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HomeMy WebLinkAbout2021 08-09 CCM Work Session MINUTES OF THE PROCEEDINGS OF THE CITY COUNCIL/ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF BROOKLYN CENTER IN THE COUNTY OF HENNEPIN AND THE STATE OF MINNESOTA WORK SESSION AUGUST 9, 2021 VIA ZOOM CALL TO ORDER The Brooklyn Center City Council/Economic Development Authority(EDA)met in Work Session called to order by Mayor/President Mike Elliott at 9:47 p.m. ROLL CALL Mayor/President Mike Elliott and Councilmembers/Commissioners Marquita Butler, April Graves, Kris Lawrence-Anderson, and Dan Ryan. Also present were City Manager Reggie Edwards, Community Development Director Meg Beekman, City Attorney Troy Gilchrist, and City Clerk Barb Suciu. BC INNO-HUB CONCEPT REVIEW AND DISCUSSION City Manager Reggie Edwards explained this item has come forward earlier and been rescheduled four times. He stated the item is a presentation on the City's new liquor store space. He invited Ms. Beekman to present the staff report. Community Development Director Meg provided a brief overview,noting in June of 2019 the City Council directed that 3,500 sq ft. of commercial shell space be constructed as part of the construction of Municipal Liquor Store #1, which is located in the Shingle Creek Crossing Shopping Center. The building pad was larger than the need for the liquor store space so there was an opportunity to construct an additional building space shell at a total cost of$318,000,which is relatively affordable considering the liquor store was being constructed at the same time. The City Council deemed it prudent to do this construction. The cost was originally planned to be repaid over 15 years from the EDA to the liquor store fund, which equated to approximately $27,000 per year. The repayment has not begun and staff has been waiting to determine the use of the space to determine the repayment process and term. Ms. Beekman stated the common area maintenance (CAM) charges are also to be considered and equate to $7.50 per square foot. The City's CAM rate is $3 per foot for this space, which is fixed, and would be part of any lease rates considered. She noted this is a shell space so additional finishes are required and would generally fall in the range of $150,000 to $300,000 but likely higher now than when that estimate was determined when was constructed. It is also dependent upon the ultimate end-use. 08/09/21 -1- Ms. Beekman estimated that equivalent leasable space at market rate would range from$22 to $28 per square foot so the City's ownership of this space and mechanism through which it was financed does allow for a below-market or reduced rate. Ms. Beekman reviewed the potential options offered to the City Council/EDA at the time this decision was made to not build the space;consider uses that do not require any additional resources on a scale up to and including end uses that would require more substantial or ongoing subsidy,to build additional space to sell it for retail commercial use at a highest and best price; or build additional space and utilize to support the City's goal around resident economic stability and to support small businesses. At that time, the City Council/EDA did not provide direction on what the use ultimately would be but the consensus at the time was that the use should support the City's strategic priority around resident economic stability. There are a lot of different ways that could look and given the amount of subsidy or ongoing support the City Council/EDA was comfortable with,there was no clear consensus other than the direction to have staff identify and present what some options were. Ms. Beekman stated over the past year staff explored several options in how that space can be used including leasing to a particular small business like a restaurant at below-market rent to provide an opportunity for one business to get a foothold. She noted that restaurants have a very high up- front cost for a commercial kitchen so it is difficult for start-up or smaller restaurants to do that. Staff explored that option in partnership with business resource providers who are already working with entrepreneurs and businesses. Ultimately,potentially because of the ongoing pandemic, staff was not able to identify a particular partner or business that would work for. Ms. Beekman stated they also looked at establishing a micro-business incubator for small and emerging entrepreneurs. NEON explored this concept for a time and operates something similar in North Minneapolis. Their focus is on food businesses but they have since moved on, pivoted their focus, and are no longer expanding programming. Ms. Beekman stated staff also explored a business resource hub, which is the current proposal and Paadio Consulting will explain that option in more detail. She explained that essentially the vision is to create a small business and workforce resource hub that would deliver diverse and inclusive programming for economic empowerment and fast-track post-pandemic economic recovery and rebuilding. Ms. Beekman stated earlier this evening, the City Council/EDA received a presentation on an entrepreneurial incubator. From the staffs perspective, when looking at the economic development and small business ecosystem needed in the City,the opportunity with this particular proposal is around fairly nimble, quick-moving, and dynamic, and can flex and adapt to the needs of the community. She noted Mr. Powers had talked about the need to pipeline businesses so when the entrepreneurial marketplace opens, and we find opportunities around culturally specific retail spaces, there is a need to have this flexible and quick responding center for resources to pipeline businesses into these spaces. That is how she views the opportunity around this particular hub,to take all the resource purveyors known who serve within the community and bring them together into a one-stop-shop. 08/09/21 -2- Ms. Beekman stated the concept is to serve residents and businesses within the community by providing that hub and one-stop-shop for training and microwork places,which are in high demand according to the feasibility study done by NEON Partners. It also would provide an opportunity for micro popup markets and retail sales within that space and also focus on workforce development and pairing larger businesses within the community with smaller businesses to focus on capacity building. Ms. Beekman stated Paadio is proposing to lease this space from the City and oversee the buildout into a functioning and useable space. They would manage the innovation hub in partnership with service providers throughout the community. Their role will be to deliver programming and services such as technical assistance training; bring in outside service providers to do training; bring in and manage training and development programming based in partnership with the community and regional organizations and City and private entities; manage popup markets and micro-retail opportunities; and, host community collaborative programming and leadership. Ms. Beekman explained Paadio has proposed a phased launch timeline of 36 months that will create early initial opportunities to begin programming right away and continue to develop that programming over time. Paddio has also prepared and provided a business model that talks about their stabilizing of operations over three years. Ms. Beekman stated Paadio has prepared a budget with an estimated buildout of$385,000, first- year start-up costs of$28,000, and annual operating costs of$146,640. They are seeking to raise $500,000 to initiate the project and are requesting the EDA enter into a Memorandum of Understanding(MOU)indicating the City's support and use of staff and other resources to support fundraising and program development efforts. Ms. Beekman stated this is not dissimilar to when we have a concept plan review for development proposals and they seek a preliminary development agreement with the City Council, which is an indication the City is supportive of the project under certain conditions and willing to help and provide grant writing assistance and the like. Essentially, the request is round that initial asking for direction and from there,developing a fundraising component as well as flush out the feasibility of the project itself and develop the business plan. Ms. Beekman explained if the City Council's/EDA's direction is to move forward, staff will draft an MOU for the EDA's consideration. Some of the terms could include a rent waiver for some time while the innovation hub is starting up and the use of EDA funds to continue the feasibility and fundraising efforts. She noted the EDA's budget has identified$50,000 to support identifying a use for this space and those funds could be made available as part of this effort. Motion to Extend the Rules Mayor/President Elliott moved and Councilmember/Commissioner Lawrence-Anderson seconded to extend the meeting to 10:30 p.m. Motion passed unanimously. NO VOTE WAS TAKEN. 08/09/21 -3- BC INNO-HUB CONCEPT REVIEW AND DISCUSSION—continued Jade Nnadi, Paadio, introduced other team members in attendance and thanked Ms. Beekman for her help in putting together this presentation. He stated he appreciates the opportunity to work together on economic growth for our community. He also thanked the City Council Members for hearing their presentation tonight. Mr. Nnadi stated he appreciates City Manager Edwards and congratulated him on his new position. Mr. Nnadi stated he hopes the City Council/EDA reviewed the proposal that looks at community needs and why Brooklyn Center would benefit from such an opportunity as an innovation hub. He noted that Brooklyn Center is in the center of the Twin Cities and economic growth in our economy and region,in programming. He stated Paadio has talked about improving their lives and families. He displayed a picture of silos and stated many of their clients may see something different in this picture, a windowless room in which one toils head down in isolation to get ahead. He noted our City is home to many immigrants who have experienced challenges in moving to a new community and are seeking generational wealth. He asked if there is a way for us to connect job seekers and microbusiness owners with resources to attract opportunity and prosperity. Mr. Nnadi displayed a picture of Belo Okeh, a recent immigrant, currently working as a personal care assistant(PCA),but trained as an accountant. He is married and he and his wife want to have children and buy a house. However, they are holding off until they are more financially secure. He stated as a foreign speaker, Belo has found the transition to the US to be challenging. He does not have much social capital and wants to find a better job, a professional accountant job,that fully leverages his advanced degree. His full-time PCA job only pays $12 per hour, which does not provide the financial resources to use his university training in regional accountant job listings. Belo needs training in the US and Minnesota tax codes to prepare himself for the regional job market and a higher-income job. Mr. Nnadi displayed a picture of Pang Lee, another person in their study, a second-generation US citizen whose parents immigrated from Southeast Asia. Her family has a rich history in the textile industry and Pang is continuing on that tradition with her athletic clothing line. Now she works in a garage and did not join the Chamber of Commerce or business networking groups because they seemed to be mainly white. The next step for Pang would be to secure a large place for her company and she could use some upscaling of her business such as training, mentoring, and business support groups. Mr. Nnadi stated Pang and Belo have different stories but share some key challenges as face individuals and families across our City. They are short on time and short and capital to invest in growth and prosperity. He asked what does that look like. He stated each uses 100% of their available resources such as time and money to get to their current situations. They are living paycheck to paycheck and seeing the effects of the pandemic you will further understand the frugality their families experience when operating at a subsistence level. He asked when everything you have is essential, how are you supposed to level up your skills, train for new qualifications, upgrade your business, space, technology, or services. He explained the key to growth is the ability to change fast and when a community business or individual has little to 08/09/21 -4- nothing,it is not reasonable to expect transformational growth. Mr.Nnadi explained that changing outcomes across our community relies on looking from subsistence to surplus. Mr.Nnadi stated prosperity is the result of having a bit left over after providing for necessities and creating that surplus requires looking at differences between our culture centers and individual opportunities. We have the tools and resources to provide the support that can help the citizens of Brooklyn Center use their earnings and share in the prosperity of our fortunate and growing reason. Mr. Nnadi introduced Robert Sorensen, another person in their study and a facilities manager for a Fortune 500 company who lives in Maple Grove with his wife and children. They are a one- income family and when he is not at work, he likes to golf and enjoys fishing at his lake house. However, at work, Robert is increasingly being asked to diversify the hires in his department. Roberts likes the inclusive vision of the company but has his challenges. His work life and social life don't bring him in contact with many people of color. Robert needs a connection to a diverse group of potential vendors and employees to support his company's effort to create better equity. Robert is among many business leaders and managers who are wrestling with the question of what would inclusive business practices look like. Mr. Nnadi displayed a snapshot of the Paadio equity model as applied to business. He explained a simple way to approach things is to look at the relationship and association within the business world, process or outflow from a business, and look at who is involved. Is this a homogonous group, is there diversity, who are the suppliers, customers, investors, managers, lower-wage employees. Mr.Nnadi explained that one measure of diversity and equity would be when all of the contributing population groups are homogenous and have similar makeups to the general population in the area of the company's operations. When any stakeholder segment diverges from looking like the general population,the picture becomes less inclusive and, in reality,that is true. Mr. Nnadi asked what and how can we do an inclusive department in Brooklyn Center. He reviewed the needs they heard about with the four quadrants of DEIB leadership and innovation; micro-business growth services; upskilling workforce development; and, DEIB business matchmaking marketplace. He said Belo needs support in matching job listings with opportunities, Pang needs support with her business, and Robert needs the opportunity to meet people like Belo and Pang. Mr.Nnadi stated our community,region,and mission meet in the vision and are realized when it comes to building an equitable society in which one truly belongs. Mr. Nnadi asked how can we provide for the needs and support for these businesses, noting good ideas need a good home and they have just such an opportunity right around the corner and close to the City Hall. He noted the City's shell building on Shingle Creek Parkway sits empty, waiting for a good occupant that can benefit our community, such as the BC innovation hub. Mr. Nnadi stated Paddio has experts in microbusiness development and diversity, equity, and inclusion. He noted Brooklyn Center has the experience to benefit our residents and businesses who need support transitioning from subsistence to surplus. Paadio comes with a rich group of 08/09/21 -5- partners ready to support business and the vision of programming at all levels. This means that Paadio plus Brooklyn Center plus Paadio partners equal opportunity for all of our residents. Mr. Nnadi asked how this will all work, noting their proposed innovation hub creates a rich supportive web,of services and resources to help people like Pang, Belo, Robert, and many others. The innovation hub is to simplify and demystify the complex web of networks and operations required to lead the community from subsistence living to surplus. This requires integrated services such as micro business navigation, coworking space, upscaling training, cross-sector networking, professional support services, technology for growth and events, and creates the conduit for connecting individuals, organizations, government, and businesses with the resources and expertise to grow our City into a prosperity zone that attracts resources and produces generational wealth for all. Mr.Nnadi presented Paadio's role in the hub to navigate the shift for maximum outcomes that will provide real value for our community. He reviewed key offerings and programming examples including the definition of micro business as being companies with up to 500 employees. From that point of view, their small businesses are truly multimillion-dollar businesses with a lot of revenue and resources. He noted micro businesses make up the vast majority of businesses in our City. They are small businesses with up to five employees grossing under $22,000 per year. This is the incubation stage for entrepreneurs with rich ideas that fuel our economy and generate a significant portion of our tax base. Microbusiness owners wear many different hats so they need support across the board. He reviewed the many work tasks for mom and pop shops, noting it is rare to possess all of these skills so Paadio supported programming is very valuable. Mr. Nnadi offered to answer questions, noting they live in the best small community. He commented on a presentation he attended about a real estate initiative by Outbound,the benefit of collaborative efforts, and that their program adds value to immigrants and organizations. Mr. Nnadi reviewed their work with other service providers in Brooklyn Center and the Twin Cities area. Mayor/President Elliott thanked Mr.Nnadi for the presentation and opened the floor for comments and questions. Councilmember/Commissioner Graves thanked Mr. Nnadi and Ms. Beekman for the presentation and stated she is excited to hear about this because it is well aligned with other efforts and filling a gap we knew needed to be filled. She was also excited about the space in the first place, getting it built at a lower cost by doing it at the same time as the liquor store,and envisioned it as something that could propel us with our resident economic stability efforts. Councilmember/Commissioner Graves stated it was a good presentation and it sounds like they are already doing a lot of the groundwork to build the relationships that will be necessary. She is hopeful to see how it moves forward. Councilmember/Commissioner Ryan stated his feeling about the space adjacent to Municipal Liquor Store#1 was that he would never have accepted the purchase and the buildout of that space if it had not been the intention of a buildout for the City's revenue. He thinks it is mistaken to just 08/09/21 -6- turn this over for these uses when commercial space is abundant throughout the City of Brooklyn Center that could be used for these worthy purposes for enhancing commercial uses for minority businesses. Councilmember/Commissioner Ryan stated because of the value of this space adjacent to Municipal Liquor Store#1,we should either sell the space or lease it to commercial use. He stated he has heard this is something cities are not particularly good at, leasing out space to be a landlord. But like we have with Shingle Creek Crossing, that absentee landlord engages a property management organization to lease out space. He asked why can't City lease the space out for our gain, noting the City needs the income. Councilmember/Commissioner Ryan stated that is where he is coming from when other commercial space is abundant at more competitive rates available to this very worthy use that we are all behind,where the City could gain more from either divesting its interest in this pad adjacent to Municipal Liquor Store#1 or lease it out with a property management agency that runs Shingle Creek Crossing. He stated those are his thoughts. Councilmember/Commissioner Butler stated she is struggling a bit to see if this fits into what was presented earlier or if this is a different concept because she is hearing similar themes. She wondered if they are similar ideas, would they be operating in silos or collaboration with the idea proposed earlier. Also, she is thinking about who is running this operation, which was spoken to earlier in the previous presentation on the type of entity that would lead something like this. Councilmember/Commissioner Butler stated she is not opposed to it but also thinks she is not totally on board because there still needs to be some things flushed out. She stated she was never in favor of the liquor store being in that location and we now have a space so we should be utilizing it and making sure it is going towards a good purpose. She stated in thinking about what businesses would want to be next to the liquor store, she is not sure that is the desire of a lot of businesses, but she could be wrong too. Councilmember/Commissioner Butler referenced the question brought up about being able to lease it to another business and wondered about the reality of that happening when Shingle Creek Crossing has many vacant storefronts. She asked what success would the City have in attracting a business to lease our space versus the other spaces already available. Councilmember/Commissioner Butler stated she appreciated the presentation and was sorry it had to be put off Also, at this late hour, it's a little bit harder to process all of the information. Ms. Beekman stated in terms of its connection to the space we talked about earlier, she thinks there is an opportunity to fully define that as we go about continuing feasibility on both projects. She does not want to make any definitive statements that it is all figured out because the intention is to continue the work and exploring. She views the two as being connected as this particular opportunity can be fairly quick in terms of implementation. In terms of a business model, her review is that it is a fairly nimble and flexible business model to identify the assets within the community through partnerships and bring them together into a hub or one-stop-shop for 08/09/21 -7- entrepreneurs and businesses to be able to come in and quickly receive the services and resources they need. It is a real-time opportunity. Ms. Beekman stated ultimately, she thinks the opportunity is that this could be a pipeline to help build the capacity of businesses so when the entrepreneurial market opens on day 1, there are businesses in the community ready to move in and build out their spaces and begin operating. She stated that does not mean this needs to be in this space forever and maybe in several years when the entrepreneurial market is ready, it relocates into that space but continues to operate in its functions of bringing people together, providing those nimble services, and creating that pipeline for businesses to grow out of. Or, maybe it finds it has a way to define itself distinctly and differently. Ms. Beekman stated the idea is that these spaces and developments we are working on will interconnect and feed into each other and because of the City's and EDA's involvement in these projects, there are lots of opportunities to make that happen. Ms. Beekman stated in terms of location, and this space versus other retail space, the City could hire a broker and attempt to lease this space out to a retailer or commercial user for the highest and best or market-rate rent. But she cannot answer the question this evening about the level of interest and likelihood of being able to attract a tenant. She thinks generally speaking cities really should not be in the business of competing directly with the free market in terms of business. So, if that was the direction the City Council/EDA wanted to go, her recommendation would likely be to simply sell it to a private entity, perhaps Shingle Creek Crossing, and have them take that role. She noted the City does own land and has tenants but generally it is for redevelopment with a public purpose or component to the City's work. Ms. Beekman stated when looking at this space, she does not know staff would have ever recommended that it be considered if the City Council/EDA intended to simply rent it out at a market rate and not have it function in some way to serve a public purpose and interest. She stated there are options if that is the direction the City Council/EDA wants to go. Councilmember/Commissioner Lawrence-Anderson stated she very much appreciates the presentation tonight and certainly appreciates the late hour everyone is experiencing now. She encouraged everyone to go through this agenda item and the background. She noted the City has, through the liquor store fund, incurred quite a bit of debt, $27,000 per year for 15 years based on the $318,000 to build that site. In looking at the options, during the discussion on June 10, 2019, her opinion at that time, due to the debt incurred, was that we would lease it at market rate or sell the space. She noted our constituents paid for that and to lease it for free for three years and with the uncertainty of our budget right now, it is concerning to her. She stated that is not saying it is something she won't maintain an open mind about, but she is concerned about a long-term investment and continuing expense. Councilmember/Commissioner Lawrence-Anderson stated again it was a great presentation and a lot of information, which she appreciates. As a Work Session item, she noted there is more to discuss. 08/09/21 -8- Mr. Nnadi thanked the Council Members for the input and discussion. He stated with this plan, they are looking for a simple term, which he explained. He stated at the end of the day, we know the economic status and business shift in our community and that these businesses need support. He stated last year, the City put some funds around small businesses and also got funds from the federal government and other places and the pandemic is still there. Mr.Nnadi stated their dream is to get going and they plan to use six months to build out the space; however, the pandemic is still there. He commented that some immigrants do not know where to go and ask for help. He noted that most immigrants won't ask but typical Americans will ask and know how to solve their problem. Mr. Nnadi stated this is not just what they are saying, you support this business. They are saying that they are providing opportunities and especially for those who have lived in the trenches, owners of small businesses going through this pandemic, and knowing the City has supported, in the past, to help businesses move on. That is the point he is coming from but he is not saying the City should sustain it or that it is free. They are saying they want to balance these. Mr. Nnadi shared an example of the Opportunity Site, which he has been involved in for the last two years, and during the last year, he has reviewed the master plan so he knows the Opportunity Site very well. He explained they have in the back of their minds that once they get the hub going, they will have a big screen smart TV that residents can come to this hub and interact with on the Opportunity Site, what the programs will be like, and how to participate. It will provide engagement and reach out to the community and share with them. He stated they plan to be highly involved and in having the model prototype displayed, residents can come in and see the Opportunity Site, the acres of land, and they can get feedback. Mr. Nnadi stated if the City Council/EDA considers the plight of business people who are in the trenches and can't even support themselves, some are not educated, or maybe because of where they are coming from, they don't have what it takes to get an adequate job so they are underemployed, this is the opportunity to beef them up. Mr. Nnadi stated the City Council/EDA can look to the Opportunity Site, costs, alternatives, and what value it will create in the community. From that, for those who are underemployed, unemployed,to the micro businesses that are struggling,that is the value. It is not just about what is coming to the City in terms of dollar revenue to rent it out at market rate, but actually what this can transform in the community. Mr. Nnadi stated they propose it in a way that we don't want the City to run it or be pumping money into it but they will have enough support. He referenced a national organization that is interested in helping,has experience in a hub and is willing to collaborate. He also commented on their conversations with other resource and non-profit organizations who are already in this space. He stated there are a lot of things going on and there is no way he can share all of them here but is willing to discuss, one on one, with the Council Members to give details. He acknowledged there is value in what the City Council/EDA is saying and they have partners who are willing to work with them to make this true. He believes that the value it will bring to the City will be multiple times. 08/09/21 -9- Councilmember/Commissioner Butler noted the time has gone beyond 10:30 p.m. and suggested Mayor/President Elliott close the meeting. Mayor/President Elliott thanked Mr. Nnadi for the presentation and stated they will follow up. YOUTH ON BOARDS PROGRAM DISCUSSION This item was rescheduled. ADJOURNMENT Councilmember/Commissioner Butler moved and Councilmember/Commissioner Lawrence- Anderson seconded adjournment of the City Council/Economic Development Authority Work Session at 10:44 p.m. Motion passed unanimously. STATE OF MINNESOTA) COUNTY OF HENNEPIN) ss. Certification of Minutes CITY OF BROOKLYN CENTER) The undersigned,being the duly qualified and appointed City Clerk of the City of Brooklyn Center, Minnesota, certifies: 1. That attached hereto is a full,true,and complete transcript of the minutes of a Work Session of the City Council of the City of Brooklyn Center held on August 9, 2021. 2. That said meeting was held pursuant to due call and notice thereof and was duly held at Brooklyn Center City Hall. 3. That the City Council adopted said minutes at its August 23, 2021, Regular Session. edidAuL64/ibt Barbara Suciu, City Clerk ike Elliott, Mayor 08/09/21 -10-