HomeMy WebLinkAbout3. Joint Meeting with EDA Committee
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TENTATIVE AGENDA
JOINT MEETING OF
THE CITY COUNCIL FOR THE CITY OF SHAKOPEE, MINNESOTA AND
THE SHAKOPEE ECONOMIC DEVELOPMENT ADVISORY COMMITTEE
August 9, 2005
1. Roll Call
2. Approval of the Agenda
3. Discussion Items
A. Role/Function of the City in Economic Development
1. Assist Private Sector to Fill Vacant
Commercial/Industrial Buildings
11. Assist in Development of Undeveloped
Commercial/Industrial Land
111. Redevelopment Issues
IV. Downtown Shakopee
B. Tools for Accomplishing Economic Development Goals
1. Staffing Levels
11. Financial Tools
Revolving Loan Fund
Downtown Fayade Loan Program
TIP/Tax Abatement
C. EDA Budget for 2006
4. Other Business
5. Adjourn
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City of Shakopee
Memorandum
TO: Mayor and City Council
Economic Development Advisory Committee
Mark McNeill, City Administrator
FROM: Kris Wilson
Assistant to the City Administrator
SUBJECT: Discussion Items forAugust 9 Meeting
DATE: August 4, 2005
Below are a list of topics and questions for our discussion on August 9, as well as some
background information where appropriate. Given the fact that we only have one hour
for our discussion, and a lot of topics to cover, it would be helpful if each of you
individually put some thought into these questions prior to the meeting on the 9th.
Role / Function of the City in Economic Development
~ Given the current half-time staffing for economic development activities, what
does the City Council view as the city's role in economic development?
Assuming there are multiple roles we could and should be playing, which are the
highest priority?
~ Should the city be assisting private land owners and real estate brokers in fmding
tenants for existing, vacant buildings in the industrial park?
~ Should the city be assisting in the development of vacant parcels ofland currently
zoned for commercial/industrial uses? If there is consensus that this is something
the city should be involved in, what is our primary goal- creating tax base?
Increasing the number of jobs in Shakopee? Something else?
~ When it comes to filling existing, vacant buildings or attracting development to
undeveloped parcels, is the city's role to go out and recruit businesses or to serve
as a resource for those that approach us? If we go out and recruit businesses what
are we prepared to offer them?
~ What is the city's role in redevelopment? An example would be the east end of
First Avenue, where there are several vacant and/or underutilized buildings lining
one of the primary streets into our downtown. How should we balance city
involvement with private property rights?
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).- Where do Business Retention and Expansion activities fit into the city's priorities
for economic development?
).- What is the city's role in redevelopment? An example would be the east end of
First Avenue, where there are several vacant and/or underutilized buildings lining
one of the primary streets into our downtown. How should we balance city
involvement with private property rights?
).- What is the city's role in maintaining and stimulating Shakopee's historic
downtown? The city currently provides services related to beautification (such as
the partnership with the Shakopee Downtown Partnership regarding the hanging
flower baskets and replanting along 2nd Ave.) and parking, and is about to make a
significant investment in Huber Park. The 2005 EDA budget included $50,000
for a Downtown Fa9ade Improvement Program, but nothing has been done with
this money to date. Should staff come up with guidelines for a grant/loan fund
and start marketing these funds or should they be transferred into the revolving
loan fund?
Tools for Accomplishing Economic Development Goals
Staffing Levels
In 2005, the city went from a full-time Economic Development Coordinator to a half-
time position that is part of the Assistant to the City Administrator position. Does the
Council want to stay with this approach? If so, what should be the focus ofthe
approximately 20 hours per week of staff time available for economic development
related activities?
Financial Tools
Tax Increment Financing (TIF) and tax abatement continue to be the primary economic
development financing tools at our disposaL What are the Mayor and Council's
intentions for using TIF and abatement in the future? Is there a consensus about the
future use ofTIF or abatement in the new Dean Lakes Business Park? What about
elsewhere in the city?
Revolving Loan Fund: The 2005 EDA budget provided for $100,000 to be transferred
from the EDA fund balance to a revolving loan fund, to be added to by repayments of a
Minnesota Investment Fund Loan to Challenge Printing (now Imagine! Printing). What
is the vision for utilizing this loan fund? Should additional funds be allocated for this
purpose in 2006?
Business Incubator: Some EDAs assist small start-up businesses by providing be10w-
market rate space for rental, and other operating assistance, until the company reaches a
certain size and is large enough to move to a market rate location. These are, however,
labor intensive and of some expense. If Shakopee were to provide this, is there
commitment to provide the necessary resources for this to work?
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Goals Listed in Current Economic Development Strategic Plan:
1. Economic Development Vision
Shakopee will have a comprehensive plan, special area studies, and economic development
strategic plan that will direct overall development of the City and help guide economic
development decisions and activities.
2. Revitalization / Redevelopment
Our community will have a plan that will direct revitalization and redevelopment ofthe older
commercial areas of Shako pee (Downtown, 1st Avenue Corridor, Riverfront), inclusive ofa
plan for historic preservation.
3. Historic Preservation
Shakopee will have an overall plan for historic preservation, of which the original/historic
commercial area (downtown) is a part. The historic preservation plan will be complementary
to the redevelopment plan. Preserving and revitalizing Downtown Shakopee is an important
and worthwhile investment in the economic health and quality of life in our community.
4. Retention and Expansion of Existin2" Businesses
Shakopee will have a formal business retention and expansion (BRE) program to maintain
and grow the existing business/economic base.
5. Available Industrial & Commercial Land
Shakopee will have an ample supply ofland zoned for commercial, industrial and office
development to keep the growth of the commercial/industrial tax base on pace with
residential tax base.
6. New Business / Entrepreneurial Development
Shakopee will have a program that fosters entrepreneurial activity and development of new
businesses.
7. Business Attraction / Recruitment
Shakopee has a business attraction element within its economic development program that
focuses marketing efforts on targeted industries / businesses that best fit the community,
attracting commercial and industrial enterprises that contribute to the city's tax base and
provide jobs appropriate for the community.
8. Economic Development Financin2"
Shakopee will have a variety of economic development financing tools for retention and
expansion of existing businesses, new business development, and attraction / recruitment of
businesses from outside the community, including a local revolving loan fund.
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City of Shako pee
Shakopee Economic Development Authority
ECONOMIC DEVELOPMENT REVOLVING LOAN FUND
GUIDELINES
PURPOSE
The purpose of the Shakopee Economic Development Revolving Loan Fund (EDRLF) is
to provide a financing mechanism to qualified businesses to enable them to expand the
primary economic base and employment opportunities in Shakopee. The EDRLF is
designed to encourage business expansions and start-ups and related job creation and
retention in Shakopee.
ELIGIBLE APPLICANTS
Eligible applicants are for-profit businesses and entrepreneurs in the basic sector of the
local economy engaged in manufacturing assembling, or processing operations, including
new technology-based businesses, that are primarily dependent upon external markets,
exporting their products. The EDRLF makes loans for expansion of existing businesses
and start-ups in Shakopee
The applicant should demonstrate that there will be creation of new jobs or retention of
existing jobs; increase in the tax base; that investment of public dollars induces private
funds; and that a financing gap exists ... a void between the cost of the project and the
total amount of funds that the business has available from other sources, such as owner's
cash and bank loans.
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Non-basic sector businesses which depend largely upon local markets, and whose
products are consumed locally are NOT eligible. Local services (i.e. drycleaners,
restaurants, drug stores, retail etc.) are non-basic, depending almost entirely on local
market factors.
ELIGIBLE USES OF FUNDS
- Land & Building Acquisition
- Site Improvements
- Construction or rehabilitation of manufacturing facilities
- Machinery and Equipment
- Workforce development / training
RLFGuidelines2
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INELIGIBLE USES OF FUNDS
- Debt Refinancing
- Working Capital
- Equipment Relocation
- Operation or expansion of a casino
- Projects related to a sports facility
LOAN AMOUNT
- Maximum loan amount shall not exceed $20,000.
- Minimum loan amount is $5,000.
- RLF Loan shall not exceed 50% of the total project costs; the other 50% of
funding must be secured from other sources such as equity, bank financing, etc.
TERM OF LOAN
. Real Estate -- Not to exceed 10 years
. Equipment -- 3 to 5 years, depending on type of equipment
On loans with mixed purposes, the term will be a weighted average based on uses.
INTEREST RATE
In no case shall the rate be less than four percent or greater than two percent above the
Wall Street Journal prime rate at time of closing.
JOB CREATION AND/OR RETENTION
Job creation and/or retention must also be included as part ofthe project. One full time
equivalent job must be created or retained for approximately each $10,000 ofRLF
assistance.
WAGE GOALS
Businesses receiving a revolving loan fund must pay each employee total compensation,
Including benefits not mandated by law, that on an annualized basis is equal to at least
110% of the federal poverty level for a family of four, which as of July 1,2001 is $9.33
per hour. The federal poverty level changes annually.
COLLATERAL REQUIREMENTS
Collateral - Reasonable security will be required. This will entail liens on all assets
purchased with RLF funds as well as liens on other assets as necessary. Personal
RLFGuidelines2
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guarantees of the principal owners/stockholders (that own in excess of20 percent of the
firm) will be required.
Collateral Subordination - The RLF is willing to take a subordinate position to private
bank financing.
COMMITMENTS FROM PRIVATE SOURCES
There shall be documentation of commitments from all private and/or public lenders
making loans to the project. Documentation shall include loan conditions and terms
(amount, interest rate, term and security required).
FEES AND OTHER COSTS
Loan application fee of $100 will be due and payable upon the submission of the loan
application to the Revolving Loan Fund. The application fee is charged to defer the costs
associated with credit review and is non-refundable.
RLFGuidelines2
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CITY OF SHAKOPEE
EDA FUND
2006 BUDGET
EDA FUND BUDGET SUMMARY
2003 2004 2005 2006
Actual Actual Proposed Proposed
Revenue
Taxes $ 74,618 $ 83,425 $ 80,000 $ 80,000
Intergovernmental
State Aid
County (Tax abatement) 58,322 57,078 32,620 27,000
Charges for Service
Interest 6,901 6,650 20,000 5,000
Miscellaneous
Total Revenue 139,841 147, 1 53 132,620 112,000
Expenditures
Personal Services 74,683 71,189 75,710 41,340
Supplies & Services 15,113 100,373 26,520 42,100
Downtown Fac;ade Program 50,000
ADC Payment 111 ,272 57,531 Closed Closed
Certainteed Payment " 51,528 61,850 51,000
Ryan Abatement 7,000
Total Expenditures 201,068 280,621 214,080 141,440
Excess (Deficiency) of -61,227 -133,468 -81,460 -29,440
Revenues over Expenditures
Transfers In - General Fund 52,950 59,884 29,230 31,000
Transfers Out - Revolving Loan Fund (3,273) (100,000) (100,000)
Excess (Deficiency) Of Revenues
over Expenditures & Transfers (61,227) (76,857) (152,230) (98,440)
Fund Balance December 31 $ 393,003 $ 316,146 $ 163,916 $ 65,476
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EDA FUND
2006 BUDGET
ACTIVITY:
Activity includes the operation of the Shakopee Economic Development
Authority. The EDA's mission is to enhance the quality of life in Shakopee
by expanding and strengthening the local economy; broadening the city's job
base and increasing its revenue base through facilitating the preservation,
expansion, creation and attraction of quality businesses and related jobs.
Implement strategies and administer various programs (grants, loans, etc. ) to
accomplish above activities. Staff must maintain EDA records and prepare
materials for policy decisions by Commissioners. The Commission is comprised
of the Mayor and City Council.
Staffing levels for the EDA were changed in 2005 from a full-time Economic
Development Coordinator to 50% of the Assistant to the City Administrator's
time, thereby reducing salary and benefit costs. As a result, an increase in
the need for outside professional services is anticipated and budgeted for
2006.
Section 469.107 of the Minnesota Statutes states that the governing body may,
at the request of the authority, levy a tax in any year for the benefit of
the authority. The tax must be not more than 0.01813 percent of taxable
market value.
OBJECT DESCRIPTION: Description of lines items:
Salaries:
~ of Assistant to the City Administrator's salary.
Professional Services:
Legal $20,000
Other Prof Services $15,000
Dues: $800
Membership dues for professional economic development associations such as
the International Economic Development Council and the Economic Development
Association of Minnesota.
Conference/School/Training: $500
Various conferences and training courses sponsored by professional economic
development associations mentioned above.
Miscellaneous:
. Certainteed Tax Abatement: $ 51,000
. Dean Lakes Tax Abatement: 7,000
. Economic Development Revolving Loan Fund: 100,000
$158,000
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2006 BUDGET
Est. 2006 Pay
2006 With COL Inc
Title/Description Step 3.0% FICA PERA
EDA Coordinator $ - $ - $ -
Charge in Administration N/A 32,300 2,471 1,786
Total EDA $ 32,300 $ 2,471 $ 1,786
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EDA
2006 Budget
2190 2191
Object # Description Benefits Management Total
6002 Wages FT - Reg. - 32,300 32,300
6005 Wages OT - Reg. -
6122 PERA - 1,790 1,790
6124 FICA - 2,470 2,470
6135 Health 4,240 4,240
6139 PEHP 150 150
6140 Life 150 150
6145 Dental 240 240
6170 Workers Comp - -
6180 Compensated Absences - -
6190 Retirement Benefit -
Total Personnel 4,780 36,560 41 ,340
6210 Operating Supplies 400 400
6215 Materials -
6240 Equipment Maintenance -
6300 Professional Services -
6310 Attorney 20,000 20,000
6327 Other Prof Services 15,000 15,000
6332 Postage 100 100
6334 Telephone 300 300
6336 Printing/Publishing 300 300
6338 Advertising 200 200
6350 Insurance -
6354 Liability Insurance 1,500 1,500
6400 Rentals -
6420 Equipment Rent -
6430 Building Rent (IS FUND) -
6435 Other Rent 2,000 2,000
6472 Conf / School/Training 500 500
6475 Travel/Subsistence 500 500
6480 Dues 800 800
6490 Subscriptions/Publications 500 500
6640 Designated Miscellaneous 158,000 158,000
Total Supplies & Services - 200,100 200,100
6740 Capital Expenditures -
Total $ 4,780 $ 236,660 $ 241,440
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