HomeMy WebLinkAbout05 19 2014 EDA Report 7B
4646 Dakota Street SE
Prior Lake, MN 55372
ECONOMIC DEVELOPMENT AUTHORITY AGENDA REPORT
MEETING DATE: May 19, 2014
AGENDA #: 7B
PREPARED BY: Dan Rogness, Community & Economic Development Director
AGENDA ITEM: SEWER AND WATER FEE DEFERRAL PROGRAM BUDGET
DISCUSSION: Introduction
The purpose of this agenda item is to review the revised Metropolitan Council
Master SAC Deferral Agreement and discuss its impact on the EDA’s current and
future budgets, assuming the City Council approves an increase from 10 to 25
SAC unit eligibility.
History
On February 11, 2013 the Prior Lake City Council adopted the Metropolitan Coun-
cil SAC Deferral Program which allowed for the deferment of SAC fees for small
businesses that receive SAC determinations of 10 units or less (SAC refers to
Sewer Availability Charge). The City Council also approved the City of Prior Lake
Sewer and Water Fee Deferral Program Policy, which amended the city’s previous
sewer and water fee payment program to mirror the Metropolitan Council program.
Current Circumstances
On April 21 the EDA voted to recommend that the City Council take certain actions
to amend the City of Prior Lake Sewer and Water Fee Deferral Program Policy to
mirror the Metropolitan Council SAC Deferral Program. A public hearing will be
held by the Council on May 27.
The staff report to the EDA on April 21 said the following:
Because additional funding has not yet been identified for the sewer and water fee
deferral program and the EDA may not be able to fully fund qualifying projects,
staff has proposed additional policy language which states, “The City reserves the
right to approve or reject specific Local Program funding requests based on the
availability of EDA funding.” Funding for the City of Prior Lake Sewer and Water
Fee Deferral Program is currently provided with an allocation of funds from the
EDA Professional Service Fund. The EDA may need to consider alternate funding
sources if additional program applications are expected. Staff will provide funding
options for EDA consideration during the May 2014 meeting to address potential
future applications with more SAC Units.
Staff is proposing that the EDA discuss the budget impact related to increasing
eligible business SAC units from a maximum (net) of 10 to 25. A summary of its
impact is as follows:
1. The EDA budgeted $20,000 in 2014 to support this program.
2. This budget will support 10 local deferred SAC units ($2,000 per SAC unit
is needed based on the applicant paying 80% up front).
3. No applications are pending or expected yet in 2014.
4. Two applications were funded in 2013 using $14,000 from the EDA (Arti-
san Bistro with 3 SAC units at $6,000 and Honest 1 Auto with 4 SAC units
at $8,000).
5. Repayments from the two loans add approximately $2,800-$3,000 of rev-
enue to the EDA in 2014, plus similar annual revenue through at least half
of 2018.
6. An example of a typical project using all 25 SAC units for one development
would be a convenience gas station (in fact, one may likely be constructed
in Eagle Creek Estates at CSAH 21 and Fish Point Rd.)
7. The EDA would need to budget $50,000 annually to support one or more
application requests at the 25 SAC unit level.
8. As revenue builds from the existing two loan repayments, nearly $14,500
will come back to the EDA within five years. Other loans will provide addi-
tional loan repayment revenue.
ISSUES: The EDA should discuss the impact of a maximum SAC unit increase on its 2014
budget, as well as to look ahead to 2015. In 2014 the EDA could decide to use the
$20,000 already budgeted together with $30,000 from its $60,000 reserve to pay
for larger SAC Deferral requests.
In 2015, the EDA may wish to increase its levy for this purpose. Other funding
sources (except general fund reserve) are dedicated for other purposes.
FINANCIAL Based on existing funding commitments in 2014 from the EDA’s Professional Ser-
IMPACT:
vices account, there is no option but to request a budget increase from the City
Council for anything beyond $20,000. Since there are no pending or expected
requests yet in 2014, the EDA could continue with its $20,000 budget until a higher
need is evident this year. As it discusses its 2015 budget later this year, the EDA
will need to address a full budget allocation of $50,000 to support 25 potential SAC
units.
ALTERNATIVES: 1. Recommend that the City Council approve an amendment to the EDA’s 2014
budget, by directing that $30,000 of the EDA $60,000 reserve be directed to
this program for 2014.
2. Make no change to the EDA’s existing budget; discuss budget level to support
the program for 2015.
3. Take no action and provide direction to staff.
RECOMMENDED Staff supports a motion and second in support of Alternative 1
MOTION:
ATTACHMENTS: 1. None
2