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HomeMy WebLinkAbout2024-04-09 EDA Meeting Minutes / MINUTES April 9, 2024 CITY OF COTTAGE GROVE ECONOMIC DEVELOPMENT AUTHORITY (EDA) MEETING 12800 Ravine Parkway South Cottage Grove, MN 55016 Pursuant to due call and notice thereof, a meeting of the Economic Development Authority was held on the 9th day of April, 2024, at 7:30 a.m. 1. CALL TO ORDER The meeting was called to order at 7:30 a.m. by EDA President Bailey. 2. ROLL CALL Alexa Anderson, Administration Specialist, called the roll: EDA President Bailey-Here; EDA Vice President Olsen-Here; EDA Member Carey-Here; EDA Member Jean-Baptiste-Here; EDA Member Myers-Arrived after Roll Call; EDA Member Scott-Here; EDA Member Tschida-Here. Members Absent: None. Staff Present: Gretchen Larson, Economic Development Director Brenda Malinowski, Finance Director Alexa Anderson, Administration Specialist Others Present: Ann Bailey, DARTS Jan Hicks, DARTS Charlie Cannon, NorthPoint Development 3. APPROVAL OF MINUTES 3.1 Approval of February 13, 2024 EDA Meeting Minutes EDA Vice President Olsen made a motion to approve the February 13, 2024 EDA Meeting Minutes. Motion was seconded by EDA Member Tschida. Motion passed unanimously (6-to-0 vote). 4. BUSINESS ITEMS 4.1 DARTS Presentation EDA President Bailey stated Jan Hicks and Ann Bailey will be giving a presentation on DARTS, after which EDA Members will be welcome to share any questions. Ann Bailey, President at DARTS, stated we wanted to give you an update this morning because we’ve been operating a loop in Cottage Grove for four years now. It’s always nice to give you an update to see how that is going, and we’ve also added some additional services. DARTS is turning 50 this year so it’s a happy birthday. We continue to help seniors live independently and we support the caregivers of seniors. We do this through a variety of programs, as well as using a lot of volunteers. Our mission is Creating Connections that Enrich Aging; that enrich portion is more than providing a service to an older adult, it’s also making sure that those older adults still have a place in our community and can get out and about in the southeast metro. Ms. Bailey stated we really are about just in time services, and that’s not by design, that’s by how life works. We can tell people as many times as we want that we’re here, we’re able to support people, and you don’t retain the information until the day you need it; so, we are there to help people who often are at a point of crisis, a decision point in their lives or in the lives of the person they’re caring for. You can see in 2023 we served just over 2,000 clients in the southeast metro, and this is a distribution of where the services fell, where people were registered for services. About ¼ of our folks use more than one DARTS service; so, they may use transportation and home cleaning or something like that. So, transportation still is the lion’s share, but home services, which includes outdoor chores, cleaning, and home repairs is the next runner up. She stated I haven’t mentioned service coordination. That is where we help somebody, in some cases we’re on site in CDA-operated buildings in Dakota County, in some cases we just go to people’s individual homes to provide the information that they need to get the services they need to continue to live successfully. An example might be that somebody’s living independently, and they come down and say well, I don’t really feel like cooking anymore, and we help get them the appropriate meal service so that they can continue to be successful living in their own home. Ms. Hicks stated she is the Director of Programs, so really I’m the Director of Transportation and the Director of Home Services, which are a couple of our bigger services that we offer. You all are probably familiar with our community loop service, which runs every Tuesday, so it will be running here in a couple hours. It goes to more of your densely populated senior locations, including Legends, Norris Square, Woodland Park, and then that whole little area in Hinton and Hearthside. Then it goes to places like Hy-Vee and Walmart and pretty much up and down East Point Douglas Road; as usual, Walmart is the most popular destination. For seniors in particular, here in Cottage Grove, getting from quite a bit north down to Walmart is no easy task; so, we’re a really easy low fee, $3, and we never turn anyone away for inability to pay. They can hop on the bus and they can ride along all day for four-or-five hours and go to as many places as they want. So, that’s really going well. Later this week, I’ve got a meeting with the Basic Needs Food Pantry, so we’re going to start using the loop to pick up individuals who are in need of food support. We’ll pick them up in the Woodland Hills area, over by the library, and then take them down to the food pantry. So, that’s going to be kind of an interesting new thing, and we’ll give you updates on that. We also offer group rides for individuals. So, somebody might want to go to the Twins game or the senior population might want to spend the day going to the arboretum or somewhere else in that area. Individual rides: We do have quite a few Cottage Grove residents, but I’m not familiar with how your Metro Mobility status works here, if you’re an on-call area or if you are in the ADA-required area. EDA President Bailey stated unfortunately, no. Ms. Hicks stated that is something that we do offer, and we’ve got affordable rides through the Older Americans Act that your residents can call for transportation. It requires a little bit of registration, but anybody 60 or over qualifies for some of our funding programs. So, that’s really handy and the loop provided 647 rides in 2023, and I don’t have the number of how many people took individual rides, but there were quite a few. Ms. Hicks stated the other big service that we offer is Home Services: Home cleaning, home modification and repairs, and outdoor chores. We’ve had some forays into outdoor chores here where we have some volunteers who help people with fall cleanup, lawn mowing, and we were lucky to find a snow removal contractor this year, who was able to help several of your residents with snow removal. What I really want to hit on is our home modification and repairs; this is a first for a lot of older adults. They’re not able to get on a ladder anymore, and something as simple as changing out the batteries in smoke detectors and carbon monoxide detectors can be a big barrier. Something like a grab bar can help with accessibility in a shower. We offer very affordable home repair prices; it’s $100 for the first hour and then $70 after that. We offer some subsidies for those who cannot afford it, a sliding scale. We focus on three major areas: Safety, Accessibility, and Independent Living. Safety is obviously smoke detectors, maybe enhancements to stairways so that somebody can walk up the stairs. Accessibility is things like grab bars and handheld showers, and we can offer something simple like fixing a couple of deck boards to make it safer for somebody. Independent Living: One of the things that we don’t always think about with this is like hanging some curtains or artwork because it makes a home feel nicer. When my home feels nice and my home looks good, I feel better about myself and I’m able to stay in that home because my overall self esteem is up. So, that’s one of the things that we can do with our home repair. I think right now our time is 1 to 1.5 weeks before we can get somebody scheduled, but I would highly suggest offering that as something that’s available for your folks. Ms. Bailey stated to your individual ride question, about 2% of the services that we provided in Cottage Grove were individual rides. Ms. Hicks said we did have some home repairs here, too. Ms. Hicks stated we do have volunteer opportunities; Ann will speak about Learning Buddies and Pen Pals. Ms. Bailey stated Learning Buddies and Pen Pals is a program where we have older volunteers partner with elementary schools to provide whatever the teacher needs in the classroom: Tutoring, reading, and help. Our Learning Buddies program coordinator has actually spoken with a couple of the elementary schools, and we have commitments that there are teachers in the elementary schools in Cottage Grove that would like this assistance. So, we will be doing a bigger push for volunteers for next school year so that we have enough volunteers to help out those classrooms. It’s one of those things that every so often we survey every volunteer and every client annually; to quote one volunteer, the Learning Buddies gave meaning to my life. I think a lot of times when people retire, they lose that little compass point, and having a meaningful volunteer opportunity really makes a difference. So, we’re excited to be able to bring that into the Cottage Grove area. Part of the reason for the expansion of home services into the southern Washington County area has been because for the last two years, the Department of Human Services has a Live Well at Home grant; that’s how we’ve been able to fund the expansion into southern Washington County and offer a sliding fee or adjustable rates to people. Ms. Hicks stated we should say that these are available for the whole Highway 61 corridor; we’re not going to Woodbury, but we like Cottage Grove, St. Paul Park and Newport. So, any of those areas. She asked if there were any questions for us, but none were asked. EDA President Bailey said thank you for coming in and sharing this information. I think when we set this in motion a few years back, obviously it’s been successful for the seniors that need that support. I do know our Washington County Commissioner is having a transportation workshop this afternoon. One of the things that she is really interested in is trying to get some additional, maybe DARTS, services in Cottage Grove that would actually go to the food shelf, as an example, in St. Paul Park. So, I believe she’s going to be speaking on that to the Washington County Board later on this afternoon. Ms. Bailey stated we sent her the same data, so she should have that. The thank you really reflects back to you, as a Council, you took a chance on saying this was an important service to provide and we thank you. I think that it’s a really augmented service, and it really speaks volumes to what you feel about all the residents of Cottage Grove; you’re really focusing on any age, so thank you again very much for remembering our older residents. EDA President Bailey stated thank you for coming in today. Ms. Bailey stated older, mind you, is defined as 50 and up, so that’s me; EDA President Bailey stated that’s me, too. Thank you. 4.2 ECONOMIC DEVELOPMENT UPDATE/BUSINESS INQUIRY Gretchen Larson, Economic Development Director, gave the Beige Book report: Employment, Prices, and Consumer Spending: They’re all either slightly down or modestly okay, as far as increases. Construction Activity: Is down. Commercial Real Estate Activity: Is kind of flat. Office Market Sector: Is soft. Residential Real Estate: Remains subdued. The theme for the day is the economy is okay, but it’s not going gangbusters, essentially. Manufacturing Activity: Increased slightly. Agricultural Conditions: Sales fell. Minority and Women-Owned Businesses: Reported lower sales and profits since the last report. So, this quarter we’re struggling a little bit, but hopefully it’s going to be turning around. You’ll probably hear a few things in the upcoming presentations that will explain some of that as well. Cottage Grove Construction Updates: Hohenstein’s: Their drive-through cooler has been installed, and the interior office framing has begun. So, obviously, the really nice weather this winter has caused all the construction activities to exponentially be completed faster than they probably originally intended or could have done. Low-Zone Water Treatment Plant: The footings are in, the slab is poured, and of course the walls are going up. If you’ve driven over there, it’s moving along quickly. Chase Bank: The walls are up, the building is taking shape. The parking lot has been dug up, and now they’re working on some of the interior and exterior completions on the building and the landscaping. O2B Kids: They are moving along really rapidly, interior framing is continuing, and interior trade work has started. They are ahead of schedule as well. Okoruwa Pediatric Dental: You are finally going to have a pediatric dental office in Cottage Grove. Dr. Okoruwa has applied for a permit for a new office space in the Summerhill Building, so that’s going to move along rapidly. He’s still working with MCCD on some financing. Bluestem Senior Apartments: The building permit has been issued. The City Council saw in their last report photos of it, so it’s moving along rapidly; that’s located just across from Grove80, and that’s the affordable senior housing project. Norhart Apartments: They’re building plans have been reviewed, and a review letter provided to the new market-rate apartment building. It will be located at Hadley Avenue. 4.3 3RD AMENDMENT TO AMENDED AND RESTATED CONTRACT FOR PRIVATE DEVELOPMENT (NORTHPOINT) Director Larson stated you’ve already approved two amendments to the agreement; the first one was back in May 2022, the second one was in February 2023. All of them are essentially for the same reason, the market is still soft in the industrial area and the projects are just not moving along as fast as they had hoped because they can’t secure the tenants that they need. Generally, when you secure the tenant, then you build the building. So, in January they met with the Mayor, the City Administrator, and staff, and they said they’re still delayed; they’re not getting the tenants that they had hoped for. Director Larson stated that Charlie Cannon with NorthPoint is here in case there are any questions after I’ve finished presenting the request. As a part of this 3rd Amendment request, we had our financial consultants and TIF attorney look at the request and if approved, it would result in some changes to their plans as follows: Commencement and completion dates will change for Phase 1a and also for Phases 2-4. Building sizes will also change with the net (88,000 Square Feet lower); the building size for Phase1a is substantially lower, but some of the other ones are larger. In a development of 3.4 million square feet, that’s really not a lot of difference. There are other things going on in the Business Park that may also change this as well. The jobs created will decrease from the projected 1,870 to approximately 1,200. The amount of the TIF generated will decrease from approximately $12.5M to $7.6M. This request will also result in a note that will never be paid off because of the timeframe of the actual TIF District, which Director Malinowski confirmed yesterday was 8 years. The ability to decertify the District early will likely not happen because of the timing as they have pushed their timeline for completion out to 2028. Charlie Cannon, Development Associate with NorthPoint Development, stated he’s fairly new to this project, but he’s been with NorthPoint for a couple years now. He spoke about the two existing buildings. Building 1: Lumbermen’s signed a lease a couple months ago they are moving all their product and getting situated, which is god news. That leaves about 90,000 square feet in Building 1 vacant. Building 2: Is 500,000 square feet and is still vacant. EDA President Bailey asked if the EDA Members had any questions: EDA Member Jean-Baptiste stated he had a question and needed some clarification. If I understand this correctly, the TIF is being reduced, but then it’s nonrecoverable, correct? Director Larson replied the TIF is being reduced because the increment will not be created because of the delay in the buildings. So, you operate under a pay-as-you-go system, so it’s just going to reduce the amount that NorthPoint would eventually get in their payout, and that could reduce to zero depending on how long this takes. EDA Member Jean-Baptiste asked how much of that previous amount would have been recovered, of the $12.5M. EDA Member Carey stated it notes here the request will also result in a note that will never be paid off; he asked EDA Member Jean-Baptiste if that’s what he’s referring to. EDA Member Jean-Baptiste replied yes. EDA Member Carey asked if it could be clarified what that means to the City and the taxpayer. Director Larson stated Brenda Malinowski, our Finance Director, will clarify that. Director Malinowski stated when a TIF District is created and a Development Agreement is done, there are certain things that are thought will happen; so, at that point, we thought that available tax increment would be $12.5M. Because of the delay in the project, the tax increment that will be able to be created over the life of the District has now been reduced to $7.6M. So, with a Pay-As-You-Go (PAYGO) note, such as is with NorthPoint, the developer pays those upfront TIF expenditures. For example, the street improvements in that area that they were responsible for as part of their Development Agreement, they pay those costs, and then the City or the EDA pays them back, with that tax increment. So, because of the delay in the project, we know that the tax increment that will be generated will be less; that is why that note has been reduced. Recommendation By motion: Approve the Third Amendment to the Amended and Restated Contract for Private Development by and between the Cottage Grove Economic Development Authority and NP BGO Cottage Grove Logistics Park, LLC, as presented. EDA Vice President Olsen made a motion to Approve the Third Amendment to the Amended and Restated Contract for Private Development by and between the Cottage Grove Economic Development Authority and NP BGO Cottage Grove Logistics Park, LLC, as presented. Motion was seconded by EDA Member Scott. Motion passed unanimously (7-to-0 vote). 4.4 Tax Increment Revenue Note (Up North Plastics) Director Larson stated Up North Plastics has been in the City’s Business Park since 1981. You approved the creation of TIF 1-19 in January 2019, as they wanted to expand their business operation. They added a 428,000 square-foot facility, and they created the 200 jobs that were a part of their TIF Agreement. In 2019, they also applied for the Minnesota Investment Fund and the Job Creation Fund; both of those were closed out last Fall, so they’ve gotten their money there as well. Their entire project is complete, their paperwork has been certified by Ehlers, our City financial consultants. There’s a TIF Note now to be issued, not to exceed $892,000, and their first payment will be due on August 1, 2024, and then February 1 and August 1 of every year thereafter, with their final payment on February 1, 2030. We’d be happy to answer any questions about that, but essentially this just closes out that project, and you have a recommendation before you; no questions were asked. Recommendation By motion: Approve Resolution 2024-04 approving the issuance of, and providing the form, terms, covenants, and directions for the issuance of a taxable Tax Increment Revenue Note, series 2024-A, in an aggregate principal amount not to exceed $892,000. EDA Member Myers made a motion to Approve Resolution 2024-04 approving the issuance of, and providing the form, terms, covenants, and directions for the issuance of a taxable Tax Increment Revenue Note, Series 2024-A, in an aggregate principal amount not to exceed $892,000. Motion was seconded by EDA Member Carey. Motion passed unanimously (7-to-0 vote). 4.5 TERMINATION OF CONTRACT FOR PRIVATE DEVELOPMENT MODERN AUTOMOTIVE PERFORMANCE (MAP) EDA Member Carey stated I’ll be recusing myself from this discussion. Director Larson stated Modern Automotive Performance (MAP) was the tenant in the building at 9800 Hemingway Avenue. In May 2019, you created TIF District 1-18 and they made the capital investment and created the agreed-upon jobs, per the TIF Agreement. However, in late 2023, MAP determined that they would allow their lease to expire on the building in early 2024. Staff then went over to the building, visited with the brokers, and confirmed that MAP was no longer open for walk-in business, per the signs on their door in January 2024. So, that began the process of the TIF decertification because once you lose the tenant, then it’s not operating according to the TIF Agreement originally provided. So, the building owner of 9800 Hemingway Avenue was notified in January of the default event because the tenant was leaving and/or had left. They were given 30 days to cure the default; they haven’t found a tenant that we could even possibly consider transferring a TIF to, so that did not work out. So, now before you is a consideration to terminate that agreement and the Taxable Increment note and then decertify taxing entity TIF 1-18. That’s the recommendation before you, and we’re happy to answer any questions. EDA Member Tschida stated I guess I’m a little new to TIF. If they find a new tenant later on, I guess we’re turning it off now, are they able to turn the TIF back on if they do find a new tenant? Or is this the end for them? Director Larson replied no, this would end this district.. EDA President Bailey stated it was funny because before this meeting started I said this is one of those weird meetings where we have three different, separate TIF-type items happening. So, I was asking staff to be prepared for some questions because it’s different than we normally deal with. Director Larson stated they had their PAYGO and they were receiving their payments, the District itself has collected enough money so that the City will not be out anything, and that’s the value of PAYGO’s. The only entity who obviously doesn’t get anything is the person who owns the building because it ceases. They’ve gotten approximately half of the PAYGO, and now the rest will just cease because the increment will cease. EDA Member Tschida said okay, fair enough. EDA Member Jean-Baptiste stated in the event that this was done, they broke the agreement a while back at a point in time where the City was kind of upside down in their financials, do we have anything moving forward in our agreements that would allow us to recoup anything so that we are not out any money? Director Larson replied yes, you do, you have either lookback or claw back provisions or both, depending on the type and style of the note. So, the City’s financial consultants and our City Administrator and Finance Director always make sure we’re covered. Recommendation By motion: Approve Resolution 2024-05 terminating the contract for private development and Tax Increment Financing note for Modern Automotive Performance in TIF District 1-18. Approve Resolution 2024-06 Requesting Decertification of Tax Increment Financing District 1-18 and direct EDA staff and consultants to send the Resolution to the Washington County Auditor to decertify TIF District 1-18. EDA Member Scott made a motion to Approve Resolution 2024-05 terminating the contract for private development and Tax Increment Financing note for Modern Automotive Performance project in TIF District 1-18. Motion was seconded by EDA Tschida. Motion passed unanimously (6-to-0 vote). EDA Member Jean-Baptiste made a motion to Approve Resolution 2024-06 Requesting Decertification of Tax Increment Financing District 1-18 and direct EDA staff and consultants to send the Resolution to the Washington County Auditor to decertify TIF District 1-18. Motion was seconded by EDA Member Myers. Motion passed unanimously (6-to-0 vote). 4.6 PROPOSAL TO PREPARE A HOUSING NEEDS ASSESSMENT Director Larson stated in January 2024, the City Council accepted the staff recommendation at our Strategic Planning workshop for completion of a housing study. Discussed at the workshop was that a study was needed so that we could know: Who was moving in, who was moving out, why they’re moving out, if the housing is affordable enough, do we have enough market-rate versus affordable. So, we thought the time had come to make a recommendation to actually have an official study done. Staff researched options, and the team at Maxfield Research comes highly recommended; they do over 100 housing studies every year. The study will take approximately 120 days to complete, and the cost for the study is $22,875. You’ll see on your screen the flowchart: They look at our policies, our housing stock, they do the demographics and employment, they do an economic development analysis, and they have a demand gap analysis. So, what do we have, what don’t we have, what could we use, and how is any of the housing being used. Then they’ll make some recommendations to the staff and then we’ll bring the report back to the EDA for review. We’d be happy to answer any questions. EDA President Bailey stated I’ll just make a quick plug, and maybe EDA Vice President Olsen could, too. What we hear a lot in the community in various venues, avenues, social media is that either we’re growing too fast, we’re not growing fast enough, we don’t have enough of this, don’t have enough of that. Do people want small houses, big houses; I mean, this is going to kind of give us an idea on all of that to make sure that we have our finger on the pulse of what the future looks like from a growth standpoint. Are we looking to build certain types of homes, apartment buildings, affordability, etc. From what I hear, we’re doing pretty good compared to our friends to the north on affordable housing, but we need to understand what that means for the citizens of Cottage Grove and people who want to move here. So, that’s a part of the discussion that Council had at our workshop in January, making sure that we have a good, solid understanding of what the future holds looking down the road for the types of housing, what’s changing, and what’s happening for the future. EDA Vice President Olsen stated with respect to housing, it’s a complicated issue in many regards because what you see depends on where you sit; hence, the reason to have an objective third party do this study for us so that we can strategically and tactically attack the problem, if there is a problem, in the appropriate manner. To the Mayor’s point about folks sharing their opinions on all the various social media sites or when we’re at a meeting or when we’re at an event, we frequently hear about housing stock in the community. Those of us who’ve grown up here know that for years and years and years the affordable housing in the City was considered to be the Thompson-Grove side, and the Mayor and I grew up over there. But even the properties that were original Orrin Thompson homes on that side of the highway are kind of breaking over that $300,000 mark for purchasing; so, the perception of what’s affordable and what isn’t changes, it fluctuates year over year. I think that’s another argument for the study to be done by an objective third party. We are mandated as a community to have a certain amount of affordable housing, that’s mandated by the Metropolitan Council, and so are all the other communities in the area. So, making sure that we’re doing our part is a critical element of what we do with regard to our zoning and our planning. And you’ve all read the news, supposedly the Twin Cities is short 100,000 domiciles at the moment for people who actually want to live in the Twin Cities. Development continues to be one of those sort of hot-button issues, what should it look like, where should it go, so on and so forth. Something that I found interesting in digging into this topic a little bit was from approximately 1980 to 2010, the City of Cottage Grove grew from a population perspective or from a development perspective somewhere in the neighborhood of about 2.75% annually, on average. Since 2010, that number has dropped significantly, to about 1.5% annually. So, the City is not growing nearly as fast as it did in its heyday. But we are still growing; we’re trying to grow intelligently, we’re trying to be wise about where we put housing and what sort of housing we put there. This study’s going to help us maintain focus on that and move forward in the appropriate manner, and it is necessary. The City is going to continue to grow, it just is, and as I said earlier, there’s certain things that we have to follow relative to our Comprehensive Plan and the Metropolitan Council. We want to follow that, we want to be inline with the guidance that we get from the State, from the Metropolitan Council, etc., but we want to do it smart. We want to make sure that we’re wise. This study will certainly help us do that, so I’m all in favor. EDA President Bailey asked if there were any questions or suggestions from the EDA Members: EDA Member Tschida asked if we had ever done a study like this before? Director Larson replied not to her knowledge; however, Council Member Olsen noted that one was done before Director Larson worked for the City, but it was a long time ago and he felt a new study was needed. EDA Member Tschida stated I agree that this is completely necessary because I love talking about housing. I love the idea of a third-party study, I think it’s really important to know what we’re looking for. When you talk to builders, they say it’s government regulations that are a problem, and when you talk to government, they say it’s the builders not building what people want. So, a third party is fantastic if they’re looking into that. Now, I’m excited about it and I’m excited in 120 days to see what we get back. EDA Vice President Olsen stated I just want to respond to the question of whether we’ve done this before with a little more color for you. Several years ago, I want to say 2012-ish timeframe, we had a housing summit, so to speak, down at River Oaks. We brought in realtors, we brought in developers, we brought in homebuilders, etc. We got everybody in the room, and we spent a number of hours talking through exactly what you just suggested about sort of what came first, the chicken or the egg; is it regulations, is it building materials, is it lot sizes, what have you, because we truly wanted to understand. I’m going to give credit to the Mayor here because when we stepped into our current roles in 2008, the economy was in a really bad place, and one of the things that we had to do our first year is we had to cut about $900,000 out of our budget in the first year that he started as Mayor and I as a City Council Member. It was a tough time. But one of the things that the Mayor stated at that time to the Council and to the staff was we know that the economy is going to turn around, and we want to be prepared for that. We want to be out in front, we want to make sure that we have all our ducks in a row when things change so that we can move forward quickly, and we did, and that study was part of that; that conversation was a part of that so that we had a better feel for how do we make sure that builders, developers, etc. feel like Cottage Grove is open for business and we’re ready to go to work. And so we streamlined our permitting process, we took a very hard look at some of our ordinances, which we just did again this year, and we made some pretty significant changes in the way that we do business. That led to what we’re experiencing now, which is what I would describe as intelligent growth, but growth nonetheless, and very consistent growth, year over year over year over year. So, we definitely dug deep, but as you know, the markets change constantly, they’re always fluctuating. So, we felt like it was a good time to sit down and do that again, and we meet with those folks regularly, we try very hard to understand their points of view, while still maintaining the integrity of the community in a way that we feel is appropriate. I think this will definitely help us take the next step, and then I’m certain that eight-to-ten years from now we’ll take another step and so on, just to make sure that we’re still on track with the market. That information that we got was good information, but it’s kind of old right now. So, new information’s good. I hope that’s helpful. Recommendation By motion: Approve the attached agreement with Maxfield Research & Consulting for the creation of a Housing Needs Assessment for the city in an amount not to exceed $22,875. EDA Member Tschida made a motion to approve the attached agreement with Maxfield Research & Consulting for the creation of a Housing Needs Assessment for the city in an amount not to exceed $22,875. Motion was seconded by EDA Member Jean-Baptiste. Motion passed unanimously (7-to-0 vote). 4.7 GROW MINNESOTA! PARTNERSHIP PROGRAM Director Larson stated the Grow Minnesota! Program is part of the Minnesota Chamber of Commerce. Economic Development Agencies, and other organizations in the business of economic development can join Grow MN! however, they’re not a member of the Chamber. We thought in reviewing this that it kind of really complements the reigniting of our BR&E Program and what we’re going to talk about in the workshop here in just a little bit. Some of the services that we think kind of stand out is they have specialized software to tabulate survey results, so that’s something in your plan we won’t have to purchase. They’ll provide assistance on BR&E visits, they will produce customizable reports of Statewide business trends and demographics, and our businesses can use their supplier match program database to find local suppliers that might more fit with their business needs, rather than trying to go out of state for certain things. Overall, we think it’s a real complement to what we’re doing, so we’d like to try it out for a year, and then we’ll do an evaluation and see if it gave us everything that we thought we were going to get, including like shared surveys and online surveys and those sorts of things. Again, we’ll talk more about that in the workshop. The annual cost for the Advanced Partnership is $1,000 and we would recommend our participation. EDA President Bailey asked if the EDA Members had any questions: EDA Member Tschida asked do we know how many other cities or EDAs are utilizing this; I assume it’s something that most local Chambers of Commerce are doing. Director Larson replied, interestingly enough, I asked that question just the other day, and there are 80 organizations of various forms who cannot be members of the Chamber but are Economic Development Agencies. So, 80 is pretty good in this area. They’ve conducted over 14,000 business visits and surveys over the past five years that they’ve been doing the concentrated program effort. Our local Chamber actually benefits from this partnership because they are allowed to have access; so, we have to coordinate it with them, but they’re allowed to have access to the same things we have access to without an additional charge to them because they’re a member of the Chamber itself. So, we see it as kind of a really neat partnership because then the Chamber can reach to their membership base, which helps us because there are only so many business visits we can make in a year. EDA Member Myers had a clarifying question as a former president of the Chamber: Does that benefit mutually flip if the Cottage Grove Chamber spends this $1,000 next year and in the future, is that something to work with Laurie on to continue to support the City? Director Larson replied sure, we can talk about that. EDA Member Myers stated I was just curious because I talk with Laurie; Director Larson stated I have no idea why it wouldn’t work that way. EDA Member Myers stated I know she is involved in the Minnesota Chamber; I’m just wondering if this has been filtered to her. Director Larson stated yes, we’ve actually had group meetings with Sean O’Neil, our point person at Grow MN, with Laurie; so, Laurie knows that they’re going to get access to this and then it’s just a matter of the coordination because, obviously, we don’t want to try to visit or survey the same businesses. Recommendation By motion: Authorize participation in the Grow Minnesota! Program at the Advanced Partnership Level in the amount of $1,000. EDA Member Myers made a motion to authorize participation in the Grow Minnesota! Program at the Advanced Partnership Level in the amount of $1,000. Motion was seconded by EDA Member Jean-Baptiste. Motion passed unanimously (7-to-0 vote). 4.8 DOMINION CERTIFICATION OF COMPLIANCE Director Larson stated this is not an action item, this is just a report to the EDA. For those of you who are newer to the EDA, one of the requirements of the Dominion TIF Agreement that the EDA entered into with them was that they would report annually and make sure that they are in compliance with their TIF. Their TIF requires that 80% of the housing units be affordable senior housing and another 20% is affordable but not necessarily restricted to seniors. If any of you recall some of the previous conversations in either City Council Meetings or elsewhere, you can’t say it’s just senior housing; the Federal government requires that a percentage of the housing be utilized by people who may not be seniors but otherwise would be considered disadvantaged and qualify for affordable housing. On February 13, we received a Certificate of Compliance from Dominium, it was in your packet, along with the Tax Credit Project Report, Unit Status, but that report is not in your packet because it’s confidential information; it’s literally everything about the tenants, so that one you don’t see, but it will stay on file with the City. Staff reviewed those documents, discussed it with the Finance Department, and we concur that they are in compliance with their Development Agreement. Again, no action is needed, but we’re happy to answer any questions about it. EDA President Bailey asked if there were any questions from the EDA Members: EDA Vice President Olsen stated with regard to Dominium and their certification process, I’m curious if we have gotten any additional information from them on their rental increases for this year. I know that the last couple of years there was some noise about overly egregious increases in rent. One of the things that Dominium shared with us in both of those circumstances was they were simply following the law, HUD sort of guides that process for entities like Dominium. Has there been any dialogue this year about rental increases? Director Larson stated there has been an increase for 2024 and she had asked them the other day to confirm the increase and they have not. However, at meetings with the City Administrator, the Mayor, and I with one of the owners of Dominium he said the increase for the 2024 is 4%, but you can’t tell that by what they produced unless we literally compared every single unit, which we did not do. I’ll get that answer back to you if they confirm that it was more than 4%. EDA President Bailey stated if the public or the EDA Members understand, Dominium has been in the news because there have been some concerns about the high rates of the rents, how much they went up, and then there are some concerns about parking fees and more electrical fees. Director Larson stated they so seem to have a lot of add-on fees, so that would affect the percentage increase in rates. EDA President Bailey stated I actually worked with a tenant to kind of provide some data and some information that they’re getting, and then also provided it to the County. Jointly, the City of Woodbury, Cottage Grove, and the County submitted a letter of concern to the Attorney General’s Office; we just want to make sure that seniors everywhere are not being gouged when it comes to all of these extra service fees that get placed on some of these charges that they get. One of the other things I will say is affordability is also kind of a slippery slope. The reason I say that is what is deemed affordable in Washington County is not the same as what may be affordable in Hennepin County, Ramsey County, or Dakota County; it’s all based on the Area Median Income (AMI) in that county. Ironically, Washington County has some of the highest AMI in the State of Minnesota. So, of course, what’s considered affordable in our community or Washington County is a higher number than if somebody were to move to a different county or different city. So, that’s been the challenge, trying to educate and understand why it’s so much more to live at a Dominium subsidized housing product in Cottage Grove than maybe somewhere else within the metro. Director Larson stated as a Council, you’ve done a great job; you’ve had Trellis and Roers Companies come in, and those are going to be very affordable. The Council has been transmitting their philosophy that they want affordable to be affordable and have done a lot of things that have caused builders to think they better pay attention to that. So, that’s a good thing. EDA Member Tschida stated I guess Dominium says they’ve raised rents 4%; can we try to verify that? Director Larson said yes, we are trying and will advise what we hear back. EDA Member Tschida stated that’ll be really great if you can. Do we know what the increase in Social Security was last year, because they’re on fixed incomes, their income doesn’t go up on AMI. Director Larson replied Brenda is looking it up right now. It’s not a lot, it’s like a couple hundred dollars a month for the person who is just on Social Security. Brenda stated the increase was actually 3.2%. EDA Member Tschida stated it was 3.2%, and it’s a 4% rent increase, so that’s close. EDA Member Jean-Baptiste stated so, as part of that, I know they’re kind of guided by HUD, as far as what their rent increases can be. Do we have the opportunity to kind of say if you’re going to be in this City, this is your new rent increase, and make sure that they’re not going above and beyond a certain amount? Director Larson replied well, yes and no. It’s a good question, but it’s complicated, and the two Council Members have been through many times. According to our City Attorney, you can’t place rent controls on builders because some things are mandated by state law which takes precedent. HUD has their mandatory range and right now you can raise rent as much as 12.5%. But just because you can, should you? And those are the types of conversations that the Council has with people who want to do affordable housing; I know you can, but should you? So, when they were discussing this with Trellis for example, Trellis shared that have never raised their rents more than 3% in any given year. They even showed us proof of that, so, it’s a different philosophy for them. EDA President Bailey stated it’s a great question because using Trellis as an example, we are as a City EDA giving some cash, not TIF, but cash, am I correct? Director Malinowski replied we’re giving a forgivable loan of cash, but it is from one of our old decertified TIF Districts, TIF 1-8, which was a housing district. EDA President Bailey stated and the purpose behind that was to make sure that percent of AMI is 30%, which is extremely low compared to everyone else. When they came in and said that, they told us if we could help them with this bit of money, and it’s not significant, they could keep that number that low. We said absolutely, that makes more sense. Actually, at one point we discussed or verified with The Legends, Dominium, just to make sure they were following, which is why you’re seeing this; we wanted to make sure that they are doing what they’re supposed to do. There might be some other things in there that we might be concerned about, but the reality is from a TIF Certification of Compliance, they’ve actually been achieving it. I think the Council and the EDA have been much more aware now of what is truly affordable, and if there are certain things we can do as a community, a City, and EDA to help bring better projects to town that are much more affordable, then we’re more willing to entertain that. 5 PUBLIC HEARINGS - None. 6 OTHER BUSINESS 6.1 EDA CALENDAR EDA President Bailey stated the EDA Calendar has been provided. 6.2 EDA COMMENTS EDA Vice President Olsen stated there was a lot of good stuff on the agenda today. If you’ll notice, pretty much everything revolved around TIF. I’m new to the body this year, I’ve been on the body previously, but I’m new to this group. What I don't know is whether there’s ever been any training from our TIF attorney on what TIF is, how it works, why we use it, etc. Further, understanding that TIF is just one tool in the toolbox, as it relates to economic development: Some cities love to use TIF, it’s their preferred method, others don’t. Some communities like to use tax forfeiture, tax abatement, or loans. So, I’m wondering would there be any value at some point having a workshop with our TIF attorney and/or Ehlers to just explain to the body these are some of the tools that are available to us. This is what we’re doing currently with TIF, this is why, just to make sure everybody’s up to speed because it can get complicated, it can be difficult. When you talk about increment, what is an increment? What does it mean, how does it occur, those kinds of things. I just wanted to suggest that maybe there’s a conversation there about doing some training; maybe not, maybe it’s already been done, but I just wanted to share that. I had a resident reach out to me about something the other day that I thought was interesting. On our City website, if you’re looking to get information on a specific project, it’s a little bit cumbersome. The suggestion that the resident made was wouldn’t it be neat if we had a “What’s New” page. Just here’s what’s new, here’s what’s going on in terms of economic development in the City; whether it’s a road project or the new Chase Bank, so on and so forth. Because I think the #1 thing we get asked as Council Members, and I know the Mayor does, because he puts little updates out on his Facebook page, hey, what’s coming to town, when is it coming to town? What about this, when will that happen, how come Kwik Trip’s not here yet, what are we doing with this and that? So, maybe a What’s New homepage on our website where people could then click through to look at either a packet or drawings or whatever might be a way to really ensure that #1, we’re being as transparent as possible with the public, but also #2, they can just find it without needing to kind of wonder and then figure out which packet it was in, if it was a Planning Commission meeting or was it an EDA meeting. I just wanted to suggest that as something that came my way from a resident. I know we have an outstanding Communications staff, so maybe that’s something they could think about. EDA Member Myers stated just to reply to that, we did get some high-level tutorial early on, probably when we started, but it has been a while since like TIF 101 was explained to this group. EDA Vice President Olsen stated yes, and it can be complicated, depending on how you format your TIF; it also has to be approved by the State, you can’t just do it. There are things that people I think should know. As members of this body, if somebody were to ask you, I would hope we could respond appropriately and have the information we need; EDA Member Myers agreed with that. Director Larson stated you just brought up the two subjects that are on our task list to address. The new members did receive some initial training but it was from the City Attorney about how the EDA body functions but not about TIF and other incentives in any detail. We recently discussed with the City Administrator that we should have a workshop with Ehlers to review our business subsidy program with the board. EDA Vice President Olsen stated they did my training years ago, and it was amazing. Director Larson stated regarding the “What’s New” page we’re discussing an Economic Development newsletter or projects update page and how to keep it fresh and up to date. EDA Vice President Olsen stated all you have to do is look at the Mayor’s Facebook page; when he puts out updates on things, it gets shared, it gets liked, he gets yelled at. There are definitely many responses. EDA Vice President Olsen stated it’s just something a resident brought up that I thought was relevant; Director Larson stated absolutely we agree and will update as we are working through the process with the communications team. EDA President Bailey stated two things for the group here. Ironically, since we’ve been talking a lot about housing, with staff’s help there was an article in the paper I believe it was last week regarding the Missing Middle legislation that was going through. It is my understanding that the Missing Middle legislation is now dead; can you confirm that? EDA Member Tschida replied I know it’s not moving at the moment; nothing’s ever dead. EDA President Bailey stated that’s true up at the Capitol until the session’s done, but word has it that there’s not support predominantly it sounds like from suburban counties, suburban mayors, me included. And it isn’t that we’re against it, especially as we talked about affordable housing, it was the way that they’re going about doing it, which was of extreme concern. In essence, you could build duplexes, or depending on where you’re located, fourplexes, sixplexes next to a single-family home, and the City of Cottage Grove couldn’t do a thing about it. We couldn’t stop it, we couldn’t say what kind of materials were on the building, we couldn’t say you have to have parking for all those tenants; they would be allowed to be on the street, which means in winter months we’d have to change our plowing situation in the community. So, we were very adamantly against it, basically, with the other communities. EDA President Bailey stated so I just thought I would share that with you that that’s been discussed quite extensively. We believe that there is, and I think the City does, too, that there is another way to do this. Part of it maybe like we talked about the housing study and things like that to better understand, but I think it was mentioned earlier, like each other blames the other one, right? The developers and the builders blame the cities, and the cities say you’re not building or you’re gouging. Somewhere in the middle is probably where we need to be, but this particular bill was not, in my opinion, the way to go. EDA President Bailey stated the other one, ironically, speaking of housing, is just giving everybody an update. I know it got brought up here, if you weren’t aware, the Mississippi Dunes Golf Course sold, and they closed, and they started removing trees and the houses, I think there were two down there. If you saw it on the news, there was an attempt to stop it by the Friends of Grey Cloud group. They wanted an immediate injunction, but the judge denied it. Now, there is still kind of a court case, but I think it’s out until May; so, by the time the court case were to even come, if it even goes anywhere, I don't know what’s left because the project is already in the process of moving forward. The good news I want to share with all of us, and I’ll say it again, is 54% of the entire property is going to be park and open space, which is unheard of in developments within our City. Normally, we have to kind of piecemeal stuff together, and we did piecemeal some stuff here, but we worked with our partners, the DNR and Washington County, in order to gain as much of the land as we possibly could. I think the only one that’s left right now in that process is the DNR still has to close on the two parcels that we recommended that they purchase as part of the SNA Dunes area there. I just thought I’d share that with the EDA group here that that is proceeding, everything’s moving forward. Lastly, don’t forget is this Volunteer Month, and we have a Volunteer Banquet. I’m hoping all of you are going to be able to be there; if not, thank you for volunteering on the EDA. Our banquet is this Thursday at River Oaks Golf Course at 6:00 p.m. I’m going to be doing a little State of the City just to kind of share some of the things that everybody likes to hear about, what’s going on here in our community, just before we have dinner, which will be served around 7:00. We will have our presentation after that. It’s just our little way of thanking all the volunteers, whoever you are, that make our community great, so, thank you! 6.3 RESPONSE TO PREVIOUS EDA COMMENTS - None. 7 WORKSHOP - St. Croix Room 7.1 BUSINESS RETENTION AND EXPANSION PROGRAM WORKSHOP EDA President Bailey said he has to leave, so EDA Vice President Olsen will chair that workshop today. We won’t adjourn in here, but will do the adjournment in the St. Croix Room. He looks forward to seeing the information that is shared about the BR&E Program and if there are any changes or adjustments that you want to make. With that, have a good day. Director Larson presented a brief overview of the BR&E program in the workshop stating that the program has both long-term and short-term goals and objectives. Program Goals: To build relationships, we want to find out what businesses need, how they’re growing and expanding, and what we can help with. To know what our weaknesses are in the community, what it is that we’re not doing that people think we should address. To bring good jobs to the city with higher wages. Create a consensus about what does BR&E look like, what services do we need, what things do the City Council and all of the Boards and Commissions need to be working on, including the EDA. Short-Term Objectives: We want to support the business. Help improve profitability if we can. We want businesses to know that we value them in the community and all the things that they’re doing. We want to make sure that we have an implementation plan to improve the business climate. This City has worked really, really hard on improving the relationships and fostering a good relationship. Compile an inventory of existing businesses with contact information. EDA Member Carey stated that he had to leave shortly so asked to share his thoughts about the fact that some visits are important but perhaps sending postcards or emails to literally every business in Cottage Grove, suggesting them to at least do the survey. Then, from the survey, maybe that’s how you can determine who are the most-interested businesses versus like us trying to select who those are, but not knowing. Director Larson stated exactly, that’s part of the homework. Once you’ve had the chance to read all of this we will follow up and refine the plan and report back. EDA Member Meyer said what I envision is if we were to send me a postcard or email, I’d be like this is the City, we want to help provide support and improve your profitability, please let us know how to do it. I’m going to answer that survey and give you some feedback. EDA Vice President Olsen stated we also work through various organizations that some of our businesses may be part of the Chamber came up earlier. We can work through the Chamber and make connections to inform them about this. In the past, when we’ve done this, we worked with State agencies, like DEED, and we’ve also worked with some of the tech agencies. That’s actually how we got focused on our Business Park for development several years ago. We used to send postcards; however, we found that other methods of communication tended to be a bit more effective such as emails so I think that we definitely need to keep doing that. Director Larson stated part of the homework is also to determine if you want to go on the visits as well. As for the survey we should ask ourselves things like are we asking too many questions, not enough questions? Are we asking questions that we really couldn’t follow up on, even if they answered the question? Now is the time to really look with a critical eye about what we ask them and why we ask them certain things. Two different surveys are included in your packets for review. Director Larson stated so, as we move along, we will be reaching out to you because you’re going to get a follow up email: Did you do your homework, have you read everything, and what are you thinking? Do we need to meet again? EDA Vice President Olsen stated just as a note for the body here, the City, the EDA has been doing BR&E for longer than I was on the City Council. It evolves, but some programs that you might be familiar with, that have been a result of BR&E are: DARTS, the Façade Improvement Plan, and during the pandemic, we did some grants for some restaurants in town to help them maintain their staffing level and pay their people, etc. Those were all offshoots of the feedback that we got. It seems like maybe this is just one more thing we have to do, but the fact of the matter is there’s been a lot of value to it. Director Larson stated the Program Summary will just give you that brief history of the very things that EDA Vice President Olsen just said, which is what did they do after they did the visits, and what have we changed. Things have changed, there’s more fiber and broadband in the area, more is coming, more businesses have been added to the Business Park, businesses in the Business Park like Renewal and Van Meter have expanded. So, all of those things that came out of BR&E to begin with are happening with all those connections being made, the Business over Breakfast, where they could just talk to one another because they don’t ever get out of those big buildings half the time. EDA Member Carey shared that he built his business by participating in the process. So, there’s just a lot of things that have positively occurred, and now as the City makes these strategic plans to develop the properties along Highway 61 and all the way up to 70th, headed towards Woodbury things will change even more. EDA Vice President Olsen asked if there were any questions for Director Larson or the staff. EDA Member Tschida asked should we respond to the questions being asked today. Director Larson stated we’ll send you a follow up email in a week or so after you’ve had a chance to review all of the information and get feedback on the survey, visits and your preferred involvement in the process. 8 PRESENTATIONS - None. 9 ADJOURNMENT EDA Member Jean-Baptiste made a motion to adjourn. Motion was seconded by EDA Member Meyer. Motion passed unanimously (6-to-0 vote). The meeting was adjourned at 8:56 a.m. Respectfully submitted, Gretchen Larson Economic Development Director /jag