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HomeMy WebLinkAbout04-02-14 EDCCall To Order Approval Of The Agenda Minutes March 5, 2014 03 -05 -14 EDC MINUTES.PDF Unfinished And New Business Revolving Loan Fund MEMO.PDF, ATTACHMENT A.PDF, ATTACHMENT B.PDF City Video Tour MEMO.PDF Business Retention And Expansion MEMO.PDF, ATTACHMENT A.PDF Updates TCAAP Update MEMO.PDF Commission Members Council Liaison Staff Comments Adjourn ADJOURN A quorum of the City Council may be present at this meeting. Chair: Ed Von Holtum  Commissioners: Dan Altstatt Dan Erickson  Steve Heikkila  Jim Huninghake David Radziej Vacant Vacant Council Liaison: Ed Werner Economic Development Commission April 2, 2014 8:00 am to 9:30 am City Hall Address: 1245 W Highway 96 Arden Hills MN 55112 Phone: 651 -792 -7800 Website : www.cityofardenhills.org City Vision 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. Agenda CALL TO ORDER 1. 2. 3. 3.A. Documents: 4. 4.A. Documents: 4.B. Documents: 4.C. Documents: 5. 5.A. Documents: 5.B. 5.C. 5.D. 6. Call To OrderApproval Of The AgendaMinutesMarch 5, 2014 03 -05 -14 EDC MINUTES.PDFUnfinished And New BusinessRevolving Loan FundMEMO.PDF, ATTACHMENT A.PDF, ATTACHMENT B.PDFCity Video Tour MEMO.PDFBusiness Retention And ExpansionMEMO.PDF, ATTACHMENT A.PDF Updates TCAAP Update MEMO.PDF Commission Members Council Liaison Staff Comments Adjourn ADJOURN A quorum of the City Council may be present at this meeting. Chair:Ed Von Holtum Commissioners:Dan AltstattDan Erickson Steve Heikkila Jim HuninghakeDavid RadziejVacantVacantCouncil Liaison:Ed Werner Economic Development Commission April 2, 2014 8:00 am to 9:30 am City Hall Address:1245 W Highway 96 Arden Hills MN 55112 Phone:651 -792 -7800 Website : www.cityofardenhills.org City VisionArden 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. AgendaCALL TO ORDER1.2.3.3.A.Documents:4.4.A.Documents:4.B.Documents:4.C.Documents: 5. 5.A. Documents: 5.B. 5.C. 5.D. 6. CITY OF ARDEN HILLS, MINNESOTA ECONOMIC DEVELOPMENT COMMISSION MARCH 5, 2014 8:00 AM CITY HALL -- 1245 WEST HIGHWAY 96 CALL MEETING TO ORDER Chair Ed von Holtum called the meeting to order at 8:03 a.m. ROLL CALL Present: Chair Ed von Holtum and Commissioners Dan Erickson, Dan Alstatt, Steve Heikkila, and David Radziej Also Present: Council Liaison Ed Werner, Community Development Director Jill Hutmacher, and Associate Planner Matthew Bachler. 1. APPROVAL OF AGENDA It was the consensus of the Commission to accept the agenda as presented. 2. APPROVAL OF MINUTES It was the consensus of the Commission to accept the December 4, 2013, meeting minutes as presented. 3. UNFINISHED AND NEW BUSINESS A. Introductions Community Development Director Hutmacher commented that with the recent appointment of David Radziej to the EDC, it would be helpful for the commissioners to introduce themselves. Commissioners introduced themselves and provided general background information. B. City Video Tour Community Development Director Hutmacher reported that at the Economic Development Authority (EDA) Joint Meeting with the EDC on January 27, 2014, the EDA and EDC discussed EDC Minutes March 5, 2014 Page 2 of 6 developing a City video tour and agreed that this item should be a priority on the EDC’s 2014 Work Plan. Community Development Director Hutmacher reported that staff had met with CTV about creating a video using the CTV staff hours allotted to the City. She explained that the video would be approximately three minutes in length and focus on economic development. Commissioner Radziej commented that given the short length of the video, perhaps two videos should be made: one focusing on residential properties and the other on commercial properties. He suggested staff contact a commercial real estate agent to learn more about how commercial properties in Arden Hills are marketed to businesses. Commssioner Alstatt questioned how the TCAAP redevelopment would fit into the video. Community Development Director Hutmacher commented that TCAAP would not be the primary focus of the video, although it could be featured in the economic development segment of the video. With the pending development of TCAAP, the City Council wanted to ensure that the rest of the City’s business districts weren’t forgotten. The Council specifically asked that the video tour focus on the City’s existing development. She added that Ramsey County is actively working on promoting the TCAAP site. Commssioner Heikkila suggested that the video include visuals that identify the location of the business districts in Arden Hills and that footage of each district be included. Commssioner Erickson commented that the diversity of businesses in the City should be highlighted. He suggested that corporate, independent retail, manufacturing, and warehousing businesses be represented in the video. Chair von Holtum commented that the quality of the local workforce should be emphasized. Commssioner Erickson suggested that the video focus on two or three particular companies and include interviews with business owners. Community Development Director Hutmacher noted that staff was intending to use testimonials from business owners in the video. She added that staff would generate a list of potential businesses for these testimonials and review the list with the EDC at the April meeting. Community Development Director Hutmacher reviewed the general outline of the video. An introduction would be provided by the Mayor and a voiceover would be used for narration. Staff will present a detailed outline of the video at the April EDC meeting for further discussion. Commssioner Erickson suggested that community amenities such as parks, schools, and housing should be mentioned in the video, but that this section should be kept relatively brief. Council Liaison Werner questioned how often the video would need to be updated. EDC Minutes March 5, 2014 Page 3 of 6 Community Development Director Hutmacher responded that the intent was for the video to remain relevant for at least several years. C. Arden Hills Notes Distribution Community Development Director Hutmacher explained that the Arden Hills Notes newsletter is currently sent as bulk mail to all addresses in the City, but since it is not addressed to specific individuals, it may not be getting to local business owners. She asked the commissioners to provide feedback on two options for addressing this issue: doing a direct mailing of the newsletter or sending the newsletters electronically via email to business owners. She explained that direct mailings would be an additional cost to the City and require Council approval. Commissioner Erickson was in favor of sending the newsletter electronically. He suggested that a sign up link be added to the business section of the City’s website. Commissioner Radziej recommended continuing the bulk mailings and also sending the newsletter electronically to the City’s business contact list. Commssioner Heikkila volunteered to collect additional contact information from businesses in the Gateway District if needed. Community Development Director Hutmacher commented that the City has compiled a list of business contacts covering all business districts except Red Fox/Grey Fox, which staff will work to address this year. She added that an email list would need to be updated at least every two years to ensure that contacts stayed current. Chair von Holtum recommended that direct mailings still be done when businesses within a particular district needed to be notified of planned public improvement projects. Community Development Director Hutmacher requested that the commissioners provide feedback at the next meeting on ways the City could regularly update the email contact list. D. Business Retention and Expansion Associate Planner Bachler provided an overview of the goals of Business Retention and Expansion (BRE) programs and the framework of these initiatives. He explained that completing research on the feasibility of a BRE program was part of the EDC’s 2014 Work Plan. In the upcoming months, staff will be contacting other cities that have implemented BRE programs and having further discussion with the EDC on the costs and benefits of this type of program. Commissioner Radziej questioned if there had been discussion on developing a business attraction plan as well, especially considering the redevelopment of the TCAAP site. EDC Minutes March 5, 2014 Page 4 of 6 Associate Planner Bachler responded that these efforts could occur in tandem. He explained that completing a BRE program would allow the City to continue to respond to the needs of existing businesses while still working on attracting new commercial uses to TCAAP. Commssioner Alstatt asked for further explanation on the economic need for a BRE program. Community Development Director Hutmacher explained that significantly fewer financial and staffing resources are needed when cities focus on the strength of their existing businesses as opposed to trying to entice a new business to move to their community. She added that BRE is also about developing strong relationships between the City and local businesses. Commssioner Heikkila noted the similarities between a City focusing on retaining existing businesses and the importance of maintaining strong customer relations in the business world. Chair von Holtum added that one of the main benefits of a BRE program is that it educates the City on what the business community needs. He commented that he would like to see data of the efficacy and costs of these programs and would like additional information on the time frame. Associate Planner Bachler explained that staff would be collecting this sort of information over the next few months and that there would be regular discussions with the EDC on how to best design a BRE program for Arden Hills. E. Open Meeting Law Community Development Director Hutmacher provided an overview of the Minnesota open meeting law and its applicability to meetings and communication among EDC commissioners. She explained the commissioners should avoid any discussion as a quorum or more either in informal settings or over email. Commssioner Heikkila questioned what the potential consequences are if commissioners violate the open meeting law. Community Development Director Hutmacher explained that a violation of the open meeting law, depending on the situation, could result in legal action against the City. 4. UPDATES A. TCAAP Update Community Development Director Hutmacher provided an overview of the “STEAM Learning Center at TCAAP,” which is designed to support the Mounds View School District science, technology, engineering, arts, and math (STEAM) curriculum. In February, staff from the City, County, Rice Creek Watershed District, and St. Paul Chamber of Commerce worked EDC Minutes March 5, 2014 Page 5 of 6 with 7th Grade students at Chippewa Middle School to provide a hands-on learning experience related to the TCAAP redevelopment. Community Development Director Hutmacher explained that staff was proceeding with a surface water management study that will consider issues related to drainage and stormwater infrastructure on TCAAP. The City is working with the Rice Creek Watershed District on how to proceed with the study in a manner that will simplify the future permitting process. B. Commission Members None. C. Council Liaison Council Liaison Werner discussed the photograph window decals that will be added to the north façade of the Walgreens Pharmacy on Lexington Avenue. Council Liaison Werner provided an overview of the two public hearings on franchise fees held in February. He noted that the City Council would not be moving forward with a franchise fee at this time. Commissioner Erickson asked about the status of Allina’s proposal to operate an ambulance substation at 1209 County Road E. Council Liaison Werner explained that the City Council had voted to deny the proposal (3-2, Werner and McClung dissenting) at their meeting on February 24, 2014. Community Development Director Hutmacher reported that Allina was continuing to work with staff on identifying an appropriate location in Arden Hills for their facility. She explained the reason for denial was because the proposed use was not consistent with the Guiding Plan for the B-2 District. Commissioner Erickson noted that it was important for the City to accommodate emergency response providers. EDC Minutes March 5, 2014 Page 6 of 6 D. Staff Comments None. ADJOURNMENT Chair von Holtum adjourned the meeting at 9:30 a.m. __________________________ __________________________ _ Ed von Holtum, Chair Jill Hutmacher Community Development Director City of Arden Hills Economic Development Commission April 2, 2014 Page 1 of 3 MEMORANDUM DATE: April 2, 2014 EDC Agenda Item 4.A TO: Economic Development Commission FROM: Matthew Bachler, Associate Planner SUBJECT: City of Arden Hills Revolving Loan Fund Background In November 2013, the EDC reviewed changes recommended by the Economic Development Authority to the City’s Revolving Loan Fund (RLF) program. Since then, staff has met with several local bankers to discuss the RLF in more detail and to determine the feasibility of the proposed revisions. The section below provides a summary of these discussions and incorporates the input provided by the EDC at the November 2013 meeting. Staff will present general recommendations to the EDA on how the RLF program could be restructured at their meeting on April 28, 2014. Staff is requesting that the EDC review the feedback received from local banks and provide staff with any additional comments. Discussion Goals and Principles The RLF guidelines should have clearly defined goals in terms of the types of projects the City would like to target so that businesses applying for loans can easily evaluate whether their projects would be consistent with the City’s objectives. Specific principles to consider included:  Prioritize projects that will result in a direct financial benefit to the City, such as through increases in property value.  Focus on businesses that are well established. The first two years are often volatile for businesses and issuing loans to new businesses could expose the City to additional risk.  Target sectors that have better success rates with repaying loans, such as manufacturing.  Consider structuring the program to support private investment that would complement the planned public improvements in the B-2 District. City of Arden Hills Economic Development Commission April 2, 2014 Page 2 of 3 Loan Amount and Terms The maximum loan amount should be between $50,000 and $75,000. If the City were to set the RLF interest rate at two or three percent, these loans would be very competitive with commercial lending rates. Currently, commercial rates average at least five percent. The private lender should set the term length, but the City could still put a limit on the maximum number of years for a loan term. Terms are determined by the amortization period. Projects requiring less capital investment (equipment acquisition) usually have a shorter amortization and term, while projects with a larger investment (real estate acquisition) have a longer amortization and term. If a goal is to see a quicker return of loan repayments, the City should focus on projects with short-term amortization periods of ten years or less. Eligibility The following types of projects should be eligible for loans issued through the RLF:  Land and building acquisition  Real property improvements  Commercial façade improvements  Fixed asset equipment Financial Criteria Revolving fund loans should act as gap financing for loans being made by a private lender. For each loan, the City would enter into a participation agreement with the partnering bank. The lender would prepare the note and collateral documents and the City would issue a check from the RLF to purchase a participation in the note. The lender would be responsible for disbursing the loan funds and collecting payments for both the City and private portions of the loan. Monthly payments would then be submitted to the City. The bank would also be responsible for doing the necessary underwriting for the entire loan package. Since banks are risk-averse in lending money, if an applicant meets a bank’s underwriting requirements the City can be confident about the risk level associated with the loan. Additional recommended financial criteria included:  Require a minimum of 50 percent of a project be privately financed.  Be willing to take on some risk recognizing that the City will likely see a direct benefit from a successfully completed project regardless of whether the loan is repaid in full (for example, improvements to real property).  Many projects would likely not receive a high score using the City’s Grading and Report Card for public financing proposals, as that tool is largely focused on redevelopment projects. Consider exempting projects receiving financing through the RLF from being reviewed using this evaluation tool.  The job creation requirements in the existing RLF Guidelines should be revised considering that certain projects such as façade improvements and equipment acquisition may not meet this required criteria. City of Arden Hills Economic Development Commission April 2, 2014 Page 3 of 3 Guidelines and Approval Process The application process for obtaining revolving loan funds should be streamlined and transparent. The City should set a goal of completing the necessary evaluation and deciding on a loan request within 30 to 45 days of receiving a completed application. A long approval process will make the program less attractive to businesses interested in participating. The City could consider establishing a special committee comprised of members of the City Council and staff that would be responsible for evaluating applications and making recommendations to the EDA. Attachments A. Economic Development Commission Staff Report, November 6, 2013 B. Economic Development Commission Minutes, November 6, 2013 MEMORANDUM DATE: November 6, 2013 EDC Agenda Item 4.B TO: Economic Development Commission FROM: Matthew Bachler, Community Development Intern SUBJECT: City of Arden Hills Revolving Loan Fund Summary The Economic Development Authority (EDA) is currently discussing the future use of the City’s Revolving Loan Fund (RLF). The City established the RLF in order to participate in the Minnesota Investment Fund (MIF) program, managed by the Department of Employment and Economic Development (DEED). Grant funding received through MIF in 1998 was used to provide Cardiac Pacemakers, Inc. with a low-interest loan for an expansion project. A $100,000 portion of the loan was repaid to the City and was used to capitalize the RLF. As of October 24 2013, the RLF cash balance was $155,649. The CPI loan repayment and investment interest earnings are the only revenue sources represented in this balance. A more detailed history of the RLF was provided in the April 29, 2013, staff report to the EDA (Attached). Background The use of revolving loan funds is regulated by guidelines that were first adopted by the City in 1997. At the EDA meeting on August 26, 2013, staff and commissioners discussed the goals of the RLF and whether the guidelines needed to be updated to reflect new priorities. The Arden Hills Business Subsidy Criteria and City Public Financing Guidelines were also reviewed to evaluate how these policies might impact or limit the use of the RLF. Any revisions the City wishes to make to the RLF guidelines are required to be reviewed by DEED prior to EDA and City Council approval. At a minimum, the guidelines should be changed to state that the Minnesota Business Subsidy Law applies to RLF loans (this law came into effect following the adoption of the guidelines in 1997). Staff is requesting feedback from the EDC on the goals and priorities outlined by the EDA. Specifically, staff is looking for insight on how the business community would view the proposed RLF guidelines. The following is a summary of the discussion from the EDA meeting on August 26th : Loan Amount and Terms The EDA discussed setting a maximum loan amount of $75,000. This number was decided on in part because under the Minnesota Business Subsidy Law, loans of less than $75,000 are not considered business subsidies and are exempt from the provisions of the state law. The question of whether a minimum loan amount should be set was raised, but the topic was not discussed. The EDA would prefer to offer short-term loans (5-year term or less) with an interest rate of between one and two percent. The loan term period and interest rate could be negotiated depending on the public benefits associated with the project, such as job creation and tax base increase. However, there would not be an option to forgive a loan. Eligibility Eligible projects would include land and building acquisition and construction, remodeling, relocation, and commercial façade improvements. Revolving loan funds could not be used for equipment acquisition, working capital, or professional fees. Commercial multi-family residential projects would also not be eligible for RLF financing. Loans would only be available to businesses located within the City’s commercial districts. Financial Criteria The main purpose of offering revolving loan funds would be to provide gap financing to businesses unable to obtain adequate affordable capital from the private market. Since RLF loans would be subordinate to loans issued by private banks, establishing and maintaining a good working relationship with local financial institutions will be key in ensuring the successful management of the RLF. Applicants would be required to meet the underwriting criteria of the private financial institutions participating in the project. The existing financial criteria for the use of funds would remain largely unchanged. These criteria include requirements on the public to private financing ratio and the percent of private equity contributed to the project. As the RLF guidelines are currently written, a project would be required to leverage at least two dollars for every EDA dollar invested, and should include a borrower’s equity contribution of 10% of the total project cost. Goals and Principles The EDA would like to target loans towards small, established businesses in Arden Hills. Two ideas that were discussed were how the funds could be used to assist home occupation businesses looking to expand operations into a commercial building, and how they could support façade improvement projects, especially along commercial corridors like County Road E. At the same time, the EDA would also like to market public financing to help bring new, value-added businesses into the community. Overall, the EDA seemed supportive of a cautious approach to lending revolving loan funds. They discussed the need to be selective in choosing projects for financing, and wanted to target projects that would bring the most benefit to the community. At the same time, the EDA was interested in making loans in the short term so that funds can start providing benefits to the community. Arden Hills Business Subsidy Criteria and City Public Financing Guidelines On April 29, 2013, The City Council voted to approve amendments to the Business Subsidy Criteria and City Public Financing Guidelines, and to approve the Public Financing Proposal Grading and Report Card. The Criteria and Guidelines set minimum standards for the City for granting all forms of public subsidy, but they primarily address the use of TIF and tax abatements. The Grading and Report Card evaluates public financing proposals based on a number of criteria, including the ratio of private to public investment, minimum valuation threshold, and expected increase in real estate value. Projects must meet a certain number of criteria in order to qualify for subsidies. At the August 26th meeting, the EDA affirmed that these policies would apply to all loans administered through the revolving fund regardless of whether the loan amount was less than what State statutes define as a business subsidy. Discussion Questions 1. Given the Commissioners’ real estate and business experience, will the terms and conditions outlined above be attractive to the business community and encourage investment in Arden Hills? 2. Because the loans will be made in conjunction with bank loans, it will be important to market the program to banks in Arden Hills and adjacent communities. How could the EDC assist with these marketing efforts? 3. Considering the EDA’s interest in targeting loans towards small businesses, are there specific types of projects that small businesses commonly seeks financing for? 4. What other feedback or information could be helpful to the EDA as it considers the RLF program? Attachments • EDA Staff Report, April 29, 2013 • City of Arden Hills, EDA Revolving Loan Fund Guidelines • City of Arden Hills Business Subsidy Criteria and City Public Financing Guidelines • Public Financing Proposal Grading and Report Card CITY OF ARDEN HILLS, MINNESOTA ECONOMIC DEVELOPMENT COMMISSION NOVEMBER 6, 2013 8:00 AM CITY HALL -- 1245 WEST HIGHWAY 96 3. UNFINISHED AND NEW BUSINESS B. Revolving Loan Fund Community Development Intern Bachler gave a presentation on the background of the City’s revolving loan fund including its history and funding sources. He reviewed the existing revolving loan fund guidelines and Economic Development Authority (EDA) discussions regarding potential revisions to the fund guidelines. Commissioner Erickson noted that it was unclear whether loan funds would be targeted towards established or startup businesses, particularly since loans to startup businesses are usually high-risk and his understanding was that the EDA wanted assurance of loan repayment. Commissioners discussed the origins of the revolving loan fund and its inactivity for the past several years. Commissioner Altstatt inquired about the balance of the fund and whether it could be used to improve real estate. Community Development Intern Bachler responded that the current fund balance is $155,649 and that it must be used specifically for economic development activities; it cannot be transferred to the City’s general fund. The loan funds could be used for real estate improvements provided that the project met the fund guidelines. Commissioner Heikkila asked whether loan funds could be used for appraisals or environmental assessments. Community Development Director Hutmacher responded that the EDA had indicated that they did not support using loan funds for professional fees. Commissioner Erickson stated that he felt the proposed terms of the revolving loan program were appropriate; however, he was concerned that the ideal candidate for loan funds was not clearly defined. Apprehensions that the loan approval process could be lengthy and uncertain could cause businesses to be unwilling to participate in the program. EDC Minutes November 6, 2013 Page 2 of 2 Chair von Holtum noted that the requirements for job creation listed in section 2 of “Criteria for Use of Funds” in the existing revolving loan fund guidelines was unclear. It was maybe created specifically for the previous Guidant loan and was no longer applicable. Commissioner Erickson asked whether the loan program would be marketed directly to businesses. Community Development Director Hutmacher stated that the program would be marketed to local banks since the loan program requires loans to be made in participation with banks which would be responsible for underwriting and loan administration. Also, banks are likely to be already working with businesses which are planning expansion projects and know which projects may need additional financing and would fit City loan guidelines. Commissioners agreed that marketing to banks would be effective and that local bankers communicate with each other and could help market the program. Commissioner Erickson suggested that the guidelines could be better defined to decrease business uncertainty. Chair von Holtum recommended that staff speak to local bankers to help define the program. City of Arden Hills Economic Development Commission April 2, 2014 Page 1 of 2 MEMORANDUM DATE: April 2, 2014 EDC Agenda Item 4.B TO: Economic Development Commission Chair and Commissioners FROM: Jill Hutmacher, Community Development Director SUBJECT: City Video Tour Requested Action Provide direction for the City video tour. Discussion City staff has met with CTV and has drafted the following outline for the City video tour. Upon EDC approval of the outline, staff will work to draft a script, contact businesses to request testimonials, and work with CTV to identify “shots”. Filming will take place this summer. Part I: Mayor Introduction (20 seconds) The Mayor will be asked to provide an introduction which provides a welcome to the viewer and describes what will be presented in the video. Part II: Background Information (50 seconds) Location. Using maps, the City’s location will be described with emphasis on the proximity to both downtowns, the I-694 med-tech corridor, and major transportation arteries. Demographics. The City’s unusual situation of having more employees than residents and the overall educational attainment level of residents will be featured. The City’s diverse housing stock including starter homes, move-up homes, and executive homes will be described. The median housing value will be compared to the metropolitan median value (on a percentage basis to avoid dating the video). Amenities. The City’s extensive parks, open space, and trail system will be discussed. The strength of the Mounds View School District and the opportunities for continuing education at University of Northwestern and Bethel University will be included. City of Arden Hills Economic Development Commission April 2, 2014 Page 2 of 2 Part III: Business and Industry (70 seconds) Business Districts. The City’s four business districts will be described including the character and types of business in each area. Maps will be used to show the location of each district. Types of Businesses. The City’s diverse business environment will be described with particular emphasis on the type of businesses that the City would like to attract in the future including corporate offices and headquarters, medical/technical businesses, manufacturers, professional services, retail, and small businesses. Two or three testimonials from different types of businesses will be included. Part IV: Economic Development (30 seconds) TCAAP. Highlight development and business location/expansion opportunities. Include a testimonial by the St. Paul Chamber of Commerce focusing on the regional economic significance of TCAAP. Other Development. Show in general terms, without details on specific projects, that development and private investment is occurring. Part V: Wrap-Up (10 seconds) Review what was presented in the video, show information available on the City website, and encourage contacts to community development staff at City Hall. City of Arden Hills Economic Development Commission April 2, 2014 Page 1 of 1 MEMORANDUM DATE: April 2, 2014 EDC Agenda Item 4.C TO: Economic Development Commission FROM: Matthew Bachler, Associate Planner SUBJECT: Business Retention and Expansion Background At the EDC meeting on March 5, 2014, staff provided a brief overview of the goals of Business Retention and Expansion (BRE) programs and the typical structure of these initiatives. Staff recently completed a ten-week course entitled Retaining and Expanding Businesses in Your Community through the University of Minnesota Extension. Included in Attachment A is the final course paper written by staff, which discusses what some of the important milestones would be for implementing a BRE program specifically in Arden Hills. In the upcoming months, staff will be reaching out to other cities in the metro that have implemented BRE programs to learn about the successes and shortcomings of their efforts. Staff will also have discussions with the EDC on the costs and benefits of a BRE program and priorities the City should set in terms of the scope of a BRE program. Attachments A. Retaining and Expanding Businesses in Your Community – Course Paper 1 Matthew Bachler Retaining and Expanding Businesses in Your Community Course Paper March 25, 2014 Business Retention and Expansion Program Milestones in Arden Hills, Minnesota Retaining and facilitating the expansion of existing businesses is an important component of any city’s strategic plan for economic development. Some studies have shown that as much as 80% of new jobs are created by existing businesses rather than by businesses attracted to a community.1 From a financial and staffing perspective, focusing on the growth of existing businesses can be more efficient than enticing a new business to move into a community with public financing commitments or other incentives. Business Retention and Expansion (BRE) programs help address broad economic development policies as well as specific short -term goals such as building improved relations between city government and the business community and helping businesses solve immediate problems. BRE programs are organized around a three-step process: research, prioritize, and implement. First, interviews are conducted with businesses to gather feedback on the perceived strengths and weaknesses of doing business within the city. Priority projects are then designed to respond to the issues identified in the data compiled from these interviews. Finally, an implementation plan is developed for each project and carried out. This paper will outline how a BRE program might function specificall y in the City of Arden Hills, Minnesota and will review the important milestones that need to be met in order to successfully carry out a program in this community. It should be noted that due to limited staff resources, a consultant would need to be hired to complete several of these milestones. The first step will be to organize the Leadership Team and Task Force Team. Both of these groups would need to be officially appointed by the Arden Hills Economic Development Authority (EDA). The Leadership Team includes the core members of the BRE program who are responsible for many of the day-to-day tasks of implementing the program. Selecting members who have a prominent position within the community and who can impact policy decisions is 1 Kraybill, David. 1995. “Retention and Expansion First,” Ohio’s Challenge. Department of Agricultural Economics, Ohio State University, Columbus, OH. Vol. 8, Issue 2, pp. 4 -7. 2 critical in having an effective BRE program. In Arden Hills, this group would be comprised of the Mayor, the Council Liaison to the Economic Development Commission (EDC), the chair of the EDC, the City Administrator, the Community Development Director, and a business representative from one of the major employers in the City. Additionally, a staff member from the Community Development Department would serve as a staff liaison to the Leadership Team and would be responsible for administrative duties and assigning specific tasks related to the BRE program to other staff. The Task Force is a larger group of volunteers that sets the overall framework and goals of the program. This group should represent a broad cross-section of the community and have members with different areas of expertise. Cities that can recruit a diverse task force increase the likelihood of priority projects being implemented.2 In addition to the Leadership Team, the Task Force would be made up of the remainder of the City Council, members of the EDC and the Planning Commission, several local business owners representing different industries, and a representative from the Mounds View School District, the Metro North Chamber of Commerce, and Bethel University. The Leadership Team would be responsible for identifying and recruiting individuals for the Task Force Team. Following the organization of these two groups, the BRE program would focus on conducting the business visits. Arden Hills would likely work with a consultant that has already designed an interview survey specifically for BRE programs. The benefit of using a standard survey is that it has previously been tested and can easily be reused if a BRE program is repeated in the future. Additionally, the results of the analysis can be compared to data collected by other cities that have carried out similar programs. If a standard survey were to be used, the Leadership Team could still work with the consultant to add questions particular to Arden Hills. City staff would present different options to the Task Force Team on the potential scope of the BRE program. Since Arden Hills has a relatively small number of businesses, the BRE program would likely take a comprehensive approach targeting all businesses within the city. Alternatively, the program could focus on a certain business district or type of industry. The Leadership Team would be responsible for making a final decision on this matter. An introductory mailing would be sent by staff to all businesses providing an overview of the 2 Morse, George W., and Inhyuck, Ha. 1995. “How Successful are BR&E Implementation Efforts? A Four State Example,” Department of Applied Economics, University of Minnesota Staff Paper P95 -13. 3 program and inviting them to participate. Members of the Leadership Team, specifically the Visitation Coordinator and the Business Resources Coordinator, would then be responsible for following up with each business. The Task Force would be largely responsible for recruiting volunteers from the community to complete interviews with participating businesses. City staff would also promote the BRE program on the City’s website and through the monthly community newsletters. Due to the importance of how the interviews are conducted, Arden Hills would hire a consultant to hold a training session with volunteers. In order to get a high completion rate, volunteers need to feel confident in doing the business visits and this training can provide them with those necessary skills.3 Upon the completion of this training, volunteers will provide City staff with their general availability and the number of visits they would be willing to do. Administrative staff would then contact participating businesses to schedule meetings and coordinate with volunteers to assign each interview. An important milestone within a BRE program is responding to warning flags identified during the business interviews. Warning flags typically involve issues that are specific to an individual business, such as a problem with public infrastructure or a potential relocation. Responding to warning flags gives the City an opportunity to demonstrate early accomplishments and to build a positive attitude about the BRE program within the business community. During the training session, the consultant would discuss with volunteers how to recognize warning flags in the business interviews. City staff will create a short debrief form to be filled out by volunteers after their visits, which will give them an opportunity to list potential immediate problems. Some of these items can be addressed directly by staff, while more complex issues will need to be discussed by the Task Force Team. Prior to bringing these issues to the Task Force, staff would be responsible for coming up with a recommended response to be reviewed by the larger group. The Task Force retreat to discuss priority projects is a critical component of a BRE program as it lays the groundwork for a successful implementation phase. It is important that the selected priority projects are achievable and that there is political support to actually carry them out. Arden Hills would likely hire a consultant that could complete the data analysis and research 3 Loveridge, Scott and Morse, George. 1997. “Visitation Coordinator Manual”, Implementing Local Business Retention and Expansion Visitation Programs, Northeast Regional Center for Rural Development, University Park, PA, Publication No. 72 4 report summarizing the findings from the surveys and facilitate the retreat. The expectation would be that discussions during the retreat would generate approximately ten project ideas, and that three or four of these would be identified as the best options. Since most BRE projects would require a commitment of some public funding, the selected projects would be presented to the EDA or City Council for final approval. The Community Development staff would largely be responsible for the implementation of the priority projects. Project teams that included outside assistance would be organized on an as needed basis depending on scope of the project. For example, if the goal of a project was to connect skilled workers living in Arden Hills with local jobs, staff might form a project team with a representative from the Department of Employment and Economic Development to help with this initiative. Staff would prepare quarterly reports that would be distributed to the Task Force detailing the progress on each project. Additionally, more formal presentations on the BRE projects would be made at the annual State of the City event and at the first EDA meeting of the year in January, which the Task Force Team would be invited to. Focusing on the expansion and retention of existing businesses is a beneficial economic development strategy, but the success of these programs hinges on careful planning and the ability to galvanize political support for implementing priority projects. Before a community decides to undertake a BRE program, it should evaluate whether it will be able to follow through on the projects it has committed to undertake for the business community. To help ensure the successful implementation of a BRE program in Arden Hills, this paper has attempted to outline the important milestones that will need to be met and to identify key community members who should be involved over the course of the initiative. Page 1 of 2 DATE: April 2, 2014 EDC Agenda Item 5.A TO: Economic Development Commission Chair and Commissioners FROM: Jill Hutmacher, Community Development Director SUBJECT: TCAAP Update Requested Action None. Discussion The City and Ramsey County are working together on a Request for Proposals for an infrastructure study that will consider roadways, utilities, surface water management, and grading. Ramsey County will be the lead agency for the contract which will include analysis and preliminary design for the Spine Road and other infrastructure. City utilities will be included in the study, and the City will be asked to enter into a cost-sharing agreement for its portion of the contract. Staff expects that the RFP will be released in early April, and a consultant will be selected by mid-May. Special and regular City Council work session meetings have been scheduled to discuss issues related to the Master Plan and City infrastructure. Discussion topics are tentatively planned as follows: March 31, 2014, Special Work Session following the regular meeting  Infrastructure Study Update  Metropolitan Council Sewer Access Charge (SAC) Credit Discussion April 14, 2014, Special Work Session at 5:30 pm  Review Draft Alternative Urban Areawide Review (AUAR) and Mitigation Plan  Financial Modeling for Trunk Utilities  Review of Public Comments on the Draft Master Plan MEMORANDUM Page 2 of 2 April 21, 2014, Regular Work Session at 5:00 pm  Ramsey County Economic Development and Redevelopment Goals for TCAAP  PTRC Recommendations for Park and Open Space  City Goals for Surface Water Management April 28, 2014, Special Work Session following the regular meeting  I-35W/Highway 96 Intersection Design Recommendation It is anticipated that additional regular and special work session meetings will be scheduled to discuss TCAAP issues. Future meeting topics will be defined as those dates draw nearer. At the April 2, 2014 EDC meeting, staff will update Commissioners on Council discussions on March 31.