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HomeMy WebLinkAbout2015-11-10 Approved Minutes CITY OF COTTAGE GROVE E CONOMIC D EVELOPMENT A UTHORITY MINUTES November 10, 2015 Pursuant to due call and notice thereof, a regular meeting of the Economic Development Authority was held at Cottage Grove City Hall, 12800 Ravine Parkway, Cottage Grove, Minnesota 55016 on the 10th day of November, 2015. CALL TO ORDER The meeting was called to order at 7:30 a.m. by EDA President Bailey. ROLL CALL Members Present: Myron Bailey, EDA President James Celkis, EDA Member Trent Cole, EDA Member Steve Dennis, EDA Vice President Member Tony Jurgens, EDA Member Ramona Westerberg, EDA Treasurer Members Excused: Jeff Carter, EDA Member Staff Present: Charlene Stevens, EDA Executive Director Jennifer Levitt, Community Development Director/City Engineer Robin Roland, Finance Director Kori Land, City Attorney Alicia McMonigal, Economic Development Assistant Others Present: Danielle Killey, South Washington County Bulletin Bernie Hesse, UFCW-Local 1189 Peter Hosch, Hy-Vee EDA President Bailey stated EDA Member Carter will not be in attendance due to the fact that he is unable to vote on the redevelopment and business subsidy on today’s agenda. APPROVAL OF MINUTES 3.1EDA Member Jurgens motioned to approve the October 13, 2015 EDA Meeting Minutes. EDA VP Dennis seconded (6-to-0 vote). BUSINESS ITEMS 4.1 Development Update / BR&E Update Economic Development Authority - Minutes November 10, 2015 Page 2 Community Development Director/City Engineer Levitt discussed the development update items that were presented in the packet. 4.2 Gardenworld – TIF District Creation / Purchase Agreement Community Development Director/City Engineer Levitt reviewed the Gardenworld materials discussing the site map, site plan, technology and proposed TIF schedule. EDA Treasure asked if the relocation included the entire operation to Cottage Grove. Gardenworld owner, Dave Vander Sman responded in the affirmative. EDA Member Jurgens asked for the number of anticipated jobs. Dave Vander Sman replied 17 full time positions anticipating an increase to 25 jobs within the first two years and clarified 20 year round jobs. EDA VP Dennis asked for clarification on the site selection process. Dave Vander Sman replied three to four communities were considered. The highlights regarding Cottage Grove were the proximity of workforce, good land, and expansion possibilities. EDA Member Jurgens called for the adoption of the resolution for a public hearing for the creation of TIF District 1-16. EDA Member Celkis seconded. Motion passed unanimously (6-to-0 vote). EDA VP Dennis called for the adoption of the resolution calling for a public hearing on the business subsidy and land sale on December 8, 2015. EDA Treasurer Westerberg seconded. Motion passed unanimously (6-to-0 vote). EDA Member Cole called for a motion to approve the Purchase Agreement with WAG to the EDA contingent on the public hearing on December 8, 2015. EDA Treasurer Westerberg seconded. Motion passed unanimously (6-to-0 vote). EDA Member Jurgens called for a motion to approve the Purchase Agreement with the EDA to Gardenworld contingent on the public hearing on December 8, 2015. EDA Member Celkis seconded. Motion passed unanimously (6-to-0 vote). 4.3 Signage for Grove Plaza Redevelopment Site Community Development Director/City Engineer Levitt reviewed the redevelopment signage materials that were included in the EDA packet. EDA Treasurer Westerberg motioned to authorize the purchase and installation of two 32 square foot signs for the Grove Plaza redevelopment projects at a cost of $1,150. EDA Member Celkis seconded. Motion passed unanimously (6-to-0 vote). Economic Development Authority - Minutes November 10, 2015 Page 3 4.4 Temporary Lease Agreement – Christmas Tree Sale Community Development Director/City Engineer Levitt reviewed Christmas tree sales materials that were included in the EDA packet. EDA Member Jurgens motion to approve the temporary lease agreement with the EDA with the Bork Family Tree Farm. EDA VP Dennis seconded. Motion passed unanimously (6-to-0 vote). PUBLIC HEARING Grove Plaza Redevelopment Community Development Director/City Engineer Levitt reviewed the Grove Plaza Redevelopment materials that were included in the packet. EDA Member Jurgens asked where the funds for the relocation of Merchants Banks is coming from. Community Development Director/ City Engineer Levitt stated the funds would come from the EDA Trust Fund. Peter Hosch from Hy-Vee discussed reinvesting in Cottage Grove by bringing life into the community, utilizing existing infrastructure and Hy-Vee becoming a community partner. He discussed the challenges of parking, site size and relocation of the Merchant’s Bank. EDA President Bailey asked about the status of the 600 jobs stated in the packet. Peter Hosch replied hiring decisions are made at the local store with members of that community. There would be approximately 135-140 full time positions and the remainder would be part time hiring locally. EDA Member Jurgens stated the entire cost of the relocation is not the $450,000 subsidy and then asked for a breakdown of the costs associated with the relocation. Peter Hosch stated the $450,000 does not cover acquisition of the property, relocation of facility, build out or redevelop. EDA VP Dennis stated his thanks to Hy-Vee for their 26 million dollar reinvestment in Cottage Grove. 5.1Amended Hy-Vee Developer’s Agreement – Business Subsidy / Independent School District 833 Land Sale EDA President Bailey opened the Public Hearing. Bernie Hesse from, United Food and Commercial Workers International Union, UFCW summarized points from his letter dated November 5, 2015 that was included in the packet. Peter Hosch replied that Hy-Vee would not be moving forward without the subsidies; we are not looking for handouts we are looking for equity. EDA President Bailey closed the Public Hearing. EDA VP Dennis made a motion to approve the amended the Hy-Vee Developer’s Agreement with business subsidy and land sale of ISD 833 property. EDA Member Celkis seconded. Economic Development Authority - Minutes November 10, 2015 Page 4 Motion passed unanimously (6-to-0 vote). 5.2Grove Rainbow Developer’s Agreement - Business Subsidy / Home Depot Land Sale EDA President Bailey opened the Public Hearing. No one spoke in favor or against the application. EDA President Bailey closed the Public Hearing. EDA Treasurer Westerberg made a motion to approve the Grove-Rainbow Developer’s Agreement with business subsidy and land sale of the Home Depot. EDA VP Dennis seconded. Motion passed unanimously (6-to-0 vote). OTHER BUSINESS 6.1 Calendar EDA Members viewed the various upcoming events listed on the calendar. 6.2 EDA Comments EDA VP discussed the Cottage Grove Shop Local Business Summit. EDA Member Cole discussed the ‘With Community Pride’ initiative with the Cottage Grove Area Chamber. EDA President Bailey acknowledged the difficulties with business subsidies and is hoping for the cohesiveness in the redevelopment. Further, he thanked the EDA and staff for involvement and commitment. Meeting recessed to the St Croix Room. 6.3 BEC Workshop – St. Croix Room (8:30 A.M.) Community Development Director/City Engineer Levitt reviewed the BEC Workshop materials that were included in the packet. Councilmember Thiede discussed the history of the BEC Advisory Board and introduced Joe O’Brien. Councilmember Thiede stated that his belief in the BEC mission but understands the need for outside support if it is going to be a place that nurtures businesses and not just a place that offers cheap rent. He also stated a need for an intermediate sites prior to graduating and locating in the Business Park. Joe O’Brien discussed his previous business experience. Then suggested the following in order to achieve success at the BEC:  access to capital is a must  need a concrete program  measurable success  hands on mentorship Economic Development Authority - Minutes November 10, 2015 Page 5  system to evaluate ideas  refine business plans  introductions to businesses  real networking opportunities  prototype connections  fast track regulatory affairs connections Joe O’Brien suggested a researching other Cities that have launched and are running successful programs. If those are found, review the model that was used. Joe O’Brien suggested a public/private partnership. Public would contribute the real estate and structure leases. Private contributes management of the incubator program and management of the access to capital. Utilizing a venture capital model where the interest tends to be in the equity of the startup. In exchange for being in the program and some small amount of capital, there is an equity transfer where the Private entity is highly motivate to get the startup successful so there is a return on the equity. If you are committed to the mission and vision of the BEC, find someone that can develop a business plan for the BEC and develop it. Community Development Director/City Engineer Levitt discussed the potential that Washington County may consider the location for a library in 2019 but Washington County isn’t near finalization of the master plans or the capital investment plan. In order to keep future options open, leases do not run past December 2016. She further suggested integrating a public/private partnership and setting a milestone date to determine the direction that will ultimately be taken. EDA Member Jurgens fully disclosed that he is on the master plan strategic plan committee with Washington County Library Board but that process is not yet including facilities and sites. EDA VP Dennis thanked Joe O’Brien for attending the meeting and offering his insights. He stated as a local government, there is not opportunity to be in the equity business and the most challenging is not having guarantees that these businesses will locate in Cottage Grove. The BEC has been operating for a few years, and we are not seeing a return on the investment. There are extreme infrastructural needs in our community and if the BEC is sold the proceeds could be used to offset those types of burdens from tax payers. As a government entity, he struggles with the financial component. Joe O’Brien stated the short and mid-term goal to view the building would be to see additional employment and the long-term goal would be that they would locate in our Industrial Park. The short to mid-term goal to sell the building would be to have a private partnership develop and run the concept ultimately buying the building and there would continue to be some economic development benefit for the City. Having been through the building in detail, he would not buy the building unless he had a strategic use for that site because committing to an incubator project would require a fair amount of work. This is an idea that could work if there was a commitment and vision to that piece of property. EDA VP Dennis asked Joe O’Brien if he was interested in buying the building. Mr. O’Brien declined at the 1.3 million appraisal amount. He is interested in rental space and if there is an economic development commitment over a period of time to get this concept to work he would be interested in having further discussion. Economic Development Authority - Minutes November 10, 2015 Page 6 Community Development Director/City Engineer Levitt stated we don’t want to buy out leases so we are better off letting them stay in the building until 2016. EDA Member Cole stated his full disclosure is that he represents the Chamber. When the Chamber was moved in, there were encouraging concepts. One was gaining access to new members from those graduating from the BEC. There was almost immediate concern because the Chamber was met with apprehension and were limited to training room usage. The Chamber wanted to promote inter-tenant discussions between the businesses and ultimately creating a mentorship program by using the experience and expertise of the Chamber’s members as mentors. EDA Member Jurgens stated he was on the EDA at the time of the BEC’s inception and the goal was never solely to be a place for low rent but the idea that businesses would graduate in Cottage Grove. The real challenge would be for the staff to be with them through the process while building relationships and eventually moving them into a place in Cottage Grove. If we continue with the BEC, there needs to be quarterly board meetings and quarterly updates to the EDA. EDA Treasurer Westerberg inquired as to the cost of the expertise to make the BEC concept work. EDA Executive Director Stevens stated the City would be covering the operating costs of the facility and the risk would be to the private company on that expertise. The goal would be to protect the City’s interest by covering the lease costs and determine if there is a buyout or a timeframe for the building to be available for a different use. EDA Treasurer Westerberg asked what the motivation is for the mentors. Joe O’Brien stated if a public/private partnership were created, the City would own the building and they would need to find an incubator operator to use the space to establish and operate the program. The City’s mission and vision are economic development related to employment and growing businesses in Cottage Grove. The incubator operator’s position is to own a portion of successful fast moving businesses. You find a program that serves both missions and you let the people with the expertise operate and profit from it. The City will not lose money in the short-term. The mid-term options remain to be open. This option may get you a few years down the road and see if something like this will work. EDA Member Cole asked if the City could make money on the process. EDA Executive Director Stevens stated if it became a profit center, the City would have to pay taxes on the property. Finance Director Roland stated the original idea for the building was set up with reduced rent to avoid paying taxes and further stated that originally there was a five year plan for success. EDA Executive Director Stevens stated the City can always operate it as a profit center and pay taxes if it chooses. Joe O’Brien stated that if the private partner had success, they would be the logical partner to buy the building. He further stated filling the building with the proper tenants, offering support to those tenants, and giving them reason to stay in Cottage Grove. EDA President Bailey commented positively on a private/public partnership. He stated it is too early to determine if the library would be appropriate for the site and further there wouldn’t be tax income. He asked staff to research incubators that are operated by a community and report where they are located and how they are run. The ultimate goal is to foster business growth within our community. EDA President Bailey wants to revisit integrating the Chamber’s utilization of the meeting rooms and utilizing Chamber members as experts and mentors for new businesses. Community Development Director/City Engineer Levitt asked for time to work through ideas to bring back to the EDA and find others in the community that would be vital to a board position and Economic Development Authority - Minutes November 10, 2015 Page 7 board setup. EDA Executive Director Stevens stated that the private investor would stop costuming spaces but renovate the space and market what we have to offer. EDA Member Jurgens stated he does not want to see City Staff burdened with BEC management tasks. Council Member Thiede stated his support of the public/private partnership and he thanked Joe O’Brien for his attendance. He would like to have a vision for an intermediate space in Cottage Grove allowing businesses to transition from the BEC to the Business Park. AJOURN 7.1 EDA Member Cole made a motion to adjourn. EDA VP Dennis seconded. The meeting adjourned at 9:35 a.m. (6-to-0 vote). Respectfully Submitted, Alicia McMonigal Economic Development Assistant