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6.0. HRSR 06-09-2003 ITEM # 6. • i1kj it River MEMORANDUM TO: Economic Development Authority FROM: Catherine Mehelich, Director of Economic Development', DATE: June 9, 2003 GG SUBJECT: Industrial Land Development Strategy Attachments • Minutes from May 6 and June 3, 2003 Marketing Committee Meetings Background The City's goal is to be "the light industrial hub for small to medium-size firms in the northwest metro region". This mission was adopted by the EDA as part of the Strategic Industrial Marketing Plan. Over the past two years staff has experienced two primary barriers to successfully recruiting small to medium sized light industrial development in Elk River. The two barriers are: • Availability of 1.5 —2 acres lots • Land costs At its April meeting the EDA directed the Marketing Committee to review the analysis being prepared by Ehlers/staff and make a recommendation back to the EDA. Analysis The attached minutes reflect the discussion from the two recent Marketing Committee meetings. The following items were the consensus of the Marketing Committee: OBJECTIVE: To attract small to medium size light industrial users to Elk River. PURPOSE: 1. To increase the cities future property tax base thus reducing future increases in property taxes on current residents. 2. To create quality job opportunities for current and future residents. 3. To create an increased customers base for retail business. • Industrial Land Development Strategy EDA Meeting June 9,2003 Page 2 of 2 • GOAL: To provide a comprehensive marketing strategy that will attract small to medium size light industrial users. The strategy would be designed to compete in the market place and be flexible to change as conditions warrant. The strategy would be designed to work with current private landowners to put all land in the city on an even playing field. Landowners could choose to participate or not on an individual basis. Each user would be required to prove the need (but for) for any incentives provided. Direction The Marketing Committee requested that staff and Sid Inman of Ehlers &Associates meet with each industrial landowner to discuss the landowner's interest in participating in a competitive marketing strategy for light industrial development. In addition,it was the consensus of the Committee that a clear distinction is made between Business Park and Light Industrial Following the landowner meetings, staff and Mr. Inman would develop a strategy for which to determine the basis to which the city may participate for industrial development on each site,including established goals for the type of user,building standards, and level of assistance needed to make the site competitive within the market. The strategy would be reviewed and discussed by the Marketing Committee and presented for review and final action of the EDA at its July meeting. • Prior to staff proceeding with the above steps, the Marketing Committee requests the EDA's consensus on the direction to which they would like to proceed. • MEETING OF THE ELK RIVER MARKETING COMMITTEE • HELD AT ELK RIVER CITY HALL, CONFERENCE ROOM A TUESDAY, MAY 6, 2003 Members Present: Jim Barthel, Gary Santwire,Jim Simpson and Dan Tveite Members Absent: Chris Carlson and Daryl Thompson Staff Present: Catherine Mehelich,Director of Economic Development Heidi Hall,Economic Development Assistant Others Present: Sid Inman, Ehlers &Associates Louise Kuester, EDA Representative Mark Urista, Coldwell Banker Vision 1. Presentation: Sid Inman, Ehlers &Associates Mr. Inman presented an Industrial/Business Park Land Market Matrix to the Committee,which provided information on the area's current industrial development market. The matrix provided a clear comparison between Elk River and competitor cities. Mr. Inman explained the matrix further by providing the group with a typical pro forma used by small to medium manufacturers upon deciding where their company should be located. 2. Discussion Ms. Mehelich reminded the Committee that the main objective of the City's Strategic Industrial Marketing Plan is for the City of Elk River to be the light industrial hub of the NW Metro. Ms. • Mehelich provided a detailed account of the obstacles in developing current industrial property in the City of Elk River,which indicated that the City's current product offering does not match the City's market strategy. Ms. Mehelich provided the Committee with the following three ways in which the City might address the product offering/market strategy issue: • Consider Different Strategy with Private Landowners • Consider City-owned Industrial Park • Do Nothing It was the consensus of the Committee that"do nothing"was not an option and that the City must be willing to compete with surrounding communities for the long-term good of the City of Elk River. 4. Committee Request to Extend Discussion at a Future Meeting The Committee requested that staff prepare a more detailed list of strategy options and their ramifications in which the City could use to address the industrial land issue. The Marketing Committee agreed to review the options for recommendation to the EDA in June. 5. The Meeting of the Marketing Committee adjourned at 5:40p.m. • Heidi Hall,Economic Development Assistant MEETING OF THE ELK RIVER MARKETING COMMITTEE • HELD AT ELK RIVER CITY HALL, CONFERENCE ROOM A TUESDAY, JUNE 3, 2003 Members Present: Gary Santwire,Daryl Thompson, and Mark Urista Members Absent: Jim Barthel, Chris Carlson,Jim Simpson, and Dan Tveite Staff Present: Catherine Mehelich, Director of Economic Development Heidi Hall,Economic Development Assistant Others Present: Sid Inman, Ehlers &Associates Louise Kuester, EDA Representative 1. Marketing Strategy: Sid Inman, Ehlers &Associates Mr. Inman raised the following questions for discussion by the Committee: • Is the city willing to compete in the market for small to medium size light industrial users? • Is the city willing to provide incentives to compete (tax increment—tax abatement)? • If private landowners do not want to participate,is the city willing to move ahead without that support? • Is the city willing to use its assessment tools (429 bonds) to assist with infrastructure? • • If the city uses the land it currently owns, does it want to be the developer or try to find a master developer? • If the city uses the land it currently owns,will it be willing to sell it for a price less than the current costs? • Does the city want to use incentives (tax increment—tax abatement) to insure higher quality? Mr. Inman explained that a marketing strategy for industrial land development was prepared in response to the Committee's request at their last meeting. The strategy could be designed to allow Elk River to accomplish the following: • Compete in the marketplace • Be flexible to change as conditions warrant • Work with current landowners to put all land in the city on an even playing field • Allow landowners to choose to participate or not on an individual basis • Require users to prove the need (but for) for any incentives provided 2. Discussion Committee members stated they did not feel comfortable making a formal recommendation on a strategy without more members present. The Committee stated that they needed direction from the EDA before proceeding, although the Committee members agreed that the strategy should include • the following conditions: EDA Marketing Committee Minutes Page 2 June 3,2003 • • The City will market private industrial property before City-owned property but that serious consideration be given to put a small phase of city-owned property on the market. • All appropriate landowners should be informed of each industrial prospect so that they have the opportunity to "bid" on each project. • The City should clearly define its criteria for the financial and market feasibility of each project (amount of subsidy,price of land, etc.) as each project is introduced to landowners. The Committee also discussed the difference between business park and light industrial. It was stated that business park property will attract more high tech,higher end light industrial users that will take longer to attract while light industrial property will attract the small to medium size market that Elk River currently receives. The Committee agreed that there is no industrial land available in Elk River (with water and sewer) and that only business park land is available. It was the consensus of the members that a clear distinction must be made to current landowners and the EDA between business park and light industrial. Mr. Inman suggested that a different incentive strategy be prepared for each. The Committee agreed that the City's lack of available industrial land does not comply with the objective of the Strategic Industrial Marketing Plan,which is to attract small to medium size light industrial users to Elk River. 4. Committee Request to Extend Discussion at a Future Meeting The Committee requested that staff and Mr. Inman meet with each industrial landowner to discuss • the landowners'interest in a competitive marketing strategy for light industrial development. Staff was asked to provide the Committee with the results of staff's meetings with the landowners at a future meeting so that the Committee could further define a marketing strategy with each landowner for recommendation to the EDA at its July meeting. The Committee requested the EDA's consensus on the direction to which they would like staff and the Committee to proceed. 5. The Meeting of the Marketing Committee adjourned at 5:20p.m. Heidi Hall,Economic Development Assistant •