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HomeMy WebLinkAbout2001 [11] Nov 2111-21-01 Page 1 of 5 CITY OF ST. JOSEPH ECONOMIC DEVELOPMENT AUTHORITY Meeting Minutes -Wednesday, November 21, 2001 Present: Bruce Gohman, Mayor Larry Hosch, Bob Loso, Mike Deutz, Ross Rieke (arrived 4:08) Also present: Cynthia Smith-Strack, Municipal Development Group, President Gohman called the meeting of the St. Joseph EDA to order at 4:07 p.m. Minutes: Moved by Loso, seconded by Hosch to approve the minutes of the October 17, 2001 EDA meeting as presented. Minutes were approved 5:0. The minutes of the August 8, 2001 meeting will be presented at a future EDA meeting for approval. Update of the Protective Covenants for Buettner Business Park (a.k.a. St. Joseph Business Park). Smith-Strack explained that at its October 17, 2001 meeting the EDA recommended two modifications to the established covenants applicable to the St. Joseph Business Park after reviewing a request by a development prospect. The prospect subsequently withdrew the development request and the modifications to the covenants have not been recorded by the owner at the County. MDG has completed a review of all the existing covenants and recommends clarification in a few areas. Property owner, Leo Buettner, requested additional time to review the proposed changes. EDA members reviewed proposed changes briefly. Commissioner Deutz indicated a copy of the revisions should be forwarded to Spring Green. MDG will forward a copy of the proposed revisions. President Gohman indicated he sent copies of covenants from several St. Cloud developments to Buettner for information and review. Deutz questioned what the covenants Gohman forwarded to Buettner looked like. Gohman explained they were more restrictive than the Business Park standards, but thought they presented illustrative validity. Gohman indicated a need to be realistic and take into account what is existing in St. Joseph with regard to restrictive covenant standards. Commissioner Rieke inquired as to the duration of the covenants. Smith-Strack indicated the EDA is responsible for considering and acting upon proposals or plans within the park throughout the initial ten-year term of the covenants, which were executed in September of 1999. The EDA suggested reviewing and finalizing the covenants with the property owner at the next official EDA meeting. EDA Levy A budget outlining the proposed sources and uses of EDA funds for the year 2002 were discussed. Sources of funds identified were: • An EDA approved levy in the amount of $18,087.00 (.01813% of the estimated taxable market value). • A direct allocation from the City's General Fund in the amount of $10,193.00. 11-21-01 Page 2 of 5 Uses of funds identified were: • Professional services ($15,000.00) Dues and subscriptions ($8,500.00) • Telephone ($1,200.00) Legal fees ($1,000.00) • Legislative bodies ($700.00) Office supplies ($500.00) • Advertising ($500.00) • Postage ($250.00) Work Comp. Insurance ($180.00) In summation the proposed budget totaled $28,280.00 a reduction from the 2001 budget of $66,765. Rieke questioned why the EDA was not involved in the budget process prior to this point. Concerns regarding the ability to add a staff Community Development Director or re-negotiate a contract for consultant services within the parameters of the proposed budget were identified. Concerns regarding the availability of start of funds for a local revolving loan fund (RLF) were also identified. Smith-Strack indicated if the EDA wished to propose changes to the 2002 budget a motion to recommend modifications should be entertained. Hosch indicated levy limits imposed by the state legislature severely impacted the ability of the City to increase the budget. The need to add additional support staff and a finance officer along with the purchase of a new front-end loader were significant in the proposed 2002 budget. Hosch also indicated it was not too late to modify the final budget, as the City Council was scheduled to meet at 6:00 p.m. this evening to finalize the budget. The EDA indicated a need for increased flexibility in the budget due to uncertainties about projects which may arise in 2002 and staffing. The topic of rolling over funds to following years' was mentioned. Smith-Strack handed out informational materials regarding the Minnesota Community Capital Fund for purposes of discussion in relation to a RLF. The EDA reviewed a summary sheet on the program which would allow communities the ability to loan ten times the amount of dollars contributed to the MCCF, and, because the MCCF immediately sells off the loan in the secondary market, risks are non-existent. Gohman indicated because of the immediate sale to the secondary market, the city can also re-loan funds almost immediately. The EDA cautioned that this program has formed anon-profit organization, but the actual fund has yet to be originated. Smith-Strack indicated some entities who have pledged support and contributions include: St. Cloud HRA, Tracy, Rochester, Kandiohi County, Willmar, Winona, and Mantorville. MCCF is for greater Minnesota cities only. The EDA is interested in the MCCF concept. Gohman recommended an increase in special project and salary line items in the budget. Hosch inquired as to what amount the EDA felt was appropriate. Loso proposed an increase in the amount of $25,000 for discussion purposes. Hosch left the meeting at 4:48 p.m. to ask the City Administrator a question. Hosch and City Administrator Judy Weyrens returned at 4:50 p.m. 11-21-01 Page 3 of 5 Weyrens explained the budget process was occurring at the time staff changes were occurring and amid the confusion, the EDA budget was overlooked. Weyrens explained the EDA was able to suggest changes to the proposed budget for discussion and action by the City Council at this point. Weyrens also suggested the EDA request an amount from the City reserves should the EDA and City decide to move ahead with the establishment and funding of a revolving loan fund (RLF). Weyrens will also check with Stearns Electric to determine whether or not the RLF there could be used for start-up of the St. Joseph RLF or a contribution to the MCCF. Weyrens suggested the EDA may wish to propose an increase in the budget corresponding to the EDA tax levy ($18,087.00). Moved by Hosch seconded by Rieke to request $15,000 from reserves for a contribution to a revolving loan fund along with an increase in the proposed budget of $18,087. The budget increase would raise the professional services' line item by $5, 000 with the remaining increased balanced placed in a `special needs' line item which the EDA could roll-over to the following year's budget. Brief discussion followed centering on the request from reserves and the adequacy of the proposed budget increase. Following the discussion Rieke recommended Hosch amend his motion to exclude the $15,000 request from cash reserves. Loso noted the proposed revised budget would include expenses of 46,367. Weyrens exited the meeting at 5:05 p.m. Hosch amended the proposed motion to exclude the $15,000 allocation from cash reserve. The revised motion was approved 5-0. Gohman noted the revised budget proposal totaled $46,367. TIF Application Escrow Requirements Smith-Strack explained Section VI of the City's TIF application sets forth application fees for developers requesting assistance. Current requirements include: • A $2,000.00 non-refundable application fee at the time of submittal of the final TIF application; and • A $15,000 escrow fund to cover attorney and consultant costs as part of amending or establishing the district and drafting and negotiating the development agreements. Unused portions of the escrow are refunded to the developer. Smith-Strack continued by reporting the fees and escrow requirements appear to be somewhat higher than other communities; and, that research with Juran and Moody and Briggs and Morgan it is estimated that the cost of most TIF deals is approximately $8.000. EDA discussion of the topic of escrow requirements was sought. Gohman indicated he thought the current escrow requirement was not unusually high. Deutz indicated that as a developer he'd like to use the excess escrow upfront in any deal. Deutz identified TIF application expenses in Howard Lake where he recently concluded a project to be $7,500. Discussion followed on a step-type graduated system of escrow requirements, as suggested by Gohman. The step-system would be less burdensome on smaller developments, while requiring large developments make a larger commitment to achieve TIF assistance. Rieke suggested holding the item over to the next meeting. Loso suggested a step system in which projects totaling $750,000 or less be required to escrow $8.000 whereas developments totaling $750,001 or more are required to escrow $15,000. Brief discussion on the suggestion followed. 11-21-01 Page 4 of 5 Motion Loso, seconded by Rieke to(1)Amend Section VI of the Policies and Procedures for Tax Increment Financing to(a.) require developments totaling $750, 000 or less submit a $2, 000 non- refundable application fee and a $8.000 escrow at the time of final TIF application submittal and(b.) require developments totaling $750, 001 or more submit a $2, 000 non-refundable application fee and a $15,000 escrow as currently required; and, (2) to recommend the City Council also approve the amendment. Vote total: 4 yes; 1 no, with Duetz voting against. Project Updates Gohman indicated he had informed Municipal Development Group that he had not been in contact with DBL-MCO recently; however he reported at the EDA meeting that he has indeed been in contact with DBL-MCO regarding reconfiguration of an alternative site in St. Cloud (Vision Ease site). Gohman indicated his staff is actively working on the reconfiguration request. Smith-Strack indicated several contacts and efforts have been made to assit DBL-MCO with retention and expansion plans in St. Joseph since the last EDA meeting. MDG the met with one of the property owners regarding his conversations with contacts at DBL-MCO. The property owner indicated the DBL-MCO parent company may be looking for a more generous financial incentive package from the City. The property owner, EDA President Bruce Gohman and MDG representatives met to discuss revised TIF options. A revised TIF analysis (based on increased building size and assessment rates along with decreased administration expenses) was submitted to DBL-MCO. The revised worksheet also included reminders of various programs offered through DTED (i.e. MIF program and commercial loan programs). Dave Gruenes from Stearns Electric, Mayor Hosch and MDG staff (Smith-Strack) also met to discuss additional incentives available to the project including: economic development rate reductions, energy conservation incentives and the Stearns Electric Revolving Loan Fund. MDG estimates total incentives available to be approaching $400,000-500,000. A follow-up call to DBL-MCO was placed less than one week ago. Smith-Strack provided an overview of other project updates including: three new contacts and continued discussions with the American Legion, VicWest, INH Property Management and Lisa Pfannenstien. Deferred Assessments: Buettner Business Park Mayor Hosch asked the EDA for their opinion on deferring assessments for the Buettner Business Park. After brief discussion, the consensus of the EDA indicated an unwillingness to endorse an assessment deferral. Mayor Hosch questioned the EDA for their opinion on allowing developers to assume the assessments rather than pre-pay them at the time of closing (at this point the development agreement does not allow for the assuming of assessments). After brief discussion consensus of the EDA indicated a willingness to allow developers to assume assessments. Motion Rieke, second Loso to amend the developer's agreement to allow for the assuming of assessments in the Buettner Business Park. Motion approved: 5-0. Next Meeting The next official meeting of the EDA is scheduled for December 12, 2001 at 4:00 p.m. Gohman requested Leo Buettner be present to finalize revisions to the Business Park Covenants. 11-21-01 Page 5 of 5 Adjournment Motion Loso, to adjourn; Second Rieke. All voted in favor of adjournment, the EDA meeting adjourned at 5:43 p.m. - ~~~ C~ ~cC~~ce~