Loading...
HomeMy WebLinkAbout2025.03.24 EDAM3/24/25 -1- MINUTES OF THE PROCEEDINGS OF THE ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF BROOKLYN CENTER IN THE COUNTY OF HENNEPIN AND THE STATE OF MINNESOTA REGULAR SESSION MARCH 24, 2025 CITY HALL – COUNCIL CHAMBERS 1. CALL TO ORDER The Brooklyn Center Economic Development Authority (EDA) met in Regular Session called to order by President April Graves at 9:24 p.m. 2. ROLL CALL President April Graves and Commissioners Kris Lawrence-Anderson, Dan Jerzak, Teneshia Kragness, and Laurie Ann Moore. Also present were City Manager Reggie Edwards, Director of Fiscal & Support Services Angela Holm, Sales Director/Interim Heritage Center Director Tami Buetow-Staples, City Clerk Barb Suciu, and City Attorney Siobhan Tolar. 3. APPROVAL OF AGENDA AND CONSENT AGENDA President Graves pointed out Consent Agenda Item 3b. Forfeiture Sale of Earle Brown Drive (Former Brown College Site) would need to be removed. Commissioner Lawrence-Anderson moved and Commissioner Jerzak seconded to approve the Agenda and Consent Agenda, as amended, and the following item was approved: 3a. APPROVAL OF MINUTES 1. February 10, 2025 – Regular Session 3b. FORFEITURE SALE OF 5951 EARLE BROWN DRIVE (FORMER BROWN COLLEGE SITE) This item was removed from the Consent Agenda. 3c. RESOLUTION OPTING NOT TO WAIVE LIMITED TORT LIABILITY FOR 2025 Motion passed unanimously. 4. COMMISSION CONSIDERATION ITEMS 4a. HERITAGE CENTER CATERING CONTRACT 3/24/25 -2- Executive Director Reggie Edwards noted that Recreation Director Cordell Wiseman was unable to attend the meeting. He commended the Staff for their strategic efforts and innovative ideas regarding the Heritage Center. In 2020, there was a $1.3 million deficit. However, Staff has created a game plan to eliminate the deficit. Staff have shown they are able to create and implement similar strategies. In 2023, there was a deficit of $709,000, and in 2024, the deficit was estimated at $518,000. It would be unrealistic to resolve the issues in one year when the problems have been building up over decades. He invited Sales Director/Interim Heritage Center Director Tami Buetow-Staples to continue the Staff presentation Sales Director/Interim Heritage Center Director Tami Buetow-Staples thanked the Council for participating in a discussion about the Heritage Center. She explained they are working on new marketing strategies, attending networking events, combining sales strategies with Mintahoe, and working on Joint Powers Agreements with governmental Departments. Ms. Buetow-Staples pointed out that the Heritage Center brought 35,249 guests into Brooklyn Center, and the number has been consistently rising since then. In 2023, there were 53,315 guests, and in 2024, there were 65,945 guests. They project an increase for 2025. Ms. Buetow-Staples noted their corporate and wedding clients want an all-inclusive planning process, which makes the exclusive catering partner even more important. Ms. Buetow-Staples stated there were 215 events in 2024. There are 148 events scheduled for 2025, and the number will continue to grow. There are 71 events already scheduled for 2026 and 34 in 2027. Ms. Buetow-Staples added that the Heritage Center has a strong impact on local hotels, especially the Embassy Suites and Fairfield Inn and Suites. The event space also brings shoppers to the City. The Heritage Center is one of the top employers in Brooklyn Center, and the venue contributes to the Brooklyn Center identity. Ms. Buetow-Staples pointed out that the Heritage Center generated $268,311 for the Embassy Suites in 2023. They generated $273,772 in 2024 and are projected to generate $377,969 in 2025. The data is only based on all-inclusive bookings provided through the Heritage Center. There are likely additional bookings due to events at the Heritage Center. She didn’t have statistics from the Fairfield Inn and Suites. However, their Sales Director provided a letter in support of the Heritage Center. Director of Fiscal & Support Services Angela Holm reiterated that the City has been hit hard financially in recent years. The Heritage Center’s finances include four business units: administration, event rentals, catering, and office rentals. She pointed out that the rentals must cover the entire operating expense. The Heritage Center also has a capital fund. The operating account and capital account are combined on the annual financial report. Ms. Holm stated there is a 72 percent revenue sharing with Mintahoe. There is no management fee. There is a 24 percent split of the service charge between the Heritage Center and Mintahoe, 3/24/25 -3- of which Heritage Center receives 46 percent. The billing process is simple and doesn’t require cost verification. In the previous contract with Flik, there was a ceiling of 70 percent for revenue sharing, a flat fee for management, the same service charge split, and a cost verification requirement for the reimbursement-based billing process. Ms. Holm showed a table comparing the 70 percent revenue sharing to the 72 percent revenue sharing. At catering revenues below $5 million, the variance in percentages is negated by the inclusion of a flat management fee. As the catering revenue increases, the variance and savings diminish. Historically, catering revenues that would be subject to the revenue sharing agreement have been below $3 million and are projected to remain under $5 million for the term of the proposed contract. Ms. Holm explained that Staff from the Finance Department and Heritage Center have collaborated to determine the best path to profitability. Based on extensive financial analysis and conservative assumptions, they have developed a three-year plan. Continued monitoring of the plan is vital to its success. Ms. Holm showed a table depicting the proposed plan to ensure profitability within three to four years. The contract under consideration is factored into the projections. Staff were very intentional regarding the assumptions used in the projection. For example, the increasing water costs are included in the calculations. Each line item was reviewed for accuracy and special consideration was applied as needed. By the end of 2027, they expect a deficit of only $82,136.50. The estimates are conservative, and they hope to be more aggressive where possible. Ms. Holm added Staff is researching additional opportunities to generate revenue. Ms. Holm noted that Commissioner Kragness previously asked a question about the cost to wire funds. She stated the cost of a wire for the City is $0. Ms. Buetow-Staples explained they plan to continue to increase room rental fees, continue to sell available dates, adjust the catering and menu as needed, increase the audio/vidsual items while remaining competitive with other vendors, create packages and deals to increase wedding sales on empty dates, update the website to increase clicks and impressions, decrease expenditures, and prepare quarterly updates and reports for the Council. She added they plan to hire consultants to assist with future revenue plans and the sale or lease of the venue. Ms. Buetow-Staples stated the Council had some questions at a previous meeting. They asked if Mintahoe would consider a month-to-month contract. The caterer stated they cannot do a month- to-month contract as there is no security, and they couldn’t hire permanent staff. The Council asked if another catering company could be contracted. Ms. Buetow-Staples explained that only three companies provided a proposal to the Request for Proposal, so it would be very difficult to find another catering company. Ms. Buetow-Staples noted Council asked if Mintahoe would be interested in managing the venue. The proposed scenario would be unattractive to Mintahoe because of the taxes they would have to 3/24/25 -4- pay. Also, there would need to be joint powers contracts, and they would need to go through a competitive bidding process to work with Mintahoe. Ms. Buetow-Staples added Council asked if outside caterers could work at the Heritage Center. Ms. Buetow-Staples explained that the Heritage Center hosts multiple events each day, and additional vendors would create an issue with the use of kitchens and equipment. Plus, the Heritage Center owns all of the kitchen equipment, and having an exclusive caterer helps maintain the City’s assets more effectively. Ms. Buetow-Staples stated that the Council also asked if the business will grow with so many repeat clients. Ms. Buetow-Staples pointed out that repeat business is a core component of the Heritage Center, but there is still room to grow. Also, they will increase the room rental fees and food minimums year over year. Commissioner Jerzak pointed out the Heritage Center’s financial situation is not new. He added the value goes beyond the simple financials. The Council must define its expectations for the Enterprise Funds. It will require more discussion, but the Enterprise Funds need to be self- sufficient. Commissioner Jerzak thanked the presenters for answering the previous questions the Council posed. He explained he can support the contract with a few guardrails in place. There needs to be a conversation about what has gone well in the past and what hasn’t, especially because there is a new vendor. Commissioner Jerzak requested that the 11 th item in the contract be removed. Mintahoe is welcome to seek out bids for such a project. From there, they can create a detailed presentation for the Council. The Heritage Center needs to focus on its recovery before taking on more responsibilities. Commissioner Kragness thanked Staff for the presentation. She acknowledged the Heritage Center has been in the red for a long time, but this is the first time there has been a plan to grow the business. She thanked Mr. Wiseman and Staff for their work on the item. The turnaround won’t be quick, considering it took many years to get to this place. Commissioner Kragness noted her appreciation of the explanation about 70 versus 72 percent. The new contract will already save the City some money. She stated the Council doesn’t need to review every step of the process. There was a breakdown in the process, but the Council should empower Staff to do what they have been hired to do. Commissioner Lawrence-Anderson pointed out Flik always had positive reviews for their food. She stated she would assume there was food tasting for Mintahoe catering. Commissioner Moore stated there will still be a loss at the end of 2027. Ms. Holm confirmed there is a projected loss of $82,000 by the end of 2027. 3/24/25 -5- Commissioner Moore asked Commissioner Jerzak to explain the two points he made. Commissioner Jerzak stated that he suggested an annual review and removal of the 11 th item about the $300,000 contribution. There is still a projected loss over the next three years, and there isn’t a plan to recoup the Capital Improvement Plan funds. He doesn’t want the City to lose any more money. Commissioner Moore asked if Mintahoe would consider a one- or two-year contract. Dr. Edwards stated a three-year contract was proposed. President Graves asked if there are regular compliance checks with contractors. Dr. Edwards explained his understanding is to reassess the agreement to see how it is going. Staff intends to meet with the Economic Development Authority well before a year into the contract, following a check-in with the contractor. He stated he welcomes a regular check-in. Commissioner Jerzak agreed he wouldn’t want Staff to renegotiate the contract each year. Instead, he would like to see an opportunity to check in with one another. City Attorney Siobhan Tolar pointed out that the fourth provision of the contract includes an agreement to participate in regular meetings. She read, “The Parties agree to have periodic meetings to discuss the operation and budget of the Heritage Center and Catering Facility as determined by the Owner. Additional meetings may be called by either party through written communication. Manager agrees to obtain the approval of the Owner with respect to all major programs and policy matters which could have a material and substantial effect upon the reputation and character of the Catering Facility. If there is doubt about needed approval, the Manager must consult with the Owner to obtain clarity.” Ms. Tolar explained that the “Owner” refers to Brooklyn Center or the EDA. Also, there is a provision setting a meeting before the end of the contract to assess the partnership before renegotiating a contract. Commissioner Lawrence-Anderson noted she has no intention of micro-managing Staff’s efforts. However, she would like regular updates until the direction of the Heritage Center is turned around. She pointed out she would be open to updates in the weekly email rather than a formal presentation. President Graves stated that Dr. Edwards previously confirmed Staff has planned for regular updates to the Council. Commissioner Kragness pointed out that Commissioner Jerzak wants to eliminate the 11th section. There is a vendor interested in investing $300,000 into the Heritage Center. She asked why the City would reject it. Commissioner Jerzak stated that the expectations for the investment are unclear. He explained he would like more details on the improvements and the future arrangement. He had a conversation with Dr. Edwards about his concerns, and Dr. Edwards stated Mintahoe would “get a larger piece 3/24/25 -6- of the pie” for the improved spaces. However, that detail is not included in the proposed contract. Commissioner Kragness stated if the contract doesn’t include such details, then the City isn’t agreeing to such a stipulation. The only requirement for the $300,000 is that improvements begin within the three-year contract period. Dr. Edwards noted he would compile more details to provide to the Council. He assured the Council that Staff would only negotiate a contract that is favorable to the City. Commissioner Jerzak thanked Dr. Edwards for his comments. President Graves moved, and Commissioner Kragness seconded to adopt EDA RESOLUTION NO. 2025-03, a Resolution Authorizing the Heritage Center of Brooklyn Center to enter into a Contract with Mintahoe Catering and Events for Management and Operations of the Heritage Center Catering Facilities and authorizing the Executive Director to execute such contract. Motion passed unanimously. 5. ADJOURNMENT Commissioner Lawrence-Anderson moved, and Commissioner Kragness seconded the adjournment of the Economic Development Authority meeting at 10:02 p.m. Motion passed unanimously.