Loading...
EDSR MEMORANDUM 02-14-1994 ELK RIVER ECONOMIC DEVELOPMENT AUTHORITY MEMORANDUM TO: ECONOMIC DEVELOPMENT AUTHORITY FROM: WILLIAM RUBIN ECONOMIC DEVELOPMEhji I yt— COORDINATOR U �� DATE: FEBRUARY 9, 1994 SUBJECT: AGENDA MEMO FOR FEBRUARY 14, 1994 EDA MEETING 5.FINANCIAL UPDATE The following is a summary from Finance Director Lori Johnson: ill MICRO LOAN FIND The Micro Loan Fund had a cash balance of $107,206.30 on January 31, 1994 (excluding 1993 interest income). The loan to Woodsmen Quality Products in the amount of$18,750.00 was closed in January. Also, a loan to James and Marlene LaRose for$25,000 was approved;the funds have not yet been disbursed. As of February 9, 1994, all loans are current with the exception of Puresteam, ACTION REQUESTED This is an informational item only and no action is requested. 6. ICE ARENA FINANCIAL FEASIBILITY STUDY The concept of a second ice arena in Elk River has received a great deal of attention in recent months. An ice arena committee has formed and has met diligently to explore the siting and the financing of this arena. Most recently, the ice arena committee appeared before the January 17th City Council Capital Improvement Work Session and the January • 31st joint meeting between the City and the School District. This information is included in the EDA agenda packet as is a related summary from the City's newsletter The Current. P.O. Box 490 • 13065 Orono Parkway • Elk River, MN 55330-1743 • (612) 441-7420 • Fax: (612) 441-7425 Equal Opportunity Housing and Equal Opportunity Employment 2 Financing options for an arena may range from the City issuing revenue bonds or general obligation (G.O.) bonds or a lease/purchase agreement which requires an annual appropriation from the City Council. A bond issue based purely on the revenues of the arena is one option. A G.O. issue requires a referendum which authorizes a tax levy to pay the debt. Under a lease/purchase scenario, the EDA could issue revenue bonds similar to those issued to finance the construction of City Hall. Because this requires the annual appropriation of funds, it is not necessary for a referendum. The EDA merely repays the bonds through lease revenues from the arena. If the revenues are insufficient, other revenue sources must be identified. If other sources are not available, a tax levy would be necessary. Another lease/purchase option is similar to how the Fire Station and Public Works buildings were financed. These do not involve the EDA but are annual appropriations from the City Council. The City relies on the revenue stream from the arena, and, if this proves insufficient, other sources of funds must be identified. The annual appropriation enables the City to terminate this lease if ice arena revenues and/or other financing sources are insufficient. This may result in a costly financing option due to the City's ability to walk away from the project if revenues are insufficient. In order to proceed with a bond issue, an independent feasibility study must be completed to successfully market the bonds. Such a study would likely cost $15,000 and the results of which may find that the project is not self-supporting. The ice arena committee is requesting that the EDA consider financing this study. If a bond issue is not pursued, the Hockey Association would repay the EDA for the cost of this study. Finance Director Lori Johnson has gathered names of firms that have done ice arena feasibility studies for projects that our fiscal consultant, Springsted, Inc., has reviewed. These companies include: Marquette Partners Boonestroo Rosen Anderlick and Assoc. Midwest Hospitality Analysis Real Estate Appraisers Advisors For additional information on this topic, please refer to the attached correspondence from the ice arena group. Action Requested The EDA is asked to fund an independent feasibility study on a second ice arena. This is a cost that can eventually be refunded through a bond issue. However, if the study determines that revenues cannot support an arena, the Hockey Association would repay the EDA for its costs associated with the study. 411 3 • If the EDA elects to fund the study, it may be appropriate to interview, say, two or three of the firms before selecting one. 7.EDA MAIN STREET SITE At its January 31st meeting, the Elk River City Council considered the Kjellberg request for TIF Assistance associated with the construction of a 2-level, 12,000 square foot commercial facility on the EDA Main Street Redevelopment Site. This request was denied on a 3 to 2 vote. A subsequent motion was approved which authorized the Economic Development Coordinator and the EDA to once again market the site to perspective developers/businesses. Although some contact has been made with potential developers, it may be appropriate to discuss individual goals and expectations for this project in order to ensure its successful closure. For example, in recent weeks this site has been the topic of two editorials, and it was among one of several topics discussed by the Area Chamber of Commerce Board and the Downtown Development Corporation members. Consequently, it is important that staff's goals, the EDA's goals, the City Council's goals, etc. are consistent. • 8. CITY VIDEO PRESENTATION The Economic Development Video Presentation is now complete. It is approximately 6 minutes in duration and is reflective of the high quality of life in Elk River and the numerous commercial-industrial- and retail opportunities available here. The video will be presented for comment by EDA Commissioners at the February 14th meeting. Action Requested The EDA is asked to approve the video presentation and authorize final payment to Diversified Marketing Resources, Inc. 9. ANNUAL REPORT Please refer to the 1993 Economic Development Annual Report which has been included in the agenda packet. Action Requested The EDA is asked to accept the Annual Report. 4 • 10. BUSINESS PARK TASK FORCE The Task Force met once again on January 12th in order to: a. Review the changes and additions to the proposed B-P Zoning District; b. Discuss the proposed Comprehensive Land Use Amendment affecting the I-1, Light Industrial Land Use in the western part of Elk River; and to c. Obtain an update on Anoka Electric Cooperative's(AEC'S) participation in the Elk River request to REA for infrastructure funding. The standards for a B-P Zoning District were approved by Council action on January 18th. Although no land in Elk River currently contains this zoning, the standards are of record and are now considered part of the City's ordinance. The City Council will conduct a public hearing on the Comp Plan Amendment request on February 17th. Following its public hearing on this matter, the Elk River Planning Commission unanimously recommended that this amendment request be denied. One Business Park Task Force member submitted a letter in response to comments made at the Planning Commission. This letter is included in the agenda packet. • Although nothing has been finalized in writing through AEC, staff is currently working on an initial draft of the REA application. Before long, the EDA and its Business Park Task Force will need to finalize a site and begin an engineering feasibility study in order to help determine project costs and the amount of the grant-loan request to REA. 11. PROSPECT STATUS REPORT The Prospect Status Report has been sent under separate cover.