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Home My WebLink About[06d] Annual Report to Council • CITY OF ST. JOSEPH www.cityofstjoseph.com Date: December 10, 2014 Memo To: Chairperson Wick Administrator Members of the EDA Judy Weyrens City Administrator Weyrens Mayor Memo From: Cynthia Smith-Strack-MDG, Inc. Rick Schultz RE: Annual Report to City Council Councilors Steve Frank Bob Loso BACKGROUND Renee Symanietz The EDA is required to submit an annual report to the City Council. Please find attached a draft Dale Wick report for the calendar year 2014. EDA ACTION Doug Danielson Review, discussion, and comment on the report. If the EDA is comfortable with accepting the Steve Frank report and submitting it to the City Council a MOTION to do so is in order. Larry Bosch Gary Osberg Dale Wick f THIS PAGE INTENTIONALLY LEFT BLANK 37 2014 Annual ST. JOSEPH ECONOMIC DEVELOPMENT AUTHORITY Cynthia Smith Strack, Consulting Director T.JOSEPH EDA 25 COLLEGE AVENUE NORTH-ST.JOSEPH MN 56374 3/ CITY OF ST. JOSEPH EDA Annual Report 12 Executive Summary This report documents the EDA's activities over the previous year and the EDA's progress toward the creation of new wealth, 'setting the table' for new business opportunities, providing assistance to businesses to spur economic investment and job creation locally,and to conduct outreach to business contacts. In summary: The St.Joseph EDA pursues four core functions:organizational development, business development, market development,and infrastructure development. Organizational development efforts focus on maintaining and enhancing the capacity of the EDA as a public entity. Business development activities are strategies implemented to retain and attract business. Market development efforts are outreach actions including but not limited to website maintenance, production of marketing materials, and participation in local and regional events/establishments. Infrastructure development activities strive to'set the table'for economic development including the creation of shovel ready commercial and industrial lots. The EDA met a total of thirteen times in 2014.The regularly scheduled meeting date is the fourth Wednesday of each month at 5 p.m. Meetings are held in the lower level conference room at St.Joseph City Hall.The meetings are open to the public. The EDA employs a variety of metrics to gauge progress and efficacy.Continued progress to enhance the commercial/industrial portion of the City's total value,thereby diversifying the tax base, providing employment opportunities,and addressing the needs of the community as evident.Total business new construction value added since 2000 is nearly$43million. The percentage of the City's market and tax capacity values related to commercial and industrial property continue to increase on an annual basis. The St. Cloud Metropolitan Area continues to recover from unemployment highs charted during the Great Recession; however the recovery pace is more measured in the St.Cloud MSA than in other Minnesota metro areas. Sales and use data for the City of St.Joseph over the previous several years illustrates continued gains in economic progress and activity.Gross and taxable sales continue to increase and trend positive.Gross sales across all industry sectors in St.Joseph in 2012 (latest available data)totaled $150,406,920, up 36%over 2011 and driven by construction (non-taxable)spending.Taxable sales increased nearly 30 percent over 2011 to$30,870,498 lead by increases in food sales Six(6) new projects arose in 2014:three were secured,one likely for 2015,and follow up continues with the remaining two. In addition,follow up with twenty-one(21) projects from previous years occurred.Of the twenty- seven (27) leads,twelve(12) moved forward, nine(9)are stable/on-going,and six(6) ultimately moved elsewhere (one)or were abandoned for lack of financing(five). Goals for 2015 include: ✓ Create of shovel ready industrial lots ✓ Market outreach and marketing map update ✓ Downtown revitalization and alley project 100 block West Minnesota ✓ Respond to inquiries and pursue viable leads, move additional projects from 2014 forward in 2015 ✓ Implement and administer technical and financial assistance programs 3z. CITY OF ST. IOSEPH EDA Annual Report 13 CONTENTS Executive Summary 2 Mission 4 Core Functions 4 2014 Activity by Core Function 5 2014 Meetings 5 Metrics 6 Historical Building Permit Values:Commercial&Industrial 6 Historical Market Value and Tax Capacity Composition 6 Unemployment 7 Employment and Wages 7 Historical Housing Starts 8 Historical Sales and Use Data 8 Projects 9 Business Contacts:Technical Assistance,Coordination,and Financial Assistance 9 Goals 11 33 CITY OF ST. IOSEPH EDA Annual Report 14 Mission The St.Joseph EDA provides a professional municipal economic development program that assists industrial and commercial development activities which minimize impacts to the environment,transportation system, municipal water/sewer use,and financial resources for the City of St.Joseph. Core Functions The St.Joseph EDA as a driving force for economic development pursues four core functions:organizational development, business development,market development,and infrastructure development. ✓ Organizational development efforts focus on maintaining and enhancing the capacity of the EDA as an economic development organization. Resources allocated to this core function are associated with meeting attendance, meeting packet preparation,drafting meeting minutes,annual report preparation,goal setting/administration,and budget development/administration. ✓ Business development activities are strategies implemented to retain and attract business.Activities included in this core function are related to: business retention/expansion efforts; Downtown revitalization; meetings, research,and information sharing to/with qualified project contacts and representatives;and,administration of technical/financial assistance. ✓ Market development efforts are outreach actions including but not limited to website maintenance, production of marketing materials,and participation in local and regional events/establishments. ✓ Infrastructure development activities strive to'set the table'for economic development.Activities included with this core function are efforts toward the creation of shovel ready commercial and industrial lots. Business Market Development Development Organizational Infrastructure Development Development EDA 3� CITY OF ST. JOSEPH EDA Annual Report 15 2014 Activity by Core Function ACTIVITIES 2014 vs. 2013 • ORGANIZATIONAL DEVELOPMENT 2014=15% vs.2013=19% A BUSINESS DEVELOPMENT 2014=75% vs.2013=63% ✓ MARKET DEVELOPMENT 2014=8% vs.2013=18% A INFRASTRUCTURE DEVELOPMENT 2014=2% vs.2013=0% •Organ izational Development•Infrastructure Development •Business Development •Market Development Core Funtion History 2014 Meetings as 62% The EDA met a total of thirteen times in 2014.The regularly scheduled meeting 26% date is the fourth Wednesday of each month at 5 p.m. Meetings are held in theaXimar lower level conference room at St.Joseph City Hall.The meetings are open to DEVEELOPMENT �'�"�ssotvEO to MARKET otvetnr�ort the public. .20t4 .2013 .2012 2013 OFFICERS BOARD MEMBER NAME TERM EXPIRES CHAIRPERSON Dale Wick Coterminous with Council Term BRE FDA VICE CHAIRPERSON Doug Danielson 2017 Oev&l;s' TREASURER Larry Hosch 2018 AT LARGE Gary Osberg 2019 Activities AT LARGE Steve Frank Coterminous with Council Term 35- (I CITY OF ST. JOSEPH EDA Annual Report 16 Metrics The EDA employs a variety of metrics to gauge progress and efficacy.The following information illustrates continued progress to enhance the commercial/industrial portion of the City's total value,thereby diversifying the tax base, providing employment opportunities,and addressing the needs of the community.Total value added since z000 is nearly$43million. Historical Building Permit Values: Commercial & Industrial YEAR VALUE 2014 $ 954,009 New Commercial Construction Value 2013 $2,371,500 2012 $3,601,549 58,000.3 2011 $5,392,599 $7,000,000 2010 $ 307,378 $6000000 2009 $7,216,910 2008 $3,690,877 55,000,000 -- 2007 $3,376,221 54000,000 2006 $1,259,957 - — 2005 $2,790,177 ' ' — — 2004 $2,708,838 52,000,000 2003 $3,461,695 51,000,000 — — 2002 $4,678,430 50 1 n n 2001 $ 593,000 - ,, N .a o m CO N. l.0 ,n 0 0. m N -, o 2000 $ 361,500 0 0 N 0 0 N 0 0 0 0 N 0 8 0 04 Historical Market Value and Tax Capacity Composition The percentage of the City's market and tax capacity values related to commercial and industrial property continued to increase in 2014.The market and tax capacity composition statistics do not include the approximately forty-two(42) percent of value attributed to non-property tax paying entities. COMPOSITION CATEGORY 2014 2013 2012 2011 2010 2009 Total Market Value $ 270,764,873 $ 270,691,487 $281,905,313 $ 319;772,893 $ 329,203,827 $330,154,087 ... ..._ .: - - : ic.,- : i-2 51:: 5256% -- - - Market Value : : I _.._ . ._-3:: 14 62% _- . _. __ . Composition - :-::: 2 93%'% - _- - 319% -- - Commercial/indusrial ____ . 20.79% 20.46% 18.68% .- : __5E:: _.ler --5 : _=9:: 134% 105% : _ _ ._ . Total Tax Capacity Value $ 3,258,465 $ 3,249,611 $ 3,380,793 $ 3,771,137 $ 3,837,441 $ 3,799,530 Homes:ead Residen:ial --•2:i:: -=_5;: 48 73% 52 96% :_-: : :: : Tax Capacity Non Homestead Residen:ial :-_ : _ _-, 15 21% 13 67% __E::: Composition Farm __. . 2 42% 2 620 2 71% 2 55-: _-- . Commercial/industrial 32.43;: 33186% 31.46% 2912% 27_- : _--_ . Other 2.13% :;,5;0 1.98% 1.55% i 5 - 34 CITY OF ST. IOSEPH EDA Annual Report 17 Unemployment . Illustrated below is a comparison of historical unemployment in metropolitan areas in Minnesota (excluding Duluth).The St. Cloud Metropolitan Area continues to recover from highs charted during the Great Recession, however the recovery is pace is more measured in the St. Cloud MSA than elsewhere. Unemployment rates are delayed economic indicators which confirm what has occurred and they are counter-cyclical meaning that the lower the rate the better the economy. T.CLOUD MSA. ROCHESTER MSA ' MSP MSA MANKATO MSA 2008 Annual Average 5.6 4.`, 5.1 4.3 2009 Annual Average 8.2 6., 7.9 6.6 2010 Annual Average 7.4 6.1 7.2 6.1 2011 Annual Average 6.5 5.4 6.4 5.3 2012 Annual Average 5.6 4.i 5.5 4.8 2013 YTD Average 5.4 4.5 5.0 4.3 [ 2014 YTD Average 4.8 4.0 4.3 3.7 Employment and Wages Historical Jobs, Establishments, and Wages EAR JOB ESTABLISH MENTS JOBS(Annual Average) t01 1,876 127 $706 toll 1,902 130 $680 Lai 1,723 122 $657 1,9a? 1,92 1031,7 1, 1 s RI 1,703 127 $646 1,577 1,5 00`„ 1,577 127 $644 _._ _ _ _ 01F200 1,578 130 $631 I 2004 1,924 133 $654 tit. k006 1,883 133 $631 2013 2012 2011 2010 2009 2008 2007 2006 37 ... ....I... it CITY OF ST. IOSEPH EDA Annual Report 18 Historical Housing Starts New home construction in St.Joseph peaked in 2005 and has decreased significantly thereafter.The rapid decrease is of course indicative of the Great Recession and housing decline. New home construction in St.Joseph is lowest on record for several years despite offering a WAC/SAC credit incentive. YEAR NUMBER NEW HOMES 2014 4 2013 6 2012 8 160 2011 13 140 2010 5 120 2009 12 10D 2008 7 8D 2007 24 2006 77 40 20 2005 156 0 — ■ 1Awl- _. 2004 78 h CC cl` - wi 0 O 2003 112 0 ° ° — — _ = 0 ° Historical Sales and Use Data Sales and use data for the City of St.Joseph over the previous several years illustrates continued gains in economic progress and activity.Gross and taxable sales continue to increase and trend positive.Gross sales across all industry sectors in St. Joseph in 2012(latest available data)totaled$150,406,920, up 36%over 2011 and driven by construction (non-taxable) spending.Taxable sales increased nearly 30 percent over 2011 to$30,870,498 lead by increases in food sales. Sales Tax History Gross Sales s•Taxable Sales 5160,000,000 s14o,000,000 5120,00 ,0 5100,000,0 $80,000,000 } I $60,000,000 I �r 540,000,E $20,000,000 5- 2005 2006 2007 2008 2009 2010 2011 2012 CITY OF ST. IOSEPH EDA Annual Report 1 9 Projects The EDA and staff continued to interact with several qualified business prospects which emerged in 2014 or were carried over from previous years.Following is a summary of various contact activities within 2014. Businesses have been identified with a project number to protect the confidentiality of the company. Business Contacts: Technical Assistance, Coordination, and Financial Assistance PROJECT CODE STATUS DESCRIPTION OF ACTIVITY Large commercial or mixed use development at new CSAH 2/Hwy 75.The City Project 03-A 40 and EDA worked diligently to bring a hotel to this area in 2014 only to be turned down by the property owners. Several acres of industrial property previously the subject of platting and Project 04-S improvement design. EDA and bank representatives entered discussion regarding installation of utilities to this area in the last half of 2014. Project 05 A Former feed mill.Spoke with property owner several times in 2014, most recently in November. Distributed information to three leads this year. Involves development of property at new CSAH2/3 and Hwy 75. Remain in Project 06-H J —, touch with property owner/developer. Need to extend sewer and water to make development possible. No plans for such as of yet. Project 06-I Construction(Army Reserve Center)completed in 2014. Project 07-J Large commercial or mixed use development at new CSAH 2/Hwy 75. Numerous interactions regarding extension of sanitary sewer to site. Project 08-A Targeted/special need residential development in close proximity to Downtown.Construction underway. '�" Property owner in downtown had on several occasions expressed interest in Project 08-C ♦ demolition and reconstruction. Project remains on hold at this time. Last contact November 2014. Project 10-1 Property adjacent to CSAH 75/CR 133. Remain in contact with realtor on a quarterly basis. Project 11-L Project involves a vacant building in the industrial park. Information on this property was distributed four time in 2014. No successful outcome. Involves the presence of a financial institution in the City. Project remains in Project 11-M planning phase, perhaps for 2015. Last contact November 2014. 39 CITY OF ST. JOSEPH EDA Annual Report 110 PROJECT CODE STATUS DESCRIPTION OF ACTIVITY Project 12-F Business opened in 2012 in Indian Hills,expanded in 2014. If suitable space is located this business owner would like to consolidate Project 12-I business holdings into one location in St.Joseph.Specific criteria for lot and location have this project on hold at this time. Remain in quarterly contact. Involves potential relocation of a regularly reoccurring event to the Project 12-K Downtown area.Considering internship applications to provide support for this project in 2015. Finkens Water purchased the former DBL building Fall 2013. Demolition and Project 13-C reconstruction completed in 2014. This is a national retailer, publicly traded company. Have purchased a two Project 13-D acre parcel in Indian Hills. Project was a hotel at 1-94. Investor and franchise lined up by City,study Project 13 F completed. Property owner not willing to sell property. Lead had evaluating a business tied to the Wobegon Trail. Provided several Project 13-H items of information as requested. Potential entrepreneur determined ideas was not feasible at this time. Lead had sought space for a photography business in the downtown. Project 13-I + Followed up on several occasions with information. Ultimately located in Waite Park as suitable space was not available downtown. Existing business was looking to expand in St.Joseph. Entered into purchase Project 13-J + agreement on property in town.Seller ultimately rescinded purchase agreement. Business remains in St.Joseph operating in expanded lease space. Providing technical assistance as requested.This contact relocated an existing Project 13-L manufacturing establishment following purchase of the company.The business was relocated to a bank owned property in St.Joseph in 2014. This project involved the opening of a used clothing/consignment shop in the Project 14-A downtown.The EDA assisted with a BFA grant. Business opened in summer. This project involves the development of a mixed use structure adjacent to Project 14-B College Avenue north of CSAH 75. I met with the developer on a couple of occasions early in 2014.This project is on the radar but on hold at this point. This project involved the new small business.The contact originally met with the Mayor and then on several occasions with EDA Director Strack.Strack Project 14-C provided location options, introductions to property owners,and introductions to potential end users.The business opened in November of this year downtown. This is the Bayou Blues project.The City approved TIF for this project in Project 14-D November of this year. This is a project involving the potential reuse of property in the downtown. Project 14-E _/ Several meetings and discussions occurred regarding City involvement with a redevelopment effort.Contact is ongoing. This project involves the potential construction of a new office building in St. Project 14-F Joseph. Numerous discussions and meetings have occurred. Potential project for 2015. CITY OF ST. JOSEPH EDA Annual Report I Goals Following were EDA goals for 2014 with updates on progress toward goals and plans for 2015. EXTEND SANITARY SEWER TO I-94/CSAH 2 Progress:City/EDA brought a hotel investor and franchise opportunity to property owners. Enhanced opportunity with a hotel study. Property owners refused project. Alr Up next: Developers must decide to go ahead with project. This is no longer viewed as the priority for EDA.Any activity will be property owner driven. DOWNTOWN REVITALIZATION Progress: Two new businesses opened in the Downtown in 2014. City approved Bayou Blues three story construction and TIF assistance. Up next: Continue focusing on one or two commercial lots and actively pursue revitalization resulting in additional commercial space. MARKET OUTREACH Progress: Real estate round table held; 'Best Neighbor lir program tried. Website content added relating to 'news'. Up next: Continue real estate round tables, website design/use, and business outreach. L// CITY OF ST. JOSEPH EDA Annual Report RESPOND TO INQUIRIES, PURSUE VIABLE LEADS 1111 Progress:Six new substantial leads generated in 2014. Three moved forward with projects, one looks promising for 2015. Remaining two are too early to tell. Up next: Convert at least two additional leads generated in 2014 into successful projects in St.Joseph in 2015. IMPLEMENT/ADMINISTER TECHNICAL/FINANCIAL ASSISTANCE PROGRAMS Progress: TIF and abatement projection analysis completed for five prospects in 2014. Numerous occurances of assistance/incentive promotion. J11- Up next: Utilize TIF/abatement and/or other incentives to secure advancement of Project 14-F. NEW GOAL: DOWNTOWN ALLEY PROJECT In 2014, several owners of property abutting alleys in the 100 Block of West Minnesota addressed the EDA regarding the condition of alleys. The EDA recommended action. Up next: A feasibility study has been authorized.The EDA will likely be asked to invest in public amenity elements if included. CITY OF ST. JOSEPH EDA Annual Report I NEW GOAL: MARKETING MAP UPDATE In 2014, the EDA initiated an update of a marketing map to be distributed at several business venues. The map would provide information to visitors. Up next: Complete map and work on distribution in 2015. NEW GOAL: EXPLORE SHOVEL READY LOTS - PARKWAY BUSINESS CENTER In 2014 the EDA made a conscious decision to seek a willing partner for the establishment of shovel ready lots. Meetings began with representatives of foreclosed property. Up next: Investigate shovel ready lot formation in area formerly known as "Parkway Business Center". NEW GOAL: SCDP OWNER OCCUPIED REHAB GRANT CLOSE- OUT In 2014, Central Minnesota Housing Partnership began administering a $600,000 grant on behalf of the EDA. Up next: A construction balance of$324,000 remains. The CMHP will continue to solicit rehab leads in 2015. THIS PAGE INTENTIONALLY LEFT BLANK