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HomeMy WebLinkAbout01-30-20 MINUTES ECONOMIC DEVELOPMENT AUTHORITY Regular Meeting January 30, 2020 1. CALL TO ORDER The meeting was called to order by Chair Simmons at 6:30 p.m. Members Present: Simmons, Bernhjelm,Butterfield, Cordes, Craig, Jolley, Wilson Members Absent: None Also Present: Adam Kienberger, Community Development Director; Terry Donnelly, Councilmember; Kara Hildreth,Dakota County Tribune 2. PLEDGE OFALLEGL4NCE 3. ROLL CALL 4. APPROVE AGENDA MOTION by Wilson, second by Cordes to approve the Agenda. APIF, MOTION CARRIED. • 5. CITIZEN COMMENTS/PRESENTATIONS 6. CONSENT AGENDA MOTION by Craig, second by Bernhjelm to approve the Consent Agenda as follows: a) Approved Meeting Minutes (November 21, 2019, Regular Meeting) b) Received Monthly Financial Statements APIF,MOTION CARRIED. 7. PUBLIC HEARINGS 8. DISCUSSION ITEMS a) Continued—Downtown Facade Improvement Grant Program Application 345 Third Street—Fletcher Building This item was continued from the October EDA meeting pending availability of funds and the decision by the Planning Commission whether to issue a Certificate of Appropriateness. Staff presented an outline of events that have occurred with this item. On January 14, 2020, the Planning Commission denied the Certificate of Appropriateness. That decision is being appealed to the City Council. The applicant's original request for a facade grant in the amount of$20,772 was before the EDA tonight. This building was designated a Heritage Landmark in 2001 by the Heritage Preservation Commission. The amount allocated to the façade grant program is $20,000 annually. Grant awards range from $1,500 to $10,000 with required 1:1 matching funds. There are no changes to the program for 2020. EDA Minutes(Regular) January 30,2020 Page 2 Member Bernhjelm recalled it was mentioned to remove the building from the Heritage Landmark designation. Member Craig noted that will be brought up at an upcoming City Council meeting. Member Bernhj elm recalled removing that designation would free up the EDA to approve grant money. Chair Simmons stated for the next item,there was discussion around reducing the limit for the façade grant program and getting back to the smaller projects. Chair Jolley asked who makes the decision as to whether a building is designated as historic. Member Craig stated there isn't an official Heritage Preservation Commission anymore. Because of that, the Planning Commission would be responsible. Chair Jolley clarified the Planning Commission will make the decision whether or not it is designated as a historic building. Members stated the City Council will make that decision. The Planning Commission was working to see how they could make Ms. Heikkila's request work. There are guidelines as to what can be done with a Heritage Landmark building. Member Bernhjelm stated the City Council will decide whether to remove the building from the Heritage Landmark list. Ms. Heikkila did not own the building when it was designated. Chair Simmons stated this current application does not meet the guidelines for the façade grant program. If the building is removed from the list and she submits an application that is within the limits,then we can move forward. Member Jolley noted this is a complicated process for her to know what needs to be done. She wanted her to stay in business and be able to fix the building, but it is not at a stage where we can enter into the discussion. Member Craig stated she cannot do anything right now because of the cold weather so this is not hurting her. Chair Simmons stated it is beyond the scope and authority of this board to approve the grant application in its current form. By closing the loop,we can say when you have an application that meets the grant requirements, bring it back to us. Member Jolley stated we have someone in front of us who has been here a long time so let's try to keep her in business. She understood the problems, but it is frustrating. Member Craig stated the community could do a fundraiser. Depending on whether she is on the landmark list or not, maybe some people could help with labor. Member Wilson asked if the idea behind three Planning Commission meetings was due to the fact that staff was waiting for Robert Vogel to have an opinion on materials that were going to be used? The applicant may have waited a little longer than need be knowing the materials proposed were inconsistent with what could be used. Staff explained at the first Planning Commission meeting they felt they did not have enough information to make an informed decision and sought additional information which was brought to the October meeting. After the additional information,they wanted an outside expert for a third opinion which was commissioned from November to January 14, 2020. The city paid for the historic consultant's report. Chair Simmons stated we have consensus that we cannot act on this application in its current form so the options are to continue this to future meetings or close the loop on the application that both exceeded the program limits as well as did not have plans that comply with city requirements and ask her to re-submit when those other pieces are in place. MOTION by Wilson, second by Cordes to deny the active application and have the applicant re-apply in EDA Minutes(Regular) January 30,2020 Page 3 the future with the materials that will comply with the program. APIF, MOTION CARRIED. b) Business Retention and Expansion Update The EDA created a subcommittee to deal with business retention and expansion. This item is a recap to present the work that has been done so far. The subcommittee is tasked with setting up business visits, selecting who will make the visits, create and maintain a training program for those selected to visit businesses and report back to the EDA. A pilot program has been approved with a few businesses to try it out. Member Wilson stated there are some businesses that are very committed to this program and we have to make sure that information doesn't get dusty. Member Butterfield noted the committee felt the survey questions could be burdensome and it was discussed to narrow it down to high level questions and then during the meeting get more detail. Chair Simmons asked if it was decided who would conduct the visits. Member Bernhjelm stated each meeting will be a little different, but there will be a pool of people to draw from to go on the visit. As the City Council did interviews for boards and commissions,that was one of the questions to the applicants, whether they would be interested in doing that. Member Butterfield stated the committee decided it would only be staff, members of the EDA and City Council for the pilot program visits. c) EDA Programs and Financing Discussion Staff presented a list of things the EDA currently doesn't engage in along with costs and funding mechanisms. The EDA receives an allocation of$40,000 each year from the City Council which comes from the general fund. Staff provided a list of programs the EDA currently funds which includes the Site Readiness Program with an annual allocation of$20,000; Commercial Rehabilitation Grant Program with $27,000 currently available; Open to Business Program where the EDA contributes $5,513 annually; General Operations to cover legal, IT, professional development,programming expenses, etc. amounts to $20,000 annually; the EDA earmarked$100,000 in 2018 for the creation of a Rambling River Center Plaza which has not been scheduled for implementation. After current commitments there is approximately $50,000 of unprogrammed funds left in the EDA fund balance. An optional revenue stream is an EDA Levy. An EDA is able to levy taxes with provisions, statutory guidelines and City Council approval. Our financial advisors note we have the best of both worlds right now, as this group is overseen by the City Council and appropriate dollars as part of the tax levy to the EDA. Member Wilson asked if surrounding cities have an EDA levy. Staff noted Burnsville does and the revenue is based on your estimated tax value for the city which would be around$380,000 maximum levy. Chair Simmons noted we have a lot of things allocated and not utilized. One being site readiness which hasn't been utilized since its creation. Especially for EDA Minutes(Regular) January 30,2020 Page 4 the $100,000 for the plaza, is this a continued value to save these dollars now? Councilmembers Bernhjelm and Craig stated yes. Anywhere we can save funds to be part of future financing is huge especially if we don't have an immediate need for it. Chair Simmons suggested starting the discussion with the items that exist. Regarding the $20,000 facade grant allocation she recalled the last discussion was to get back to the original goals of the program which was to make the grant amounts less than $10,000. We want the funds utilized, but we would rather have six businesses doing $5,000 than one business doing a$10,000 grant. Member Wilson does not want to handcuff the EDA to a certain dollar amount. He would prefer to go down to smaller dollars, but doesn't want to keep modifying the plan and say we can't do $10,000. Member Bernhjelm asked if we need more than $20,000 to allocate in a year or is that sufficient. That is where we get into the question of budgeting and having to ask the Council to budget more for a program like this. Member Craig asked for some history as to how many applicants we had each year and the size of the grants. Staff stated that was provided at the last meeting. Over the past couple years,we have adjusted the amounts. Last year we did not spend the full amount. The $20,000 provides for a couple good projects each year. Member Butterfield felt it was a successful program and doing what was intended. It is a little off putting to talk about decreasing the amount now when we just punted one forward for the full amount. It would be a great idea to add additional funding. The value over the last two years of$140,000 in increased property value is a great story. Chair Simmons' concern with increasing was she is more interested in allocating dollars towards some of the implementation things we can do to support the highway 3 corridor plan. She would like to see dollars go there before we increase an existing program. The facade program has existed for three years and we increased the grant amount because we weren't getting a response and that caused it to grow. She would like to discuss that and as far as the limit, what if we get two $10,000 applications by March? Do we tell everyone else no? That goes back to the budgeting and how we want to be really intentional about using dollars this year. She did not want to self-impose rigid standards that don't have a benefit, but we want to think about that. Member Jolley agreed it is realistic to think that after three years a lot of the work has already been done. She didn't think we need to increase it. Our budget is holding and if we have additional dollars,there are other projects that are needy as well. The downtown was the main focus because the facades needed some work. Other areas are newer. It is a great program and she is happy people have taken advantage of it. She is not in favor of increasing it. Member Bernhj elm stated an option is to expand the program so it is not just downtown, but for any business to apply towards. That way it is all encompassing and you can increase the dollars so it can accommodate other businesses including highway 3. This increase would be for 2021. Members agreed with that option. Chair Simmons suggested for this first year, expand from downtown to highway 3 and see how that goes. Those were the redevelopment areas prioritized in our strategic plan. Staff stated the reason the focus has been on the downtown is that is an area EDA Minutes(Regular) January 30,2020 Page 5 identified in our strategic plan as well as the downtown redevelopment plan. Rationale is similar for the highway 3 corridor plan. If McDonald's want to put up a new awning and it cost them $30,000 and we get an application for$10,000, is that a good use of public taxpayer dollars to put a façade grant towards a very large business that is capable of doing it on their own, versus a designated, targeted area in the community. The EDA could be put in a position of more winners than losers based on the timing of the application or who has the most merit for their application. Member Butterfield stated the EDA has the right to approve or deny an application and say we are targeting a different audience. Staff noted that is what your policy discussion is around and what position do you want to be put in when an application is received. You are going to be more challenged to approve it if it meets the merits of the program. Chair Simmons does not want to lose site of the goal to build relationships with businesses. She would rather have a program that defines that spirit that we can agree on and captures the goals we set forth so that we don't feel like we are sacrificing relationships. Member Craig stated the spirit of the program was to work with the area that would need façade improvement. That would still be downtown and the highway 3 corridor. We want it to improve the look of Farmington. She agreed with staying with that and expand from there. Chair Simmons felt it was easy to explain expanding the program to highway 3 because we spent$50,000 to have that study done. We have a strategic plan for highway 3 and downtown. It was intentional; something we paid for. Chair Simmons asked if the EDA agreed to expanding the façade program to highway 3. Member Bernhj elm suggested putting extra dollars on the wish list to expand the program. Member Jolley asked about the amount to expand the dollars to include highway 3. She felt we could include highway 3 in the current budget, because the downtown looks good. Member Butterfield suggested adding to the wish list facility upgrades or rehabilitation for more industrial type businesses, or grant dollars they can apply for as far as assembly lines that would increase the value of their property or the number of workers. He has also seen energy type projects. A city level grant fund for solar generation on the roof or generators because that increases the tax value of the property and they are large capital investments that draw both workers and tax dollars into the city. Maybe expand the spirit of the façade program where it is driving directly at an objective of the EDA to bring foot traffic downtown to increase retail value. Some of those programs would increase the tax base. Members agreed with those suggestions. Chair Simmons recalled from the last meeting there was interest in creating a new program that was beyond façade improvement by identifying key properties and the example was Dakota Motors. The sprinkler system could be a barrier to a buyer. That is a highly visible,prime location. Create a program where the EDA would prioritize properties where we could allocate dollars that fills a gap in our funding. EDA Minutes(Regular) January 30,2020 Page 6 Member Jolley recalled several years ago the city put forward dollars to bring the Dueber's building up to code. It came from a grant of some kind. Without that they couldn't have partitioned the separate offices. If the sprinkler system is a deterrent for the buyer then that is a good program. Staff stated it amounts to approximately$100,000 for a sprinkler system. The EDA would partially fund it. For the Dueber's building we used community development block grant dollars for improvements to their HVAC that were a required building code improvement. We still have some CDBG dollars for the commercial rehab, but it is restrictive in how the dollars are used because it's a federal program. The intent of that is to make improvements to buildings that have code deficiencies. We could look at something that mirrors that, but retain local flexibility in how we administer it. Staff summarized the suggestions. A desire to focus on highway 3 and recommended a separate, but similar program to make sure the outcomes are tailored specific to that geographic area rather than cast a wider net to our existing program. Chair Simmons asked what the distinction would be between the existing program and expanding the allowed area. Staff explained we have an in- depth document that refers to a defined geographic area with downtown. The façade program is based on deliverables in this plan. The draft theory instead of taking what was built for the downtown and opening it wider so we capture a different geographic area,why not create a similar but separate program that has more mirrored goals with a program that speaks to the validity of the highway 3 area. Staff heard a desire for a third, less geographically focused, but for removing barriers for re-investment into commercial/industrial, rewarding those that are expanding, adding industrial lines, etc. It could include energy efficiency programs. Then we have the question what dollars do we assign to a program like that. Member Bernhjelm suggested putting together examples of other cities that have these programs and the types of projects it funds,that will help drive the conversation about how much money we need to request to fund it. Member Butterfield stated Minnetonka and Edina have done those types of things and see if it gets the bang for the buck and does it increase taxable value by more than $100,000. Staff agreed that is a key point. Consistency with a program drives credibility within the program and attracts new applicants to the program. If you are always moving the goal posts it is difficult for applicants to figure out how and when to maneuver within the program. Member Butterfield clarified we are discussing 2021 programs. Member Bernhjelm stated the idea is we go to the City Council this spring and say these are some programs and funding we would be interested in for 2021 so when Council does budgeting in the summer, it can be considered. Chair Simmons noted we still have $50,000 unallocated for 2020 and have to determine what we can do for our current programs. Member Jolley suggested a wish list item the EDA used to talk about which is putting up some wayfinding signs. As you come into each of the entrances to Farmington, signs that say EDA Minutes(Regular) January 30,2020 Page 7 Downtown, High School, historic downtown Farmington, Fairgrounds. So when people come in,they know where to go. Can we get started on that and put up at least one? That is something that is visible and inexpensive to accomplish. Staff noted it is identified as an outcome in the highway 3 and downtown plans. The programmable reader board was about$50,000. Members stated it could be just a sign with our logo and wording. Staff agreed to look into the cost of signage. Staff stated the EDA sign next to Dakota Motors is lit and is in need of repair and is outdated. Member Bernhj elm stated only one of the entrance signs, along Pilot Knob was lit and we could add lighting for the others to this package. Chair Simmons noted there was some tangible things in the short-term highway 3 plan that we could accomplish. She asked staff to bring recommendations around that. Regarding Member Butterfield's suggestions for industrial investment would that capture what we discussed for easily accessible, internal barriers to re-investment. Staff agreed. Chair Simmons summarized that we want a similar program to the façade program created for highway 3; facility upgrades for industrial energy projects; rehab for eliminating barriers to key redevelopment properties; and options for wayfinding signage. Staff also heard to leave the downtown façade program as is. Members agreed. One of the biggest hurdles mostly for restaurants are SAC units for new businesses when they come into existing spaces that may not have been a high- water user in the past. It is a rather substantial fee that is imposed by the Met Council and the city has their own sister fee that is tied to that before any business can open. Staff has heard of a city having a sale for SAC units as a way to promote restaurants so that they are more competitive than surrounding cities and here is the barrier we are looking to remove or do a cost share. We could catch that into the removing barriers program. Staff also suggested one of the biggest pieces of redevelopment is site control. We haven't owned a lot of property. The only piece we have left is the Riste lot downtown. We haven't spent time talking about redevelopment via the powers of site control. Ultimately,whoever owns the land gets to control who goes in there. Staff asked for thoughts on economic development, redevelopment, site acquisition and control. Member Bernhjelm did not have an extreme appetite for it because it is very expensive and you have the liability of maintaining land and properties. Member Craig stated the last time the City Council discussed this, we were in agreement that the city did not want to be in the business of owning property. Staff noted it is one of the most powerful tools this group has. One of the fundamentals of an EDA and HRA is land acquisition and sale, but it is not for every community. For example, in the downtown plan it highlights a number of key properties for redevelopment. If that property becomes for sale, does the city have an interest in acquiring it so it can control the outcome of that property versus it going to whoever purchases it and as long as it fits within the zoning they are entitled to do what they want. The Dakota Motors building is for sale. The best way to figure out what goes in there, is you get to make the decision. You don't make the decision if you don't own it. Member Bernhjelm stated the city is going to have to make a lot of decisions on if they will want to purchase land anyway for other projects whether it is a liquor EDA Minutes(Regular) January 30,2020 Page 8 store or another sheet of ice, etc. Without resolving some of those things,to buy the property for redevelopment doesn't seem strategic. The EDA would have to levy for it or appropriate significantly more dollars to the EDA. It is within the statutory power of the EDA. That is why cities have EDA's is primarily levying dollars for economic development and land deals. Member Butterfield stated one of the big constraints with the City Council is not to raise taxes in the future. Until you start showing increases in the tax base, it is difficult to do. Staff noted there is a section in the downtown plan that mirrors that exact argument. It is your biggest tool, but it adds to the tax burden. Member Jolley wouldn't have a problem with that if we already had a vision in mind of something we would like to do, but we can't because we don't have the property to do it. She would like to see the plan first rather than just buy something because it is strategically located. Member Butterfield stated the highway 3 plan has a lot of examples of what the vision is with the strip mall if that came up for sale. In the plan,that is a multi- residential type community. If that came up for sale,we could jump on that and develop it into multi-residential. Member Wilson didn't know if the city should determine what goes at the Dakota Motors location. It should be a market activity. That is such a pivotal development. He could see it both ways. Member Bernhjelm was concerned that if we own property,then residents are really upset when we don't let certain businesses in. Staff stated primarily when a city acquires land it is for demolition and sale to a suitable end user. That is what was done with the Riste building. Chair Simmons asked about Member Wilson's suggestion to keep an open mind about property acquisition, but not a priority right now. Members agreed. Staff attended the Economic Development Association Winter Conference last week and one of the topics was on downtown Main Street redevelopment. One of the big things where they see success is regular small incremental projects to show progress because that builds momentum rather than big projects. But you need to be active about programming dollars towards that. Chair Simmons stated that ties to our annual plan so every meeting we are checking on goals for the year. Member Butterfield asked that as staff identifies the small things that are incremental that could align to the strategic plans, he would be open to bringing those up whether it be signage, etc. and tackling one a year. c) City Council Update Member Bernhjelm stated the City Council has their annual goal planning session next Friday. So this discussion was valuable for us. She encouraged members to look at council's priorities from 2019 and to contact Councilmembers for any ideas. 9. DIRECTOR'S REPORT a) January Director's Report The city in partnership with the school district held a Realtor Rally. There were 25 realtors attending. Chair Simmons noted the flyer is similar to what she had in mind for the why Farmington landing page for economic development on the EDA Minutes(Regular) January 30,2020 Page 9 website. Staff attended the Farmington Expo this past Saturday. The next EDA meeting is February 27, 2020, and is our annual organizational meeting. 10. ADJOURN MOTION by Bernhjelm, second by Cordes to adjourn at 8:03 p.m. APIF,MOTION CARRIED. Respectfully submitted, Cwt14i,a Mu.LLer Cynthia Muller Administrative Assistant