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HomeMy WebLinkAbout1991 11-25 EDAM Special Session1 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 SPECIAL SESSION NOVEMBER 25, 1991 CITY HALL CALL TO ORDER The Brooklyn Center Economic Development Authority met in special session and was called to order by President Todd Paulson at 9:23 p.m. ROLL CALL President Todd Paulson, Commissioners Celia Scott, Jerry Pedlar, and Philip Cohen. Commissioner Dave Rosene arrived at 9:31 p.m. Also present were City Manager Gerald Splinter, Finance Director Paul Holmlund, City Attorney Charlie LeFevere, Assistant Finance Director Charlie Hansen, EDA Coordinator Brad Hoffman, City Assessor Mark Parish, EBHC Manager Judith Bergeland, Staff Accountant Tim Johnson, and Council Secretary Ann Odden. REVIEW OF THE 1992 PROPOSED EDA BUDGET The EDA Coordinator reviewed the 1992 proposed special operating fund EDA budget of $550,331. He noted the 1992 proposal included requests for the following: a micro computer for the Assistant EDA Coordinator, funding for the continuation of the Earle Brown Neighborhood Housing Newsletter, and professional services to assist with the development of legislative programs and various housing programs. The EDA Coordinator outlined the 1992 goals and plans for the EDA's main programs and the impact on the budget of each. Administrative costs were budgeted at $165,434. The EDA Rehabilitation Grant Program was budgeted at $140,761 and would provide funding for 13 home improvement rehabilitation grants and associated administrative expenses. The Scattered Site Redevelopment Program was budgeted at $75,000 and would provide funding for one blighted, single family property for demolition and redevelopment. The EDA's Spot Renewal Program was budgeted at $108,136 and would provide for the acquisition and demolition of two single family properties. 11/25/91 1 The Rental -to -Owner Conversion Program was budgeted at $61,000 and would provide funding for approximately 10 conversions of single family rental property to owner occupied housing. The Earle Brown Heritage Center was budgeted at $1,105,518 for expenditures, and $953,846 for revenues, which would result in a loss of $151,672, which would be funded from the Earle Brown Tax Increment Financing (TIF) District. The 1992 budget was focused mainly on promotion of the center and efforts to reduce operational costs. A 24% increase in revenue projections for 1992 was anticipated. The EDA Coordinator indicated new accounting procedures were being implemented which would help identify profit and loss centers. The ongoing goal was to make the Heritage Center self sustaining. Following the EDA Coordinator's presentation, he responded to the Commission's questions on various line items. The EDA Coordinator indicated the classification on some apartment buildings had been changed to Title II to reduce taxes. Commissioner Cohen questioned how that impacted the value, and the EDA Coordinator responded that the value was reduced by approximately half of one percent. Commissioner Cohen questioned the amount per unit of the reduction and suggested a rent reduction be explored. The EDA Coordinator did not have figures on the impact per unit, but indicated he felt a rent reduction was possible, and he would review this further. President Paulson questioned the $27,000 budgeted for dues, and the EDA Coordinator indicated the cost was primarily for participation in the North Metro Mayors organization. Commissioner Scott questioned what had happened to the $60,000 in the 1991 budget for legal services, and the EDA Coordinator responded the money was part of the fund balance. President Paulson noted the 1991 budget for the Rehabilitation Grant Program had been approximately $88,000, as compared to $140,000 in 1992. The Scattered Site Redevelopment Program had a 1991 budget of $140,000 as compared to $75,000 in 1992. He questioned whether the focus on the two programs had been transposed. The EDA Coordinator indicated both programs served some of the same functions, and both received some funding from Urban Hennepin County Community Development Block Grant (CDBG) funds. Depending on what funding the EDA received for each program, dollars were allocated to one or the other of the two programs. Also, money was re- programmed between the two programs as needed throughout the year. He indicated there was not a specific shift in the EDA's direction, but the 1992 budgeted amounts were the best estimates to date. He also indicated more time was allotted to use the funding in the Rehabilitation Grant Program, so more funds had been allocated. He noted any reprogramming of funds would be done only at the direction of the Commission. 11/25/91 2 1 1 1 1 President Paulson commented he felt it would be preferable to spend more dollars on redevelopment rather than rehabilitation. The EDA Director and the EDA Coordinator commented they agreed with that statement, and that was their intention. They felt the funding schedule as proposed gave the EDA the most latitude in using the federal funds available for projects. In addition, the EDA Coordinator stated the EDA was looking for ways to fund some curb and gutter improvements through use of CDBG funds, and indicated those funds would come from the Rehabilitation Grant Program. President Paulson indicated no funds had been earmarked in the 1992 EDA Budget for a Commercial/Industrial and Housing Study. He questioned whether the EDA was considering continuing this process. The EDA Coordinator indicated the study had been a one -time expenditure for a specific task that had been completed. The EDA had plans to develop an overall policy, which would be brought before the Commission sometime in 1992. President Paulson questioned whether dollars for the studies could be taken from CDBG funds. The EDA Coordinator indicated this was the case, and would come from the Rehabilitation Grant Program. Following discussion of the EDA Programs, the EDA considered the budget for the Earle Brown Heritage Center. The EDA Coordinator noted the Hippodrome had been a cash negative project that needed further review. Some marketing efforts were being targeted at business training seminars as a potential source of revenue. He reported business on weekends was very good, and the Monday through Thursday time slot would become a focus for new business. Commissioner Cohen questioned what approximate percentage of business persons attending conventions stayed overnight at the Inn. Judith Bergeland, EBHC Manager, indicated speakers that were brought in usually chose to stay at the Inn, and estimated approximately 40% usage overall. In regard to the advertising and marketing program for 1992, Commissioner Pedlar indicated he had been involved in interviews for various advertising agencies, and all had reported that the $85,000 budgeted for advertising in 1992 was not adequate. Although it was difficult to balance the Center's negative cash flow, advertising dollars were spent on the premise that business would increase. He felt it was important to properly advertise the Center while it was still new, and advocated increasing the advertising and marketing appropriation to $120,000. Commissioner Pedlar noted the Center had spent $104,000 on advertising in 1991. He felt the presentations of the advertising agencies were very good, and concluded Merrill -Bush, 11/25/91 3 the current agency, was particularly impressive. He felt it was possible to get measurable results from the increase in funding. The EDA Coordinator also noted the marketing strategy was shifting away from the fact the Center was a historic location, and toward the fact it was a first rate facility with excellent service. Commissioner Pedlar felt it was important to change this perception, since previously, some clients had incorrectly assumed the facility had dirt floors. There was a motion by Commissioner Pedlar, and seconded by Commissioner Cohen to increase the 1992 funding for EDA promotional activities from $85,000 to $120,000. Commissioner Rosene indicated he felt advertising was important, but was concerned about finding a source for the additional funding. The EDA Coordinator indicated a deficit of $151,000 was already projected for the Center in 1992, and that was based upon projections for an increase in business. If no increase was achieved, the deficit would be even larger. EBHC Manager Judith Bergeland felt the benefit of additional business offset the increase in promotional costs. Commissioner Cohen indicated this represented a financial risk, and President Paulson questioned what would occur if no additional business resulted. The EDA Director indicated the funds would come from the tax increment district. Commissioner Rosene and President Paulson expressed some apprehension at spending more money without a clear source of revenue. Commissioner Scott felt since conventions were planned up to two years ahead of time, it might take some time for a payback to become obvious, but she felt this would eventually occur. Commissioner Cohen commented that he viewed the Heritage Center budget differently than the City Council budget, in that it was a business, with the primary goal of making money. Therefore, it needed every opportunity to succeed. Vote on motion to increase funding for promotional activities: The motion passed unanimously. The Commissioners discussed the convention center, and the EDA Coordinator indicated certain market segments were being targeted through radio advertisements. President Paulson felt the EDA should consider diversifying this marketing approach. Television advertising was considered too expensive to pursue at this time, but the Center was attempting to get a joint sponsor for some media events. Commissioner Rosene suggested some center services might be exchanged for advertising services, if the opportunity arose. 11/25/91 4 1 1 1 Commissioner Rosene requested a schedule for upcoming events at the Center, and EBHC Manager Judith Bergeland indicated she would put the Commissioners on the mailing list for activities. In regard to salaries and wages, President Paulson questioned why the figures were not always consistent. Tim Johnson, staff accountant, indicated the 1992 budget included a change in the accounting procedures related to staff time. Staff time would be charged to various activities, which had not previously occurred. The change in numbers reflected a more accurate estimate of actual expenses incurred. President Paulson felt the City Council and the EDA staff salaries should be handled in a similar manner. He felt the EDA staff should not necessarily get an automatic increase. Mr. Johnson indicated the salary increase was not automatic, but would be voted upon by the Commission at a later date. The budget set aside funding for the possibility that an increase would occur. President Paulson felt he would be more comfortable if the policy was consistent with that of the City staff. The EDA Director indicated this could be done and this would be reviewed prior to the 1993 proposed budget. Commissioner Pedlar questioned the difference between the 1991 adopted budget for salaries, and the 1992 requested amount. The EDA Coordinator indicated the difference was approximately $20,000. Judith B. reported usage at the Center had increased in the past year, with October, 1991, showing a 45% increase in business over October, 1990. Mr. Johnson indicated it was difficult to accurately compare the 1991 budget with the 1992 budget, because the 1992 proposed budget was based upon a new and much more sophisticated system of reporting and accounting. Commissioner Rosene questioned why 60% of the budget for salaries was spent in three months of the year, and the EDA Coordinator responded those were the busiest months of the year. In regard to the Heritage Center deficit, Mr. Johnson commented that it was subsidized by the TIF district. There would be a problem in 1992 because there would not be enough TIF funding for the debt and the additional $35,000 in advertising approved by the Commission. In response to President Paulson's question, the EDA Coordinator indicated there were not many options, but there were two parcels of undeveloped land in the TIF district which might be added to the tax base. 11/25/91 5 Commissioner Cohen was interested in exploring ways to improve the TIF situation in that district, and suggested the possibility of expanding the district. Various alternatives required the cooperation of the legislature and /or the school district. Commissioner Cohen felt the school district would not be adverse to expanding the district, and felt further review was necessary to come up with the most feasible plan. President Paulson questioned the accounting procedure used to handle the City's use of the facility. The EDA Coordinator indicated trade offs were not reflected, but were an internal accounting function. The City's use of the facility was budgeted, however. RESOLUTION RESOLUTION NO. 91 -30 Commissioner Dave Rosene introduced the following resolution and moved its adoption: RESOLUTION APPROVING THE FINAL BROOKLYN CENTER ECONOMIC DEVELOPMENT AUTHORITY BUDGET FOR THE YEAR 1992 PURSUANT TO MSA CHAPTER 469.033, SUBDIVISION 6 AND MSA CHAPTER 469.107, SUBDIVISION 1 The motion for the adoption of the foregoing resolution was duly seconded by Commissioner Celia Scott, and the motion passed unanimously. ADJOURNMENT There was a motion by Commissioner Cohen and seconded by Commissioner Scott to adjourn the meeting. The motion passed unanimously. The Brooklyn Center Economic Development Authority adjourned at 11:09 p.m. Recorded and transcribed by: Ann J. Odden Northern Counties Secretarial Service 11/25/91 6 Todd Paulson, President 1 1