HomeMy WebLinkAbout5. Work Plan and EDAC Meeting Schedule
CITY OF SHAKOPEE
Memorandum
TO: Honorable Mayor and City Council
Shakopee Economic Development Authority (EDA)
Mark McNeill, City Administrator and EDA Executive Director
FROM: R. Michael Leek, Community Development Director
SUBJECT: Possible Economic Development Work Plan and Economic Development
Advisory Committee (EDAC) Meeting Schedule
MEETING DATE: March 17, 2009
INTRODUCTION:
On February 17,2009 the EDA directed staff to prepare an outline of potential work tasks
and possible meeting schedule for the EDAC, which has been on hiatus since February
2008. Presently, the City's economic development efforts are limited to;
. Responding to business requests for incentives to move to or expand in Shakopee.
The only incentive the City currently offers is abatement of the city portion of the
property taxes for a period up to six years;
. M<l.intaining vacant property information on the City's website.
, Providing m~tching loans for fa9ade improvement in the Downtown and First
.
A venue Corridor under the Fa9ade Improvement Loan Program (FILP);
. Coordinating activities with the Downtown Partnership.
Staffs experience has been that these activities do not yield sufficient issues to keep the
members of the EDAC engaged; and which would seem to benefit from the input ofthe
EDAC. For that reason, before making a decision taking the EDAC offhiatus and setting
a meeting schedule, staff believes a discussion about other possible economic
development activities may be in order.
P'OSSIBLE ECONOMIC DEVELOPMENT ACTIVITIES:
As the Council/EDA is aware, there are a range of economic development services,
programs and incentives that are offered by cities in the Twin Cities Metropolitan Area.
Similarly, the amount of funding and staff resources varies depending on the range of
services provided by each city. A range of possible programs and services are briefly
outlined below for the Council's information. This is not an exhaustive list, and the
Council/EDA may have ideas about other activities that it wishes to discuss.
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Business Retention dnd Expansion (BRE):
BRE programs are concerned with a) knowing existing businesses in the community, b)
maintaining relationships with them, and c) on a routine basis (perhaps annually) meeting
with those businesses to identify I) issues that the business has that the city might be able
to resolve, and'2) opportunities for expansion ofthe business that the City may be able to
assist with.
BRE programs are time intensive, and for a community like Shakopee that has a large
number of businesses, it is often most effective to establish a committee consisting not
only of city employees, but also of other business representatives who can conduct the
actual yearly interviews. One of the problems that sometimes crops up with BRE
programs is that some of the businesses simply don't have, or may not want to take, the
time for such visits.
There is extensive training available related to establishing and maintaining a BRE
program, e.g. through the University of Minnesota Extension Service.
Possible Costs and Funding:
Costs would vary depending on how extensive a BRE program would be put in place, and
how large a percentage of Shakopee businesses were targeted. Based on my past
experience with such programs, and without assuming an increase in staff to handle the
program, following might be a reasonable starting point for a program and the costs
associated with it;
. Two to four business interviews per month;
. A total of about six hours preparation, interview, and follow-up time per business.
At the Community Development Director's hourly rate, that translates to between
about $9,000 and $18,000 in staff time to administer a program.
Marketing of Existing, Vacant IndustriallBusiness Park Building and Vacant
IndustriallBusiness Park Land:
In the summer of 2008, with the assistance of the intern Chris Guzek, staff updated site
and contact information for vacant land and buildings. The information was put in map
and table format, and uploaded to the City's website
The question for Council is whether it wishes to have the City more actively market these
sites in conjunction with the listing agents. This could involve the following activities
. Placing ads in trade publications;
. Developing a specific marketing package that can be customized for individual
properties;
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. Attending industry trade shows, or joining in State-sponsored trade missions
targeted to particular countries or industries;
. Meeting on a regular basis with listing agents to update them on City or other
assistance that is available, and to get updates from them on prospects for specific
buildings or sites.
. Conducting walk-throughs and following up with prospects.
Possible Costs and Funding:
Staff has not yet researched costs for the activities described above (e.g. the cost of ads,
registrations for trade shows). Other costs would be primarily the hourly cost of calls to
and meetings with real estate brokers and prospects, which would be charged either at the
appropriate staff hourly rate, or, if involving the City's consultant Shannon Sweeney, at
his contract rate.
Marketing of Existing, Vacant Commercial Buildings and Existing, Vacant
Commercial Land:
Similar to what is described for vacant industrial and business park land, the City could
take the step of assembling, posting and updating information regarding commercial land
and buildings.
As is the case for industrial and business park land, the question for Council is whether it
wishes to have the City more actively market these sites in conjunction with the listing
agents. This could involve the following activities
. Placing ads in trade publications;
. Developing a specific marketing package that can be customized for individual
properties;
. Meeting on a regular basis with listing agents to update them on City or other
assistance that is available, and to get updates from them on prospects for specific
buildings or sites.
. Conducting walk-throughs and following up with prospects.
Possible Costs and Funding:
Prior to undertaking this kind of activity, it would be worthwhile to undertake some sort
of market absorption study. Based on previous inquiries, it appears to staff that the
consultant cost of such a study would range from $20,000 up depending on how
extensive. If such study were undertaken by City staff, because staff are not expert in
such studies, it might be reasonable to expect the equivalent staff costs would be
somewhat higher.
Staff has not yet researched costs for the activities described above (e.g. the cost of ads,
registrations for trade shows). Other costs would be primarily the hourly cost of calls to
and meetings with real estate brokers and prospects, which would be charged either at the
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appropriate staff hourly rate, or, if involving the City's consultant Shannon Sweeney, at
his contract rate.
In 2008, the Community Development Director was involved in meetings with brokers
and walk-throughs on about four sites. Including preparation for and follow up for those
four sites the cost in staff time for each was about $400.00
The cost of follow-up if a project materialized would have to be further explored, and
could include the cost of consultant time, legal services if there were some sort of
contractual agreement between the City/EDA and a prospective business.
Assemblage of Land and/or Installation of Infrastructure for New Industrial/Business
Park Use, andfor New Commercial and Residential Use:
Other than the River City Centre project, it appears that the City has not routinely taken
an active role in assembling land for development, other than for public projects, or in
developing infrastructure to attract new business. Thus, this would be a major shift in the
City's policy.
Possible Costs and Funding:
The last such activity that staff was involved with was for the River City Centre project.
My recollection of that project is that for several months it may have occupied up to
about 25% of the author's time, which in current terms would translate to about $32,000
in staff time for such a project. This would not include actual costs of acquisition (on a
willing seller basis), legal, administrative or other costs.
Downtown and First Avenue Corridor Fafade Improvement Loan Program:
This is an ongoing, but relatively small, activity. There are other funds that the City has
(as from the CDBG rehab loan program) that could be used to set up other, revolving
loan fund programs for housing or other purposes. Council should discuss and decide
whether it is interested in establishing such additional funds.
POTENTIAL FUNDING SOURCES FOR ECONOMIC DEVELOPMENT
ACTIVITIES:
Many of the staff costs described above would simply be paid for from budgeted funds.
The impact would be to decrease the commitment of staff time, and thus funds, to other
activities normally carried out in the normal course of business. With limited budget
resources, staff does not expect that at this time Council would wish to consider a budget
or staff expansion.
Following is a listing, and brief description of, some possible sources of funding for a
variety of the activities described above.
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. Tax Increment Financing (TIF):
Tax increment financing (TIF) is a planning and financing tool which has been
used by local units of government since 1973. Tax increment financing was
originally designed by the Minnesota Legislature to replace the federal urban
renewal programs of the 1960s, which were gradually cut back and eventually
eliminated.
Tax increment financing uses the increase in property taxes resulting from new
development to finance qualified public improvement costs related to that
development. It is this increase or difference between the current property tax on a
parcel of land and the estimated property tax after development that is the tax
increment. Other sources of revenues may also be classified as tax increment.
Permitted uses of the tax increment generated vary according to the type of tax
increment financing and the year during which the tax increment financing district
was certified. There are three different types of TIF Districts; economic
development, housing, and redevelopment. To the extent that the City used TIF
several years ago, it appears to have been only for economic development, rather
than housing and redevelopment purposes (with the possible exception of an older
TIF district for the Downtown area)>
. Tax Abatement:
Tax abatement is a finance tool whereby, similar to TIF, the increase in property
tax as the result of new development is used as an incentive or gap financing
device for a limited number of years. With tax abatement, the business pays the
increased tax, but upon demonstration that the business has met economic
development, job creation or other goals, the increment of tax attributable to the
new development is reimbursed to the business.
In recent years tax abatement has been the most frequently used financing tool
used by the City of Shako pee. Generally, the tax abatement period has been
limited to six (6) years.
. Other Programs:
a. Minnesota Investment Fund (MIF);
The Minnesota Investment Fund provides grants to add new workers and
retain high-quality jobs statewide. The MIF focuses on industrial,
manufacturing, and technology-related industries.
Grants are given to local units of government who provide loans to assist
expanding businesses. All projects must meet minimum criteria for
private investment, number of jobs created or retained, and wages paid.
The maximum grant is $500,000. Only one grant per state fiscal year can
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be awarded to a government unit. At least 50 percent of total project costs
must be privately financed through owner equity and other lending
sources, although most applications selectedfor funding have at least 70
percent private financing. Grant terms are for a maximum of 20 years for
real estate and 10 years for machinery and equipment. Interest rates are
negotiated. Applications are accepted year-round.
b. Minnesota Job Skills Partnership Program
The Minnesota Jobs Skills Partnership Program (MJSP) helps Minnesota
businesses and schools competitively train the worliforce. "Grants are
awarded by the Minnesota Job Skills Partnership Board to educational
institutions that partner with businesses to develop new-job training or
retrainingfor existing employees. Funds may be usedfor training-related
costs or educational infrastructure improvements necessary to support
businesses located or intending to locate in Minnesota. A cash or in-kind
contribution from the contributing business must match program funds on
at least a one-to-one ratio.
The main MJSP program is:
. Partnership Program - grants to provide training that businesses
.... need for new or existing employees
0 A Pre-Development Grant may be available to assist in
. covering costs associated with planning a specific, large-
scale project for which Partnership Programfunds will
subsequently be requested
Other MJSP grant activities are:
. Special Incumbent Worker Training Program - grants to provide
training to assist businesses and workers to gain new skills that
are in demand in the Minnesota economy
. Health Care and Human Services Training Program - grants to
provide training to alleviate worker shortages in the health care
and human services industries
. Pathways Program - grants to provide trainingfor individuals
making a transition from public assistance to work
. Low Income Worker Training Program - grants to help low-
income individuals receive training to acquire additional skills in
order to move up the career ladder to higher payingjobs"
(Information from MnDEED site on MJSP program)
c. Possible membership in Twin Cities Community Capital Fund (TCCCF)
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The Twin Cities Community Capital Fund (TCCCF) is an economic
development financing resource for the seven county Twin Cities
Metropolitan Area. By pooling resources, TCCCF members can offer
much larger loans than would be possible with limited local resources,
greater gap-lending flexibility for financing local development projects,
and significantly lower loan risk. This is done with the support and
. services of a professional fund manager and loan officers at no cost to
Fund members.
POSSIBLE EDAC MEETING SCHEDULE:
The majority of the City's advisory boards meet once a month, but on occasion, meetings
have been scheduled on a quarterly basis. When the EDAC was last active, there were
two problems that were encountered; 1) getting majority attendance at the meetings, and
2) having substantive issues that the EDAC could tackle beyond the Fa<;ade Improvement
Loan Program.
Staff would suggest that before reactivating the EDAC and setting a meeting schedule,
the Council should decide what, if any, additional economic development efforts the
Council wishes to undertake that would benefit from input by the EDAC.
STAFFING:
Prior to going on hiatus, the Community Development Director was staff to the EDAC.
Prior to that, the Assistant City Administrator was staff to the EDAC. Because the City
does not have economic development staff per se (it contracts with a consultant, Shannon
Sweeney, but has not used his services a great deal), it is expected that the Community
Development Director (who also staffs the Council meetings, Planning Commission and
Transit Commission) would staffEDAC meetings.
RELATIONSHIP TO VISIONING:
This supports Goal D - Vibrant, resilient and stable.
ACTION REQUESTED:
Council is asked to provide direction regarding the following;
1. Maintaining the status quo regarding economic development programs and the
EDAC's current status;
2. The additional economic programs or services which the Council wishes to begin
providing;
3. Council's suggestions regarding the staffing level for the additional programs or
servIces;
4. Council's direction regarding the source of funding for items 1 and 2 above; and
5. Depending on the Council's direction to items 1-3 above;
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a. The role that Council wishes the EDAC to play in these programs or
services; and
b. How frequently Council would like the EDAC to meet.
,/"? ~ c)
-;/'~17"~~~~?"~~:~~L.
,. .1
R. Michael Leek
Community Development Director
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