HomeMy WebLinkAbout07-29-13--
Dave McClung
Ed Werner
www.cityofardenhills.org
Arden Hills is a strong community that values its unique environmental setting,
strong residential neighborhoods, vital business community, well-maintained infrastructure, fiscal
soundness, and our long-standing tradition as a desirable
City in which to live, work, and play.
CALL TO ORDER
APPROVAL OF AGENDA
APPROVAL OF MINUTES
2.A.Approval Of Minutes
APRIL 29, 2013, REGULAR EDA
Documents:13.PDF
CONSENT CALENDAR
NEW BUSINESS
4.A.Round Lake Road And TIF District 2 Funds
Patrick Klaers, City Administrator
Terry Maurer, Public Works Director
Sue Iverson, Director of Finance and Administrative Services
Documents:MEMO.PDF,ATTACHMENT A.PDF
4.B.2014 EDA Budgets
Patrick Klaers, City Administrator
Sue Iverson, Director of Finance and Administrative Services
Documents:MEMO.PDF,ATTACHMENT A.PDF, ATTACHMENT B.PDF
UNFINISHED BUSINESS
5.A.EDA Revolving Loan Program
Matthew Bachler, Community Development Intern
Patrick Klaers, City Administrator
Documents:MEMO.PDF,ATTACHMENT A.PDF
EDA MEMBER COMMENTS
STAFF COMMENTS
Approved:
CITY OF ARDEN HILLS, MINNESOTA
ECONOMIC DEVELOPMENT AUTHORITY MEETING
APRIL 29, 2013
6:00 PM CITY HALL
CALL TO ORDER/ROLL CALL
Pursuant to due call and notice thereof, President Grant called to order the Economic
Development Authority meeting at 6:06 p.m.
Present:
EDA President David Grant; EDA Commissioners Brenda Holden, Fran
Holmes, Dave McClung, and Ed Werner
Absent:
None
Also present
: Secretary Patrick Klaers; Treasurer Sue Iverson; Executive Director Jill
Hutmacher; Community Development Intern Matthew Bachler; and Deputy Clerk Amy Dietl
1. APPROVAL OF AGENDA
MOTION: Commissioner Holmes moved and Commissioner Holden seconded a motion to
approve the meeting agenda as presented. The motion carried unanimously (5-
0).
2. APPROVAL OF MINUTES
A. February 25, 2013
MOTION: Commissioner Holmes moved and Commissioner Werner seconded a motion to
approve the February 25, 2013 Meeting Minutes as presented. The motion
carried unanimously (5-0).
3. CONSENT CALENDAR
None.
4. NEW BUSINESS
ARDEN HILLS EDA MEETING APRIL 29, 2013 2
None.
5. UNFINISHED BUSINESS
A. Business Subsidy Criteria and City Public Financing Guidelines
Executive Director Hutmacher
apologized for the City Council memo and attachments for the
meeting later in the evening having inadvertently been substituted for the EDA memo and
attachments. This material would have provided the EDA with additional background information
for this discussion. This EDA material was then distributed.
Executive Director Hutmacher
discussed the business subsidy criteria and City public financing
guidelines with the Commission in detail. Based on a discussion with the County Assessor, the
$125 per square foot.
Commissioner McClung
questioned if this starting point was too low.
Secretary Klaers
indicated the City could return to the $150 per square foot minimum and see how
the market responds.
Commissioner Holmes
supported the $125 per square foot minimum.
The Commission was in favor of proceeding with the $125 per square foot minimum as
recommended by Stacie Kvilvang of Ehlers & Associates.
Executive Director Hutmacher
reviewed Section 6.2 Desired Qualifications further with the
Commission.
Commissioner Holden
suggested further clarification be included in this section regarding the term
Office
Commissioner Holmes
stated this section could read high-tech, med-tech, and R&D
facilities/offices. This would assure the offices are professional in nature. The Commission agreed
with this suggestion.
Executive Director Hutmacher
then reviewed the Grading and Report Card point classification
and bonus point criteria. The TIF Districts and total tax capacity for the City was discussed. She
noted that Mounds View was removed from the analysis of total tax capacity captured by TIF
districts as an outlier. She questioned what range the Commission wanted as a limit on captured tax
capacity.
Secretary Klaers
noted the State average was 6.4% and the Financial Planning and Analysis
Committee recommended the City assume 75% of this rate.
Commissioner Holden
stated if the recommendation was followed, the TIF rate would be 4.8%.
ARDEN HILLS EDA MEETING APRIL 29, 2013 3
President Grant
stated a TIF District would be going offline in 2015 and this would provide the
City with more of a cushion for future projects.
Commissioner McClung
indicated Presbyterian Homes made up a good portion
captured tax capacity. He commented that Cottage Villas and Round Lake were the other two
districts in place at this time. He expressed concern with the redevelopment taking place in Red
Fox/Grey Fox and how TIF could be used to benefit this area.
President Grant
was comfortable with a low captured tax capacity limit. He did not see the need
for TIF in the TCAAP redevelopment.
Secretary Klaers
explained prior to Presbyterian Homes, the City captured $590,000 in TIF which
tax capacity
was $773,000 which was 4.8%.
President Grant
proposed a 5.8% cap on captured tax capacity be used. He requested comments
from the Commissioners.
Commissioner McClung
recommended the cap be set as accurately as possible. He understood the
cap was a guideline that could be adjusted. He suggested 6.0%.
Commissioner Werner
was in favor of 6%.
Commissioner Holden
agreed with the 6% but recommended this issue be discussed by FPAC in
further detail.
The EDA requested the cap be set at 6% and direct staff to review this item again in six months.
Commissioner Holmes
suggested that the language within the criteria read that all viable
requests will be reviewed by a third party financial advisor. Several other language revisions were
discussed.
Executive Director Hutmacher
questioned if the EDA wanted the Council to approve this
document this evening. The Commission recommended this item move forward to the Council.
B. EDA Revolving Loan Program Update
Executive Director Hutmacher
stated the EDA requested the revolving loan fund be investigated
to see where the funds came from. This issue was researched by Community Development Intern
Matthew Bachler.
Community Development Intern Bachler
discussed the history of the revolving loan program
noting it was established in 1997 to allow the City to participate in the Minnesota Investment Fund
(MIF). The fund provides industrial and manufacturing businesses with low cost financing for job
creation and retention projects. The loans are administered through local governments and the
program allows local governments to retain a portion of the loan principle and accrued interest to
establish a revolving loan fund.
ARDEN HILLS EDA MEETING APRIL 29, 2013 4
Community Development Intern Bachler
explained that in January of 1997 the Council
authorized the City Administrator to execute an MIF loan agreement with Cardiac Pacemakers, Inc.
(CPI). A $100,000 portion of the state financing was in the form of a low-interest loan that was
repaid to the City. This loan had a five-year term at 3% interest rate. The proposed use for the
funds was a 47,000 square foot expansion project to enhance research and development programs at
CPI. The company estimated an additional 200 high-skill jobs would be created as a direct result of
the investment. Prior to dispersing the MIF grant, the State required Arden Hills to adopt guidelines
for the revolving loan fund. The regulations were designed to set parameters on the use of funds to
guidelines were approved
by the EDA (August 25, 1997) and City Council (May 26, 1998).
Community Development Intern Bachler
indicated the CPI loan was fully repaid to the City as of
December 31, 2003. The current balance of the revolving loan fund is $154,969 as of December 31,
2012. Staff requested the EDA review the revolving loan guidelines and provide staff with
comments. The Minnesota Department of Employment & Economic Development (DEED)
recommends that, at a minimum, the revolving loan fund guidelines be updated to reference the
State Business Subsidy Law. DEED will need to review and approve any changes to the revolving
Community Development Intern Bachler
loan fund guidelines. noted this item would be
discussed further at a future work session meeting.
C. EDA General Fund Budget Discussion
Secretary Klaers
noted the EDA budget information was provided to the Commission for review
and that discussion on EDA budget items and issues can take place at the next EDA meeting.
6. EDA COMMISSIONER COMMENTS
None.
7. STAFF COMMENTS
None.
8. ADJOURN
MOTION: President Grant moved and Commissioner Holmes seconded a motion to
adjourn the Economic Development Authority meeting. The motion carried
unanimously (5-0).
President Grant
adjourned the Economic Development Authority meeting at 6:59 p.m.
__________________________ __________________________
Patrick Klaers David Grant
Secretary EDA President
NEW BUSINESS - A
MEMORANDUM
DATE: July 29, 2013
TO:Honorable Mayor and City Council Members
FROM: Patrick Klaers, City Administrator
SUBJECT: Round Lake Road
Background/Discussion
At the June 17, 2013, Council CIP work session, the Council considered the issues
related to a Round Lake Road (RLR) improvement project. Attached for your review is a
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memo from Public Works Director Terry Maurer dated June 12 on the RLR project.
This memo includes a very preliminary cost estimate that shows a total project of slightly
more than $2.6 million (about ½ for utilities and ½ for street and land acquisition).
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At the end of the discussion on June 17, the Council indicated support for doing this
project in 2014 and for using available TIF 2 District funds for this project. The Council
also indicated support for assessing out to benefitted property owners some of the road
improvement costs.
The RLR project is on the July 29, 2013, City Council agenda to hire a consultant to
complete the feasibility report for this project. This report will give the EDA and City
better information to work with in deciding funding options and whether or not to move
forward with the project.
th
Since the June 17 work session, staff has been in contract with Shelly Eldridge of Ehlers
and Associates and we have received information on recent TIF law changes and how the
TIF 2 District funds can be use. In brief, the District has $1,027,984 that can be used for
any City approved project or activity without restrictions and has $159,481 that needs to
be spent consistent with the TIF 2 budget (i.e. on the RLR project). This unrestricted use
of funds opportunity needs some EDA discussion as staff will be making a
recommendation that these funds be transferred out of the TIF district when the EDA
meets on October 28th. If some of these funds are not used on the RLR project, then
MSA funds would be needed for the City expenses related to the street and land
acquisition.
Requested Action
The EDA is requested to approve the use of TIF 2 District funds in the estimated amount
of $159,481 for the RLR project as shown in the preliminary TIF 2 District budget for
2014.
Attachments
Attachment A: Memo dated June 12, 2013 from Terry Maurer
Attachment A
NEW BUSINESS - B
MEMORANDUM
DATE: July 29, 2013
TO:Honorable Mayor and City Council Members
FROM: Patrick Klaers, City Administrator
SUBJECT: EDA Budgets for 2014
Background/Discussion
At the last EDA meeting on April 29, 2013, there was not time to discuss the EDA
budgets. The main budget issue I wanted to review with the Council is the need to
establish a stable reoccurring funding source for the EDA General Fund. For background
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information, attached is the budget material that was in the April 29 packet.
Also attached for your review are the preliminary 2014 EDA budgets. These budgets are:
the summary page showing of all the EDA budgets, the EDA General Fund, the
Revolving Loan Fund, TIF 2, TIF 3, and TIF 4.
The EDA General Fund budget needs some discussion. Staff is including all economic
development related expenses in this budget in order to show a true reflection of the
and reserves
will not be available to finances these activities without a transfer from the City General
Fund budget or the establishment of an EDA tax levy for economic development
activities. A separate EDA levy is not needed until at least 2015, but the discussion on
this issue should begin soon.
Requested Action
The EDA is requested to approve the preliminary EDA budgets for 2014. (These budgets
are not dependent on a tax levy for revenues. These budgets may be revised prior to final
approval in November/December.)
Attachments
Attachment A: April 29, 2013, Packet Item
Attachment B: Preliminary 2014 EDA Budget
Attachment A
UNFINISHED BUSINESS
MEMORANDUM
DATE: July 29, 2013
TO:Honorable Mayor and City Council Members
FROM: Patrick Klaers, City Administrator
SUBJECT: EDA Revolving Loan Fund
Background/Discussion
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At the end of the last EDA meeting on April 29, Community Development Intern
Matthew Bachler briefly reviewed his findings and memo on the status of the EDA
Revolving Loan Fund. This memo and the existing loan guidelines (from 1997) are
attached for your reference.
th
Based on the EDA Budget and the Round Lake Road project also being on the July 29
agenda, I am not sure how much time will be available for the continued discussion on
the loan program. If time allows, feedback from the EDA on the questions included at the
end of Matth
the loan program at an upcoming EDA meeting.
Attachments
Attachment A: Memo dated July 29, 2013, from Matthew Bachler
Attachment A
MEMORANDUM
DATE:
April 29, 2013
TO:
EDA President and Commissioners
FROM:
Matthew Bachler, Community Development Intern
SUBJECT:
EDARevolving Loan Fund
Requested Action
Provide direction on the future goals of the EDA Revolving Loan Fund.
Summary
The EDARevolving Loan Fund (RLF) was establishedby the City in order to participate in the
Minnesota Investment Fund (MIF) programmanaged by the Department of Employment and
Economic Development(DEED). Grant funding received throughMIF in 1998 was used to
provide Cardiac Pacemakers, Inc.with a low-interest loan for an expansion project. A $100,000
portion of thisloan was repaid to the Cityand was used to capitalize the RLF.The CPI loan
repayment and investment interest earnings are the only revenue sources currently represented in
the RLF’s cash balance. TheexistingRLFguidelines shouldbe updated to meet State Business
Subsidy Lawrequirements.Revisions to the RLF guidelines must be approved by DEED.
Background
The Department of Employment and Economic Developmentestablishedthe Minnesota
Investment Fund to provide industrial, manufacturing, and technology-related businesses with
low-cost financing to help create or retain high quality jobs. Loans are awarded to and
administered by local units of governments; to qualify for financing, a business must complete a
joint application with a local government. Generally, the program allowslocal governments to
retain a portion of theloan repayment to create an RLF.
In January 1997, the City Council authorized the City Administrator to execute an MIF loan
agreement with Cardiac Pacemakers, Inc. (CPI). A$100,000portion of thestate financing wasin
the form of a low-interest loan that was repaid to the City. This loan hada 5-year term at a3%
interestrate.The proposed use for the funds was a 47,000 square foot expansion project to
enhance research and development programs at CPI. The company estimated an additional 200
high-skill jobs would be created as a direct result of the investment.
______________________________________________________________________________
City of Arden Hills
Economic Development Authority Meeting April 29, 2013
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Prior to dispersing theMIF grant,the State required Arden Hills to adoptguidelines for the
revolving loan fund(attached).Theregulations were designed to set parameters on the use of
fundsto ensure consistency with the City’s economicdevelopment policies.The RLF guidelines
wereapproved by the EDAon August 25, 1997 and by the City Council on May 26, 1998.
The CPI loan principal plus accrued interest was paid off entirely as of December 31, 2003.At
this point the RLF cash balance was approximately $140,000. This number represents the CPI
loan principal, interest payments, and investment interest earnings. TheRLFbalance was
estimated to be $154,969 as of December 31, 2012.Growth in cash reserves in the RLF between
2004 and 2012 was derived entirely from investment interest earnings.
The City did administer a second MIF loan through the RLF for Guidant in 2004. However, none
of the funds currently in the RLF are associated with this agreement, as the City forgave its
portionof the Guidant loan. In April 2004, the City executed an agreement with DEED to
provide the company with $250,000 for the purchase of machinery and equipment. The City
committed to forgive its $100,000 portion of the loan if the company met certain job creation
numbers. Guidant complied with these set terms and its portion of the loan was subsequently
forgiven. On April 20, 2005, the City transferred the repaid loan principal and interest
($150,083.30) from the RLF to DEED.
Revolving Loan Fund Guidelines
Theuseof the EDA Revolving Loan Fundis regulated by the Minnesota Business Subsidy Law.
Loans of less than $75,000, however,are not considered business subsidies. The EDA may want
to consider revisions to the RLF guidelines that target loan funds to specific types of economic
development projects. At a minimum, the RLF guidelines should be revised to state that the
Business Subsidy Law applies to RLF loans. Any revisions made to the RLF guidelines will need
to be reviewed by the State Department of Employment and Economic Development prior to
EDA and City Council approval.
As staff drafts revisions to the RLF guidelines, guidance on the following questions is requested:
What are some types of business development projects the City would like to finance
using RLF loans?
What steps could be taken to educate the local business community about the availability
of RLF loans and other public financing tools?
Do the existing RLF guidelines adequately address the City’s goals and objectives
regarding the use of RLF loans?
Recommended Action
Direct staff to draft revisions to the Revolving Loan Fund Guidelines in accordance with EDA
discussion on the goals of the RLF.
Attachments
City of Arden Hills, EDA Revolving Loan FundGuidelines
______________________________________________________________________________
City of Arden Hills
Economic Development Authority Meeting April 29, 2013
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