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HomeMy WebLinkAbout2011-11-08 PACKET 03.D MINUTES October 11, 2011 Pursuant to due call and notice thereof, a regular meeting of the Economic Development Authority was held at Cottage Grove City Hall, 7516 80 St. S., Cottage Grove, Minnesota 55016 on the 13th day of September 2011. CALL TO ORDER The meeting was called to order at 7:30 a.m. by EDA Secretary/ Treasurer Paul Poncin. ROLL CALL Members Present: Tony Jurgens, EDA Member Craig Patterson, EDA Member Paul Poncin, EDA Secretary/Treasurer Chris Reese, EDA Member Members Absent: Myron Bailey, EDA President, Justin Olsen, EDA Vice President, Richard Remackel, EDA Member Staff Present: Robin Roland, Finance Director Ryan Schroeder, EDA Executive Director Ken Smith, Communications Coordinator Danette Parr, Economic Development Director Others Present: Alex Sheppard - Cottage Grove Area Chamber of Commerce Sean Lentz - Ehlers, Mary Ippel - Briggs and Morgan A motion was made by EDA Member Jurgens to approve the September 13, 2011 Economic Development Authority minutes. The motion was seconded by EDA Member Reese, all present were in favor. DEVELOPMENT UPDATE / BR &E UPDATE / BUSINESS LEADS EDA Executive Director Schroeder provided the development update. Residential permit activity continued on pace with our more recent projections which is at a total unit count of 50 estimated for the year. Per unit values continued on average at just over $291 K which is well above the Economic Development Authority - Minutes October 11, 2011 Page 2 values in all prior years except 2007 -8. Lot exhaustion will occur in 2012 PSCH Executive Director Schroeder informed the EDA that on September 21" the City Council awarded the project to Graham Construction. On September 29 there was a groundbreaking ceremony at the Ravine Parkway Site. The initial Graham schedule anticipated a notice to proceed on October 19 The same date is scheduled for their submittals of long lead materials and equipment with review of those submittals by November 2n and procurement generally by November 17` Project costs are estimated at $15,708,491 with a base bid of $12,985,000 plus the Veteran's Memorial of $36,000. MSP- Executive Director Schroeder stated that the regional MSP economic development marketing entity is now up and operating. They have scheduled a PR event in October to announce their arrival. We have begun receiving leads from them for the past month or so. EDA members can get tickets. Home Depot — Executive Director Schroeder stated the City was working with Stonehenge & LA Fitness toward the redevelopment of the shopping center. We wanted to take advantage of some statutory changes that allowed us to pull funds from different TIF districts. We tabled the spending plan into November at the last Council Meeting. Hopefully we'll have something at next EDA meeting. They have to start construction by July1st in order to meet the statutory requirements. EDA Member Reese asked if the right turn issue was in the plan and Mr. Schroeder replied no. Hollywood Video — Executive Director Schroeder told the EDA we are still looking at getting a restaurant in the space. The owner wants to remodel and the tenant wants a new building. EDA Member Jurgens asked if the restaurant was looking at other locations. EDA Executive Director Schroeder replied no. Lease Revenue Bonds Finance Director Robin Roland informed the group that the City Council has determined that financing for the construction of the new Public Safety /City Hall project should be in the form of Lease Revenue bonds. The bonds would be issued by the EDA with an annual appropriation (tax levy) by the City to cover the debt service. As such, the EDA must begin the process by calling for proposals for the issuance. Historically, the City has done bond sales as a competitive bid process. That process includes the determination of the amount of the financing, issuance of a "Preliminary" statement and bidding on a specified date by all interested banks /brokerage houses. The award of the bid is based on the bid with the lowest total interest cost and the bonds are sold to that bidder who markets them to investors. At the Council meeting on June 1, 2011, the City's financial advising firm, Ehlers provided an alternate scenario: a "private placement" of the Lease Revenue bonds through a Bank of America program for municipalities which had recently become available. The City Council directed that after the PS /CH bids were received, staff proceed with an RFP to selected banks /underwriters, including but not limited to Bank of America. Ms. Roland included a copy of the project budget — sources and uses with her memo. The budget reflects expected bonding of $9,900,000. Ehlers has provided anticipated debt service schedules based on this amount, along with a proposed schedule for the actions necessary to Economic Development Authority - Minutes October 11, 2011 Page 3 issue the bonds. She mentioned that she also included an article explaining municipal bond underwriting. Sean Lentz from Ehlers and Mary Ippel, the City's bond attorney from Briggs & Morgan, were in attendance to answer any questions EDA members may have about the schedule or process. Ms. Roland asked the EDA to adopt the resolution calling for Requests for Proposals providing for the sale of $9,900,000 in Lease Revenue Bonds, Series 2011A. Ms. Roland explained that there is a need for the PSCH building and that revenue bonds are the safest way to go. EDA Member Jurgens initiated a discussion about CIP and General Obligation bonds and their differences. Ms. Roland said GO bonds are a special kind of bond allowed by the state for city and county. Mr. Jurgens asked if you can use CIP with private placement. Sean Lentz replied yes but very close to GO bonds. GO bond is the strongest credit a city can provide to a purchaser. Ms. Roland stated that the appeal of private placement is smaller expenditures for upfront cost. Negotiated sale would have different upfront costs. Mr. Jurgens asked if this is the cheapest way to go. Mr. Lentz said when we looked in June, bank's cost were very close and could be cheaper. GO sales on December 7 will determine. Ms. Roland replied that GO bonds are more risky but no city would tell its EDA we won't pay bonds. There is not a lot of municipal bonding occurring at this time so demand will make the difference between Lease Revenue Bonds and CIP bonds not that much. Lease Revenue Bonds is the most sure way to go. There is negligible difference at this time. EDA Executive Director Schroeder commented that the cheapest way to go would be cash. Mr. Lentz informed the EDA that the sale is December 7 and closing is December 22 He stressed that the market will view this as a strong deal because it is a public safety building not an ice arena. Ms Roland added that they used to be called Story Bonds because you tell a strong story tied to the need. Mr. Lentz interjected that Banks will look for this for their own portfolio. Ms. Mary Ippel commented that the City will be making lease payments. Ms. Roland stated that this is a very transparent deal. We will have money in hand and make payments. Mr. Sheppard asked if this was a 20 year bond. Yes, Ms. Roland replied it will be paid off over 20 years. Mr. Jurgens asked if the rate can change. He was told no by Ms. Ippel. On December 7th rate will be locked in. EDA Member Patterson asked if there was a parachute. Ms. Ippel replied on December 71h you could decide you won't issue bonds, we would lose our fee. Ms. Roland stated it is our intention to send RFP's to other banks. Ms. Ippel stated that historically, this kind of project has been used under state law. We are 100% under state law and have statutory authority. EDA Member Jurgens asked if vote should wait for all EDA members to be present. EDA Executive Director Schroeder informed the EDA that the City Council helped put this deal together and will act on October 19 Ms. Roland said she believes absent EDA members want this deal to go forward. EDA Member Jurgens said he wished to table the issue until the next meeting because all EDA members were not present. EDA Secretary/Treasurer Poncin made a motion which was seconded by EDA Member Patterson to adopt the resolution calling for Requests for Proposals providing for the sale of $9,900,000 in Lease Revenue Bonds, Series 2011 A. Four EDA members were in favor with one opposed; that being EDA Member Jurgens. Economic Development Authority - Minutes October 11, 2011 Page 4 Retail Marketing Meeting Economic Development Director Danette Parr updated the EDA on the retail meeting. She stated that on September 10 the City hosted a marketing meeting at River Oaks for Cottage Grove retailers. The meeting gave an opportunity for the following: • Share information related to what the City currently does to support retailers in Cottage Grove through such marketing efforts as the Shop Local website, Growth Partners website, and various other outreach efforts. • Educate retailers on the various events and tournaments held in Cottage Grove throughout the year that provide natural marketing opportunities to a captive audience. • Brainstorm possible ways that we can collectively improve marketing efforts by pooling resources. • Establish a dialog and create an even stronger working relationship with our retailers. The meeting was attended by approximately 30 people and allowed for ample discussion among participants. While we would have liked to have had a greater number of participants, the individuals in attendance expressed appreciation for being able to take part in the worthwhile event. Ms. Parr stated that we will do another meeting and discuss issues from the first meeting. EDA Member Jurgens said he thought it was good. He fielded questions about the City renovating some buildings that looked bad. He also was asked about access on 70 St. EDA Member Patterson brought up the Sign Code. Work Plan Priority Setting Economic Development Director Parr informed the EDA that in continuation of the September 13`" EDA discussions related to the City Council Objectives, Staff would like to review and receive feedback from the EDA on the third of the five Objectives (she read the objective listed below): 3. Provide for continued development of the industrial park, redevelopment of the Gatewa Majestic redevelopment opportunities. Include a business community feedback mechanism to include prospects not attracted to a local development site. Improve reporting to EDA and Council. Ms. Parr explained how the City does Tech Reviews several times a month which is related to new development and future businesses. Finance Director Roland described it as a valuable interactive process. EDA Executive Director Schroeder said it was education for the developers and that it was a free review. Mr. Sheppard talked about CG Motors, the Majestic and the Rush nightclub. EDA Member Jurgens asked if the Rush was up to date on its taxes. He was told yes. Ms. Roland explained that the owners need to be realistic about their asking price. Incubator Update Ms. Parr told the EDA that she had a meeting today. The second person we contacted said no but that we expect a proposal from another group soon. She is not sure what it will look like. Economic Development Authority - Minutes October 11, 2011 Page 5 Commercial Zoning Ordinance Update As the EDA may recall from the August joint meeting with the City Council and Planning Commission, it was determined that it would be beneficial to have the Commercial Zoning Ordinance comprehensively reviewed to assure that the document is: • Responsive to changing market conditions and development patterns; • Responsive to changing policy direction; • Consist with adopted City plans; and • "User- friendly" for ease of understanding. At their September 26 meeting, the Planning Commission had an initial conversation to determine the best way to proceed with this important undertaking (McCool memo attached). It was decided that the process would likely benefit from joint collaboration with members of the EDA and other interested City commissions. For that reason, the Planning Commission is soliciting interest from the EDA to determine who would be willing to attend a series of future workshops to review the Zoning Ordinance related to the following five Zoning Districts: • Limited Business District (B -1) • Retail Business District (B -2) • General Business District (B -3) • Planned Business District (P -B) • Neighborhood Business District (B -N) The Ordinance review will take place over the next few months through a series of workshops. If EDA members are willing to assist in reviewing the Commercial Zoning Ordinance, please express your interest to Danette, as well as your anticipated availability over the next few months. Ms. Parr asked the group what they want to see in the commercial corridor how does it relate to the zoning ordinance. EDA Member Patterson asked EDA Executive Director Schroeder if he has seen the need to change. He explained that we have a lot of districts. Ms. Parr stated that the City doesn't want businesses coming in and have to go through another process. She explained that she is looking for volunteers and that this will be separate from the Planning Commission. EDA Member Reese stated he would like to volunteer. Economic Development Specialist Economic Development Director Parr informed the group that she had received 68 applications for the position. Seven people were interviewed and two stood out. The City is backgrounding this individual who will assist us with business development and retention efforts, marketing campaigns and other duties as assigned. 2012 EDA Golf Tournament Update Community Services and Communications Coordinator Ken Smith gave the EDA the 2012 EDA Golf Tournament update. He reminded the members to set the date of August 14 aside. He asked them to choose an event they would like to participate in. EDA Member Patterson said he would like to help with the beverage cart. EDA Members Jurgens, Poncin and Reese (if in the Economic Development Authority - Minutes October 11, 2011 Page 6 State) said they would all participate in some manner. A suggestion was made to hold the EDA meeting at River Oaks the day of the event right before the tournament starts. EDA Calendar EDA Executive Director Schroeder asked that the all commission meeting be added to the calendar. The meeting format will be similar to the last meeting with an emphasis on focus groups. EDA Member Jurgens mentioned we could use the meeting to solicit input from commission members. The December 7 th special meeting will be added to the calendar as well. MISCELLANEOUS BUSINESS ITEMS EDA Member Poncin said he liked using the iPads for the EDA meeting. ADJOURN EDA Member Jurgens moved to adjourn the meeting. Seconded by EDA Member Poncin, all present were in favor. The meeting adjourned at 9:04 a.m. Respectfully Submitted, Kenneth L. Smith Community Services and Communications Coordinator