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HomeMy WebLinkAbout3.1 11-08-2022 EDA Meeting Minutes CITY OF COTTAGE GROVE ECONOMIC DEVELOPMENT AUTHORITY ____________________________________________________________________ MINUTES Economic Development Authority (EDA) Meeting November 8, 2022 Pursuant to due call and notice thereof, a meeting of the Economic Development Authority was held on the 8th day of November, 2022, 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 Carey-Here; EDA Member Krohn- Here; EDA Member Myers-Here; EDA Member Sandi Scott-Here; EDA Member Thiewes-Here. Members Present: Myron Bailey, EDA President Steve Dennis, EDA Vice President Chris Carey, EDA Member Joe Krohn, EDA Member Dan Myers, EDA Member Sandi Scott, EDA Member Eric Thiewes, EDA Member Members Absent: None. Staff Present: Jennifer Levitt, City Administrator Gretchen Larson, Economic Development Director Brenda Malinowski, Finance Director Jaime Mann, Assistant to the City Administrator Zac Dockter, Parks and Recreation Director Others Present: None. EDA President Bailey welcomed EDA Member Scott to the EDA. APPROVAL OF MINUTES 3.1 Approval of September 27, 2022, EDA Meeting Minutes EDA Vice President Dennis made a motion to approve the September 27, 2022, EDA Meeting Minutes. Motion was seconded by EDA Member Carey. Motion passed unanimously (7-to-0 vote). BUSINESS ITEMS 4.1 Economic Development Update/Business Inquiry Gretchen Larson, Economic Development Director, reviewed the Beige Book Report: Employment: Grew slightly while total job openings have moderated; firms have reconsidered some job openings due to recession concerns or extreme difficulties in filling the positions. Price Pressures: Eased slightly but remained elevated with non-labor prices increasing since September. Consumer spending: Grew slightly; retail contacts reported softer revenues during September but were optimistic about future sales. Commercial Construction and Real Estate: Grew slightly; construction costs, supply chain, and interest rates remain issues. Agricultural conditions: Improved modestly and remained strong overall heading into the harvest season. Oil and gas exploration activity unchanged from last report but well above levels from a year ago. Project Updates: Oakwood Park Renovation: This celebration took place on October 5; the park is beautiful and people are very excited about it. Staff did a great job of showcasing everything that had been done. Design Plus Cabinets: On October 7, Mayor Pro Tem Dennis, Council Member Olsen, City Administrator Levitt, and City staff were all on hand for their ribbon cutting and grand opening to welcome them to the City. They’re excited to be here, and it looks like it’s going to be a great business. Bieter Eyecare: Had a grand opening and ribbon cutting on October 12; they were happy to have expanded in the City. Mayor Pro Tem Dennis and City staff were present. Renewal by Andersen: Foundation, plumbing, and underground work have begun on their fourth expansion. NorthPoint Cottage Grove Logistics Park: Building #1 and Building #2 are moving along quickly. They think they’ll have at least one lease by the end of the year, but they’ll be ready to go in the spring. Hemingway Industrial Center: Permits for both buildings have been issued, and footings and foundation work is underway on both projects. Leafline Labs: Wall panels are being installed, and they worked over the weekend of October 29 to install the roof in order to complete exterior work before winter conditions set in. Park Place Storage: The building permit plans for their fourth building have been approved. Cottage Grove Apartments: Wood framing continues with trade work starting; they anticipate opening in the Spring. The Views Apartments: Construction of the wood-framed portion of the building has started. Endeavour, 95th and Jamaica: The City was notified on November 3 that they did not intend to close on the property. There is significant interest in the property, and staff has reached out to all prior interested parties to notify them it is back on the market should they be interested in submitting an offer. There’s a meeting today with another interested party. EDA Member Carey asked about the yellow areas on the map that had been displayed. Director Larson stated the yellow areas were properties for sale. CP Rail owned the vast majority of those, with the exception of the 18.5 acres and the yellow to the right of the screen. CP Rail is only probably going to Economic Development Authority - Minutes November 8, 2022 Page 2 of 3 swap property with interested parties because of their expansion with Kansas City Southern; so, they’re kind of in a holding pattern on their land. Some land is for sale, but because their expansion is so large and there are so many unknowns for them at this time, it really isn’t. EDA Vice President Dennis asked if we had any idea of our current percentage of commercial vacancy. Director Larson stated the last time she checked on commercial it was at 3.4%, not including the Business Park. She can double check that as they’ll be running those numbers again as they’re working on some projects in the Business Park and also on the 80th Street redevelopment. 4.2 MNCAR Update Director Larson stated she, EDA President Bailey, EDA Vice President Dennis, City Administrator Levitt, and staff members attended the MNCAR Expo on October 26. There were more than 700 attendees, so it was nice to be able to connect with new brokers and learn about projects. We had many discussions with brokers we knew well about projects that they’re working on in the City and near the City. She and Assistant Mann followed up with everybody after the event, and we already have people interested in some of the properties in Cottage Grove. Commercial space is hard to come by, and most of them want what they consider an ideal location, so it’s challenging; we actually need more locations. The MNCAR Expo is good exposure for the City, and attendees get to interact with our staff, our Mayor, and Council, and have the opportunity to discuss things. EDA President Bailey stated there is somebody who is interested in the 18.5-acre property previously mentioned by EDA Member Carey, and they spoke with us there, hoping that they might be able to close on that property before the end of the year. He stated that’s a decent-sized spot in our Business Park, which will help create more jobs and increase our tax base. Director Larson confirmed that they’re pretty sure they will have a deal closed on it. EDA President Bailey stated we had the largest booth at MNCAR, and people were taking photos of it, so that was awesome. 4.3 Hotel Study Update Director Larson stated the EDA Board approved moving forward on a Hotel Market Study on August 9. The team at HVS, a hospitality analysis company, did market interviews, including businesses in our community, sporting locations, and economic development agencies in the area with the intent of trying to figure out if the City of Cottage Grove was potentially ready for another hotel. The good news is that based upon their interviews, and the pattern of business development in the City, they found that the City could support a midscale or upper midscale limited service, chain affiliated 90- unit hotel. It’s not a luxury hotel, not necessarily an extended-stay hotel, but is somewhere in between. The demand is there, and they recommended focusing on the Highway 61 corridor because of the visibility and businesses there; when folks stay in a hotel, they like to be able to go out to eat. As the City continues to grow, the Shoppes at Cottage View area and the Jamaica Avenue area are both prime to add another hotel at some point. We anticipate receiving the completed report this week, so then we can send that to all of those in the hotel business who’ve already expressed an interest in this report. She stated it was nice to be at the MNCAR Expo and have somebody randomly walk up and ask about a hotel; after being told we were doing the study, that person commented, “You’re already doing the study? Golly, you guys are brilliant.” We’ll take that compliment. We’re very excited about this, as it’s good for the Convention and Visitors Bureau, good for the City, and good for visitors. 4.4 80th Street Redevelopment Appraisals Director Larson displayed a map of 80th Street and the 80th Street Village Green and MSI; they have both expressed an interest in selling their properties. That was a longtime discussion that Administrator Levitt had with the EDA and the City Council. We don’t know exactly what we’re going to do yet, but the first steps include conducting an appraisal on both of the properties, and both property owners have given their permission to do that. Administrator Levitt wanted to make sure that we also pointed out that we have applied to Washington County CDA for the Brownfields Program to cover the costs of Phase 1 Environmental Reports that will be due on both properties. Those will go hand in hand with the appraisals. Assistant Mann is working on the two separate applications, which will determine their eligibility. We received two quotes for appraisals of the two properties: BRKW Real Estate Valuation Services quote was $8,200; Patchin Messner Valuation Counselors quote was $11,000. EDA President Bailey shared with the EDA when he was previously on the Planning Commission or the Council, the EDA spearheads opportunities of putting properties together for redevelopment. Some of those areas include: The corner where Walgreens is now located, Kohl’s and the area surrounding Kohl’s, and the EDA owns property along Highway 61, in the Langdon area. The idea is if we get somebody who wants to do a development or redevelopment, we have that land put together so they won’t have to deal with individual entities. Our intent here is to just get the appraisals; we’re not doing anything yet with this property. It would be nice to expand that area, but this is a good start. He noted that MSI is looking at a spot in the Business Park because they want to expand, and there’s no space for them to do that at their current location. EDA Member Carey confirmed that the EDA wants this to happen, as it will lead to redevelopment of the property, increase its value, and eventually increase future tax revenue. EDA President Bailey noted we want MSI to stay, but the 80th Street Village Green Center is pretty dilapidated, and they’re having a challenge keeping it filled due to its location. There have been some plans to make this area more easily accessible, from both a traffic and visibility standpoint. That’s really what this is all about, wanting to put some properties together. There are also some restaurants that want to be in Cottage Grove, and there’s interest in this particular area and the immediate vicinity. EDA Member Carey asked if the EDA would buy this land, or if we’d work with a partner and then plan this together to develop it. EDA President Bailey replied depending on what the appraisal is, we might want to buy one or the other or a combination thereof. If the appraisals are off the mark, or they come back at a decent mark where they want millions of dollars, we’re more than likely not going to do that. A different entity would then come in and do that. It often takes a long time; an individual worked with us to create the Walgreens area, but it took years for that to be assembled. He personally doesn’t think this is something that will happen overnight, and it will take a while to get things going. Depending on the appraisals, there’s a possibility that the EDA would purchase it. The appraisals are public, so an outside entity could come in and want to buy those properties. EDA Member Carey stated regardless, this will set the ball in motion for redevelopment of a critical area. Recommendation: By motion, authorize the appraisal of 7155 80th Street South and 7130 East Point Douglas Road South by BRKW Real Estate Valuation Services for a total cost of $8,200. EDA Member Thiewes made a motion to authorize the appraisal of 7155 80th Street South and 7130 East Point Douglas Road South by BRKW Real Estate Valuation Services for a total cost of $8,200. Motion was seconded by EDA Member Myers. Motion passed unanimously (7-to-0 vote). Economic Development Authority - Minutes November 8, 2022 Page 3 of 3 4.5 River Oaks Interfund Loan Zac Dockter, Parks and Recreation Director, stated our River Oaks Golf Course General Manager would say that the golf course is a living, breathing facility that needs constant care, attention, and nurturing. The golf course is the body, the heart is the pump station and the irrigation pond, and the blood vessels will be the irrigation system. Without all of those systems in place, the golf course wouldn’t exist in its current condition. This project is a very important one. The objective of the River Oaks Irrigation Replacement Project is to simply replace the 1989 irrigation system; we’re converting PVC piping from 1989, which is rapidly deteriorating, to a high-density polyethylene piping; that’s much more durable and has a 50+ year life expectancy. We’re converting to more efficient controlling systems (valves, wireless controllers, etc.) and more efficient mechanical systems, the pump system. The project schedule will begin in the winter of 2023 if the bid is accepted; the bids will be considered by the City Council in December. In the winter of 2023, the pump station work will begin. In July 2023, we will actually start the irrigation system replacement; we’ll start pulling pipe out of the ground and installing new pipes, valves, and heads. There will be no course closure; at times, we will have to close a hole and adjust the rates accordingly or have players play an extra hole. Project completion is expected in 2023. Expected benefits include: • Improved turf conditions • Reduced water consumption • Reduced energy costs • Reduce labor and material costs • Increased operational efficiencies • 30-year irrigation system infrastructure; we hope to get at least 50 years out of the pipe Project Budget: $2.5 Million-We took bids, and Council will consider the bids in December. Proposed Project Funding: ED Trust Fund Loan, $1.85 million* and Water Enterprise Fund-$650,000 *The intent is to issue a capital bond in 2025 or some future date to repay the ED Trust Fund Loan. Recommendation: By motion, recommend City Council approve an Interfund Loan from the Economic Development Trust Fund (286) to the Golf Course Fund (640) at an interest rate of 2% for 15 years, or until bonds are issued for the project in the future. EDA President Bailey stated there were questions by the EDA on how the Interfund Loan works, so he asked Finance Director Brenda Malinowski to speak about that. Director Malinowski explained the Interfund Loan for the Golf Course Irrigation Replacement Project. The Interfund Loan is an internal financing mechanism that cities use; we’ve previously used it for some other projects. The project expense is $2.5 million: Using Water Conservation Funds of $650,000, the remaining $1,850,000 is the Interfund Loan from the ED Trust Fund. Currently, the ED Trust Fund (286) has a cash balance of about $5.1 million, so it has sufficient funds to loan to the golf course for this project. We would anticipate that this would be a temporary loan, and we would issue bonds in 2025 to repay this loan; that would allow funds to go back into the ED Trust Fund to be used for other economic development projects. We’re looking at the ED Trust Fund because when the golf course was built in 1994, the EDA issued golf course revenue bonds for that project just because the golf course initiates economic development in the City. Terms of the Loan: 15 years at 2%, similar to when we built this Public Safety/City Hall building in 2012, as we issued an Interfund Loan at that time for 20 years at 1%. So this is within the range of what we’ve done previously with Interfund Loans. EDA Member Thiewes wanted to confirm that the sprinkler system is an eligible use of the ED Trust Fund Loan. Director Malinowski stated yes, it’s our belief that this would be an eligible use of that fund. Bonnie Matter, 6649 Inskip Avenue South, asked for permission to approach; EDA President Bailey informed her that this was not a public hearing. Ms. Matter stated she would like to share her thoughts and asked when she could do that. EDA President Bailey replied that would be at the City Council meeting. Ms. Matter stated this would be on the Consent Agenda; EDA President Bailey replied he didn’t know if it would be on the Consent Agenda, but she could certainly speak during the Open Forum portion of the meeting. EDA Member Myers made a motion to recommend City Council approve an Interfund Loan from the Economic Development Trust Fund (286) to the Golf Course Fund (640) at an interest rate of 2% for 15 years, or until bonds are issued for the project in the future. Motion was seconded by EDA Vice President Dennis. Motion passed unanimously (7-to-0 vote). PUBLIC HEARINGS - None. OTHER BUSINESS 6.1 EDA Calendar EDA President Bailey mentioned the Lunch & Learn next Tuesday, November 15, from 11:30 a.m. to 1:00 p.m. at River Oaks. We will note that we’ve been looking at all of our ordinances and our land uses, to try to streamline them. We’ve held Council and Planning Commission workshops related to Zoning Codes throughout the City, so those are going to be updated and clarified. That will make the City Code easy to navigate for both the general public and potential developers in the City of Cottage Grove. This is a Chamber of Commerce event with the City of Cottage Grove and the EDA. 6.2 EDA Comments EDA President Bailey noted that today is Election Day, so he encouraged people who have the opportunity to vote to do so; make your voices heard. 6.3 Response to Previous EDA Comments - None. 7 WORKSHOP - None. 8 ADJOURNMENT EDA Member Scott made a motion to adjourn. Motion was seconded by EDA Member Krohn. Motion passed unanimously (7-to-0 vote). The meeting adjourned at 8:01 a.m. Respectfully submitted, Jaime Mann Assistant to the City Administrator /jag