Loading...
The URL can be used to link to this page
Your browser does not support the video tag.
Home
My WebLink
About
2008.11.24 EDA Packet
AGENDA CITY OF HUGO ECONOMIC DEVELOPMENT AUTHORITY MONDAY, NOVEMBER 24, 2008 8:30 - 10:00 AM 8:30 am 1. Call to Order 8:31 am 2. Roll Call 8:32 am 3. Approval of Minutes EDA Meeting of October 20, 2008 8:35 am 4. Health East Clinic 8:40 am 5. Discussion on City Owned Property • Mark Finneman, Finn Daniels Architects • Richard Fischer, Richard Fischer Architects 9:30 am 6. Update on BR&E Committee 9:40 am 7. Update on Proposed Sign Ordinance 9:50 am 8. Update on Downtown Redevelopment 10:00 am 9. Adjournment r BACKGROUND MEMO FOR THE EDA MEETING OF MONDAY, NOVEMBER 24, 2008 3. Approval of Minutes for EDA meetinp-of October 20, 2008 Staff recommends approval of the October 20, 2008 EDA meeting minutes. 4. Health East Clinic Staff invited Scott North, CEO, and Len Kaiser, Administrative Director both from Health East Clinic to welcome Health East into Hugo. The new clinic is under construction and is located at the northwest corner of County Road 8 and Everton Avenue. They attended the November 17, 2008 meeting and talked about the progress of the construction of the building. They were welcomed into the City as a new business. 5. Discussion on City Owned Property Mark Finneman from Finn Daniels Architects and Richard Fischer from Richard Fischer Architects will be present at the meeting. They would like to discuss a development idea for the City owned property in the downtown. They will be presenting their ideas to the EDA at the meeting. 6. Update on BR&E Committee Staff will update the EDA on the progress of the BR&E subcommittee. 7. Update on Proposed Sip-n Ordinance Since August 6, 2008, the ordinance review committee (ORC) has been working on revising the City's sign ordinance. The ORC consists of three Planning Commissioners, Tom Weidt, Bob Rosenquist, and Adam Moore, and two Council members, Mike Granger and Frank Puleo. The goals of the committee were to make the sign ordinance business friendly, make sure the signs are easily seen by the public, and make sure the signs are made out of quality materials. These goals were the basis of creating a new sign ordinance. Staff presented the proposed sign ordinance to the Hugo Business Association and the Planning Commission held a public hearing on the ordinance on November 13, 2008. Staff will update the EDA on how the sign ordinance will affect businesses and the outcome of the public hearing. 8. Update on Downtown Redevelopment Staff will update the EDA on downtown redevelopment projects. Certi' f'icate lecti' on State of Minnesota, City of Hugo This is to certify that: Phil Klein of the City of Hugo and State of Minnesota, having received the highest number of votes cast for the office of Council Member — Ward 2 at the Election held on the 4th day of November, 2008, in the City of Hugo and State of Minnesota, as appears from the official election returns and canvass, is hereby declared duly elected to said office. Witness my hand and official seal at Hugo, innesota t is 6th day of ovember, 2008 Mike Ericson, City Administrator City of ,Hugo Michele Lindau, City Clerk MINUTES FOR THE EDA MEETING OF OCTOBER 20 ,2008 EDA Vice President Phil Klein called the meeting to order at 8:30 am. PRESENT: Jan Arcand, Jim Bever, Tom Denaway, Mike Granger, Phil Klein, Brian Thistle and Fran Miron ABSENT: None CITY STAFF PRESENT: City Administrator Mike Ericson, Community Development Director Bryan Bear, and Associate Planner Rachel Simone APPROVAL OF MINUTES FOR THE EDA MEETING OF SEPTEMBER 15,2008 Klein made motion, Granger seconded, to approve the minutes for the EDA meeting of September 15, 2008. All aye. Motion carried. NORTHLAND PALLET COMPANY Northland Pallet Company has purchased and is now running its business out of the old 84 Lumber building. Northland Pallet is a company that constructs pallets and recycles pallets into mulch. The company moved from Minneapolis to Hugo. Mitch Martin from Northland Pallet was present at the meeting to talk about his business and answer questions that the EDA may have on the business. Mr. Martin stated that the main portion of the business is the refurbishing of pallets and they also make mulch with the pallets that can not be fixed. The EDA welcomed Northland Pallet as a new business in Hugo. SUBURBAN CABLE CANNEL AWARD FOR"THAT'S HUGO, TODAY!" On Friday, October 10, 2008, City officials attended the 2008 Annual Suburban Community Channels (SCC) Excellence Awards Ceremony at K& J Catering in North St. Paul. Rachel Simone, Nate Ehalt, and City Administrator Mike Ericson attended the 2008 Excellence Awards Ceremony on behalf of the City of Hugo. SCC Executive Director Ted Arbeiter announced that the award for technical excellence,the category which recognizes good camera composition, consistent audio/video levels, and a mixture of both field and studio production, went to the City of Hugo. Rachel Simone and Nate Ehalt accepted the award on behalf of the City of Hugo along with directors Terri Hodges and Cindra Schmidt, who are key members of the production team. UPDATE ON BR&E SUBCOMMITTEE Staff updated the EDA on the progress of the BR&E Subcommittee. The committee is putting together a workshop on Finance. The date of the workshop is November 18, 2008 from 7-8 pm at Hugo City Hall. Representatives from the local banks will be presenting on the "credit crunch" and the basics of lending. Staff will send out notices to business owners, put the information on the City website, and contact the local newspaper. UPDATE ON DOWNTOWN REDEVELOPMENT Staff updated the EDA on downtown redevelopment. Mike Anderson, from Carpenters Resturant has submitted for site plan review for a new restaurant on the site. The EDA will be reviewing the site plan at a later meeting. ADJOURNMENT Granger made a motion, seconded by Klein, to adjourn at 9:55 am. c 2008 Westwood Professional Services, Inc. Call 48 Hours before digging: GOPHER STATE ONE CALL Twin City Area 651-454-0002 / •\ I Mn. Toll Free 1-800-252-1166 \ I I Legal Description from Washington County Tax Description IN, E)L ROW \ 'TFpTM That part of the East Half of the Northwest Quarter of Section 19, Township 31, Range 21, l _ \ Os� Washington County, Minnesota lying northerly of the center line of the Highway. / _ / \ •\ 4fq, •Y EX. ROW LINE \ _ i TRASH f RECEPTACLE a. Development Data 1 LOCATION L f t3�o. Plat Name. FRENCHMAN PLACE 1st ADDIAON Area. Total Site Area 2.97.i-cc. - �'�—�. Lot 1, Block 1 2.97toc. I 8612 CURB & 6 GUTTER (TYP.)7 SETBACK LINE(TYP.) Zoning Standards OUTLOT A I Z I - Existing Zoning C-2 &FUS l O I Category C-2 Zoning I I - Proposed Zoning C-2 EASEMENT LINE(TYP.) 1 I - Min. Lot Size 20,000 sf. CURB ONLY W (TYP•) � ����tt�__JJIIII - Min. Lot Width (at front setback line) 100 ft. \ Y 40 ,� I ( - Min Lot Depth 250 ft. n \ o c I 6' 4O� o T ' I - Min. Front Yard Building Setback 30 ft. \ $ w 6' o �^ 9- Min. Side Yard Building Setback 30 ft. J I BLOC 1 2z � I i � • n - Min. Rear Yard Building Setback 30 ft. •` I = - Max. Building Height 35 ft. \ I I + I I - A•fox. Lot Area Covered By Buildings 35% \ < ( - Max. Lot Area Covered By Impervious Surface 80% EXISTING EVERTON AVE. N. I 22 - Min. Building Size of Principal Building 2,000 sf.. TYPICAL INTERIOR POND EASEMENT - Max. Garage Size 1,000 sf • I •67' PARKING STALL: 9'X20' 9 \ 6' CONCRETE 5.6 SIDEWALK VERTON AVE. N. IMPROVEMENTS BY OTHERS / l 45.90' Impervious Coverage 0 22' I - Lot 1, Block 1 129,417 sf. = 2.97 ac. SEE SHEET 7 FOR - Proposed Green Area 63,338 sf. = 1.45 ac. (49%) \ �1\ 7•Y9�— I I PARKING LOT SECTION - Proposed Impervious Area 66,079 sf. = 1.52 ac. (51%) - Paved Area 40,483 sf. = 0.93 oc. TYPICAL EXTERIOR - Sidewalk Area 3,396 sf. = 0.08 oc. (3%) / I PARKING STALL, 9'X20' - Building Area 22,200 sf. = 0.51 ac. (17%) ' 296.19 i CURB ONLY i / (TYP•) RETAINING WALL (TYP.) *- ' 100'PROPOSED ROW WIDTH Parking v- ` ' POTENTIAL - Gross Area of Building 22,200 sf. - MONUMENT SIGN LOCATION EASTERLY ROW(FUTURE �' - DEDICATION BY ADJACENT City Requirement: p � I LANDOWNER) - 3 stalls + 1/200 s.f. (22,200/200 = 111 + 3 = 114 '4j,��`` ���`-\ I stalls require) r ( Stalls Provided: 114 stalls I - �- Interior Landscaping Area Calculation - Parking Lot Area 40,483 sf. - 5% of Parking Lot (Green Space Requirement) 2,024 sf. Provided Parking Lot Green Space 2,225 sf. 1. The lot dimensions and areas on this plan are approximate. Refer to the Final Plot and supporting data for exact lot dimensions and areas. 2. Additional Drainage & Utility Easements will be provided as required. e � 0' 50' 1DO' 150' Latest Revision Date 3/31/08 ( �' � z_ 200310385Froi.d.g 2{13/08 aheee 2 OF 7 W ti__�..e Frenchman Place s..�sew 28 ..e-..s.-r..,_..q.s..now.u..a �+-` Final W �=PUM > `�.`...�. „a Everton Investments, LLP 1st Addition site Plan m�ie>• sa� �� °� 3500 Wmow Lake Blvd,Suite 1.00 Pea4 a...r..ti.iau. YYrdwood ..o..uaY... De:_ 3/sy06 „—N. 4u6e-- Vedasis Fieigltts,MIIv 557110 Fivga,Minnesoh L EXTERIOR MATERIALS SCHEDULE (j1 y N WVt40 In I STONE: ARRISCRAFT RENAISSANCE STONE ~ F °'41q n 12x24x3 5/8" & 4x24x3 5/8" o COLOR: WHEAT •� V i x°° DRESSED FINISH 3 o LL STONE WTS METStONE W ISADS AT ENTRY 1CPof PdyPET BRICK: ENDICOTT CLAY a n EL•Do•-o• 4x4x12 (UTILITY SIZE) PNERN6IE1 ALIMW9 70%/46 MEDIUM IS VELOUR ~ O d Y7 3 "R0XCTWCC"°'CE /- _ _ *DP ccPdaAPE* 30%#77 MEDIUM IS VELOUR / �'ET'b• (SET IN RUNNING BOND) �.mN — — TDP CF PARAPET 2 h �,�• N m E.I.F.S. DRYVIT (J113(AMARILLO WHITE) V EVA TEXTURE: QUARZPUTZ STONE fEADER WTN NSET bTOE B+LFDS PREFINISHED LINA-CLAD 'DARK BRONZE' • hm— eREx TA L: ME L Q A . Do _ _ TCP OF SLAB AIN TENANT ENTRT FUN BLM ENTRY ENTRY EL•loo'•°' 10 WINDOWS: DARK BRONZE ANODIZED GLAZING PFDlEGTED PIEFNI6NED TONE DARE wlu FRAMES W/BRONZE TINTED INSULATED _ cAFDPr.kMRY NSET STONE DARDS GLASS ANDOIZED ALU'TNM CA AZ►L FRA•Eb OlN TNTED GLASS M Y fi o x E _axle t EAST ELEVATION ���_� � 5 A-3.7 313?" . P•0' $a E o L i. a T Y 0. v PREFNI6NED FETLL A j LITE CN ENTRY PARAPET CAP FLLS," •EAST ELEv BEYOND § � w SIOFE wTS NSET S1pNE _ BANDS AT ACCENT AREA ;p FETAL SATES YV o ■►r TDP 6 PARAPET — _ BEND.PANTED& PREFNm`mD ALMNM PROJECTED CORNICE EL.•RI'-B• m O TDP OF PARAPET EIOLLARDb RF — — EL•IIS•-A• FRONT ELEVATION GATE COLLARS.PANE FJFJi LASNNi CN Z iAE EA OW B STONE y WAYWITS O Z O TON bTURDB E�x PREFNI&ED FETAL F W N — — TOP OF SLAB $ r Z$ - Q Z EL. 100.-0• _0D NE ELISE B N i W WEl STONE BADS Q ANODISED LLIRTLu NM GLAZR 1 D••®• F F1WES BTS'WED GLASS L L H Z O TIP.SIDE/REAR ELEVATION O Z W 0 _ a > s TRA514 ENCLOSURE W J z WEST ELEVATION O d A-3.1 3/32' I'-p" A-3.1 3132" . F-V" z 1— a z W99 L6 C11101E 0FM NfiET BTOE STONE wTS WET HTONE BANDS AT ACCINT AREA BADE 4T ACCENT AREA PARAPET 07026 EL.•IIT'-B" — — — — PIEFNINEDALU' — — — PTojett NO.: M PROJECTED LLU'lITlJ"T _ TDP OF PARAPET PROJECTlD CORNICE EL.,M'•D' OTORn By. SAW PROECTED CORNKE TDP 6 PARAPET Checked Sy. T PARAP T EUS ! Iswes and Revisions: ' I EJFS. STONE FEADER wTu ST04 HEADER WTu CITY SUBMITTAL 03.14.2008 "SET bYCNE DANDB WET STONE BANDS CITY SUBMITTAL 03.31.2008 BR1rx �� TOP OF BLAB EL.•100'-°' EL•100'-O' GLAZ STONE BASE WTS ST ANODISEDpFE MBE wTN NUT ST"BADS WET STONE BANDS ALB'RU'1 NG FRAFES WTN TNIED GLASS YIOD D LL FR•Y'EO MN TNTED GLASS sheet Title: CONCEPT EXTERIOR ELEVATIONS 3 SOUTH ELEVATION 4 NORTH ELEVATION A ■ -3 1 A-3.7 3/32' I'-0" A-3.7 3132". 1'-0" 09 ``111 Cial U.S.HIGHWAY 61 ----------------- UKJ A&IL Lai Amb- U11.11 CIU 8,000 SFLai .: Vw un Lab i —t—d t "TAU T" `ssf `4sm ! r i AN& It Jia _ r y CONCEPT LAND USE PLAN PROFESSIONAL BUSINESS PARK HUGO, MINNESOTA FINN 2008 OrHugo`y ° You ' re Invited . Business Retention and Expansion Subcommittee Finance Workshop When: Tuesday, November 18, 2008 7 :00-8 :00 PM Where: Hugo City Hall Council Chambers 14669 Fitzgerald Ave. N There will be representatives from the local banks in Hugo presenting on the topic. The existing "Credit Crunch" How local business are affected Basic lending practices for businesses Small Business Administration (SBA) To RSVP for this workshop please contact Rachel Simone at (651) 762-6304 or rsimonegci.hugo.mn.us. Please call if you have any other questions regarding this workshop IartungKemp's graphic G I O I mmIn 1991,just 100 were abroad.In ign work is intended to 2004, the company opened a attention to the com- Hugo-based Wilson Tool International has become plant in Shanghai. Brian Robin- any or message,not to a global power in metal stamping. son, the 17-year company veter- the design itself.The an who became Wilson Tool's company also has done CEO in June, stresses that Wil- roduct-packaging work > Wilson Tool International is ing sheet metal in numerous in- son didn't go to China for cheap cluding the new Sweet one of those well-kept secrets in dustries—particularly appli- labor or to export from there.In- of cakes and candies). the Twin Cities business world. ances; enclosures for electronics stead,it went largely to cut deliv- ddition,it has increas- The company keeps a low products; and heating, ventila- ery times. specialized in"corpo- profile,making products only for tion and air-conditioning equip- "We followed our customer rate responsibility" other manufacturers. But don't ment. The Maple Grove-based base,"Robinson says. "We've got messages(for Target, be fooled. Wilson, which has ex- Manufacturers Alliance, which to find ways to compete with among others). panded eight times since 1978 at this year named Wilson one of low-cost manufacturers around its production, research, and Minnesota's three best large the world." other people tell headquarters compound in manufacturers, calls the compa- How has Wilson stamped out that story.Then its Hugo, is making a big splash ny the largest independent tool- a place among global rivals? believable." around the world. maker in the world. • Productivity gains. Before This summer, Wilson produces tools for Some 6,000 of Wilson Tool's the 2001 recession, Wilson em- the agency won a punching, bending, and stamp- 20,000 customers are overseas. ployed 900 workers worldwide. major piece of Today, its sales are the same as business—work- then,but with a work force that's ing on a new ` "T O O L 200 employees fewer. products for John- Low employee turnover. )n's McNeil Nutri Company officials say their vhose products in- turnover rate is less than 1 per- and Lactaid milk). cent. They believe high wages Kemp, the agency and benefits, in the 90th per- Ing anew McNeil _ ENHANCE YOV centile for their field, keep good ity, tone, and per- ``` PRESS workers. { 0 Work force interaction. Tool- -mp's work isn't all :�, makers, enginees, and salespeo- :)fit sector. It has 9 pie typically work in very sepa- )ught out projects CAATWBE ��;`� ! rate silos. At Wilsons stamping („ P g ntities and philan- _,o division, that's been diminished, s since its incep- which encourages the sharing of est six months, the 411ideas. Teasingly won cor- • Research. On average, Wil- cts emphasizing son introduces ahalf-dozen -sponsibility" products, and files six to eight gKemp, this work patents annually. )mething of a spe- Founded in 1966 by Ken Wil- s discover that so- son, Wilson Tool started selling less-is perhaps as in European markets in 1982.Six growing number 41 years later,it acquired a plant in -$ (particularly Swindon, England, and began as good ad and i production there. The company n. Says Hartung, is closely held Wilson, his wife, er wants to find and their nine children own all of guys green? Are the stock. So expect Wilson Tool back to the com- to stay based in Minnesota for CEO Brian Robinson's company was named a"Manufacturer of the Year"in April some time. —Kristi Johnson by the Manufacturers Alliance. —Dave Beal S BY]OROE.COM DECEMBER 2007 tcbmag.com TWIN CITIES BUSINESS 37 Public Sector Advisors Springsted Mi* nnesota Team Special Announcement Springsted Announces New Additions to Minnesota Team Springsted Incorporated is pleased to announce the additions of Paul Steinman and Doug Green to its Minnesota service team. Both have been employed with Springsted for a number of years and have been tremendous assets during their tenure. Mr. Steinman and Mr.Green join the ranks of our other established Client Representatives,highlighted below. We welcome them to the team! ---------- Ms.Aho has been a principal of the firm since 1993. She has a reputation for developing creative solu- Kathleen A.Aho — tions for managing today's most challenging financial issues,such as housing,economic development, advance refunding,sales and/or special tax-backed financings and enterprise management. In over 25 President years of experience as an advisor to the public sector,she has served as manager on hundreds of _ financing assignments that involved both taxable and tax-exempt obligation transactions. Ms.Aho is kaho@springsted.com the current president of the National Association of Independent Public Finance Advisors. 1 Mr.Fick has extensive experience in municipal finance. He has significant background in the areas of Barry W.Fick negotiated financings and project management,with over 18 years of public finance experience and over 13 years experience in higher education financings. Mr.Fick is a Certified Public Accountant,a licensed jSenior Vice President ! attorney and has also earned the Certified Independent Public Finance Advisor(CIPFA)Certificate. and Client Representative ------------------ bfick@springsted.com – - --? Mr.Green has completed multiple studies in areas such as fiscal impact analysis,utility rate analysis, R.Doug Green revenue diversification/cost recovery,financial feasibility,financing options,capital improvement programming and debt management. He also served as an executive budget officer for the Minnesota Assistant Vice President Department of Finance where he assisted in the development and review of biennial budget proposals �and Client Representative 1 for state agencies and conducted quantitative and policy analysis to evaluate current programs,budget dgreen@springsted.com recommendations,and management efficiency within assigned agencies. Ms.Heaton has over 24 years of local government experience,including five years as the chief Terri Y.Heaton financial officer for the City of Bloomington,Minnesota,and six years as a public finance advisor --� with Springsted. In Bloomington,she developed several creative financial programs to finance economic Senior Vice President development,public facilities and infrastructure,and led the successful effort to obtain the City's and Client Representative first AAA/Aaa bond ratings. Ms.Heaton focuses on long-term entity-wide solutions. theaton@springsted_com j Ms.Krueger comes from a local planning background,having previously worked in city government Brenda A.Krueger for five years. With two decades of experience working on hundreds of municipal infrastructure financings at Springsted,Ms.Krueger has worked with municipalities of all sizes. Her experience Vice President encompasses both general obligation and revenue transactions across a range of complexity. and Client Representative bkrueger@springsted.com Mr.MacGillivray's direct client responsibilities cover major cities and counties,as well as high-growth David N.MacGillivray suburban jurisdictions. He is the author of numerous studies on fiscal impact analysis,economic development finance and debt management. In addition to his duties at Springsted,Mr.MacGillivray frequently lectures on Chairman economic development,financial management and the municipal bond industry. He is a member of the Standing Committee on Economic Development and Capital Planning of the GFOA,teaching the national dmacgillivray@springsted.com course on economic development finance,and is a Certified Independent Public Finance Advisor. Mr.Steinman has more than 20 years of experience working in and for the public sector. He has Paul T.Steinman extensive working knowledge of development and redevelopment tools,long-term operational financial planning,capital improvement planning and public bond transactions. He has a solid understanding of Vice President public policy issues related to redevelopment and debt issuance. Mr.Steinman has maintained and Client Representative successful client relationships by providing strategic,value-added solutions based upon his experiences psteinman@springsted.com �', working through everyday challenges faced by local government officials. SEPTEMBER 2008 Expertise. Insight. Accomplishment. 800.236.3033/651.223.3000 www.springsted.com Public Sector Advisors r] Springsted Other Resources Available to Our Clients in Minnesota... Springsted Incorporated features not only a host of talented and experienced Client Representatives,but also highly coveted Consultants with the education and background to successfully guide your community through its growth and transitions. Housing and Economic Development Ms.Huot has a strong background and special expertise in tax increment financing,tax abatement, Mikaela R.Huot and impact analysis. She has certification through the National Development Council and has Assistant Vice President completed projects in bond cash flow analysis,policy development,and developer review and j and Consultant negotiations,among other areas. j mhuot@springsted.com —T Mr.Schertler is head of Springsted's Housing and Economic Development group. He has over Anthony L.Schertler 15 years'experience in local government,with 10 years focused on downtown development and redevelopment. Mr.Schertler is responsible for creating incentive programs in the areas of business Senior Vice President retention and attraction. He is a licensed attorney,with an extensive background in land use and Consultant and real estate development. tschertler@springsted_com 7 Investment Services Mr.Langhoff directs Springsted Investment Advisors,a wholly-owned subsidiary of Springsted Charles R.Langhoff Incorporated. He offers a full range of investment services,including forming policy,analyzing cash flow,evaluating portfolios and evaluating performance. Mr.Langhoff serves on client cash management Senior Vice President committees to advise and opine on specific investments and overall portfolio management. He works and Consultant solely on our clients'behalf to develop and implement well-conceived and prudently executed clanghoff@springsted.com investment portfolio programs. Operational Mr.Dragisich is team leader for Springsted's Management Consulting Services team. He has over 26 years Nicholas R.Dragisich of management experience,including service as a city administrator and city engineer. Mr.Dragisich has been directly responsible or involved in numerous utility expense and cost analysis studies and in the development Executive Vice President of models for utilities in Iowa,Kansas,Virginia,Minnesota,Missouri,North Carolina,North Dakota,Virginia, and Consultant Washington and Wisconsin. He holds a bachelor's degree in civil engineering,a master's degree in business ndragisich@springsted.com- administration,and is a licensed professional engineer in Minnesota and Washington. Ms.Kettles has over 13 years of experience working with Springsted clients on various projects, iPatricia L.Kettles ! including performing utility rate analyses and financial feasibilities,financing options,capital improvement programming and debt management. She holds a bachelor's degree in finance Vice President and Director and a master's in business administration. j of Quantitative Services pkettles@springsted.com Organizational Man.• Resources i ' Ms.Antonsen has a strong background in organizational management and human resources that she Ann S.Antonsen I uses effectively in developing position analyses,classification and compensation studies,performance Vice President evaluation studies and in conducting executive search efforts for the public sector. She also specializes and Consultant in performing organizational studies,developing personnel policies and manuals and in conducting organizational management training sessions. aantonsen@springsted.com Ms.Klumpp specializes in organizational and management consulting for public agencies. She has Sharon G.Klumpp extensive government experience,having served as an executive director of the Metropolitan Council, the associate executive director for the League of Minnesota Cities,a city administrator and an assistant Vice President city manager. She holds a bachelor's degree in political science and a master's in public administration. and Consultant sklumpp@springsted.com 800.236.3033/651.223.3000 www.springsted.com Public Sector Advisors Springsted PRESENTATION TO Metropolitan Area Managers Association Fick's Financial Forecast September 11,2008 Presented by: Barry W.Fick Senior Vice President Springsted Incorporated Public Sector Advisois Springsted Topics Considered — September 11 , 2008 • Introduction • The Markets —defined & outlined • Interest Rates history & current • 2007/8 — Economic Disruption in Credit Markets • Issues in Credit Markets — Sub-Prime and the rest • Forecast • Alternative Outcomes • Conclusion Public Sector Advisors Springsted i Barry W. Fick — Background & History j • Springsted since January 1989 — Bachelor of Economics—University of Minnesota i — Juris Doctorate—Hamline University School of Law — Certified Public Accountant(CPA) — Certified Independent Public Finance Advisor(CIPFA) • Focus is on Complex Financings & Revenue Bonds — Higher Education&Health Care; Public Utilities;Auction Rate debt — Continuing Care Retirement Communities — Variable Rate Bonds — Swaps and derivatives Nu hli;.Srt tc' %'ti eiscic Springsted Financial Markets — Public Entity Debt • What is "the market"? — Combination of many independent decision makers — Can be large("Billions and Billions") — Can be small("We'll fund that out of petty cash") — Purchasers of investment instruments — Market segmented by investment needs and demands — Changes frequently—responds to variety of conditions Public Sector Advisors a © Springsted Financial Markets — Public Entity Debt • Who are "the market" participants? — Institutional participants • Insurance companies • Corporations • Banks • Mutual funds • "QIBs" — Economic&Political forces • Domestic • Global • Commodities-Oil Public Sector Advisors .. Springsted Market Makers & Participants • Underwriters(and their motto) — Firms that purchase bonds and distribute them to"the market" — "We're not happy until you're not happy" • Investors(and their motto) — Retail—focus is on Coupon rate • Tend to ignore actual yield — Institutional—focus is on Yield and Premium/Discount • Focus is on high sustained value—YTC, not YTM • Issuers — The highest compliment we can give our client is: "I wouldn't buy your bonds for my portfolio—the rate is too low." Public Sector Advisors a Springsted U.S. Financial Markets 1 Equity Markets Debt Markets Commodity Foreign Federal Reserve Markets Exchange System(Banks) 1 Markets Taxable Debt (Municipal Bonds) l Gov rnment Federal Corporate Securities Agencies Debt T-Bills GNMA Commerdal Paoer Notes FNMA Corporate Bonds Bonds FHLMC Preferred stock I Public Sector Advisors 7 Springsted Government Securities • T-Bills Discount securities 3 month,6 month and 1year maturities • Notes Coupon securities 2 year through 10 year maturities • Bonds Coupon securities 10 year through 30 year maturities • TIPS Treasury Inflation Protected Securities, coupon securities 5, 10 and 20 year maturities • US Savings Bonds Capital appreciation instrument Redeemable after 1 year Springsted Federal Agencies and Government Sponsored Enterprises • GNMA• Government National Mortgage Association • FNMA Federal National Mortgage Association • FHLMC Federal Home Loan Mortgage Corporation • FHLB Federal Home Loan Bank • FFCB Federal Farm Credit Bank • FICO Financing Corporation • REFCORP Resolution Funding Corporation • SLMA Student Loan Marketing Association • SBA' Small Business Association Carry the full faith and credit guarantee of the US Treasury Note:Securities issued:debentures,discount notes,mortgage backed securities Uubl c Sedct Gcelscis Springsted Corporate Debt • Commercial Paper Discount securities maximum maturity for unregistered paper=270 days, if longer,it must be registered • Corporate Bonds Coupon securities 1 year to 50 year maturities • Preferred Stock Coupon security form of equity often convertible to common stock Public Sector Advisors io .� Springsted Market Makers • Treasuries Primary Dealers(currently 21) Government Securities Dealers (broker dealers, banks,etc) Treasury Direct • Agencies Managing Underwriters Government Securities Dealers (broker dealers,banks,etc) • Corporates Investment Banks Broker Dealers other Financial Institutions — Market Makers are regulated — Salesmen working for SEC regulated companies must be licensed — Bank employees aren't required to be licensed Public Sector Advisors n. Springsted 2006 Issuance — US Bond Market (Billions) • Municipals S 386.8 6.2% • Treasuries S 752.3 12.6% • Mortgage Related $2,002.6 32.1% • Corporate Debt $1,058.9 17.0% • Agencies $ 747.2 12.0% • Asset Backed $1,251.9 20.1% $6,235.9 100% Information from Securities Industry and Financial Markets Association("SIFMA")website Public Sector Advisors Springsted US Debt Outstanding At End of 2006 • Municipals $ 2,404.1 8.8% • Treasury $ 4,322.9 15.8% • Mortgage Related $ 6,492.4 23.7% • Corporate Debt S 5,374.2 19.6% • Agencies S 2,660.1 9.7% • Money Markets $ 4,007.5 14.6% • Asset Backed 2,130.4 7.8% $27,391.7 100% Information from SIFMA website Public Sector Advisors Springsted �Ma8101'w Fa��]01;ILW Springsted sow.kr 8.2008 Investment Advisors Cash and Swap Indications Yield Curve Comparison 09/013120011 - kM4eesa Ryurew Ye4n 2s.srn oo AAA slixA sw<.tn<r s%w Rab Aer•ermet pv.rwN 1 2.»% 1.11% 20214 2.17% V.- I.$- 252% 5A% _______________________________________________________ 2 214% 200% 211% IN% p.N% 3.24% 2N% :111 ___________________________________ 2 255% 2,40% 2AN4 )50% NM% ).N% f.14% )A% • 2.75% 202% 3q% 9iv% 30.N% ]]•% SN% I.0% ____________________________________ 5 2»% 211% 2AD% 11- a s»% a+ax )41% 7243% - io ).- 111% 3W) 4.3]% .02% 472% )01% 1 2 3_ 4 _5 7 10 M 20 30 lN% 12)1 )4% 457% 7677% 4.52% 4.12% t +Treae" �GOAAA y-8IFMA -11-OM LWS p 20 4.0% 4.5% )s]% 4as% 11- dsox 4»% m 47e% 411% aat14 4Nx »1+% 4.14% 424% ' Imwmsdprewrbn md]purclaev gamnem revs aeMM+Mv en•rfvinp<w/pe.R•pu<keee 1 ap•srca:rssune eoaKY roA41N. 1 I Fcaxoxtc iviu7s Mm OaY Tu-y Mdn•sday -,.y friday Gan<um0•At irye 9Meq• R<durs RUlnx.McYl ImveR R'mv bAex lAbAV alu'Fee3)E-, MARKET WINCES 1-1 bdax ry.yj Prabxs vrcebw(r<Yr WeAsesday Reset R:Oa PPI E.Fv<e)Emgr(Ye'A 0-" L.A Weep V er14N9•n ConvMsv SIM 1.630 1.M% t &sorer xnena<wa Imo 108OR 210% 2.17% j RPtiq 71" 74.AW erol.wrMx:e.2v c.%Me.R„leeaaw, � MAMepleeEM IrOnelYRie44<n mlE-dE-Ww t•N9M IN'sWre C.wuneven Lwrms RwlNrn.» CN 6i•MdGwry(Ya'A u.B.Fve.JR<wrq<. YMe1LmnAw x<rFr10 F040CRNDsIavA irmxMmmr.vMM.v<Rawm evr<Cfimsaee tdxn1ew13+E[Y saife0rrw4.<�evAAva<M.rq;MsgirH var<Nr<mlMwtrr�rr.n1%.4bme bsMtemO'mlare ......<...i .Y,-u�mavw+a,s+vl.ve+o.a'+va.evs.bw a.. wnnvv.,se+v Ursa Mr-be.sryMwewnnkamnr!•snw.nrewmmhrrrtr�ewNVJer�c-wrr.nsesam0..ne.l�r�er Cash and Swap Indications Yield Curve Comparison 12IO3I W Imamem Yes, Treasury Inured Muni BMA Swap Lbx Swap r.- keelrem 1 3.19% 32% 3.10% 423% 73.31.: 390% 3.83% 2 299% 3.335. 28N 3.85% ]4.39% 3609: 3459. •r• ..... ..... 3 3005: 381% 290% 3.07% 7434% 3629: 3471 4 331% 3.39% 297% 3.98% ]4.62% 373% 3.50% 5 3394. 3.59: 3099: 409^. 70.304: 3&% 3.60% 1 1 7 3.76% 3.61% 3.to9, 4.31% ]3.91% 406% 3.P1% --, 10 403% 391% 3.36% 4.61% 74.01% 429% 4.14% ..... 1 15 4N% 6.334. 3.501 6769: 75.26% 4.51% 9 465% 445% 3709. 4.85% 76.9% 30 1369: 4495. 379°'. 4699: 31.13% Imeslmed ogre termrepmcnase agreemem Mee are for toll Its,amoftoN caOrads. AepPrcnae.egreemams a%Pme eg-,P."-wl ECONOMIC EVENTS M-. T-" x4awq The'W" MARKET INDICES Wednesday Reset Rates anwng ABC Gaeuner Navarm RoOunMY KSG CHm51ae LHryem4-'. Current Lest Week mPree,Paa L<Maerrz -M Saes YoY Pa]7o0 eW NorvM JIMIN UradPalme^--- BMA 358% 358% Ave-4 E- R40AA aH Myi 1 mo LIBOR 4.82% 4.78% urW augN9an Ga1Mmce Redo 7431. 74.90% FM e Rate Deccan Impar)& lPrdW Price lHx L<%Imar PrQ lHev E.peded IOMId(YoYIy) 1M E.&W YI REAF rye57 ABL Laemrer PR&F00d)ErNgy GRW)&N) Comgerce IMOMI d rYeVl 1MOMI 6 ryeYl IHusdal PiWa'lon LapaUy UO.xation W Sra�n1 aveamM Aawvaam mx'WvnYneam<dry o pma<rrwae<.v aYmx nYMHrY b nYbe Mwn mal iwn aan mernrreq nY<mem uµ umedamamnv wn ma Ym Namaem sexbevr<maderecarwvx.semvwrdlmamNm MYvtl meMn2maMrn WdwmvinrnpwtbmewmesoraetlnVeeo.nYoes�vrwuea nvzamenlwxre. Public Sector Aovisols 15 Springsted Questions and Answers 1. What is the yield curve? A graph showing: Interest rates from overnight to 30 years Different curves for different products: Treasury curve Muni curve Libor curve 2. What is a good source for Springnet, Muni curves? Bloomberg page"MFVI" 3. What do different yield curves Steep curve predicts inflation mean? Flat to normal curve predicts stability Inverted curve predicts recession 4. What drives interest rates? Simple question—complicated answer Money supply and demand FOMC announcements Commodity prices Strong economy -Weak economy �b�i�scud �ceisers �e Springsted Questions and Answers 5. What events affect rates? FOMC rate changes Unemployment CPI and PPI(inflation) Economic announcements on: retail sales,inventories,manufacturing housing data,mortgage applications Currency International events 6. What is the relationship Typically stock market up,bond market Between equity markets and down and vice versa fixed income markets Equities up,debt down,rates up or Equities down,debt up,rates down Usually funds flow to best opportunity .,�,i<, i a:;�«,•. ,J Springsted Public Finance — Holders of Debt Issued FWndPLOcRe Holders or 8.000.0 Municipal 2.5000 -- Debt 2.000.0 I aver From $911iors 1.5000 0Ins Go 1996 1.000.01 0 Banks 500.0 I MA d R1ds To 0.0 IndAds 2007 1996 1998 2000 2002 2004 zoos Year Sourer:Fed.mi Revrve I i Public Sector Advisors 1 Springsted 1 I i Public Finance — Security of Debt Issued G.O. GenOblkje ion and Revenue Debt vs. Revenue soo.o s -- Bond Issue hm by $ 40000000(billions) svder��0From 1020N GO 1996 0.0 To 1999 1998 M 2n 2004 zoos 2007 `ter Public Sector Advisors 19 Springsted Investment Banking Difficulties Illustrated AMEX - ROKERIDEALER INDEX 10MG.P)Wnamle.o.0-24:00 beau nlalkettrencillne ISO." 80.80 i 40.00 2006 weak close 2s.so 03 17 31 14 28 11 25 10 24 07 21 05 19 02 18 38 14 28 11 25 08 Dec 2008 Feb Mal AIN May Jun Jul Aug Sep y Sign .�sgna.cwn Public Sector Advisors Springsted Financial Market Difficulties Illustrated SECTORFINANCIAL SELECT SPETF DR 4 DynarnkAM-2.0f 34.00 market hendllne 32.80 J 30.00 weak close 8.00 6.00 2.00 s.00 o s9�.�,x006 19 01 17 31 14 28 11 25 10 24 07 21 OS 19 02 16 30 14 28 11 25 08 Dec 2008 Feb Mac Al. May J Jul Aug Sep 7i Published b,e5igna w w.esignal.com) i i Public Sector Advisors Springsted Public Finance - Types of Debt Issued Fixed Rate, A*da>d1�ri*ftds Variable Rate, 511 Am Other Bond Issue From 1996 sva-aiiian oaue To ®Vanade-Pale i 1997 Y 0 F*d-Rate_I 19% 1998 2000 2002 2004 zoos Year l............. .__._ - Public Sector Advisors >r Springsted Public Finance Sale Method History Method .o ------- -- ----–— of 400.0 -- Sale 800.0.! -- $va. 0 Pnv PlawYl From 2000. — . iaded 1996 1000 ec«mpeIarve To 00 2007 1996 19% 2000 2002 2004 zoos >ear .l'ource:Thom.n Fo.wi:l i Public Sector Advisors 23 Springsted US Treasury Yield Curves US Treasury USTrewyYield Qrves Yield Curves from sso°o 500 0 -- August 2007 ' ' -4-1-W 400°-e to A300 0 - - --- Sept 2008 °` 31-N1ar-08 200°0 -- 2�Pug-06 1000 -- —- ---- ---- - 0.00°0 .. i 3 6 1 2 3 4 5 6 7 8 9 10 15 20 25 30 Source:Blw.lwrg $ Public Sector Advisors 24 Springsted i i Minnesota GO Yield Curves G { i Minn GO Mi"sota GO Yield Cave Yield Curve 5.00% - -- - - ---from rr t4 z, +1Ag-07 August W 4.00°o t..... 200710 c 3.00°/ - — ---- ---- 30-Jun-08 Sept 2008 2.009% -- �"-- 29- p 1.00 --- __. - - 9� 0.001% 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 Source:Bloomberg Madr4Years i Public Sector Advisors .. Springsted i Foreclosures in the United States 2Q 2008 i f Mortgage Getting Worse 275, 3.82 Bankers Percentage of all mortgage loans on one-to four-family homes in the foreclosure National average:2.75% Association process at the end of the second quarter. .. report on r foreclosures in ! - — the second - R.I. 4.r 1 quarter of 2008 r across the USA - - � 7 te r'^•--,� _j - HIGH \\�- Fla:6.M }i a� rr Swr<a;MEAS reatwoar -^'"' tri DQINwUMCY SV/'/!Y Public Sector AdvisorsSpringsted It Could be Worse — An Historic Example • Winter 1863—Confederate States of America is winning battles, but suffering economically • CSA is striving for diplomatic recognition by Europe • Union forces blockade Southern ports, reducing cotton exports, damaging the economies of both the CSA and Europe (esp. England and France) • CSA desperately needs a loan to continue the war effort, purchase supplies, pay for ships being constructed in Europe s�et_� E- Springsted It Could be Worse — An Historic Example • Son of French bank marries daughter of CSA envoy to France and England • French bank loans$15 million on the following terms: — Interest rate of 7% — OID of 23%(CSA gets$11,550,000 but must repay$15,000,000) — French bank gets right to future purchase of Cotton at 1/2 market price — French bank sells bonds to public at 01 of 10%, making instant 13%profit Sw—The Civil War.A Nanaiive,Vol.2,pp 155157,by Shelby Foote Public Sector Advisors Springsted i Federal Reserve Actions • Market projection of Federal Reserve Action — Market projects no change in rates at next 2 FOMC meetings • Future Rate Direction — Will depend on economic conditions—take`lag"time into account • General consensus is that FOMC will increase rates • Effect on Dollar Valuation — Continued rate reductions may weaken dollar value(which has improved in recent weeks) • Leading or Following? — Fed strives to avoid perception it is reacting to rather than anticipating market conditions Public Sector Advisors Springsted The Current & Future Economic World • Economic challenges — Property Valuation&tax collection — Foreclosures — Permit& Development fees and charges revenue — Continuing Cost pressures — State support and/or Mandated services • Rating Agency changes in Public Finance views — Implementation of Global Rating Scale — Reduced public confidence in Rating Agencies Public Sector Advisors Springsted Managing Credit Rating Relationships • Rating Agency Changes in Public Finance Views — Increasing frequency of review • Surveillance fee(Hospitals,Higher Ed,Public Utilities,Cities,etc next?) • Increasing standards(Financial Management grading,derivatives exposure, etc.) • Effect of outside standards(Sarbanes-Oxley) — Not required for Government Bodies...yet — SOX is"Best Practice"in Corporate world • Creeping adoption may be required/expected for Government entities Public Sector Advisors .i Springsted Managing Credit Rating Relationships • Proactive Credit Rating Strategy — Trend analysis is becoming more important — Distinguish your situation from general trends(if appropriate) • Frame the discussion & issues — Develop ongoing relationship with Credit Analyst — Consider invitation to visit to your community OUTSIDE of a bond issue situation • Avoids"time compression"issues related to"getting a rating out" • Allows time to provide information&more detail • Assists in setting stage for maintaining or improving credit rating Public sector Advisors Springsted Managing Credit Rating Relationships • Trend Analysis—Inside the "Black Box" — Much trend analysis you already include in CAFR—MDA — Focus on positive trends—they can more than offset temporary negatives — Develop&implement strategy to mitigate or cure negatives • Communicate strategy&share results with Rating Agency • Assess, Review& Update Policies & Plans regularly — Capital Improvement Plans — Development Plans — Debt, Investment, Derivatives,etc. Policies Public Sector Advisors Springsted Economic Disruption — 2007 • Credit Market Issues — Sub-prime mortgage issues — Auction Rate Market freeze • Financial Firm Losses — Banking firms — Investment firms — Bond Insurers • Accounting Issues — Valuation of Investments&portfolios — Loss recognition and timing Public Sector Advisors Springsted Economic Disruption - 2007 • Structured Investment Vehicle(SIV) — Off Balance Sheet investment set up by Financial Institution — Borrows in Commercial Paper market — Invests borrowed funds in Mortgages — Marketed as Money Market alternative/supplement • Collateralized Debt Obligation (CDO) — Mortgages have been used as collateral for repayment — Multiple`tranches"used to offer different degrees of risk — Structuring can result in creation of high investment grade w/o underlying high investment grade collateral Public Sector Advisors .. Springsted Economic Disruption — 2007 & 2008 • SIV's and CDO's — Low rated tranches defaulted at higher than predicted rate — Default risk moved up to include higher rated tranches • Market Conditions—Freeze-up — As credit quality deterioration accelerated, buyers retrenched and SIV's couldn't refinance when ABCP matured,triggering default's and forced sales or receivership • Valuation models not working — No sales to compare with,valuation models can't accommodate stress levels in market Pubic Sector pavlso;r. ,.. Springsted Mortgage Issues — Sub-Prime, et al • Sub-Prime mortgage default rate higher than projected — Unprecedented default levels — Jan—Jun 2007 Sub-prime mortgages-25%currently in non- payment status • Loan Documentation insufficient — Stated Income, minimum documentation — NINJA—"No Income, No Job or Assets" • Borrowers unable to meet higher payments on rate reset — Foreclosures result in downward pressure on new home prices — Could lead to a downward spiral until supply balances demand Springsted Potential Solutions • Super SIV — Utter failure—plan was to be operational by end of 2007 • Rate Freeze — Extend low-rate period for up to 5 years • Government Intervention — Extend Government loan guaranty to sub-prime loans — Effectively have taken over Fannie Mae and Freddie Mac to insure certain outstanding mortgages; extend additional credit of US Govt. — FOMC lowers discount rate and fed funds rate in different amounts Public Sector Advisors Springsted Potential Solutions • Super SIV — D.O.A—proved to be`too little,too late" — At estimated$80 billion, it was dwarfed by the multi-hundred million SIV rollover issues • Rate Freeze — Defers underlying issue of affordability and suitability to future date, doesn't resolve fundamental issue • Government Intervention — Potentially rewards bad with the deserving,dilutes consequences of bad management&poor underwriting Public Sector Advisors Springsted Real Solutions • Patience — Avoid quick action or sale of assets — Allow current rules and regulations to be enforced before new rules are considered • Address underlying issues — Increased monitoring/disclosure of financial products — Changes in laws/regulations to be considered • Coordinated Efforts — Allow current process to proceed—regulatory agencies, local issue specifics coordinated with general"big picture"guidelines � :I.<,� ». Springsted Other Economic Factors • Value of the U.S. Dollar to other currencies • World Economic Growth • Federal Reserve Action • Crude Oil Prices • Demographics • Housing decline spillover effects — Retail sales, home improvement sales — Construction&other employment 4, Springsted Other Economic Factors • Foreign Investment — Sovereign Funds • Currency Concerns — European Union—the Euro • Internal conflict—Germany,France,Spain,Italy • Global linkage - Housing • Spreading issues — Retail sales — Fuel prices Public Sector Advisors Springsted The "Rest of the Story" • Crisis of Confidence — Fear is the dominant characteristic of the credit market — Credit fundamentals are shaken by mortgages,but only by mortgages • Fear of Unknowns — How long will liquidity freeze continue? — How long will sub-prime issues last? — What other financial"surprises"are there to be found? • Economic Results show continued growth — Most economic statistics show slowing but continued growth in output,etc. Public sector Advisoi Springsted Forecast • Credit issues likely to mitigate in late 2008 and early 2009 — Year end balance sheet window dressing making liquidity temporarily worse — Sub-Prime mortgage problems to remain in 2008, but decline thereafter • Housing will be drag on local budgets, but not significant — Housing, like politics, is local—effect on budgets will vary based on: New construction levels • Reliance on development fees Property tax valuation&adjustments to existing housing/commercial stock i Public sector Advisors Springsted Forecast • Yield curve to "revert to mean" and become steeper — Lag time for short-term FOMC action will have an effect — Increased liquidity should reduce demand for short-term instruments • Interest rates likely to rise in later 2008, but not significantly — Additional demand may increase demand and long-term interest rates — Increasing global competition will help keep interest rate increase in check Springsted Alternative Outcomes • Full Recession — Housing, mortgage and Credit problems affect rest of the economy — Economic activity declines,but inflation continues to lurk, raising the possibility of"Stagflation" • Acceleration of Economy — Economy outside of housing continues to expand at steady pace — Foreign trade&investment offsets some of housing decline — Housing stabilizes,then gradually increases Public Sector Advisors 46 Springsted Alternative Outcomes • Foreign Currency Issues — European Union breaks apart • Common Interest policy differences results in EU breakdown • Foreign Investment — Withdrawal of foreign holding of US Treasury debt — Currency pricing of commodities-$or other? i Public Sector Advisors nl Springsted Conclusions • Housing to be an issue through 2009 • Lower Future housing growth means changes • Recession probability > 90% • Credit Markets likely to remain volatile in near-term future • Muni Bond rates likely to remain low for 2008, showing gradual rises and steepening yield curve • 2008 Elections mean little major government intervention until 2009 and later Public Sector Advisors Springsted Information Sources • Springsted-www.springsted.com • Federal Open Market-www.federalreserve.gov • Bloomberg-www.bloomberg.com • MN Dept. of Finance-www.finance.state.mn.us • SIFMA-www.sifma.org • Bureau of Labor Statistics-www.bls.gov • National Association of Realtors-www.realtor.org Public Sector Advisors 49 Springsted Perception is Reality II j l �++KoFF i Well,yes,its a routine proredure,—if you routinely have someone sliiee Open your body with sharp instruments and then fiddly zi;ith ymerintides Public Sector Advisors so - Springsted