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HomeMy WebLinkAbout9D EDA Business Plan Report 4646 Dakota Street SE Prior Lake, MN 55372 CITY COUNCIL AGENDA REPORT MEETING DATE: MAY 21, 2018 AGENDA #: 9D PREPARED BY: PRESENTED BY: CASEY MCCABE, COMMUNITY DEVELOPMENT DIRECTOR CASEY MCCABE AGENDA ITEM: CONSIDER APPROVAL OF A RESOLUTION APPROVING THE PRIOR LAKE ECONOMIC DEVELOPMENT AUTHORITY (EDA) 2018 BUSINESS PLAN AND APPROVING A FUND TRANSFER FROM THE PRIOR LAKE GENERAL FUND RESERVE TO THE EDA SPECIAL REVENUE FUND DISCUSSION: Introduction The purpose of this agenda item is to consider approval of the attached resolu- tion, which approves of the EDA 2018 Business Plan and authorizes a transfer of funds in the amount of $300,000 from the Prior Lake General Fund to the EDA Special Revenue Fund. History The EDA and City Council held a joint work session on Monday, April 16th. Dur- ing the work session the EDA requested a funding mechanism be created which would allow for the EDA to request, and the City Council to approve, periodic allocations from the Prior Lake General Fund (Fund 101) to the EDA Special Revenue Fund (Fund 240). In addition to the funding request, the EDA also requested the City Council provide the EDA with the ability to expend funds so allocated, provided that the purpose is consistent with the approved EDA Busi- ness Plan. Current Circumstances The EDA received direction from the City Council to prepare a document that identifies how additional funding could be requested, approved and used to achieve a greater economic development impact in the community than existing resources allow. The EDA has prepared and approved the 2018 EDA Business Plan for Council review which identifies economic development initiatives the EDA would like to pursue. The intent is for the EDA to update the Business Plan annually for City Council review and approval, so the EDA can be assured that it is expending funds on appropriate economic development initiatives. Conclusion This agenda item includes a request for approval of the EDA 2018 Business Plan and authorizing a transfer of funds in the amount of $300,000 from the Prior Lake General Fund to the EDA Special Revenue Fund. Earlier on this evening’s agenda, the Council was asked to consider approval of resolution amending the EDA Enabling Resolution to include language which allows the EDA to utilize 2 EDA Special Revenue Funds to facilitate economic development initiatives iden- tified in the EDA Business Plan. Provided the EDA Enabling Resolution amend- ments were approved, this current action would provide funding to carry out the economic development initiatives. ISSUES: The EDA reserve fund is intended to provide cash flow so that the EDA can operate between property tax payments, which it is almost exclusively depend- ent upon. Based upon the City Finance Director’s recommendations, the EDA Business Plan includes language to ensure the EDA will maintain a cash flow for a minimum of six months of projected operating expenditures. Section 110 of the Prior Lake City Code provides that disposal of real property shall be approved by the City Council. The EDA may acquire real property with- out City Council, but it may not dispose of it until the City Council has approved. Because of this provision the City Council and EDA are a team in economic development matters. FINANCIAL IMPACT: As of April 30, 2018, the EDA Special Revenue Fund had a fund balance of $226,903; however, $50,000 of the balance is restricted for a previously approved business subsidy agreement and 2018 budgeted use of re- serves. The unrestricted EDA Special Revenue Fund balance as of April 30, 2018 is $176,903. The EDA is requesting the Prior Lake City Council approve a transfer of $300,000 from General Fund Reserves to the EDA Special Revenue Fund to pursue the Special Revenue Fund Economic Development Initiatives identified in the 2018 EDA Business Plan. If ap- proved, the EDA Special Revenue Fund will have an unrestricted balance of $476,903. About $100,000 of this fund balance should be retained for cash flow purposes. A transfer of $300,000 from the General Fund to the EDA Special Reve- nue Fund would reduce the General Fund unassigned fund balance as a percentage of the 2018 expenditures/transfers out from 51.9% to 48.7% considering all transfers presently contemplated. ALTERNATIVES: 1.Motion and second approving the resolution approving the Prior Lake Eco- nomic Development Authority 2018 Business Plan and approving a fund transfer of $300,000, or some other amount as determined by the City Coun- cil, from the Prior Lake General Fund (Fund 101) reserve to the EDA Special Revenue Fund (Fund 240). 2.Motion and second to deny the resolution approving the Prior Lake Economic Development Authority 2018 Business Plan and deny the fund transfer from the Prior Lake General Fund (Fund 101) reserve to the EDA Special Revenue Fund (Fund 240). 3.Motion and a second to table action and provide further direction to staff and the EDA. RECOMMENDED MOTION: Alternative #1 ATTACHMENTS: 1.2018 EDA Business Plan 4646 Dakota Street SE Prior Lake, MN 55372 RESOLUTION 18-___ A RESOLUTION APPROVING THE PRIOR LAKE ECONOMIC DEVELOPMENT AUTHORITY (EDA) 2018 BUSINESS PLAN AND APPROVING A FUND TRANSFER FROM THE PRIOR LAKE GENERAL FUND (FUND 101) RESERVE TO THE EDA SPECIAL REVENUE FUND (FUND 240) Motion By: Second By: WHEREAS, The City of Prior Lake Economic Development Authority (EDA) has completed its 2018 Business Plan and submitted it to the City Council for review and approval; and WHEREAS, The Business Plan identifies EDA initiatives during 2018 and beyond; and WHEREAS, WHEREAS, WHEREAS, WHEREAS, The EDA has requested the City Council allocate funds from the Prior Lake General Fund to the EDA Special Revenue Fund to accomplish the economic development initiatives in 2018 and beyond; and EDA initiatives include but are not limited to: i) property acquisition; ii) storefront rehabilitation; iii) direction and promotional signage such as banner poles, visitor kiosks, or wayfinding signage; iv) economic development and redevelopment loans and incentives; v) new business attraction through website enhancements and marketing; vi) efforts to facilitate commercial development and redevelopment; and vii) enhancing the character of commercial areas; and The City Council finds that it is in the public interest to approve the EDA 201 8 Business Plan to further economic development in Prior Lake; and The City Council finds that it is in the public interest allocate funds from the Prior Lake General Fund to the EDA Special Revenue Fund to accomplish the economic development initiatives in 2018 and beyond. 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 2018 Business Plan. 3.The Prior Lake City Council approves the transfer of $300,000 from the Prior Lake General Fund (Fund 101) to the EDA Special Revenue Fund (Fund 240). 4.The Prior Lake City Council authorizes the EDA to expend funds from the EDA Special Revenue Fund (Fund 240) to facilitate economic development initiatives identified in the EDA Business Plan, which plan is to be approved annually by the City Council. 2 Passed and adopted by the Prior Lake City Council this 21st day of May 2018 VOTE Briggs McGuire Thompson Braid Burkart Aye ☐ ☐ ☐ ☐ ☐ Nay ☐ ☐ ☐ ☐ ☐ Abstain ☐ ☐ ☐ ☐ ☐ Absent ☐ ☐ ☐ ☐ ☐ ______________________________ Frank Boyles, City Manager Page 1 of 7 PRIOR LAKE ECONOMIC DEVELOPMENT AUTHORITY (EDA) 2018 BUSINESS PLAN April 30, 2018 EDA Commissioners: EDA Staff: David Chromy (President) Frank Boyles, Executive Director Annie Sheehan-Kerber (Vice-President) Casey McCabe Zach Braid Amanda Schwabe Marie Boucher-Hoese Cathy Erickson, Treasurer Kirt Briggs Purpose The City of Prior Lake is fortunate to have an active and entrepreneurial entity, known as the Economic Development Authority (EDA), focused on creating a desirable environment to attract and grow businesses which will expand and diversify the city’s tax base and employment opportunities. This business plan describes the framework for the EDA to accomplish the city’s economic development initiatives. The mission of the City of Prior Lake, 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 establishes guidelines and criteria regarding the use of EDA Special Revenue Fund to achieve economic development initiatives of the City of Prior Lake and objectives of the EDA. These guidelines and criteria are in addition to the requirements and limitations set forth by provisions of Minnesota Statute 116J.993 – 116J.995 (“MN Business Subsidy Law”) and City of Prior Lake policies and guidelines with respect to any form of subsidy. Prior Lake encourages thoughtful and orderly economic and community development to provide retail and services for our residents, create employment opportunities through retention and expansion of existing businesses and attraction of new businesses , ensure high quality residential and business development, and build a strong and diverse tax base. The fundamental purpose of this plan is to guide the EDA as it develops and implements strategic initiatives in 2018 and beyond to 2020, 2030 and 2040, and to encourage desirable development or redevelopment within our community that may not otherwise occur. Page 2 of 7 EDA Purpose (Bylaws) The business of the Economic Development Authority shall include but not be limited to promoting growth, development and redevelopment of retail, commercial and industrial properties in Prior Lake; diversifying the City’s tax base; providing tools and incentives to achieve the Economic and Community Development Vision Element in the City‘s 2040 Vision and Strategic Plan; and providing an incubator to generate ideas and initiatives to support economic growth and vitality. EDA 2017 Accomplishments & 2018 Goals 2017 EDA Accomplishments • Commercial/Industrial Development o The EDA enjoyed an extremely successful year of commercial/industrial development, in which Prior Lake saw the opening of the Grainwood Senior Living facility and issuance of building permits for the construction of the Prior Lake Revival project, Select Space Storage, Blahnik Law Office, Universal Motors, SDDI Signs, Boathouse Brothers Brewery, Port City Bakery, as well as recommending a redevelopment assistance agreement for PLate on Main. • Communication and Collaboration o The EDA emphasized communication and collaboration between committees by holding joint meetings with the BEC, Planning Commission, and City Council related to land use, 2040 Comprehensive Plan updates and the appropriate use of business incentives. • Land Use Related Activities o Assisted the Planning Commission and City staff in the review and update of the Land Use and Housing chapters of the 2040 Comprehensive Plan update which resulted in the removal of the 50% building addition restriction in the Transit ional Town Center Use District and identification of key areas for future commercial growth. 2018 EDA Goals • Work with downtown stakeholders (residents, current and potential business owners, etc.) toward an integrated construction and financing plan for streetscaping and building construction/remodeling to maintain and encourage the economic vitality of downtown businesses through the TH13/CR21 corridor improvement project and facilitate future downtown development. • Establish a process and plan to target resources for economic opportunities that provide significant benefits to Prior Lake, including those that may include property acquisition and direct support to commercial and industrial development. • Continue to guide the Business Engagement Committee and support the Technology Village Board of Directors as they implement the recommendations of the Phase II.5 Technology Village Business Accelerator Plan, including expansion opportunities within Scott County. • Explore opportunities to identify, assist and encourage commercial and industrial development along the CH21 and CH42 commercial corridors. Page 3 of 7 • Conduct an annual meeting each with the Scott County CDA First Stop Shop, the Prior Lake City Council, the Prior Lake Planning Commission and Technology Village Board of Directors as well as quarterly meetings with the Business Engagement Committee to promote partnerships and collaboration. 2040 Vision & Strategic Plan Goals Short and Mid Term goals identified under the Economic and Community Development Strategic Element of the 2040 Vision and Strategic Plan include: 1. SHORT: Complete update of Orderly Annexation Agreement or implement agreement “as is.” 2. SHORT: Complete graphic of Downtown based upon the Downtown Development Guide to communicate anticipated evolution of the downtown area. 3. SHORT: Take actions to encourage tourism in accordance with River South objectives. 4. MID: Complete studies to update all development fees contemporaneously with 2040 Comprehensive Plan Update. 5. MID: Facilitate concentrated commercial growth at County Road 13 / County Road 42, County Road 21 / County Road 42, (Jeffers Waterfront), County Road 21/Highway 13 (South Lake Village), Adelmann /County Road 21 (Deerfield Business Park) and County Road 42/ Pike Lake (Vierling Property). 6. MID: Complete update of comprehensive plan utilizing staff resources for land use and SCALE resources for transportation. 7. MID: Repave Colorado Street parking lot in conjunction with TH13/CR21/Main/Arcadia improvement project. 8. MID: Address on-street parking issues in Charlie’s on Prior area. 9. MID: Incorporate enhanced parking facilities where they are demonstrated to be necessary to facilitate commercial development in the community. 10. MID: Extend Arcadia Street as primary downtown southern access and improve wetland trails together with the watershed and/or UMN upon development of Gross Property 2018 EDA Initiatives and Implementation Plan The following actions have been identified by the EDA as 2018 key initiatives . All initiatives work together to support a business community that is focused on technology, job creation, diversification of tax base and Prior Lake’s strengths in entertainment and recreation. 1. Special Revenue Fund Economic Development Initiatives. Periodically the EDA will request that the City Council allocate funds from the Prior Lake General Fund (Fund 101) to the EDA Special Revenue Fund (Fund 240). The EDA will utilize funds from the EDA Special Revenue Fund to accomplish the following economic development initiatives in 2018 and beyond. Initiatives include but are not limited to: i) property acquisition; ii) storefront rehabilitation; iii) direction and promotional signage such as banner poles, visitor kiosks, or wayfinding signage; iv) economic development and redevelopment loans and incentives; v) new business attraction through website enhancements and marketing; vi) efforts to facilitate commercial development and redevelopment; and vii) enhancing the character of commercial areas. Page 4 of 7 2. Technology Village Business Accelerator. Technology Village opened in January 2013 on the main floor of Prior Lake City Hall within a previously underutilized office space of approximately 2,000 square feet. Initiating the program in the existing city hall building helped minimize start-up costs and allowed for the shared use of services already in place serving City of Prior Lake staff, including; internet, phone, meeting space, cafeteria/break room, etc. The office space within city hall also provided the added locational benefit of allowing the program participants to be near city staff who administer the day-to-day program operations. The Technology Village Board of Directors developed a ‘virtual’ participant program in 2016. The virtual program is designed to provide support to emerging technology and professional service businesses located in Prior Lake, or throughout Scott County, which are not physically located in the designated Technology Village space. The virtual program provides an opportunity for businesses, which may be home -based or are already established in an office space, to participate and benefit from the Technology Vi llage Business Accelerator program. In 2018, the EDA will focus on shifting the Technology Village program from a City of Prior Lake program into a county-wide model, which will be managed by First Stop Shop staff within the Scott County CDA. 3. Targeted Areas for Development. The EDA will help facilitate commercial development in three targeted areas around highway intersections, including: (i) CH 21 / TH 13; (ii) CH 21 / CH 42; and (iii) CH 42 / TH 13. It will also help facilitate full development of the remaining lots within the 50-acre Deerfield Business Park and maximize development potential within the 40-acre Welcome Industrial Park. Redevelopment opportunities also exist in certain locations, such as Welcome Avenue and downtown Prior Lake. 4. Downtown Parking. In 2015, SRF Consulting Group completed a Downtown Parking Analysis. The purpose of the study was to build upon previous parking studies by identifying downtown sites that will best accommodate future public parking demand, including structured parking facilities. Prior Lake is fortunate to not only have very little downtown vacancy, but the downtow n is also seeing some significant commercial development and redevelopment activity. With the increased activity and occupied storefronts, convenient municipal parking stalls will become more difficult to locate. The EDA will review the Downtown Parking Analysis and determine which short, mid and long-term implementation steps should be pursued. 5. Commercial Activity During Construction. Prior Lake will see some significant road improvement projects in 2018 and 2019 along key transportation networks. The EDA will work with commercial businesses and stakeholders in these areas, as well as the Chamber of Commerce, Business Engagement Committee and other groups to maintain and encourage the economic vitality of our businesses before, during and after these construction projects. Page 5 of 7 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 total market value of commercial/industrial (C/I) property is below average. For example, Prior Lake’s payable 2019 estimated market value for commercial/industrial property is 3.55% of total. This amount is low when compared to commercial/industrial values in Savage at 12.72% or Shakopee at 24.72% of total. 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. Although Prior Lake has convenient access to the major transportation corridors, businesses look elsewhere when highway access a top priority for them. In addition, rail service is absent in Prior Lake. Important improvements have occurred recently on County Highway 21 north and east, resulting in much better access to and from Prior Lake and additional transportation improvements are planned along Hwy 13 and CH21 which will improve access. Prior Lake does have access to a high -speed fiber network which the city has taken advantage of through a cooperative project with Integra. Through this effort, fiber was made available to the city’s various commercial/industrial areas to help compensate for the 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, not all of this land is ‘pad-ready’ for development. Prior Lake has approximately 56 acres of vacant commercial property with 36 acres being pad-ready or near pad-ready (64%). The city has approximately 50 acres of vacant business park/industrial property with 25 acres being pad- ready or near pad-ready (50%). This land supply is insufficient to accommodate the increased commercial and industrial development anticipated in the Commercial and Industrial Demand Analysis, completed by Maxfield Research. The Comprehensive Land Use Plan, which is currently being drafted by city staff, will dedicate additional commercial and industrial land for future development. 4. Direct Business Connection or Link to the Lakes. Prior Lake is known for its fourteen lakes, parks and many recreational opportunities, which are extremely important assets for city residents. However, there is very little connection between these assets and the business community. With one restaurant and few commercial marinas located here, Prior Lake could benefit from additional commercial opportunities related to its lakes and recreation. 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 Development Director position. ➢ Support one-half of a City Planner position. Page 6 of 7 ➢ 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. 2017 EDA Budget Budgeted Expenditures Budgeted Revenues $125,041 Personnel Services $140,000 EDA Levy $26,284 Operational Expenses $2,500 Interest Earnings $9,500 Technology Village $8,500 Technology Village Leases $160,825 Budgeted Expenditures $9,825 EDA Reserves $160,825 Budgeted Revenue Actual Expenditures Actual Revenues $94,231.41 Personnel Services $139,357.85 EDA Levy $2,930.06 Operational Expenses $1,523.12 Interest Earnings $1,335.61 Technology Village $8,292.53 Technology Village Leases $98,497.08 Actual Expenditures $0.00 EDA Reserves $149,173.50 Actual Revenue Unrestricted EDA Special Revenue (Reserve) Fund Balance as of 12/31/17 = $200,962. 2018 EDA Budget Budgeted Expenditures Budgeted Revenues $117,453 Personnel Services $140,000 EDA Levy $28,324 Operational Expenses $2,700 Interest Earnings $7,820 Technology Village $7,820 Technology Village Leases $153,597 Budgeted Expenditures $3,077 EDA Reserves $153,597 Budgeted Revenues Measuring Success (Metrics) The EDA will track performance measurements that allow reporting on important aspects of its services, programs and processes. To measure progress toward achieving the objectives identified in this plan, the following metrics will be used: • Track building permits issued for commercial/industrial projects. • Track residential permits and remaining lot inventory. • Track lease inventory of available commercial/industrial building space. • Track change in commercial/industrial market value using County data. • Track the number and acreage of pad-ready commercial/industrial sites. Page 7 of 7 INTENT TO RETAIN FLEXIBILITY The EDA will work to prioritize those projects that, in the EDA’s judgment, will address the most pressing public purpose. Because it is not possible to anticipate every type of project that may provide benefit to the City of Prior Lake, the EDA shall retain the option to amend or waive sections of this plan when it is determined to be necessary and/or appropriate. This business plan will provide guidance regarding the criteria the EDA will use in evaluating certain initiatives; however, whether a project meets the criteria and serves the City’s present needs shall be the EDA’s decision. The guidelines are instructive only and do not have the force of law. If the EDA finds that its present needs require one project to be given priority over another, then the EDA’s judgment will ultimately prevail. It is the intent of the EDA to provide funding to achieve these econom ic development initiatives in the most limited fashion possible to assure the initiatives are achieved. This process is inherently subjective, and whether an initiative is funded or achieved may be as much a function of the EDA’s budget as the merit of the project or initiative. FUNDING SOURCES Funding to achieve the economic development initiatives identified within this plan is available within the EDA annual budget and the EDA Special Revenue Fund. The EDA Special Revenue Fund has an unrestricted fund balance of $200,962 as of 12/31/2017. In addition, the Prior Lake City Council has provided $____________ ($300,000 being requested on 5/21/18) of General Fund Reserves to the EDA Special Revenue Fund to pursue these initiatives. The EDA will attempt to identify sustainable sources of revenue for future consideration by the City Council. Potential sources of revenue that the EDA will explore, in addition to general fund reserves, include, but are not limited to a redirection of fiscal disparity funds to the EDA, the transfer of revenue generating properties form the City of Prior Lake to the EDA, or an increase in the EDA levy. Comprehensive Financial Management Policy In conformance with the Comprehensive Financial Management Policy, the EDA will strive to maintain a fund balance within the EDA Fund to meet both anticipated and unanticipated future economic development needs. The EDA will maintain a reserve balance at a level which takes into consideration, i) professional services; ii) significant funding which may be required for acquisition of land for development opportunities; iii) potential relocation costs or legal costs attributable to economic development actions; iv) anticipated or unanticipated environmental concerns or impacts; and v) cash flow for a minimum of six (6) months of projected operating expenditures. ANNUAL REPORTING The EDA will submit an updated Business Plan to the City Council annually which details the previous year’s activities and provides an accounting of how EDA f unds were spent to achieve the identified initiatives during the prior year.