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HomeMy WebLinkAbout3.1 12-14-2021 EDA Meeting Minutes CITY OF COTTAGE GROVE ECONOMIC DEVELOPMENT AUTHORITY ____________________________________________________________________ MINUTES Economic Development Authority (EDA) Meeting December 14, 2021 Pursuant to due call and notice thereof, a meeting of the Economic Development Authority was held on the 14th day of December, 2021, at 7:30 a.m. CALL TO ORDER The meeting was called to order at 7:30 a.m. by EDA President Bailey. ROLL CALL Assistant Mann called the roll: EDA President Bailey-Here; EDA Vice President Dennis-Here; EDA Member Knop-Here; EDA Member Krohn- Here; EDA Member Myers-Here; EDA Member Thiewes-Here. Members Present: Myron Bailey, EDA President Steve Dennis, EDA Vice President Kyle Knop, EDA Member Joe Krohn, EDA Member Dan Myers, EDA Member Eric Thiewes, EDA Member Members Absent: Chris Carey, EDA Member Staff Present: Jennifer Levitt, EDA Executive Director/City Administrator Robin Roland, Finance Director Christine Costello, Community Development Director Jaime Mann, Assistant to the City Administrator Others Present: Brent Miles, Chief Marketing Officer/Founding Partner NorthPoint Development EDA President Bailey welcomed the newest member of the EDA, Joe Krohn, who is filling a vacant seat. EDA Member Krohn thanked EDA President Bailey and stated he’s excited to be here. APPROVAL OF MINUTES 3.1 Approval of November 9, 2021 EDA Meeting Minutes EDA Vice President Dennis motioned to approve the November 9, 2021 EDA Meeting Minutes. Motion was seconded by EDA Member Thiewes. Motion passed unanimously (6-to-0 vote). BUSINESS ITEMS 4.1 Economic Development Update/Business Inquiry City Administrator Jennifer Levitt gave the Beige Book Report for November, 2021. Employment grew moderately, but there are still tight labor constraints impeding what would be a very robust employment market. Wage pressures remained strong, and the frequency and size of wage increases have steadily increased. Price measures increased moderately from an already elevated level, which is being passed on to consumers, especially with the holiday shopping. Home heating costs were forecasted to increase sharply this winter as natural gas prices are expected to rise. Consumer spending grew modestly; retailers reported some missed sales due to supply-chain issues. Commercial and residential construction grew moderately; they continue to report labor constraints, high material prices, and supply chain disruptions. We’ve seen that in our industrial area as Tilt-Up panels and seal are quite delayed in the supply chain. Commercial real estate rose moderately; office vacancy rates remain elevated. Residential real estate was low, and industrial space remained strong. We continue to see increased manufacturing interest in our Business Park. Agricultural conditions improved. Project Updates: Caribou Cabin: Opened yesterday, and there were no issues; it was exciting to see that be successful for them. We’re still waiting for their ribbon-cutting date. ICC: Is expanding, they have their Tilt-Up Panels, preparing for steel for their 18,000 square-foot addition. 61 Marine & Sports: Completed expansion of their storage area and showroom spaces. Park Updates: Hamlet Park: The shelter is coming along well, moving on to interior finishes. Oakwood Park: Footings and foundation are there; the contractor will start framing and blocking soon. Residential: We’ve definitely not seen that slowing; McHattie Landing is one of the last pieces of our puzzle of the Upper Ravine District at the corner of Military and Jamaica; they’ve brought forth a plat for 80 single-family homes with 60-to 70-foot lots and four outlots with this project. We’re excited to bring the historical element of the Military Road corridor together. Military Road will probably be closed down in two years, as neighborhood connections are now present; we’re leaving it open until all of the heavy construction traffic is done so it’s not being pushed through the neighborhood. Economic Development Authority - Minutes December 14, 2021 Page 2 of 3 A “Made in Cottage Grove” video of Advance Corporation was played for the EDA Members, after which EDA President Bailey stated those videos highlighting our community are very nice. 4.2 NorthPoint TIF Christine Costello, Community Development Director, reviewed the background information on this project and the NorthPoint Tax Increment Financing (TIF). NorthPoint is making an investment of $310M; additionally, we have preliminary road and utility easements as part of this project, estimated at $9.93M, and City fees at approximately $7M. The EDA unanimously approved the Term Sheet at their November meeting, so this is a rehash of those same items that were in the Term Sheet; we’ll put those in our actual TIF Agreement. The maximum amount of tax increment collected cannot exceed the project cost. The budget does not resemble the amount of assistance being provided; the actual amount of assistance will be $8.311M in the form of a Pay-As-You-Go Note. The developer will construct all of the public improvements by April 30, 2024. Director Costello reviewed the number of jobs and wage goals the developer must meet and is required to annually report the progress of those jobs and wages for each phase, throughout the terms of the TIF Note. If the goals are not met, the TIF Assistance, with interest, must be repaid. Operations must be maintained within the City for at least five years from project completion. The developer will need to provide proof of expenditures for the public improvements. The term of the TIF Note is six years and interest paid will be at 4%, payable from 90% of the available increment; the EDA retains 10%. In the event of default, the City can cancel or rescind the TIF Note. The developer will not be seeking a reduction in market value of the property during the term of the TIF Note. The developer is meeting the needs and objectives of our Business Subsidy Policy. As part of the TIF Agreement, there’s an Interfund Loan; with the creation of TIF District 1-20, at the December 15 City Council Meeting this would authorize the EDA to use tax increment to pay for certain costs identified in the TIF Plan as qualified costs. Those include: Site improvements/preparation, public utilities, other qualifying improvements, interest, and administrative costs. The Interfund Loan of up to $750K from the City’s future Economic Development Fund would be transferred to the EDA’s TIF Fund to pay for the portion of those qualified costs. As the EDA receives the TIF revenue from the TIF District, the EDA Interfund Loan will be repaid to the City’s future Economic Development fund. Recommendation: By motion: • Authorize the contract for private development by and between the Cottage Grove Economic Development Authority and NP BGO Cottage Grove Logistics Park, LLC; • Approve the resolution authorizing an Interfund Loan for advance of certain costs in connection with Tax Increment Financing District No. 1-20 (NP BGO Cottage Grove Logistics Park, LLC). Director Costello stated both the developer and the City’s financial consultant, Ehlers, are present for any questions specific to TIF. EDA President Bailey stated often TIF Districts are significantly longer, and this one is actually short; he asked Finance Director Robin Roland to comment on that. Director Roland stated TIF Districts in the economic development category can range up to nine years in repayment of tax increment. The amount of money we’re proposing to reimburse the developer for through TIF will be costs that are incurred on the front end, and is a very large amount of money; therefore, as soon as the development starts to occur and buildings come fully onto the tax rolls, then the quantity of TIF that will be paid by the developer that will be reimbursed to them should escalate quite quickly. Therefore, the amount of $8.311M would be repaid in a much shorter period of time. That’s incredible because of the investment that this developer is making in the community and the speed with which that will happen. We do not see needing the full nine years to repay the developer for those TIF expenses; in other Districts, perhaps because of the value of the project when it is constructed versus the value where it started, that difference in value might not be as great, so it might take a longer period of time, as is the case with several of the Districts in our Business Park. Brent Miles stated Christina, his assistant at NorthPoint, was also present; Mr. Miles stated they’re excited about starting this significant project. Their capital partner is now in place, so assuming everything goes well tomorrow with the City Council, they’ll be ready to hit the ground running. They’ve not had a process go as smoothly as this one has, working with your City staff and consultants; they view this as a team effort. Given the project size and investment, it’s probably one of their lower subsidies for a project of this size, but it’s what they needed. The speed in which they’ll develop this is an important factor. He’s looking forward to the groundbreaking, and once again stated that they’re very excited about this project. EDA Member Myers, as the President of the Cottage Grove Chamber, welcomed Mr. Miles to Cottage Grove; EDA Member Myers stated he’s very supportive and encourages development. Mr. Miles asked to please invite them to any other community organizations’ meetings; that way they can get the word out from a community standpoint. While they don’t live here, they want to be part of the community. If there’s something that’s important to your community, a community need, just let them know and they’ll get it in through their foundation. Please welcome us and invite us here; we’re happy to be part of your community. EDA Member Thiewes made a motion to authorize the contract for private development by and between the Cottage Grove Economic Development Authority and NP BGO Cottage Grove Logistics Park, LLC. Motion was seconded by EDA Vice President Dennis. Motion passed unanimously (6-0). Motion by EDA Member Myers to approve the resolution authorizing an Interfund Loan for advance of certain costs in connection with the Tax Increment Financing District, 1-20 NP BGO Cottage Grove Logistics Park, LLC. Motion was seconded by EDA Member Krohn. Motion passed unanimously (6-0). 5 PUBLIC HEARINGS - None. OTHER BUSINESS 6.1 EDA Calendar 6.2 EDA Comments Economic Development Authority - Minutes December 14, 2021 Page 3 of 3 EDA Vice President Dennis mentioned that his Council Update video is currently running, which should be of interest to the EDA Members because we’re talking about what the City can and can’t do relative to development. City Attorney Korine Land joined him on that, and it’s very informative. He invited everyone to watch it on the City’s YouTube channel, and it can also be accessed via the City’s Facebook page. EDA President Bailey stated the Planning Commission and the City Council approved the Master Plan for the former Mississippi Dunes Golf Course. It will be a fairly significant park, including land along the riverfront. A smaller portion of that will be an active park with a boat launch, fishing pier, etc., and the Parks Commission is still working on that. The rest of it will be more natural, with a connection into the Scientific Natural Area, over 230 acres; there will be lots of open space and trails. We completed an Environmental Assessment Worksheet (EAW) and other agencies and citizens can make comments on that until December 30, and then it will come back before the Planning Commission and the City Council. EDA President Bailey stated that Grove Plaza and its developer actually received an award for renovations and repurposing of that property; the City worked on that development for many years so that was good to hear. There are still two spots in that center that they’re working to fill, as well as an outlot, which would be a new build, and that’s being marketed to a couple developers. 6.3 Response to Previous EDA Comments - None. 7 WORKSHOP - None. ADJOURNMENT EDA Member Thiewes made a motion to adjourn. Motion was seconded by EDA Member Krohn. The meeting adjourned at 7:56 a.m. (6-to-0 vote). Respectfully submitted, Jaime Mann Assistant to the City Administrator /jag