Loading...
HomeMy WebLinkAbout04.22.13 EDA Packet `ao�FARd1�yc iso AGENDA REGULAR ECONOMIC DEVELOPMENT AUTHORITY MEETING April 22, 2013 6:30 P.M. CONFERENCE ROOM 170 Todd Larson, Chair; Geraldine Jolley, Vice-Chair Douglas Bonar, Steve Wilson, Kirk Zeaman Action Taken 1. Call Meeting to Order 2. Pledge of Allegiance 3. Roll Call 4. Approve Agenda 5. Citizen Comments/Presentations 6. Consent Agenda a) Meeting Minutes (3/25/13 Regular) Approved b) Bills: 3/25/13 —4/21/13 Approved c) Budget December 2012, January—March 2013 Information Received 7. Public Hearings 8. Continued Business a) Business Subsidy Discussion Information Received b) Business Attraction Team Update (verbal) Information Received 9. New Business a) Approve Continued Participation in CDBG Funding Approved 10. City Staff Reports/Open Forum/Discussion 11. Adjourn MINUTES ECONOMIC DEVELOPMENT AUTHORITY Regular Meeting March 25, 2013 1. CALL TO ORDER The meeting was called to order by Chair Larson at 6:30 p.m. Members Present: Larson, Bonar, Jolley, Wilson, Zeaman Members Absent: None Also Present: Lee Smick, City Planner; Cynthia Muller, Executive Assistant Audience: Andy Klaussen, Clyde Rath 2. PLEDGE OF ALLEGIANCE 3. ROLL CALL 4. APPROVE AGENDA MOTION by Wilson, second by Zeaman to approve the Agenda. APIF,MOTION CARRIED. 5. CITIZEN COMMENTS/PRESENTATIONS 6. CONSENT AGENDA MOTION by Bonar, second by Wilson to approve the Consent Agenda as follows: a) Approved Meeting Minutes (2/25/13 Regular)(2/28/13 Special) APIF, MOTION CARRIED. 7. PUBLIC HEARINGS 8. CONTINUED BUSINESS a) Appoint Business Attraction Team Member Wilson suggested appointing one person from the school district to allow for another opening for a business owner. He also suggested appointing a realtor to the team. Staff has received two applications from business owners, and the Superintendent is interested. Members agreed to not extend the deadline to receive more applications. If staff hears of an additional person who could add value, staff should place them on the team. Member Wilson suggested a business owner that is outside of Farmington that perhaps does business in Farmington. MOTION by Bonar, second by Wilson to appoint Amanda Pellicci, Lisa Franxman, Superintendent Jay Haugen, Mark Loftus, Chair Larson, and Member Jolley to the Business Attraction Team. Member Wilson will serve as an alternate for the EDA members. APIF, MOTION CARRIED. EDA Minutes(Regular) March 25,2013 Page 2 b) Business Subsidy Discussion City Planner Smick is looking at a 3-6 month timeframe to develop a business subsidy policy. The City receives property taxes in July and that is when the EDA will have funding available. The most important trend right now is business retention and expansion. Staff had examples of incentives from other cities. Members noted there are a lot of façade improvement programs. City Planner Smick has worked with City Attorney Poehler on a draft Business Incentive Program. The EDA needs to determine what kind of incentive we want to give the businesses. Do we want to keep existing businesses,help them expand, allow new businesses to come in, or both. City Attorney Poehler stated the EDA's authority to act is provided in the State law. There are many statutes that apply to EDA's and what their powers are. As long as the EDA is working towards economic development or housing and redevelopment,we can typically find the necessary powers to do this. Through the CDA and CDBG you may be limited to the type of funding. Each state has different laws as to what EDA's are allowed to do. Members suggested developing a policy that allows for a broad application of dollars that allows us to be flexible. City Planner Smick noted the EDA needs to determine if they want to help and encourage new businesses, or help existing businesses expand, or both. Members agreed we should help both types. The EDA also needs to determine what size business they want to help,the number of employees, or the purpose of the business. Should we put in infrastructure for businesses? Member Wilson suggested putting the funding sources into buckets to provide a menu of options. Then we can determine which business falls into which bucket. Staff noted the business criteria and fairness issue will be huge. The EDA should also consider do we have enough incentives? Mayor Larson stated we do want to help businesses, we are doing the right things and we should continue. Member Zeaman recalled we need to determine which businesses we want to attract. Member Jolley noted there was a comment at a business visit that the person who goes out and finds a program that will work for him and comes to the City with it, shouldn't he have a preference. A few months ago we talked about what is fair. If a program works for one, should it be offered to others that are just as eligible? City Planner Smick stated the EDA also needs to decide on a timeline of when a business can apply for a second grant. Mayor Larson felt that may be on a case by case basis, and what they have done, and what they will be doing. City Attorney Poehler reviewed the Business Incentive Program. It gets back to what is the purpose or the goal for the incentive; retain existing businesses,bring in new businesses, or both. Member Bonar suggested looking at the maturity of a business and at what point do incentives no longer serve a good public purpose. City Attorney Poehler stated it gets back to what is your public purpose; to fix up facades, to expand employees, or keep them here. They also need to pass the"but for"test. We would come up with the criteria based on what the EDA is looking EDA Minutes(Regular) March 25,2013 Page 3 for. Staff noted we already have the low/moderate criteria met through block grants. So the incentive program developed would not have to include low/moderate criteria. Mayor Larson would like to see criteria developed for specific niches that could work for both new and existing businesses and not have five programs that do the same thing. Mr. Andy Klaussen, Roundbank, noted what the EDA develops will be vital to bankers in town. Banks need a document they can read, especially what bucket things fit into. He asked if the EDA was looking to bring in more full time employee jobs and get those employees buying in the stores, or is it a tax paying entity? Members felt it was both. There will be further discussion on business incentives at future meetings. 9. NEW BUSINESS 10. CITY STAFF REPORTS a) April Business Visits Staff was having difficulty arranging visits with businesses. Mayor Larson suggested having business visits once a month. City Planner Smick will provide information on the business a week prior to the visit. Member Wilson suggested giving the businesses something, such as a contact sheet for Council, EDA, and City staff. b) Bank Summit Update This event went very well. This gathering will be held again in the future. Mr. Klaussen stated he was shocked at all the options that are available and the partnerships the City has with other agencies. He was looking forward to an opportunity when a new business comes to him and the bank can't help, he can give them these other options. 11. ADJOURN MOTION by Zeaman, second by Jolley to adjourn at 7:45 p.m. APIF,MOTION CARRIED. Respectfully submitted, Cynthia Muller Executive Assistant 6� AI T. 9 01 j 0 el o vI 0 § k Z Z Z Zr- ct ) 0. ) g 0 0 to U1 U1 0 0 0 g g 0 / 0 0 0 R Co 2 = I CO ) § 3 o 0. ) -j va o 0 ) a. < § co 2 § [ 21 N= )§ vc) or■ S CO co ._ © 2I 0 0 N cm @ § co § ] « n § IL 03 / 0 Z N 6 th ° CO co N to o o / ( ( -El o o- cm 210 a o ) ( k g z U1 o 2 - & 2 ( 2 0 0 P N ` § % § a § 0 a 0 \ W § S k § $ Cl) § o 0 / Cl < a CO k « • _ F a Lu To \ k 2 2 e § ) a t t § ƒ "ii < 8 8 7 7 § k > co 0 < eV L4 Pi o L4 § .c k co § k § qt 2 J SO § z . § § § 0 ‘Ie... e ee ee e e N g at a °N e a 12 q > 2Z z $ N Q, q Y. q C . m . ' ' v . ' kg O ' g m ' N ' E W V ' i c �p N p m d ri eq C en K Q , O 1 v.--.Li- A 4 tliN N N g b m- N t0 W A m g m 4 (§ g y� 9g Z a m m 1 m to d+ g N N O Y VV H H Y V . 0 m -8 W 2 S O v - - 'g 4J w g a m Y 1 a a — w 2 V. : r ii F m a a _ 1 g m m i m m g a • g m m a S. oo p 14.- n N 2 r W 4 pj m m g �i 4 W ' 31 2 i 0 oo O r 5 {h N n N iD O C � E i f9 a w 1 1 $ l°' 88 r Q zg i N N N ' O V M l0 C; Yv 111 gl qNCO ON N C 1 w �o _ v E ee 18 61111 1 1 q biIllIIIin _- qi "!I' 6 R I- � j a i i Oahal Iii$$ilfligillIM 111 if21 IL i g Z Zo og PI g 8 2Z $ r 5 1 w w ~ $ 7.1 . 1 . 8 V V wN. g< W< 49 N E W m m 4, . . ill il I , § ill z z m r e e t _ m2 mmo 8 m 8 m 49 0 - IT, _ w i § , 1 1 B a m a W to , $ ; 1 g -a Qp a w — , _1* Ii W so; lil § tii .1 1 a LL ILJII� A . _ 89 u. ..f I i ii 6 Q 4 y7 N ° of N O A 1- _� , L 6 p m 1 m 1� N m a . fV LL6 1 J (A Q Q F" lb' w 4 W =" E 1 N o ii g r l �i- 1 1 1 2 [ 111° a � 1 A il gr 1 III E elthlt°6F- Bilq 1 = * §m o g / 1 111"911 H115111 1Ai NNNN n�N 11 LL ig o�EAR�i City of Farmington VAS& 430 Third Street Farmington,Minnesota c, 651.280.6800•Fax 651.280.6899 A `P www.ci.farmingtommn.us TO: EDA Members FROM: Lee Smick,AICP CNU-A City Planner/Economic Development SUBJECT: Business Subsidy Policy DATE: April 22, 2013 INTRODUCTION/DISCUSSION At the meeting on March 25, 2013,the Economic Development Authority(EDA) requested that staff prepare information concerning the various funding programs at the State, County, and Local levels of government. The"bucket"funding lists are attached as Exhibit A. Staff will briefly address this information. However,before the EDA begins the discussion about local incentives, a discussion about the latest information concerning the viability of incentives should be addressed. Eighty billion dollars was spent last year by local and state governments on economic development incentives, according to a report prepared by the New York Times. Minnesota spends at least$239 million per year on incentive programs, according to the most recent data available. That is roughly$45 per capita and one cent per dollar in the State's budget. Because of this report, staff has researched a number of studies on the merits of offering incentives versus not offering them or only offering them to smaller businesses under 50 employees. An article from the International City/County Management Association(ICMA) on "Incentives for Business Attraction and Retention" (2012) reports the following: "Most incentives are used either as a marketing mechanism to increase the number of firms that will consider relocating to the jurisdiction or as a tool for completing a deal once one or more prospects have been identified and negotiations are under way. Incentives are most likely to be effective as tools of business attraction when they are targeted to the specific needs of the firms being recruited". The article goes on to say the following: "Public incentives have come under considerable scrutiny, highlighting a rift between those who question the use of incentives as an economic development tool and those who support incentives. Opponents of incentives believe the following: • Incentives create unnecessary competition among jurisdictions and often amount to zero-sum games. (Zero-sum games: Corporate clients take all they can get—sometimes pitting local governments against each another—but seldom are held to promises to produce jobs, or even to stay put.) • Companies should exhibit loyalty to their communities because it is the right thing to do,not because they are receiving incentives. • Once incentives are extended to private firms,those firms will continue to demand more from government. • Monies that go to businesses as incentives would be better spent on social, educational, and other programs. • Firms are rarely held accountable for staying in the community or for generating jobs or other economic development outcomes once they have received incentives. Proponents of incentives believe the following: • New businesses generate additional tax revenue that is essential for providing public services; despite tax incentives,the community keeps most of the additional revenue generated. • Businesses are important members of the community; if businesses remain competitive,the community's efforts for businesses will rebound(come back)to the community's benefit. • Incentives to firms amount to a community's investment in its economic future; the return on investment makes the risk worth taking. The academic literature is divided on the appropriateness of incentives... Studies appear to agree on three key points: • With few exceptions, incentives will not effectively influence firm location decisions. • The truly important factors in business location decisions are transportation considerations, labor quality, and markets. • The best way for government to influence firm location is to create and sustain quality communities. Another finding is that incentives look better when used as a short-term strategy. It is interesting that more jobs are created by expanding existing businesses in the community than by attracting new businesses from outside the community." Staff will also discuss further research at the meeting on the topics of incentive merits as shown in the attached report from the Buxton Company, a leader in marketing and site selection(Ex. B). Additional research from "The Atlantic Cities"magazine and"Area Development Online"will also be studied. However,the information above begs the question, "What is the most important factor that a Site Selector/Corporate Manager makes in reviewing potential locations for their business?" A survey completed in 2012 asked this same question. The"Area Development Online: Site and Facility Planning"website performed a research study(their 9th Annual Survey) of more than 120 leading site selection consultants who work with corporate end-users.Nearly 90 percent of the responding consultants say executive management is involved in the site selection process. In its findings, Site Selectors/Corporate Management rank labor costs first, highway accessibility second, and availability of labor third. Corporate taxes were#7 on the ranking list,tax exemptions were#10,while state and local incentives ranked#13. Staff has attached the findings of this report in Exhibit C. This report provides detailed information on site selection factors including incentives,but a wealth of additional topics such as labor and infrastructure were also included. The report was printed without charts due to a formatting issue. Staff is awaiting the report from its publisher. Additional findings about the importance of incentives will be discussed at the EDA meeting. ACTION REQUESTED Staff has attached some of the researched studies to this memo for your review. In the meeting, staff will discuss the gathered research about the incentive merits and will ask for feedback. Respectfully submitted, tam _ Lee Smick, AICP CNU-A City Planner in 1 CD co m (.., ro O U +-+ c C 0 a OD C 0 v, c N = f0 W _ rti• 1 C 4 (6 O U 4 p CO O �_ j aJ T-I ' 0 •� :G E -o a) °o L U N N Co LL C cti• CO U N �} O cB y v •E X 2O c ++ •" — c H +' cn U O 0 a .3 a Li z .n o o m a • • • U N L CO U i L aJ +•+ C x O = O N N E a) }, v CU a)c E O bA 4- N L O C T 41 c C c O 0 O c_ c N �> C co =I O 5 p W N N a) a) O O ti E o O t/� N O O U $ c a) Q: a1 x N X a CD Ln "- L CO ;� _ Co v Co n 2 2 0 m � • • • "-I • • • i 0 'I - N 'O N +, N 4- CU > C o U) _ -0 •V 0 0 W N co O C a c O Q t U o o _c o c t,m V L.L. '` °o x p `o v +� m •= LA" N X *' m •� 0 CO o a) 0) 0 -0 E U c = 0 V v a L) v u o a > 0 m c • Minnesota Investment Fund Program Program To create new and retain the highest quality jobs possible on a statewide basis Purpose: with a focus on industrial, manufacturing and technology related Industries. Funding Department of Housing and Urban Development (HUD), Small Cities Development Sources: Program (federal funds) and Minnesota Investment Fund (MIF) Revolving account (state funds), which is repayments from state funded projects. How It Funds are awarded to local units of government, which provide loans to assist Works: expanding businesses. Cities, counties, townships and recognized Indian tribal governments are eligible applicants. When state funds are used, the grantee may retain 20% of the loan principal and interest repayments up to$100,000. When a project is awarded with federal funds the grantee retains all of the principal and interest repayment. Determinations as to the source of funding used are made by DEED. Eligible Loans are made for land, buildings, equipment and infrastructure necessary Projects: to support business expansions. Ineligible Working capital, refinancing of existing debt, retail businesses, casinos, sports facilities Projects: and industrial park development. Maximum $500,000 per project Available: Other Funds A minimum of 50% of the total project costs must be privately financed through various Required: lending sources and owner equity. Job Creation/ All funded jobs must meet a wage threshold of 110% of the federal poverty level Wages: for a family of four, which, as of February 24, 2012 is $12.19/hour. Furthermore, each job must pay, at a minimum, cash wage of$10.25 per hour in non-metro areas of Minnesota (the balance may be Benefits) and $13.00 per hour in the seven county Twin Cities Metro area. This requirement includes benefits not mandated by law. For projects funded with Federal CDBG funds, 51% of the jobs created must benefit low and moderate income people. Project Timeline: Two years to satisfy the job goals. Loan Terms: Real estate: maximum of 20 years; machinery and equipment: maximum of 10 years. Interest Rate: Negotiated. Collateral: Negotiated. Personal or Corporate guarantees may be required. Disbursement: As costs are incurred but prorated with other sources of funding. si A(Y nt Innesta- Emerging Entrepreneur Fund (EEF) Program To provide financing for small and micro-businesses that are starting up or expanding Purpose: throughout Minnesota, placing special emphasis on underserved communities. How it Works: The MN Department of Employment and Economic Development (DEED) has received federal funding though the U.S. Department of the Treasury and has partnered with approved lenders to increase debt financing activity. Eligible Businesses with fewer than 500 employees company-wide are eligible; however the Applicants: funding is focused on microenterprises and businesses with fewer than 50 employees. The fund targets underserved small business communities including those in economically distressed areas as well as minority and women-owned businesses. Target It is expected that the many of the businesses receiving financial support through this Guidelines: program will be owned and operated by a woman or a minority; or that they will be located in areas identified by DEED as distressed. Distressed areas are measured by population loss, higher than statewide average unemployment rate, and lower than statewide median household income. Eligible Start-up costs, working capital, business procurement, franchise fees, equipment, Projects: inventory, as well as the purchase, construction renovation, or tenant improvements of an eligible place of business that is not for passive real estate investment. Projects that include passive real estate are only allowed on a limited basis as determined by U.S. Department of the Treasury guidelines. Financing of existing debt is not permitted. Funding The EEF funds may total up to $150,000 per loan and must be matched on at least a one- Available: to-one basis. Participating lenders in the EEF program are encouraged to structure their loan proposals to achieve at least a 5:1 leverage of DEED/Treasury funds. Interest Each qualified program lender has the authority to determine the specific interest rate and Rate/Terms: collateral requirements within program guidelines. Application Qualified lenders accept applications on a rolling basis. Application forms and procedures Process: will vary with the lender. Interested businesses should apply with the participating lender. DEED is notified of all loans approved by the participating lenders. Website: www.positivelyminnesota.com/ssbci Contact: Bart Bevins, Emerging Entrepreneur Fund MN Department of Employment and Economic Development (DEED) Phone: 651-259-7424 or 800-657-3858 E-Mail: Bart.Bevins @state.mn.us Business and Community Development Division 1st National Bank Building • 332 Minnesota Street,Suite E200 • Saint Paul, MN 55101-2146 USA www.positivelyminnesota.com Toll Free:800-657-3858 • Phone:651-259-7424 • Fax:651-296-5287 • TTY:651-296-3900 An Equal Opportunity Employer and Service Provider &-x......- F BUXTON: The Arguments Against Development Incentives By Bill R. Shelton, CEcD Development incentives are the inducements used by state and local governments to attract and retain businesses. Originally used to overcome disincentives or disadvantaged developments, they have increased exponentially and today are considered essential and necessary by their proponents for economic development success and job creation. Yet many economists and policy analysts argue that incentives waste public dollars and divert funds from essential public sector services. Are incentives good or bad? Should our community offer incentives? Many community leaders have faced these two questions and searched for answers. This article is the first of two that explores the pros and cons of development incentives. The purpose of the two articles is neither to validate the "con" argument, nor to defend their use. Its intent is to present additional details on the deliberations for the uses of incentives as presented in recent news stones carried in The New York Times. Following are four widely used arguments against development incentives and their use by local and state governments: Incentives make little or no difference. The thesis that incentives have an insignificant effect on location decisions is by far the principal objection to the use of incentives that is found in social science literature. This conclusion about the role of incentives is generally obtained from surveys or interviews of facilities planners (business real estate executives.) For instance, in trying to determine what factors influence the location decision, the survey might ask the respondent to list the factors in their order of importance. When this method is used, it is apparent that the most prevalent factors are ongoing operating costs such as wages, transportation and facility costs, and incentives are a lessor factor than others. Incentives are unfair and inequitable. Critics argue that incentives that benefit businesses often place costly demands on state and local governments. Therefore, they argue incentives that are provided to one business shift the community's fiscal burdens to other businesses or citizens of the community. Incentives penalize small businesses. Concern is expressed that the criteria for incentives consideration favors larger businesses that are in an expansion mode. Therefore, small or struggling businesses are not only excluded, but they have to pay an inequitable share to offset the benefits provided to a company that may be in better financial conditions. Incentives are symbolic politics. This argument contends that incentives are offered to foster an image of a hospitable business climate. They symbolize the community's high regard for the private sector and their willingness to help reduce high relocation or startup costs. 1 Are incentives "giveaways" to businesses or an investment in the community?Are they good or bad?These are tough policy questions that have faced local governing bodies as they have struggled to establish incentive policies and attempts to expand or attract businesses. The next issue of The Competitive Community will explore the pro side of incentives. BUXTON: The Arguments For Development Incentives By Bill R. Shelton, CEcD In the last issue, we discussed Arguments Against Development Incentives. Now we are going to present an argument for them. In today's competitive market place, development incentives are a component of most communities' economic development program and often considered necessary for their success. Communities and states justify the use of incentives as a way of attracting and expanding businesses by reducing the costs associated with start-up or relocation costs and hence sharing the risks with business. Yet the issue of offering incentives is a hotly debated public policy decision often fraught with anger and emotions. The recent three articles in The New York Times have spurred dialogue both for and against the use of incentives. Incentives keep us competitive There are two pro arguments for using incentives for competitive advantage. One is that business costs such as energy, communication and transportation have fallen or equalized resulting in more freedom of location choices. And at the same time other costs such as wages and taxes have gone up, resulting in businesses demand for tax incentives. Taxes are one of the few factors that communities can changes or incentivized with relative easy. The other pro argument is that the competition (other communities or states) offer incentives, therefore to be competitive the community must have incentives equal to or greater than its competitors. The conclusion is that a community without incentives in today's economic development market has a difficult, if not impossible, time competing. Incentives are tie-breakers When a business finds two or more communities to be equally attractive it is argued that incentives are critical as a location-decision tie-breaker. Incentives help us achieve our economic and social goals These goals can be achieved by targeting incentives toward businesses and industries that achieve the community's economic and social goals, or to locate businesses in designated redevelopment areas. Incentives are an investment in our community Proponents argue that by using incentives as investments in the community they both encourage private investment and offer the potential of economic reward. 2 Incentives are not inherently good or bad, right or wrong. They are an economic development tool that can create tangible benefits for the community but they carry some risk unless proper safeguards are in place. Communities can mitigate the financial risk by making an accurate costs/benefit analysis to determine if the development project's benefits will outweigh the costs. 3 6)< . & 9th Annual Survey of Site Selection Consultants: Slightly More Optimism-Area Development Magazine Special Presentation (Q1/Winter 2013) For the ninth consecutive year,Area Development asked the consultants who work with corporate end- users of facilities—as well as with economic development organizations, i.e.,oftentimes consultants wear two hats—to tell us about their clients'facility plans and priorities. More than 120 consultants responded. However,since only 37 percent of those responding to our latest Corporate Survey say they use the services of consultants when site selecting,the facility plans and priorities of the responding consultants'clients may be quite different than those of the Corporate Survey respondents. Let's see just how different they are. More than 50 percent of the responding consultants say they have worked on projects for durable goods manufacturers as well as for distribution/logistics firms.About a third have also worked with non- durable goods and other manufacturers,as well as with those in the healthcare/life sciences industries and those who provide data-and computer-related services More than 70 percent of the respondents to our Consultants Survey say they are providing location studies/comparative analyses to their clients;two thirds are negotiating and managing incentives on their clients' behalf;and 40 percent handle their clients' real estate transactions. About half of the respondents say they work primarily with mid-size firms in terms of their employment numbers(100-499),while more than a third also work with companies employing 500 or more people. The respondents to our 9th Annual Consultants Survey also say they work with their clients'real estate (63 percent),tax and finance(54 percent),and other business unit management(55 percent). More than 60 percent of the responding consultants say their clients have gathered preliminary data prior to engaging their services.About half also say their client firms have narrowed down the geographic area in which they wish to locate,and a fifth actually claim their clients defer to them on the final location decision. The consultants who responded to our survey are slightly more optimistic about the state of the economy than the respondents to our 27th Annual Corporate Survey:33 percent of the consultants expect the economy to improve by the end of this year A third of the responding consultants also acknowledge that some clients are putting facility plans on hold and deferring capital spending as a result of anemic economic growth. A quarter of the respondents to our 9th Annual Consultants Survey say most of their clients who expect to open new facilities plan to do so within one year; more than half say their clients will open new facilities within two years. Two thirds of the responding consultants also say their clients will open just one new facility. 1 . , I The respondents to our Consultants Survey are primarily working on domestic projects slated for the South Atlantic-North Carolina,South Carolina,Virginia,West Virginia (16 percent of the projects);the South-Alabama, Florida,Georgia, Louisiana, Mississippi(15 percent);and the Southwest(Arizona, New Mexico,Oklahoma,Texas(13 percent). When considering all of the new domestic facilities projects the responding consultants are working on, about 30 percent will be manufacturing plants and a quarter will house warehouse/distribution operations As for expected new foreign facilities,the respondents to our Consultants Survey say many of the ones they are working on will be in Canada (17 percent)as well as Mexico (16 percent); 15 percent in Asia; and more than 10 percent in Western Europe as well as South America. The respondents to our 27th Annual Corporate Survey also slated more than 10 percent of their foreign projects for each of these latter two regions, but far fewer for our neighbors to the north and south.Of those clients' projects slated for Asia,China will garner the largest share-29 percent. More than a third of the responding consultants'clients' new foreign facilities will be manufacturing operations,with 17 percent expected to house warehouse/distribution centers. Twenty eight percent of the consultants say they have seen an increase in the number of companies establishing foreign facilities as opposed to domestic ones. More than a third cite rising foreign labor costs,and nearly 30 percent say their clients are encountering rising energy costs as well as having problems finding qualified and/or English-speaking labor. Of their clients planning relocations, proximity to suppliers/markets served as well as the need to lower labor costs,seems to be driving the decision. When asked why their clients are not spending more of their money on investment in U.S.facilities, about half of the responding consultants blamed high taxes and excessive government regulations,as well as uncertainty about taxes and regulations for 2013 and beyond. The responding consultants agree with the Corporate Survey respondents in that 61 percent say unemployment rates are not making it easier for their clients to find the labor they need. More than 80 percent of the consultants also say the unemployed are lacking the advanced skills their client companies require. This may be why only 49 percent of the respondents to our Consultants Survey rate availability of unskilled labor as"very important"or"important,"similar to our corporate respondents,and placing this factor 24th in priority. Nevertheless,fully two thirds of the responding consultants believe that their clients are less than 25 percent dependent on contract or contingent labor. More than 80 percent claim the existence of an available building is very or somewhat important in their clients'site searches. 2 More than three quarters affirm the importance of a shovel ready or pre-certified sites. Sixty one percent of the consultants say incentives have always been of great importance to their clients. Three quarters of the responding consultants say tax credits,exemptions,and the like are most Unfortunately,almost 30 percent of the consultants claim that their clients have had to repay incentives monies because job creation or investment obligations were not met Nearly half of the consultants responding to our 9th Annual Consultants Survey also have found communities offering incentives for"green initiatives," although only 23 percent say their clients have encountered "green performance" requirements as a stipulation for receiving incentives. Energy availability and costs is considered "very important" or"important" by 89.3 percent of the responding consultants, placing this factor in ninth position. In fact, more than 40 percent of the consultants say high energy costs are affecting their clients'facility operations Two thirds also say sustainable development is more important to their clients now than in the past. In response to this,three quarters of the consultants say their clients are making energy-saving modifications to their facilities;about two thirds say their clients are also recycling or re-using waste Eighty five percent of the responding consultants say their clients consider the existence of businesses in the area of search performing similar activities to theirs,with the same percentage considering this factor as very or somewhat important. We also asked our Consultants Survey-takers to rate the site selection and quality-of-life factors as"very important," "important," "minor consideration,"or"of no importance" in their clients' location decisions.The importance ratings and corresponding rankings, along with last year's consultants' ratings and rankings of the factors are available. More than 50 percent of the responding consultants say they have worked on projects for durable goods manufacturers as well as for distribution/logistics firms. About a third has also worked with non-durable goods and other manufacturers,as well as with those in the healthcare/life sciences industries and those who provide data-and computer-related services. More than 70 percent of the respondents to our Consultants Survey say they are providing location studies/comparative analyses to their clients;two thirds are negotiating and managing incentives on their clients' behalf; and 40 percent handle their clients' real estate transactions. About half of the respondents say they work primarily with mid-size firms in terms of their employment numbers(100-499),while more than a third also work with companies employing 500 or more people. Needless to say, nearly 90 percent of the responding consultants say executive management at their client firms is involved in the site selection process.The respondents to our 9th Annual Consultants Survey also say they work with their clients' real estate(63 percent),tax and finance (54 percent),and other business unit management(55 percent). In fact, more than 60 percent of the responding 3 consultants say their clients have gathered preliminary data prior to engaging their services.About half also say their client firms have narrowed down the geographic area in which they wish to locate,and a fifth actually claim their clients defer to them on the final location decision. Interestingly,the consultants who responded to our survey are slightly more optimistic about the state of the economy than the respondents to our 27th Annual Corporate Survey:33 percent of the consultants expect the economy to improve by the end of this year,whereas only 21 percent of the corporate respondents expect it to do so. In fact, more than 40 percent of the responding consultants say their clients still plan to open new facilities or expand despite the sluggish U.S. economic recovery (less than a quarter of the Corporate Survey respondents made that claim).Yet,a third of the responding consultants also acknowledge that some clients are putting facility plans on hold and deferring capital spending as a result of anemic economic growth. Clients'New Facilities&Relocation Plans A quarter of the respondents to our 9th Annual Consultants Survey say most of their clients who expect to open new facilities plan to do so within one year; more than half say their clients will open new facilities within two years.Two thirds of the responding consultants also say their clients will open just one new facility—fewer new facilities than our Corporate Survey respondents say they are planning, but perhaps this is because the responding consultants are only engaged by their clients on one project at a time.The respondents to our Consultants Survey are primarily working on domestic projects slated for the South Atlantic— North Carolina,South Carolina,Virginia,West Virginia (16 percent of the projects);the South —Alabama, Florida,Georgia, Louisiana, Mississippi(15 percent);and the Southwest (Arizona, New Mexico,Oklahoma,Texas(13 percent), regions that are also heavily favored by our Corporate Survey respondents.When considering all of the new domestic facilities projects the responding consultants are working on,about 30 percent will be manufacturing plants and a quarter will house warehouse/distribution operations. As for expected new foreign facilities,the respondents to our Consultants Survey say many of the ones they are working on will be in Canada (17 percent)as well as Mexico (16 percent); 15 percent in Asia; and more than 10 percent in Western Europe as well as South America. Interestingly,the respondents to our 27th Annual Corporate Survey also slated more than 10 percent of their foreign projects for each of these latter two regions, but far fewer for our neighbors to the north and south.Of those clients' projects slated for Asia,China will garner the largest share — 29 percent. More than a third of the responding consultants'clients' new foreign facilities will be manufacturing operations,with 17 percent expected to house warehouse/distribution centers.Additionally,28 percent of the consultants say they have seen an increase in the number of companies establishing foreign facilities as opposed to domestic ones. Nonetheless,two thirds say their clients are not expecting to locate a foreign operation/facility back to the United States.Of the third of the consultants who say their clients will re-shore, more than half explain that this is because their clients are having product quality issues at their foreign facilities and are also concerned about the cost of transporting supplies/products from overseas. More than a third cite rising foreign labor costs,and nearly 30 percent 4 say their clients are encountering rising energy costs as well as having problems finding qualified and/or English-speaking labor. We also asked the Consultants Survey-takers about their clients'domestic relocation plans. More than 80 percent say that their clients who expect to relocate a domestic facility will do so within one or two years.Of their clients planning relocations, proximity to suppliers/markets served as well as the need to lower labor costs,seems to be driving the decision. When asked why their clients are not spending more of their money on investment in U.S.facilities, about half of the responding consultants blamed high taxes and excessive government regulations,as well as uncertainty about taxes and regulations for 2013 and beyond.The respondents to our 27th Annual Corporate Survey had similar concerns. Clients'Site Selection Priorities We also asked our Consultants Survey-takers to rate the site selection and quality-of-life factors as"very important, "important," "minor consideration,"or"of no importance" in their clients' location decisions.The importance ratings and corresponding rankings,along with last year's consultants' ratings and rankings of the factors are available. Before examining the specific factors, it should be noted that eight of the top-10 factors are rated "very important"or"important" by at least 90 percent of the responding consultants. However,only two factors(labor costs and highway accessibility) received importance ratings of more than 90 percent by the respondents to the 27th Annual Corporate Survey. Nevertheless,the respondents to our Consultants Survey consider the same three site selection factors as top priorities as do the respondents to our Corporate Survey— in slightly different order. The responding consultants rank highway accessibility as the number-one factor,with a 98.3 percent combined "very important"or"important" rating,exactly the same as the prior year's Consultants Survey's respondents.Availability of skilled labor is ranked second with a 96.5 percent importance rating,and labor costs is ranked third with a 93 percent combined importance rating. In keeping with the importance of labor costs,the consultant's tenth-ranked factor is low union profile, with an 89.2 percent combined rating,representing a seven percentage point year-over-year increase — the third-largest jump in importance among the site selection factors in the Consultants Survey. Nonunion labor is traditionally lower-cost than organized labor with its concomitant benefits.The responding consultants agree with the Corporate Survey respondents in that 61 percent say unemployment rates are not making it easier for their clients to find the labor they need. More than 80 percent of the consultants also say the unemployed are lacking the advanced skills their client companies require.This may be why only 49 percent of the respondents to our Consultants Survey rate availability of unskilled labor as"very important"or"important," similar to our corporate respondents, and placing this factor 24th in priority. Nevertheless,fully two thirds of the responding consultants believe that their clients are less than 25 percent dependent on contract or contingent labor. 5 This lack of skilled labor has resulted in huge increases in the importance of proximity to technical college/training as well as training programs in general.These two factors show the greatest increases among site selection factors in their importance ratings by the consultants—jumping 19.4 and 13.2 percentage points, respectively,and now considered "very important"or"important" by more than three quarters of the responding consultants. Proximity to technical college/training also showed the largest percentage increase in importance in the Corporate Survey. The factor showing the biggest jump in the consultants' rankings is expedited or fast-track permitting— up five spots from 10th place in the prior year's Consultants Survey to fifth position this year. Consultants know the importance of speed to market and getting a client's project up and running quickly.Consequently, in a related question, more than 80 percent claim the existence of an available building is very or somewhat important in their clients'site searches,and more than three quarters affirm the importance of a shovel-ready or pre-certified site. Proximity to major markets is ranked fourth by the consultants,with a combined "very important"or "important" rating of 92.9 percent.Two other market-access factors— railroad service and waterway or ocean port accessibility—also show increases in their importance ratings,although the consultants still rank them at the bottom of the list of site selection factors considered by their clients in the location search. State and local incentives is ranked sixth among the site selection factors,and tax exemptions and corporate tax rate are tied for seventh position; all three of these factors are considered "very important"or"important" by more than 90 percent of the responding consultants.This is not surprising considering 61 percent of the consultants say incentives have always been of great importance to their clients. Remember,70 percent of the Corporate Survey respondents say incentives are very or somewhat important to moving a project forward in a particular location. Three quarters of the responding consultants say tax credits,exemptions,and the like are most important to their clients,and more than half say worker training incentives are equally important. Unfortunately,almost 30 percent of the consultants claim that their clients have had to repay incentives monies because job creation or investment obligations were not met. Nearly half of the consultants responding to our 9th Annual Consultants Survey also have found communities offering incentives for"green initiatives,"although only 23 percent say their clients have encountered "green performance" requirements as a stipulation for receiving incentives. This is important since energy availability and costs is considered"very important"or"important" by 89.3 percent of the responding consultants, placing this factor in ninth position. In fact, more than 40 percent of the consultants say high energy costs are affecting their clients'facility operations.Two thirds also say sustainable development is more important to their clients now than in the past. In response to this,three quarters of the consultants say their clients are making energy-saving modifications to their facilities;about two thirds say their clients are also recycling or re-using waste products; and more than half claim clients are seeking LEED certification for new or existing facilities. 6 Finally, in a response similar to that given by the Corporate Survey respondents,85 percent of the responding consultants say their clients consider the existence of businesses in the area of search performing similar activities to theirs,with the same percentage considering this factor as very or somewhat important. In the separate ranking of quality-of-life factors,the respondents to our 9th Annual Consultants Survey consider colleges and universities in area the number-one factor,with nearly 80 percent rating it as "very important"or"important" —a 10.2 percentage point increase over this factor's ranking in the year-prior survey. The responding consultants consider low crime rate nearly as important, ranking it second,followed by educational and housing factors.With housing costs having dropped dramatically over the last few years in many parts of the country,this factor showed the largest decrease in its combined importance rating among all factors considered by the consultants—site selection and quality-of-life(-19.4 percentage points).And the cultural opportunities factor showed a 14.8 percent decrease in importance,achieving only a 43.8 percent combined importance rating and ranking last among quality-of-life factors on the consultants' list. Consultants'Sources Information Similar to the Corporate Survey respondents, nearly three quarters of the responding consultants have used magazines like Area Development as a source of information when site selecting for their clients over the past two years.A similar percentage has used economic data aggregators. Needless to say, personal visits to areas of interest remain the top source of information as claimed by 84 percent of the consultants. More than half of the consultants who took our survey maintain their own site selection database;yet nearly all(90 percent)also search the Internet for site and facility planning information.They are primarily looking for data on specific locations and contact information for economic development agencies(87 percent).Two thirds are seeking listings of available sites and buildings,e.g., utilizing FastFacility. More than 80 percent say between one and five locations make their clients' "short list," and nearly 60 percent say they and their clients generally visit up to five locations before making a final site selection decision.And,88 percent of the respondents claim their clients usually reach a site decision within one year of engaging their services. 7 April 22,2013 Manager/Administrator City Address • Town,MN Zip Code RE: PARTICIPATION IN THE DAKOTA COUNTY CDBG,HOME, & ESG PROGRAMS Dear Manager/Administrator: Every three years, the U.S. Department of Housing and Urban Development(HUD)requires urban counties to requalify their entitlement status and participating communities for the purpose of awarding Community Development Block Grant(CDBG) and HOME Investment Partnership Program funds. Dakota County has qualified as an urban county and has received an annual allocation of CDBG funds since 1984. CDBG-funded activities have been a key element to keep our communities strong and vibrant. For the first time, Dakota County will also be receiving Emergency Solutions Grant(ESG)Program funds. The ESG Program assists individuals and families to quickly regain stability in permanent housing after experiencing a housing crisis or homelessness. The ESG Program will be administered by the Dakota County Social Services department. Receiving ESG funding requires ESG to be incorporated into the Cooperation Agreement between Dakota County and the City of . A supplement agreement to the Cooperation Agreement will be sent to you in the near future for your signature. The successful use of these federal programs is due to the active involvement and support from local government. We hope to continue this partnership. If you choose to remain a participant of Dakota County's CDBG,HOME, and ESG programs, your city/township would continue to be eligible for funding through Dakota County and the Dakota County CDA as its program administrator;however,you would be ineligible to apply for the state Small Cities CDBG program. If your city or township chooses to continue participation,no action is necessary. The existing Cooperation Agreement will automatically renew unless you specifically request to terminate,per Section III of the agreement. If your city or township chooses to terminate their participation,it must notify both the CDA and the HUD Field Office of its election to be excluded from Dakota County's CDBG,HOME,and ESG funding entitlement no later than June 1,2013, along with a copy of the applicable meeting minutes or resolution. This information should be sent to: Dakota County CDA U.S. Department of HUD Attn. Lisa Henning Attn. Sara Bergen 1228 Town Centre Dr. 920 Second Ave. South, Suite 1300 Eagan,MN 55123 Minneapolis,MN 55402 If you have any questions regarding this process or the CDBG,HOME, and ESG programs,please contact me at(651) 675-4467 or at lhenning @dakotacda.state.mn.us. Sincerely, Lisa Henning,Asst. Director of Community&Economic Development