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HomeMy WebLinkAbout07-11-2005PROCEEDINGS OF THE MOUNDS VIEW EDA CITY OF MOUNDS VIEW RAMSEY COUNTY, MINNESOTA Regular Meeting July 11, 2005 Mounds View City Hall 2401 Highway 10, Mounds View, MN 55112 6:30 P.M. 1. CALL MEETING TO ORDER 2. ROLL CALL: President Marty, Vice-President Stigney, Commissioner Gunn, Commissioner Flaherty, and Commissioner Thomas. NOT PRESENT: 3. APPROVAL OF AGENDA MOTION/SECOND: Flaherty/Gunn. To Approve the July 11, 2005 Agenda as presented. Ayes – 5 Nays – 0 Motion carried. 4. PUBLIC INPUT NONE 5. APPROVAL OF MINUTES. A. EDA Minutes June 13, 2005 MOTION/SECOND: Gunn/Thomas Approve the Minutes of June 13, 2005 as presented. Ayes – 5 Nays – 0 Motion carried. B. EDA Minutes for June 27, 2005 will be presented at the July 25th Meeting. 6. CONSENT AGENDA NONE 7. EDA BUSINESS Mounds View EDA July 11, 2005 Regular Meeting Page 2 A. Presentation by Phil Seipp, President/CEO and Scott McGuire, CFO of SYSCO Minnesota regarding the company’s TIF Request to facilitate expansion of the company’s Mounds View parking Phil Seipp, President/CEO, stated that the original building was built in 1989 and that since that time they have had two expansions of the warehouse. He stated that when they built the building they donated 47-acres to the City to be used as part of the park lands within the City. He stated they currently employee 629 individuals noting that his challenge is to grow the business, add jobs and strengthen their customer base. He indicated that their biggest obstacle right now is parking noting that they have adequate employee parking for the day in/day out business, they run into problems when they have large events such as sales training. He stated that during those periods of time they park in driveway areas and fire lanes. He stated the other times where they have constraints is when their large customers come in to do training and hold large meetings. He stated that they have also run out of truck spots, which creates a real impediment when trying to move trucks around, load them and move them out for the day. He explained the proposal stating that the project would involve moving the service drive to the east and adding employee parking along the east side of the building. He stated that these spots would be for overflow parking. He stated that they plan to relocate the water retention pond to the south and create 53 additional truck parking spots along the south side of the building on both sides of the entry drive. He stated that they expect to add approximately 100 jobs over the next five years and would span across all three shifts. He indicated that some of the positions would be sales positions where the individuals would work out of their homes. Commissioner Thomas asked how many additional trucks would be brought in and out over the next five years. Mr. Seipp stated that they would probably hire approximately 30 new drivers, which would add 30 trucks. Mr. Seipp noted that there is approximately three acres of land that had been previously donated to the city that borders the property line to the east and south that they are asking the city to give back. He stated that they are also asking for tax increment financing because this project could potentially create considerable additional expenses when they begin to consider the stormwater retention issues and square footage requirements. He indicated that this project would probably exceed what they would normally expect for the additional square footage in the parking area and reviewed with the Commission. Commissioner Thomas asked if they are actually asking for tax increment financing or the ability to utilize the TIF funds. She stated that the Commission is not looking to create another TIF District. Mr. Seipp clarified that they are asking for funds from the current TIF account. Mounds View EDA July 11, 2005 Regular Meeting Page 3 Economic Development Coordinator Backman referenced the packet provided to the Commission noting that it includes a letter of explanation from Mr. Seipp discussing the estimate for the current project, an estimate done in April by RLK, and an estimate done by SYSCO’s Houston Engineers showing a higher estimate of costs due to the construction and engineering work that would have to be done, especially with the electrical work due to the need to relocate some of the utilities. He explained that he had asked them to provide a breakout of what the stormwater/wetlands portion of the project would be and reviewed the numbers with the Commission. He clarified that he is not suggesting that the City fund the parking lot but he is suggesting that if there is a consideration for this project that it be limited to the stormwater management and items typically dealt with through the Rice Creek Watershed District. He reviewed the existing conditions stating that the project would relocate the pond further to the southeast and it would move the road further to the east. He provided a brief overview of the proposed parking areas and explained that the three acres, previously donated to the city, would be needed for the additional parking if they move the pond further south. He provided the Commission with an overview of the project timeline noting that it also includes a comparison of the estimates and what they are asking for in addition to a breakdown of costs per job within the overall project. President Marty referenced last two pages noting that the amount for SYSCO’s stormwater management is $250,000 and it also shows the EDC’s recommendation for $250,000 and asked if this would be $500,000 or are these two numbers referring to the same amount, $250,000. Economic Development Coordinator Backman explained that the EDC considered this request in June and their recommendation was to fully fund the request at $250,000. He stated the request is for $250,000 and the recommendation is for the $250,000 noting that the EDA does have the ability to set other limits if they wish. He noted total cost per square foot is not applicable because they are not talking about a building addition, they are talking about a parking lot expansion and utility costs. He referenced the city cost per job noting that this is the typical unit of measurement in economic development terms, shows $2500 and total investment per job created would be approximately $12,000 in capital investment for both private and public investment. Vice President Stigney asked if the TIF contribution would be an upfront contribution and would it be a pay as you go or is this a grant. Economic Development Coordinator Backman stated that they have asked for upfront noting that it could be a pay as you go over a period of time. Vice President Stigney clarified that this is in TIF District 3 and asked if this proposal were granted would the funds be taken from TIF District 3 or from pooled funds taken from all of the district funds. Mounds View EDA July 11, 2005 Regular Meeting Page 4 Economic Development Coordinator Backman stated that currently the financial health for TIF District 3 is good and is generating approximately $300,000 to $400,000 a year with modest obligations. He stated that the City would pay off all obligations related to TIF District 3 in approximately one year. He stated that most of the increment is being generated by SYSCO noting that the City has assisted them in the past. He stated that this was paid off in 1997. Vice President Stigney asked if the money would come from TIF District 3 or TIF pooling and if it came from TIF District 3 how long would it extend the district out. Economic Development Coordinator Backman stated that the TIF District 3 is set to expire in July 2014 and this would not extend the TIF District beyond that period of time. He noted that if there was an amount approved over a period of time it is conceivable that the entire district could be de-obligated within a couple of years as opposed to going out eight years. He stated that currently the City has obligations that are out approximately one year and once the City is done with these obligations, increment is coming in and the City has to show the Ramsey County how the City is using the money for economic development or close the District. Vice President Stigney asked what the duration would be to pay it back. Economic Development Coordinator Backman stated that if the $250,000 is approved it would take approximately two years to pay off. Vice President Stigney referenced the 2 to 1 mitigation and asked where it would be mitigated to. John Dietrich, RLK, Kuusisto, explained that the current proposal is to go offsite for mitigation in order to preserve the wooded wetlands that are up against the proposed improvements. He stated that they have had conversations with City Staff and the Rice Creek Watershed Staff noting that they have not made formal applications to the Rice Creek Watershed at this time. He stated that their proposal is to go offsite within the Rice Creek Watershed district adding that the mitigation would have to be within the same sub-watershed of the Rice Creek district. He noted that they have not had detailed discussions regarding the actual locations with Rice Creek at this time. President Marty recalled that some of the land SYSCO deeded to the City was like a wetland area. He noted that years ago Rice Creek Watershed came to Mounds View to discuss creating ponding in this area and he would like to look at the possibility of controlling the water on the land versus mitigating and paying somewhere else to control it. President Marty acknowledged that SYSCO has been a good neighbor to Mounds View and clarified that SYSCO ‘s request is for $250,000, noting that their spreadsheet shows an estimate of approximately $233,000 in addition to requesting that the City allow SYSCO to use some of Mounds View EDA July 11, 2005 Regular Meeting Page 5 the land they previously deeded to the City. He indicated that he did not have a problem with the land-use noting that he would prefer that SYSCO work to keep the costs closer to the $233,000 estimate shown on the spreadsheet. Commissioner Thomas referenced the land transfer and asked for clarification on the total acreage. Mr. Seipp clarified that the totally acreage would be approximately three acres and would include the land for the stormwater retention pond. He indicated that SYSCO did not care whether they own the land or not but in discussions with the City it was felt that it would be better not to have the property line run right through the stormwater retention pond. He noted that they would maintain the pond either way adding that it would probably make the most sense to have it located on their land. President Marty asked if there are any legal costs to transfer the land back to SYSCO. City Attorney Riggs explained that they are discussing a type of development contract noting that simple deed does not cost that much. He explained that the contract itself and how it would be handled is the more substantial cost. He stated that the costs could range from $200 to $1000 overall. Vice President Stigney referenced the costs to change the Comprehensive Plan and asked how this would be paid for. Director Ericson explained that this would be a cost born by the applicant, which includes the cost of the application fee and the processing of the application. Commissioner Flaherty asked Mr. Seipp why there is a need for assistance. Mr. Seipp explained that the corporation has other alternatives available to them to spend this money here noting that they have sister companies in Wisconsin, Iowa and North Dakota that have capacity noting that it would not surprise him if they suggested contracting the borders and allow them to serve customers from their facilities. He expressed concerns noting that this would not help them to grow or create jobs. He stated that they are trying to hold the costs under $1 million noting that the receptivity to the costs of wetland mitigation and moving a stormwater retention pond would be a difficult struggle for them to convince the corporation of the need. President Marty noted that SYSCO has operated on this property for several years and has made several changes over the years and asked if there is a possibility that SYSCO might end up back here asking for more space. He asked if the three acres would be enough or should they review the plans further and possibly consider transferring five acres now to avoid having to go through Mounds View EDA July 11, 2005 Regular Meeting Page 6 this process again in the future. He asked if SYSCO has a long-range plan that indicates further expansion in the future. Mr. Seipp explained that based on the constraints they have they would probably have to push the stormwater retention pond further south if they were to try to add additional spaces. He indicated that they do have relief coming in approximately five to seven years noting that they would be serviced out of a re-distribution center located somewhere in the Midwest area. He explained that this would change their business dramatically noting that the product stored at their facility would be decreased and the process would totally revolutionize the way they do their business. He stated that it would also help to alleviate some of the trucking problems they are currently experiencing. He stated that SYSCO believes that the three acres would be adequate. B. Discussion and Potential Recommendation regarding Assistance for Business/Parking Expansion for SYSCO Minnesota. President Marty stated that he does not have a problem authorizing $235,000. He asked if the expenses to transfer the land would be passed on to SYSCO. City Attorney Riggs stated that typically this is what is done in any type of development situation. Mr. Seipp assured the Commission that this is acceptable to SYSCO. Commissioner Gunn noted that costs go up and clarified that the $250,000 requested is probably to ensure that all expenses for the project are covered. Commissioner Thomas suggested placing a cap on the costs at $250,000 and asked if it would be possible to invoice the actual costs as they go through the process. Economic Development Coordinator Backman stated that when the City did the Highway 10 Business Center the City did bill actual costs when they did the demolition. Vice President Stigney stated that he would like to see a TIF Assessment or evaluation sheet for this project before they move forward. He stated that if they do grant any money for this project it should also be tied to the number of new employees it would bring in versus the projected 100 employees over five years. He stated that reimbursement should be based on the actual number of new employees. He stated that SYSCO should be willing to pay for half of it and be thankful they got $125,000 out of the City. Barbara Haake, County Road I, asked how much money is actually in the TIF Fund. Mounds View EDA July 11, 2005 Regular Meeting Page 7 Vice President Stigney clarified that it has not been established yet as to whether the funds would come from the TIF District 3 or the pooled funds. Economic Development Coordinator Backman stated that the fund is currently in healthy condition noting that they have paid off major bond payments and his understanding is that the fund balance is approximately $1 million right now. Ms. Haake noted that the community is going for a referendum on Medtronic and suggesting that the TIF funds be used for development costs and if the City is over $300,000 in development costs for Medtronic and if it ends up going for referendum this would have to be paid. She stated that she just wanted to be sure that the City has enough funds and she is now comfortable that the City does have enough to cover the costs. Commissioner Flaherty asked if the City has a time limit to spend the funds. Economic Development Coordinator Backman explained that Ramsey County would give the City a grace period of time if there is no activity within a district. He further explained that if, in 2006, all obligations have been paid, he would expect that by the following year the City would have to show some form of obligations or the County would likely ask for dollars back. Vice President Stigney referenced mitigation noting that he has some problems with mitigating outside the City limits noting that it would cost a lot more. He asked who would be responsible for paying the mitigation fee and would it be part of the TIF reimbursement. Economic Development Coordinator Backman explained that the costs associated with the stormwater management and wetland mitigation are TIF eligible costs and reviewed the budget breakdown for wetland mitigation with the Commission. Vice President Stigney stated that he does have a problem with paying premium price to go outside to mitigate on land and then have Mounds View pay for it. He stated that he believes that SYSCO should pay 50-percent of the costs. President Marty stated that he would also like to see the mitigation kept on the property and asked how time sensitive this issue is. He asked if SYSCO could come back with a ‘but for’ workup for the Commission in two weeks. John Dietrich, RLK, stated that it was their hope to be in process here and moving towards the Planning Commission and Council in July. He stated that this would allow them the time to make their application to the Metropolitan Council in order to start the process moving forward, which could go up to a 60-day timeframe. He stated this would start to impact any ability to place anything into the ground this year. He stated that the process has already been accelerated Mounds View EDA July 11, 2005 Regular Meeting Page 8 to the greatest extent possible. He stated that a two-week delay would put the fall start time for this project in jeopardy. Vice President Stigney noted that one of the City requirements is to have a TIF Evaluation sheet completed before requesting TIF. He stated that he would like this to happen before the Commission grants any funds. He clarified that it is his understanding that the agenda says nothing about the Commission taking any actions on this item tonight. Economic Development Coordinator Backman confirmed noting that the intent was to get a sense of how the EDA viewed this project noting that if the EDA was not interested in transferring land back to SYSCO it was important to get that knowledge now. He stated that he does think it is possible to have an action, contingent upon review of the appropriate submittals, adding that he does not think it would take SYSCO long to fill out the appropriate forms. He stated that he would work with SYSCO and assured the Commission that they would be ready within two weeks. President Marty stated that he does not see any problems with the land transfer back. He stated that if they could get the TIF Evaluation sheet put together and to the Planning Commission by July 20th for review by the EDA on July 27th. He asked that they provide as much detail as possible. 8. REPORTS None. 9. NEXT EDA MEETING: Monday, July 25, 2005. 10. ADJOURNMENT President Marty adjourned the meeting at 7:10 p.m. Respectfully submitted, Recorded and transcribed by: Bonnie Sullivan TimeSaver Off Site Secretarial, Inc.