the city needs those funds. Chair Helgemoe stated that in terms of uses, there are many good uses such as retaining businesses, conducting studies, and to support a currently unfunded loan program. If the program is unfunded then why do we have it? I believe that if generating around $168,000 it would leave a lot of money for loan programs, but if we can use some of these funds for our loan programs for improvements then it would be beneficial if it can improve properties in the city. Helgemoe asked if the Commissioners had any other comments or recommendations regarding the EDA levy. Hearing no further comments, Helgemoe said it appears that the Commission is in favor of the levy and we believe it is a positive use of funds. So to summarize, the Commission agrees number one, that the EDA levy is a positive. Two, since we are all in agreement should we recommend an amount or would we leave that up to the Council. Beeman responded, saying that it would be the Council's decision. For the EDC's purposes we need the Commission to decide what they think about the EDA levy. Is the levy a good idea, a bad idea, etc. Helgemoe stated that in that case, the Commission is in agreement that this is a positive for the city and we are recommending that this move forward to the Council for further consideration. Motion/Second: Commissioner Freichels moved and Commissioner Shoop seconded the motion recommending the EDC's support of an EDA levy to assist in the funding of business and housing goals & purposes to the City Council for further consideration. Motion Carried: 6 Ayes, 0 Nays 6. REPORTS OF STAFF Crossroad Point Redevelopment Prosect Business Development Coordinator, Brian Beeman provided the Commission with an update on the Crossroad Pointe redevelopment site. Beeman stated that he had talked to The Beard Group and they are moving away from the idea of a Housing TIF and exploring Tax Credits as a way to fund their project. Since the developers have never used Tax Credits, they are working with their consultants to better understand the process and the anticipated gap in financing before approaching the City with their plans. The use of Tax Credits requires a 20% affordability aspect of the overall project which increases the project costs. This means that out of the 205 units being proposed, approximately 41 units would need to be affordable. EDC Minutes July 15, 2016 Page 7 of 10 The developers are working with their architects and would prefer not to approach the City until they have a more finalized plan. The developers are also monitoring the available funds of the Tax Credits which have been drying up do to the popularity of the program. The developers have indicated that they are still on track to break ground this fall; however staff believes that a spring ground breaking is more realistic. Commissioner Helgemoe suggested that since the Tax Credit program funds are drying up and there is a gap, perhaps this means the project won't be moving forward. Beeman said the developers don't seem swayed by the gap in financing and they appear confident that the project will move forward. Commissioner Freichels asked if there was a reason they weren't asking for the Housing TIF. Beeman said that even with a Housing TIF and a land write-down there may still be a gap in financing and the Housing TIF also requires a 20% affordability aspect. Originally they wanted to do an all market rate project. Freichels asked if they used a Housing TIF in Osseo. Beeman said, as he understands it, they did use a Housing TIF in Osseo that triggered the affordability of certain units. Helgemoe asked if the Commissioners had any more questions. Hearing none, Beeman moved to the next item on the agenda. Business Retention & Expansion Visit (BR&E) Updates Coordinator Beeman informed the Commission that a business owner is planning on moving into the former Snap Market space as soon as he returns from his vacation and has plans for an off-sale liquor operation. BioClean is still looking for a location for its truck franchising operation. They would keep the existing building as its main office and would like the second building to be located within a five mile radius of Mounds View. Helgemoe asked if Beeman knows the price that the Skyline Motel has come down to in the negotiations. Beeman indicated that he can't release that information as it is part of the negotiation process. Beeman said the property is not formally listed, the owners are taking offers and don't seem to be motivated to sell. The price that the owners came down to was still so high that it wasn't feasible to even consider a TIF as it was felt that the City shouldn't be rewarding a business owner for not negotiating. Beeman stated, we are using tax payer's money so we need to be cognizant of how we are using those funds. The owner of BioClean was working with a contractor to negotiate with the owners of the Skyline Motel and since the Skyline Motel owners weren't willing to negotiate a reasonable price, the deal fell through. The BioClean owner wants to build his building in or around Mounds View. Beeman said that Mounds View is strategically located along 1-35 and this makes the land valuable. The land will continue to be valuable as improvements are made with the addition of the MNPASS lane, Rice Creek Commons development, and the limited land availability in Mounds View. Mounds View Square still has six vacancies and has shown interest in locating a tap room business once the City has passed the proper ordinances. The Tap Room Ordinance is expected to be passed in August. Beeman stated that he has received about three different inquiries on tap rooms so far and he has provided them the square footage and available location information. EDC Minutes July 15, 2016 Page 8 of 10 Empire House has approached the City looking at constructing a building on the vacant land north of Biolife. For some reason, they were negotiating with a company that didn't own the land. Once they found out, they decided to back out of the project. Beeman identified a person that sits on the real estate board for Biolife and ensured that the two were in contact going forward. To date, Beeman hasn't heard from the Empire House owner other than the owner saying he would follow up with the contact. The owner also had mentioned in past conversations with Beeman that he liked Mounds View and how its staff has worked with them and desired to stay in the City if possible even though they have looked at Blaine and surrounding sites. Beeman informed the Commission that it would be much easier if the City owned more land and could assemble those parcels for redevelopment. There is a high demand for industrial use and with the City owning little land, staff is forced to contact the private land owners and get them in contact with business owners. This complicates and prolongs the process making it more difficult. Helgemoe thought it was interesting that they were negotiating with someone that didn't own the land. Beeman said there have been similar cases even on the residential side out of Chicago and other places where an unknowing buyer will sign a purchase agreement with someone that doesn't own the property. This buyer transfers the money then never sees the person again. The buyer is then out both the house and the money. Next, Beeman informed the Commission that EI Loro has indicated that they will be closing in about two months. They mentioned a construction project a few years ago along 1-35 that closed a street for a time. The customers got used to taking the alternate route and they were never able to regain the customer base like they had before. They also mentioned that they tried negotiating their lease but were unsuccessful. Commissioner Rieland asked how long they have been in business. Helgemoe said they have several locations around the Twin Cities. Beeman thought they had been in the Mounds View location for about five or so years. Beeman said there isn't much that can be done to assist them. They would need to decrease their lease amount and/or increase their customer base. The owners liked the idea of the Crossroad Pointe apartments which in theory would add more customers. However, they said they are not able to hold on for another year until the new apartments are built. Helgemoe asked if Pastor Enterprises, who owns the building, had mentioned any plans for that location. Beeman said he has been approached by a restaurant who may be interested in the building; however the owner has asked that staff keep the inquiry confidential at this time. Since the building has a commercial kitchen it has a higher demand than other buildings. Beeman informed the Commission that a private event center group was looking at the Tires N More area as a possible location to hold weddings, caterings, and other gatherings. On the weekends there could be around 200 vehicles. The group was intrigued by the property since the EDA owns an adjacent parcel. However, the parking ratios may have been a challenge and the city's desire for that area is to redevelop all three parcels as one project rather than piecemeal parcels to force a project. As a result, the group has decided to continue its search in other locations. EDC Minutes July 15, 2016 Page 9 of 10 Rice Creek Commons (TCAAP) Development Update Beeman updated the Commission on Rice Creek Commons stating that the infrastructure construction is currently underway and substantial completion is expected to be this fall with final completion in the Spring of 2017. Phase I of the building construction will begin in 2017 and is expected to consist of 200 homes, and anchor business, and the recruitment of a grocery store. Alatus is the master developer. Helgemoe asked when the new bridge over County Road H will be completed. City Administrator Jim Erickson said it is expected to be completed by November this year. Commissioner Larson asked how the businesses are holding up with the construction. Beeman said he has received about three calls from businesses complaining originally about wanting more signage to direct people to their business during construction and as the construction prolongs into the summer it starts to affect the businesses and there revenue. One has even threatened a law suit even though it is a State and County project. The City also changed the addressing along the stretch of Lucky's, R.J.'s, and the Auto Repair shop from Hwy Ave to County Road H. This seems to make more sense. In addition, the City Council has approved the County Road 10 renaming to Mounds View Boulevard which goes into effect in August. Beeman has been in contact with the company that worked with Biolife on sequencing their address so clients can find them and left several message, however they have yet to get back to him. Snyder Building Beeman is still working on the Snyder building to get it sold or leased; however the owner still has not come down on price. An auto parts store was interested in the early spring but nothing came of it. Beeman had received a call from a hardware store that may want to look at it. Multiple restaurants have also asked about it but the parking ratios and price have kept them from committing to anything. Bike stores have also shown interest in the location but again, it really comes down to price. Mounds View Business Council Beeman informed the commission that the next Mounds View Business Council meeting will be held at the Mermaid Event Center September 14 at 7:30 a.m. until 9:00 a.m. Since the Arden Hills and Shoreview Business Councils have had little interest, it was thought that combining them with the Mounds View Business Council would generation more attendees. For the first meeting, we wanted a topic that all of the cities could relate to. Therefore, the speaker will be a representative from Atalus, the Master Developer for the Rice Creek Commons development. For now we are calling it the North Metro Business Council until a better name is determined. After the featured speaker, the cities will talk about how they would like to proceed in future meetings and talk about the naming of the group. Helgemoe said it will be a good speaker and encouraged the Commissioners to attend. EDC Minutes July 15, 2016 Page 10 of 10 Other Upcoming Events/Reports Beeman reminded the Commissioners that the last Music and Movies in the Park will be held at Silver View Park August 18 starting at 7:00 p.m. The Movie will start after 8:00 p.m. once it gets dark. National Night Out is August 2, 2016. Beeman encouraged the Commissioners and residents to attend and if they have ideas on an event they should call Police Officer Nate Garland at the Police Department. Filing for elections opens August 2, 2016 at 8:00 a.m. and applications will stop being accepted August 16 at 5:00 p.m. Commissioner Stevenson mentioned that the Festival in the Park is August 20. Beeman said the bike registration is $25 if registering by August18 and $35 at the day of the event. Commissioner Helgemoe said New Brighton is also having a bike race and these types of events draw a large crowd. A local bike racer has been very successful in competing internationally and he is helping to organize the event. 7. REPORTS OF COMMISSIONERS Chair Helgemoe asked for reports from Commissioners. The Commissioners had no reports. 8. NEXT REGULAR EDC MEETING Chair Helgemoe thanked Beeman for his detailed reports and thanked everyone for attending, then reminded everyone that the next EDC meeting will be held August 19 at 7:30 a.m. if needed. Beeman and Helgemoe will stay in contact as it gets closer to that time to determine if a meeting will be held. 9. ADJOURN There being no further business, Chair Helgemoe adjourned the July 15, 2016, meeting at 8:31 a.m. Respectfully submitted, --- Brian Beeman Business Development Coordinator