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Prior Lake,MN 55372
CITY COUNCIL AGENDA REPORT
MEETING DATE: MAY 26, 2015
AGENDA#: 5K
PREPARED BY: DAN ROGNESS, COMMUNITY& ECONOMIC DEVELOPMENT DIRECTOR
PRESENTED BY: DAN ROGNESS
AGENDA ITEM: CONSIDER APPROVAL OF A RESOLUTION APPROVING THE EDA 2015
BUSINESS PLAN
DISCUSSION: Introduction
The purpose of this agenda item is to approve the EDA 2015 Business Plan
which is attached to this agenda report.
History
The EDA adopted its first business plan in 2012. The EDA updated the business
plan in 2014 with the intention of reviewing and updating the plan annually to
reflect completed, ongoing and new initiatives.
Current Circumstances
Using the 2014 Business Plan as a template, staff has updated the plan with the
following major changes:
1. Short and Mid-Term Goals are added under the Purpose section, which
is taken from the 2040 Vision and Strategic Plan for Prior Lake.
2. The table at the top of page 3 is updated for the last row showing achieve-
ment levels for 2011 through 2014 as compared to goals for jobs, busi-
nesses and market value.
3. A broadband (community fiber network) initiative was deleted under the
2015 Implementation Plan section; otherwise, others remained with a few
updates.
4. A Downtown Parking initiative was added under the 2015 Implementation
Plan section.
5. The EDA budget information on page 7 was updated.
6. The employment table on page 8 was updated.
Conclusion
While the 2014 EDA Annual Report, which was approved by the City Council
during their May 11th meeting, reviewed the past year's accomplishments, the
EDA Business Plan looks forward to establish objectives for 2015 and beyond.
The updated business plan provides some focus for what the EDA will be work-
ing on during 2015 as well as continue to measures its progress since 2011.
ISSUES: In addition to the EDA's 2015 budget resources, the City (with support of the
EDA) has other resources available to help achieve economic development
goals and objectives, including:
➢ Business revolving loan accounts (approximately $209,000)
➢ TIF 1-1 redevelopment fund (approximately $77,000)
➢ Staff resources, including Frank Boyles, Dan Rogness, Casey McCabe,
and a yet-to-be-named Finance Director
FINANCIAL See resources available in the attached EDA 2015 Business Plan under "Is-
IMPACT: sues".
ALTERNATIVES: 1. Motion and a second to approve a resolution approving the EDA 2015 Busi-
ness Plan, subject to further changes as may be provided by the City Coun-
cil.
2. Motion and a second to table action and provide further direction to staff.
RECOMMENDED Alternative#1
MOTION:
ATTACHMENTS: 1. 2015 EDA Business Plan
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RESOLUTION 15-xxx
A RESOLUTION APPROVING THE EDA 2015 BUSINESS PLAN
Motion By: Second By:
WHEREAS, The City of Prior Lake Economic Development Authority(EDA)has completed its 2015 Business
Plan for City Council review and approval; and
WHEREAS, The Business Plan identifies EDA initiatives during 2015 and beyond; and
WHEREAS, The City Council finds that it is in the public interest to approve the EDA 2015 Business Plan to
further economic development in Prior Lake.
NOW THEREFORE, BE IT HEREBY RESOLVED BY THE CITY COUNCIL OF PRIOR LAKE,
MINNESOTA as follows:
1. The recitals set forth above are incorporated herein.
2. The Prior Lake City Council approves the Economic Development Authority 2015 Business Plan.
PASSED AND ADOPTED THIS 26th DAY OF MAY, 2015.
VOTE Hedberg Keeney McGuire Morton Thompson
Aye ❑ ❑ ❑ D ❑
Nay ❑ ❑ ❑ ❑ ❑
Abstain ❑ ❑ ❑ ❑ ❑
Absent ❑ ❑ ❑ ❑ ❑
Frank Boyles, City Manager
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"A Wonderful Place to Live, Work and Play for a Lifetime"
PRIOR LAKE ECONOMIC DEVELOPMENT AUTHORITY (EDA)
BUSINESS PLAN — 2015
May 26, 2015
Purpose
The City's mission, as stated in 2040 Vision and Strategic Plan, is to "...enhance the quality of life for
citizens by providing quality services which result in a safe and healthy community; recreation and
leisure opportunities; preservation and effective use of lakes, parks and other natural resources;
economic vitality;and the promotion of partnerships,volunteerism and civic pride." This business plan
will guide the Prior Lake Economic Development Authority (EDA) as it develops and implements
strategic initiatives in 2015 and beyond to 2020, 2030 and 2040.
Prior Lake encourages thoughtful and orderly economic and community development to provide retail
and services, employment opportunities, high quality residential and business development, and a
strong diverse tax base.
Short and Mid Term goals identified under the Economic and Community Development Strategic
Element of the 2040 Vision and Strategic Plan include:
1. SHORT: Update Orderly Annexation Agreement with Spring Lake Township.
2. SHORT: Complete studies to update all development fees.
3. SHORT: Complete and adopt a study regarding downtown parking to identify location, number
of stalls, and funding.
4. SHORT: Implement Phase II Business Incubator.
5. SHORT:Take action to encourage tourism in accordance with RiverSouth objectives and citizen
preferences.
6. MID: Facilitate commercial growth in four areas: County Rd. 21/County Rd. 42; County Rd.
21/Hwy. 13 (Downtown District); Franklin Trail/Hwy. 13 (South Lake Village District); and
Adelmann/County Rd. 21.
7. MID: Complete update of City Comprehensive Plan.
8. MID: Acquire necessary properties to facilitate downtown parking and economic development
opportunities, and construct a parking lot or structure as recommended by the Downtown
Parking Study.
9. MID: Prepare a redevelopment plan including priorities,timelines and incentives for downtown
area and other underutilized property.
Page 1 of 9
Prior Lake is very desirable for many reasons, but the city needs an active and entrepreneurial entity
such as the EDA to work directly with new and existing businesses to fulfill Prior Lake's vision as A
Wonderful Place to Live, Work and Play for a Lifetime. This business plan develops a framework for the
EDA, which will be reviewed and approved by the EDA and City Council annually.
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Achievement Goals —Jobs, Businesses, Values and Taxes
Considering the city's strengths and challenges, the following goals are established for Prior Lake
related to jobs, businesses and taxable market value increases. The "Base"figures are estimates based
on the past 10-year history of commercial and industrial development. These base projections assume
jobs and businesses will be added due to normal market demand. "New" goals show an increase in
jobs, new businesses and market value, over and above the historical average. These new goals assume
an increased public investment by the EDA and City Council (i.e., public financing assistance, business
accelerator program, public land sales, etc.). With increased public investment in commercial and
industrial development, the new goals show an estimated increase of 50%above the Base figures.
5-Year Base Jobs Plus Base Plus New Base Value Plus
Time Created New Jobs Businesses Businesses C/I Increase New Value
Periods (Historical) Created Added Added (Historical) Increase
2001-10 235 XXX 10 XXX $17 M XXX
5-Year Avg.
2011-2015 250 125 10 5 $20 M $10 M
2016-2020 350 175 15 8 $25 M $12 M
2021-2025 300 150 12 6 $22 M $11 M
2026-2030 300 150 13 6 $23 M $12 M
Total 2011+ 1,200 600 50 25 $90 M $45 M
Assumptions: 1. 2000-10 'Base' information is based on city building permit activity reports for new commercial and
industrial construction, not including public facilities and multi-family rental housing
2.Annual increases in base jobs,businesses and value continue trends from 2000-2010
3. Estimated increases due to Economic Development('New') uses the Base times 1.5
Page 2 of 9
The following table shows progress to achieve job, business and C/I market value goals during four
years, including 2011, 2012, 2013 and 2014.
5-Year Base Jobs Plus Base Plus New Base Value Plus
Time Created New Jobs Businesses Businesses C/I Increase New Value
Periods (Historical) Created Added Added (Historical) Increase
2001-10 235 XXX 10 XXX $17 M XXX
5-Year Avg.
2011-2014 190 100 8 4 $16 M $8 M
4-Yr. Goal
2011-2014 200 100 3 1 $1.5 M $0.7 M
Achieved
Notes: 1.Job creation data is provided by MN DEED,QCEW Reports,Quarter 2,for 2011,2012,2013 and 2014;
data is received from Unemployment Insurance reports by all businesses.
2. Business data is provided by MN DEED,QCEW Reports,Quarter 2,for 2011,2012,2013 and 2014.
3.Value data is provided by Prior Lake building permit reports for 2011,2012,2013 and 2014.
5-Year Time Base Taxes Plus Total City Portion
Periods Created E.D.Taxes Estimated. 30%
(Historical) Created '' New Taxes Estimate
2000-10 Avg. x $85 K XXX $85 K $25.5 K
5 Yrs.
2011-2015 $100 K $50 K $150 K' $45.0 K
2016-2020 $130 K $65 K $195 K $58.5 K
2021-2025 $120 K $60 K $180 K $54.0 K
2026-2030 $120 K $60 K $180 K $54.0 K
Total 2011+ $470 K $235 K $705 K $211.5 K
Assumptions: 1.Total city/county/school taxes is estimated using$3.50 per square foot of building space
2015 Implementation Plan
The following actions shall be accomplished during 2015 as key initiatives of the EDA. All initiatives can
work together to support a business community that is focused on technology and Prior Lake's
strengths in entertainment and recreation.
1. Technology Village (Business Accelerator). The EDA completed Phase I of the business plan
for Technology Village to build out 2,000 square feet of leasable space in City Hall during 2013.
This space became fully occupied in 2013 with six technology businesses. Phase II of the
business plan was supported by the EDA in 2014 to include private office space throughout Prior
Lake which allowed more businesses to participate.
• Accomplishment: Business accelerator space will strengthen Prior Lake as a place to start
and grow small software/technology businesses.
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• Timeline: The EDA and Technology Village Board of Directors will continue to support full
occupancy of space in City Hall, expand the Phase II program to vacant office space within
the community, assist all program participants through referral and mentoring, and identify
a consultant to assist with the completion of a Phase III analysis to build upon the program
success and identify the best strategies for program expansion in Prior Lake and potentially
to other Scott County communities by 12/31/15.
• Budget: $40,000 for Technology Village operations in EDA budget for 2015.
$25,000 for Phase III analysis ($12,500 from CDA EDI Grant and $12,500 in EDA
professional service for 2015).
• Metrics: Sustained businesses/jobs at City Hall (6 businesses / 9 jobs) and growth within
other commercial buildings (3 businesses/ 10 jobs).
2. Targeted Areas for Development. The EDA will help facilitate commercial development in
three targeted areas around highway intersections, including: (a) CH 21/TH 13; (b) CH 21/CH
42; and (c) CH 42 /TH 13. It will also help facilitate full development of the 50-acre Deerfield
Business Park(2/3 being vacant)and the 40-acre Welcome Industrial Park(1/10 being vacant).
The EDA will help establish an expedited platting and permitting process to assist in the timely
development of vacant property in these key areas. Redevelopment opportunities also exist in
certain locations, such as Welcome Avenue and downtown Prior Lake.
• Accomplishment: The City will evaluate opportunities to expedite development of vacant
property within targeted locations in order to assist business opportunities.
• Timeline: Complete a process to identify target areas and corresponding levels of public
support by 9/30/15.
• Budget: Unknown.
• Metrics: New business/job growth and retention, and tax base increase on the improved
industrial property, including an estimated 8 new businesses and 275 new jobs by 2020.
3. City Codes & Fees. The EDA completed a comprehensive analysis of city codes and fees in
light of making Prior Lake more"business friendly"with assistance from the EDAC and Planning
Commission. Amendments were made to the Industrial, Business Park and General Business
Use Districts as a start to changes to city regulatory standards.
• Accomplishment: Prior Lake will be more business friendly by making changes to city codes,
fees and/or processes that help achieve development in Prior Lake.
• Timeline: The EDAC and Planning Commission will finalize the evaluation of all Commercial
Use Districts and make preliminary recommendations to the EDA by 12/31/15.
• Budget: Unknown.
• Metrics: New business/job growth based on more business friendly codes and the
corresponding permit review process, all in support of the business and job figures
identified in 1-3 shown above.
4. Marketing of Prior Lake. The EDAC will provide a recommendation to the EDA related to a
marketing plan for Prior Lake. In addition, the City of Prior Lake will continue to participate in
the regional marketing effort known as RiverSouth.
• Accomplishment: The City completed a new marketing packet(Community Profile);the EDA
provided financial support to a regional "RiverSouth" marketing effort with SMSC,
Canterbury,Valley Fair, Chambers, First Stop Shop, Shakopee, Savage and Scott County.
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• Timeline: Complete a local marketing plan, and continue to support and participate with
RiverSouth marketing through 12/31/15.
• Budget: Unknown
• Metrics: New business/job growth and retention, and tax base increase on C/I property,
including an estimated 8 new businesses and 275 new jobs by 2020.
5. Building a Customer Centric City/EDA Culture. The Carlson School of Business conducted a
study of all seven cities in Scott County to determine the degree to which the processes,
regulations, attitudes embraced by the cities were in line with economic development. The
results were mixed. The approval process in many communities were long; no one person in
each organization was responsible for development from start to finish; and some attitudes
were regulatory versus problem solving in nature. The First Stop Shop has contracted with the
Carlson School of Business to conduct three workshops with an objective to simplify and
improve consistency across all cities for high-quality customer service.
• Accomplishment: The City and EDA will participate in the workshops as scheduled.
• Timeline: Complete the participation process and follow-up actions by 12/31/15.
• Budget: Unknown
• Metrics: Improved customer service as demonstrated by customer comments and
supplemental data gathering.
6. Downtown Parking. In 2014 the City of Prior Lake received an EDI Technical Assistance Grant
from the Scott County CDA to assist with the cost of completing a Downtown Parking Analysis.
The City of Prior Lake hired SRF Consulting Group, Inc. to complete a Downtown Parking Study
to build upon previous parking studies by identifying downtown sites that will best
accommodate future public parking demand, including structured parking facilities.
• Accomplishment: The City and EDA will implement the short-term recommendations
identified in the study and begin working on the mid-and long term recommendations.
• Timeline: Implement short-term objectives by 12/31/15.
• Budget: Unknown
• Metrics: Increased on and off-street parking availability for residents and visitors in
downtown Prior Lake.
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Page 5 of 9
Unique Challenges for Prior Lake
1. Historical Investments in Commercial/Industrial Development. The city has invested much of
its public resources in supporting a healthy and vibrant residential lake community, which has
been very successful. Residential property values are well above average as a result, but the
value of commercial/industrial (C/I) property is below average. For example, Prior Lake's
percent of C/I market value showed a small increase from 4.36%in 2002 to 4.84%in 2011. This
compares to an increase in Savage from 9.85%to 15.07%during that same time period.
2. Direct Access to Major Principal Arterial Transportation Systems. Prior Lake's location outside
of the metro's major highway system results in limited access to Interstate, US and State
Highways. Businesses look elsewhere when highway access is important. Important
improvements have occurred recently on County Highway 21 north and east, resulting in much
better access to and from Prior Lake. In addition, rail service is absent in Prior Lake, and there
is limited high-speed fiber network throughout the city to help compensate for its lack of
highway and rail infrastructure.
3. Pad-Ready Commercial/Industrial Sites. Prior Lake has a healthy overall supply of property
guided for commercial, business park, and industrial development. However, a very small
percentage of that designated land can be made ready for development within 30-90 days,
which is considered to be pad-ready. Prior Lake has approximately 115 acres of vacant
commercial property with only 12 acres being pad-ready(10%). The city has approximately 60
acres of vacant business park/industrial property with only 15 acres being pad-ready(25%).
4. Strong Corporate Business Identity or Focus. Prior Lake is home to the county's largest
employer, Mystic Lake Casino and Hotel. However, Prior Lake seems to share Mystic's "home"
location with Shakopee based on public perception.
5. Direct Business Connection or Link to the Lakes. Prior Lake is known for its fourteen lakes as an
extremely important asset for city residents. However, it has very little lake connections for the
business community. With one restaurant currently under construction and few commercial
marinas located here, Prior Lake could benefit from additional commercial opportunities
related to the lakes.
Summary of Funding Needs and Resources
Budget Premise: The following key premises are accepted by the EDA for future budgeting:
➢ Support one-half of the Community & Economic Development Director position.
➢ Support one-half of the Community Development Specialist position.
> Provide other necessary operational expense support(e.g., legal, communications,training).
➢ Utilize professional services to move certain initiatives forward to implementation.
> Maintain a reserve balance allowing the EDA to be entrepreneurial in assisting C/I growth.
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Economic Development Resources. The EDA has evaluated funding resources that are available and
necessary to assist businesses and help it achieve economic development objectives. Example
resources include tax increment financing, revolving loan funds, and the EDA budget. The EDA will use
current resources shown below to assist businesses, and it has established a more permanent funding
source for EDA operations starting in 2013.
2015 EDA Special Revenue Fund Budget $ 188,595
Business Revolving Loan Fund (Federal) $ 117,500
Business Revolving Loan Fund (State) $ 91,200
TIF District 1-1 Excess Increment $ 77,000
TOTAL $474,295
2015 EDA Budget(Approved):
Expenses= $188,595 ($189,170 in 2014)
• Staff salary/benefits @ 1.0 FTE ($119,255);
• Professional services ($22,000)for planning and/or assistance;
• Legal/training/misc. ($7,915);
• Business accelerator operations ($40,000).
Revenue= $188,595
• $159,000 EDA tax levy
• $22,095 EDA reserves
• $7,500 Other($6,000 accelerator leases+$1,000 revolving loan admin.+
+$500 interest earnings)
Reserve Balance 12/31/14=$144,200
2016+ Future Projected EDA Budgets:
Expenses= $195,000
• Staff salary/benefits ($125,000);
• Professional services ($22,500);
• Legal/training/misc. ($7,500);
• Business accelerator operations($40,000).
Revenue = $195,000
• $175,000 EDA tax levy
• $7,500 accelerator leases
• $2,000 SAC loan repayments
• $500 interest
Employment
With job and employment growth being key factors for economic development success, it is important
to understand the current status within Prior Lake. Data from the Metropolitan Council and the
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Minnesota Department of Employment and Economic Development (DEED) show the following
employment and business characteristics for 2013. City staff has estimated the number of total
employees that work for the Shakopee Mdewakanton Sioux Community(SMSC).
Industry Employees Percent SMSC Est.
Construction 443 5.4% 25
Trade,Transportation and Utilities 526 6.4% 50
Information 64 0.8%
Financial Activities 306 3.7% 25
Professional and Business Services 459 5.6% 50
Education and Health Services 1,047 12.8% 25
Leisure and Hospitality 3,677 45.0% 3,500
Other Services 540 6.6% 325
Public Administration 965 11.8%
Other 146 1.8%
TOTAL EMPLOYEES 8,173 100% 4,000
Industry Establishments Percent
Construction 88 16.8%
Trade,Transportation and Utilities 88 16.8%
Information 10 1.9%
Financial Activities 67 12.8%
Professional and Business Services 106 20.2%
Education and Health Services 59 11.3%
Leisure and Hospitality 29 5.5%
Other Services 56 10.7%
Public Administration 4 0.8%
Other 17 3.2%
TOTAL BUSINESS ESTABLISHMENTS 524 100%
Notes: Data is provided by MN DEED,QCEW Reports,Quarter 2,for 2014;data is received from Unemployment Insurance
reports by all businesses.
Measuring Success (Metrics)
The EDA will develop performance measurements that allow continuous reporting on important
aspects of its services, programs and processes. The use of metrics is being utilized for all city
operations in Prior Lake beginning in 2012, and therefore, metrics will be incorporated into the EDA
Business Plan. To begin this process, the following key economic development objectives are being
identified and prioritized one through five:
1. Assist in the creation of desirable employment opportunities for the citizens of Prior Lake;
2. Identify opportunities where the EDA can assist in attracting and developing new businesses
within the community;
3. Provide the necessary support mechanisms to retain/aid the expansion of existing businesses;
4. Broaden and diversify Prior Lake's tax base; and
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5. Develop a foundation which will establish Prior Lake as a community full of economic
opportunity now and well into the future by embracing the motto; Prior Lake:A
Wonderful Place to Live, Work and Play for a Lifetime.
In order to measure progress toward achieving these objectives, the following metrics will be used for
measurement purposes; all measures will be done annually:
• Track building permits issued for commercial/industrial projects; determine business and job
growth that may tie to each permit.
• Track residential permits and remaining lot inventory.
• Track lease inventory of available commercial/industrial building space;determine business and
job growth that may tie to newly leased space.
• Track business membership with the local Chamber of Commerce in order to assess additional
business and job growth.
• Track change in commercial/industrial market value using County data.
• Track the number and acreage of pad-ready commercial/industrial sites.
• Track zoning permit approval process associated with commercial/industrial projects.
Looking Ahead —2020 and 2030
2015-2020 Timeframe Goals:
1. Continue the successful implementation of a Technology Village Business Accelerator
program in partnership with existing commercial office building owners in Prior Lake,
and develop a plan to expand this to a larger Technology Village campus.
2. Encourage the full build-out of a community-wide(ultra-high-speed)fiber optic network
system to all residents and businesses in Prior Lake in cooperation with Integra.
3. Work in partnership with major property owners in the targeted areas to implement an
expedited platting/permitting process for new commercial and industrial development.
4. Work in partnership with property owners in the Deerfield and Welcome Ave. industrial
areas to fully develop these areas to their maximum potential.
5. Implement actions necessary to redevelop key opportunity sites in Prior Lake.
2021-2030 Timeframe Goals:
1. Continue to implement and expand upon all stages of economic development strategies
that were underway from 2015-2025.
2. Successfully attain a strong business presence within the Twin Cities as a community full
of smaller high technology that have built their home base around a place with
numerous amenities and a desirable lifestyle.
3. Complete all supporting infrastructure improvements that results in over 100 acres
being developed as commercial and business park uses.
4. Develop plans for the expansion of commercial and industrial development in the
Southwest annexation area of Spring Lake Township.
5. Achieve key redevelopment objectives within the city related to the downtown area and
other priority redevelopment sites.
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