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01-20-2015 EDA MINMeeting of the Elk River Economic Development Held at the Elk River City Hall Tuesday, January 20, 2015 Members Present: President Tveite, Commissioners Burandt, Dwyer, Westgaard, Provo, Olsen (5:34 p.m.), and Wagner Members Absent: None Staff Present: Community Development Deputy Director Jeremy Barnhart, and Recording Secretary Jennifer Johnson 1. Call Meeting to Order Pursuant to due call and notice thereof, the meeting of the Elk River Economic Development .Authority was called to order at 5:30 p.m. by President Tveite. Moved by Commissioner Westgaard and seconded by Commissioner Dwyer to approve the January 20, 2015, agenda. Motion carried 6-0. 3. Consider Consent Agenda Commissioner Dwyer indicated he was a director at the Bank of Elk River. Moved by Commissioner Dwyer and seconded by Commissioner Burandt to approve the following consent agenda: 3.1 December 15, 2014, Regular EDA Minutes. 3.2 Check register as outlined in the staff report. 3.3 Balance sheet as outlined in the staff report. 3.4 Revenue/ expenditure report as outlined in the staff report. 3.5 Designate the Elk River Star News as the official EDA newspaper for 2015 and the newspapers West Sherburne Tribune and Citizen Newspaper as backup newspapers. 3.6 Designate the following banks and institutions as official depositories for 2015: i First National Bank of Elk River 4M Fund ® Wells Fargo Bank The Bank of Elk River US Bank IN TCF Bank 3.7 Designate the Elk River City Council Chambers as the Economic Development Authority's meeting place for 2015. Economic Development Authority iVlinutes January 20, 2015 Page 2 3.8 Designate the third Monday of each month at 5:30 p.m. as the regular meeting date and time for Economic Development Authority meetings for 2015, and any meeting falling on a holiday be held on the next business day at the same time and location. 3.9 Appoint Jeremy Barnhart as Interim Executive Director for the Economic Development Authority and final appointment would occur at the successful conclusion of the Economic Development Director probationary period when that position is filled. 3.10 Receipt of report on modifications/ amendments to statute and /or enabling resolution as outlined in the staff report. 3.11 Direct staff to prepare any amendments to the EDA by -laws. 3.12 Receipt of report of Fox Haven commercial property clean -up update. Motion carried 6 -0. Commissioner Olsen arrived at 5:34 p.m. No one appeared for Open Forum. 5. Public Hearings There were no public hearings. 6.1 Confirmation and Recognition of New Commissioners Mr. Barnhart presented the staff report. Moved by Commissioner Provo and seconded by Commissioner Dwyer to recognize the appointment of Jerry Olsen and Jennifer Wagner as new Economic Development Commissioners. Motion carried 7 -0. .2 Election of Officers and Establish Terms Mr. Barnhart presented the staff report. Moved by Commissioner Westgaard and seconded by Commissioner Dwyer to approve the following officers for 2015: a President - Dan Tveite • Vice President — Pat Dwyer • Secretary — Barb Burandt • Treasurer — Matt Westgaard • Assistant Treasurer — Bryan Provo Motion carried 7 -0. Economic Development Authority Minutes Page 3 January 20, 2015 .3 EDA Stab - Committee Appointments - Finance Committee, Paul Motin Mr. Barnhart presented the staff report. He stated he will bring back his recommendations from the real estate profession at a future meeting for the authority to consider. Moved by Commissioner Westgaard and seconded by Commissioner Olsen to appoint attorney Paul Motin to serve on the Finance Committee and nominated Commissioner Jennifer Wagner to serve on the Finance Committee. Motion carried 7 -0. 6.4 Consideration of Staff Assignments Mr. Barnhart presented the staff report, providing an update of this year's upcoming goals for the EDA. It was noted that a review of the strategic plan is expected. 6.5 Public Art installation Mr. Barnhart presented the staff report. Jean Loy - Swanson, a member of the Judging panel, also provided information and feedback to the EDA regarding the selection process and narrowing down the judging panel's selection to their recommendation, artist Carl Zachmann and his `whimsical windmill.' Moved by Commissioner Olsen and seconded by Commissioner Burandt to award the Public Art Installation Project to Carl Zachmann as outlined in the staff report. Motion carried 7 -0. Mr. Barnhart presented the staff report. Moved by Commissioner Westgaard and seconded by Commissioner Provo to approve Resolution #15 -01 for a Jobs Incentive Microloan for Coin - Tainer/Stonesthrow in the amount of $200,000 as outlined in the staff report, and authorize the EDA chairman and city attorney to finalize and sign the loan closing documents. Motion carried 7 -0. Mr. Barnhart presented the staff report. PO 1911 i1 Economic Development Authority Minutes Page 4 January 20, 2015 Commissioner Provo asked for clarification in the application process. Mr. Barnhart explained the abatement policy allows the EDA the flexibility and authority to determine the amount of abatement they were willing to authorize, either by abating the entire value of the property, or abating the increment. He stated in this situation, the Finance Committee made the determination that it was more likely to support the increment abatement versus an entire value abatement based upon the knowledge they received from the applicant. At that point, the applicant withdrew its application. Mr. Barnhart stated the costs the city incurred was for Springsted's analysis of the application and publishing costs for the public hearing; no profit was made. Commission Westgaard asked the applicant for their thoughts on why they felt they deserved refunding the full application amount of $5000 with the knowledge the city went through a two month evaluation process. David Walters, the applicant, stated in his initial meetings with then Economic Development Director Brian Beeman, and Mikayla Hout from Springsted along with building property manager Gary Gabrielson, they received estimated tax abatement figures of approximately $45,000 per year for around 12 -15 years, which he felt was a large part in making the project viable. He explained how events occurred, requiring his business to relocate and changed some of the the factors the project, which in turn changed how much tax abatement would be received. He felt staff confusion of not fully understanding the process led to misinformation and when this was realized, they were two months into the project and therefore withdrew his application. Commissioner Dwyer stated had the applicant received full and correct information from the start, the applicant wouldn't have applied, as it would have been reported to him that historically the EDA awards incremental tax abatements, not full tax abatements. President Tveite stated in his time serving on the EDA, he doesn't recall the EDA ever awarding tax abatements on the full value of an existing building, just newly constructed buildings. Commissioner Westgaard agreed with Commissioner Dwyer and felt the EDA needs to refund the entire fee to the applicant, even though there were costs incurred. Commissioner Dwyer felt a discussion with Springsted should take place requesting an adjustment of their bill, as he felt they should have known from the beginning of the application process that a full rebate wasn't the typical policy of the EDA. Mr. Barnhart stated he will pass that request onto Springsted. He stated the challenge for him was economic development staff didn't have the Authority's historical aspect and provide advice as such, and that policy does allow the EDA to give the full V Economic Development Authority Minutes Page 5 January 20, 2015 property value abatement. In his position, he can only offer all options to an applicant, and in this case, full abatement is an option that applies. President Tveite concurred that the policy does allow a full abatement and noted there may be exceptions that would benefit from that, but stated in the future to communicate to future applicants that "historically" this is how the EDA has applied the policy and if an applicant feels their reasons to veer off from history because it's compelling they could do so with their eyes wide open. Moved by Commissioner Westgaard and seconded by Commissioner Provo to approve Coin- tainees request for reimbursement for tax abatement application fees in the amount of $5,000. Motion carried 7 -0. Commissioner Provo stated he appreciated the applicant choosing to stay in Elk River even without a full abatement and apologized for the situation. Mr. Walters stated his meeting with Mr. Barnhart was a totally different experience, noting this type of situation will never happen again. He stated he felt Mr. Barnhart was extremely efficient, communicates well, and feels changes are being made in the right direction. Commissioner Westgaard directed staff to address an adjustment with the bill with Springsted. Mr. Barnhart noted the city has used Ehlers & Associates in the past until very recently switching to Springsted. 6.8 Sale of Lots I and 2, Block I, Natures Edge Business Center II Mr. Barnhart presented staff report. The first discussion was regarding the FDA's discretion in selling its own land, and the need to deviate from the master plan for the area to support the project at this location; did they wish to sell the property fora truck service and sales enterprise. Commissioner Provo supported the sale of this property for a truck service and sales enterprise, noting he felt it aligned with the goals to create jobs and a tax base. He felt they were proposing a beautiful facility, and felt it would outperform any other tax base and job performance goals in town. He also asked that a fruit basket be sent to thank them for coming to Elk River. Commissioner Dwyer had previously expressed concern with the size of the proposed building in comparison to the amount of taxes it would generate. He stated he wasn't wild about this project on this site, but after analyzing other commercial property tax amounts in the area, and finding out this business would generate Economic Development authority Minutes January 20, 2015 Page 6 approximately $194,000 in taxes per year, that seems equivalent to the per acreage yield that other businesses in the area were paying, and at least half of the property being consider is currently zoned commerical. Commissioner Westgaard stated he was fine with the deviation from the `master plan,' if that's what they wanted to call it. He was appreciatitve of an eager applicant submitting a letter of intent, an offer, and a willingness to create jobs. Commissioner Wagner stated based upon the Decklan Group's memo indicating the applicant's creation of 60 full-time jobs shows their willingness to create good paying jobs in our area and is in support of the project even if it means rezoning parts of the business center. Commissioner Burandt agreed. President Tveite — look at use in proximity — makes more sense in that location than in others. Ok with selling it for that use. It was the consensus of the EDA that they would be willing to sell Lots 1 and 2, Natures Edge Business Center Il, to this entity. The second point of discussion was to determine the appropriate price for the lots, which was proposed in the letter of interest at $2.00 per usable square foot. Commissioner Westgaard stated based upon review of the letter of intent and analysis of the appraisal, he felt the offer of $2.00 per usable square foot seemed light to him. Commissioner Provo noted a discussion he recently had with another business owner, who stated land in Rogers was selling for $1.00 per foot. Commissioner Provo felt the EDA needed to put together an attractive abatement package to be competitive with not only Rogers but surrounding communities and felt the city would lose offers like this if land was sold for $2.00 per foot. He felt Elk River would be lucky to have this business in the city and would set a precedent for future businesses located here and what the city would offer as incentives. He stated traditionally the city shouldn't make a profit off land they own. Commissioner Westgaard noted not all businesses will create a similar job creation and wage base, but that Commissioner Provo had a good point to create an attractive abatement package. Commissioner Provo stated the city was being offered a "sexy package" and should consider that when determining the appropriate price for the lots. President Tveite stated to some extent it was the responsibility of the business to request a particular form of abatement and would think they would do that soon. He Economic Development !Authority :Minutes January 20, 2015 Page 7 stated he would like it to fall into the parameters of the appraisal and felt $2.25 was a fair starting point. Commissioner Dwyer agreed, and felt if the property was going to be re -zoned commercial, it should be sold at a commercial price. Commissioner Provo stated if they repeat what was done in the past, it would not be the intent to make a profit from the land. Commissioner Dwyer felt that because the land was city owned, it was taxpayer land, and should be sold at a fair price according to an appraisal, but what is proposed for an abatement package is a different question. Mr. Barnhart stated the costs incurred in developing this property should be considered as well as what is done to provide funding for future developments, and doesn't consider this profit as much as creating more opportunities down the line, which is why he is suggesting $2.25. Commissioner Westgaard stated they have a letter of intent but not an offer or purchase agreement and wasn't sure how to proceed. He wondered if this was enough dialog for the interested business to come back with a formal purchase agreement. Mr. Barnhart stated he had what he needed. Ms. Annie Deekert, Decklan Group, representing the applicant stated the information the EDA has provided this evening has been helpful. She stated on Nov. 18 she emailed staff asking to enter into a formal purchase agreement for the $2.00 per square foot and was waiting to receive the city template purchase agreement. She asked for clarification on the definition of useable square footage. Mr. Barnhart stated usable as was defined by the appraisal as everything except for delinated wetland. He stated he would be finalizing a draft purchase agreement based upon what was discussed this evening. The last item for consideration was if the EDA was interesting in use of Tax Abatement for the support of a retail business. Commissioner Dwyer stated he was questioning how to differentiate a car dealership versus a truck dealership when determining an abatement, and why was this considered a retail business. He would have difficulty giving an advantage to a new business coming in comparing to those competing established businesses not able to take advantage of these opportunities. so President Tveite felt he had more ease differentating this from a retail car transaction -type place as they are dealing dealing with commercial products. He agreed it was a gray area. Economic Development Authority Minutes January 20, 2015 Page 8 Commissioner Provo stated he doesn't disagree but he would have supported an abatement had a business requested one to keep the business located in Elk River. He compared the situation to a zebra, stating it's either a black zebra with white stripes, or a white zebra with black stripes. He felt it doesn't matter as long as they're creating jobs and tax base and didn't feel the focus shouldn't be on what type of zebra it is. Tom Bruce, representing Winkelman Building Corporation explained his work in the truck sales and service centers, and noted the challenge to keep costs down when preparing this type of site for this type of industry, noting space and pavement challenges. Commissioner Wagner asked the EDA if they had agreed on the appropriate price President Tveite indicated he thought it was $2.25 per usable square foot. Commissioner Wagner didn't want to lose out on this opportunity over the difference of $.25 and noted the application has been in process for several months. President Tveite stated the city hasn't ever agreed to a figure of $2.00 but her point was noted. He polled everyone to see where they were at. Commissioners Provo and Olsen felt $2.00 was appropriate. Commissioner Westgaard felt it important to be diligent within the appraisal range and didn't want to be rushed to sell to the first party that came along. President Tveite stated he agreed with Commissioner Westgaard and agreed with a price around $2.25 was more equitable based upon value. Commissioner Burandt struggled with answering this question until a decision was made regarding the amount of abatement, support the city was willing to offer. Commissioner Wagner asked if the appraisal has been provided to the applicant. Mr. Barnhart stated an appraisal is private information and not public. Commissioner Wagner stated she was in favor of the $2.00 range. Commissioner Dwyer stated he was in favor of the $2.25 and in the future wants to avoid negotiating against themselves in a public meeting, especially when a firm purchase offer isn't present. has received enough information and will draft a purchase MUDOW Economic Development Authority Minutes Page 9 January 20, 2015 7,1 pox Haven Clean -Up Update Mr. Barnhart provided a verbal update regarding the parcels located in Fox Haven Commercial. He stated they received no bids in November for the clean -up process and will readvertise in the spring in order to receive more aggressive contractor interest. There being no further business, Chair Tveite adjourned the meeting of the Elk River Economic Development Authority at 7:05 p.m. Minutes prepared by Dan Tveite, EDA President Tina Allard, City Clerk ,lax" POSSOMI OL