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HomeMy WebLinkAbout04-27-10City of Lakeville Economic Development Commission Meeting Minutes April 27, 2010 Marion Conference Room, City Hall Members Present: Comms. Matasosky, Longie, Tushie, Vlasak, Schubert, Emond, Brantly, Erickson. Members Absent: Comms. Starfield, Smith. Others Present: David Olson, Community & Economic Development Director; Adam Kienberger, Economic Development Specialist; Mikaela Huot, Springsted Inc. 1. Call Meeting to Order Chair Matasosky called the meeting to order at 4:30 p.m. in the Marion Conference Room of City Hall, 20195 Holyoke Avenue, Lakeville, Minnesota. 2. Approve March 23, 2010 Meeting Minutes Motion 10.06 Comms. Tushie / Emond moved to approve the minutes of the March 23, 2010 meeting as presented. Motion carried unanimously. 3. Presentation of City Financial Tools for Business Assistance by Mikaela Huot of Springsted Inc. Dave Olson introduced the City's financial consultant Mikaela Huot from Springsted Inc. As suggested at last month's EDC meeting, Ms. Huot was present to discuss financial assistance tools available to the City of Lakeville and how they can be utilized for a business assistance project. Ms. Huot reviewed a PowerPoint presentation on Tax Increment Financing (TIF) and Tax Abatement. The presentation was distributed to the EDC. Chair Matasosky asked about opportunities to utilize older existing TIF districts in the City. Mr. Olson explained the restrictions in place governing the older districts in Lakeville. Ms. Huot clarified the uses of TIF that are available and how the recent "Jobs bill" allows for some temporary authority to use tax increment dollars. Ms. Huot continued by describing tax abatement and how it differs from TIF. Economic Development Commission Meeting Minutes April 27, 2010 Comm. Tushie asked who determines the taxes of eligible parcels for tax abatement and what the City's tax portion is. Ms. Huot responded that the City would do a tax capacity analysis and then estimate the tax amount that would be generated by the parcel. The City would then add that amount to its City tax levy to be able to provide a benefit to the abated parcel. Mr. Mielke added that the City's portion of a business's property taxes is approximately 15 %. Mr. Olson also added that unlike TIF, the County and school district can "opt out" of participating in the tax abatement thus decreasing the overall benefit to the business. Mr. Mielke clarified that TIF can capture new revenues and tax abatement can capture existing revenues to complete a specific goal or public purpose. Comm. Tushie noted that it would tough to abate the taxes of an existing property because the subsidy would have to be spread to the rest of the community. Chair Matasosky asked if there any other business financing assistance tools available at this time. Ms. Huot mentioned that there are several including conduit financing, recovery zone facility bonds, housing improvement bonds, and revolving loan funds. Comm. Tushie asked if anybody is utilizing housing revenue bonds right now. Ms. Huot responded that there aren't many being utilized right now because private financing is difficult to secure. Mr. Olson added that in addition to the tools Ms. Huot mentioned there some internal things the City has flexibility on such as development fees, 429 assessments etc. 4. Review of and Discussion of Draft Business Assistance Policy Mr. Olson reviewed a draft business subsidy policy that outlines the items that have been discussed at several recent EDC meetings. Some things to think about include what type of minimum wage policy should be enacted for new jobs created under business assistance. What kind of jobs should be considered for a subsidy? Chair Matasosky stated that Lakeville needs to distinguish itself in some way. He added that he likes the flexibility that category number four provides in the draft policy: 1 RAF Economic Development Commission Meeting Minutes April 27, 2010 Projects that enhance or increase the economic diversity of the community by attracting businesses or industries not currently located in the City. New job wage requirements will apply to any new jobs created. Mr. Mielke stated that goals can be set based on a policy like this. Comm. Tushie suggested that construction jobs be included in the policy and not have only permanent jobs count towards job creation goals. Mr. Olson noted that the recently enacted "Jobs bill" includes construction jobs as a benefit. Chair Matasosky asked why category number seven states that additional goals need be met other than increasing tax base. Mr. Olson responded that that is a provision of the State Business Subsidy law. A business subsidy cannot be granted for the sole purpose of increasing tax base. Mr. Mielke cautioned that if a business subsidy policy and goals are set too broad what do we open the door to? If a subsidy was given to a new gas station would every new gas station then be eligible for a business subsidy? Mr. Mielke continued by stating that the City of Chanhassen opted to provide a business subsidy to every new business that came to town. Because of this over one -third of the City's tax base was tied up in subsidies. Chair Matasosky added that there should be a way to measure a project's return on investment (ROI). After TIF ends figure out how much money the business will bring to the City in taxes. He suggested that there should be a formula to establish the max percentage of the tax base that should be tied up in subsidy. Maybe this could be a yearly review and a formula used to create a cap. Comm. Tushie asked what would happen if sometime in the year the City was already up to the "cap" and a major project came along that couldn't be assisted. Mr. Mielke responded that every project will provide some sort of ROI including gas stations. He asked the EDC what sort of thresholds should be established to measure what the ROI should be. There is a cost to bringing a business to the City. Mr. Mielke continued by stating that business subsidies can also be politically difficult because if you give it to one business, other businesses are going to expect the same thing. Mr. Mielke concluded that goals will first have to be established so that there is something to move towards. He added that the draft policy should be brought forward to the City Council for discussion at either a work session or a joint work session with the EDC. Next steps will be established at that time. 3 Economic Development Commission Meeting Minutes April 27, 2010 Motion 10.07 Comms. Tushie /Schubert moved to forward the draft business subsidy policy to the City Council for further discussion. Motion carried unanimously. 5. Director's Report Mr. Olson reviewed the Director's Report. 6. Adjourn Chair Matasosky adjourned the meeting at 5:50 p.m. Respectfully submitted by: Adam Kienbe, er, Economic Db elopment Specialist Attested to: R. T. Brantly, Secretary 0