HomeMy WebLinkAbout1996 10-21 CCP Regular Session AGENDA
CITY COUNCIL WORK SESSION
OCTOBER 21, 1996
7:00 P.M.
CONFERENCE ROOM B
I. Council Items:
1) Council Member Hilstrom: discussion of citizen input at council work sessions.
2) Discussion of Earle Brown Heritage Center
3) Additional Council items:
II. Miscellaneous Items
1) Draft letter regarding LOGIS
III. Budget Items:
• 1) Fire Department request for part-time pay in 1997 budget
2) Council Direction on social service funding requests
IV. Tax Increment Financing
1) Overview of City's districts and issues
V. Carryover Items
1) Review of Commissions and assignments
2) Council Member Carmody:
1. Adopt a Park issues
2. Historical society request for use of water tower space at EBHC
Earle Brown
Heritage Center
•
October 21, 1996, Council Work Session
1
City of Brooklyn Center
A great place to start. A great place to stay.
i
To: Mayor Kragness and Council Members Carmody, Hilstrom, Mann, and Nichols
From: Michael J. McCauley- -
City Manager
Date: October 17, 1996
Re: Discussion of Earle Brown Heritage Center
Included are the following materials regarding the Heritage Center:
- Overview of operating history
- Most recent financial information: (with loss of accountant and paternity leave for
Assistant Finance Director: July is the most recent statement, Finance hopes to have more
current put together by the end of next week)
- Inn on the Farm Occupancy Rates
•
- October 3, 1996 memo from Judith Bergeland identifying options (the lease referred to
in the memo is not included since the terms would not be available due to the bonds)
- survey of other cities conducted by Ms. Bergeland
- list of capital issues identified by Ms. Bergeland
- Marquette Partners: Operating and Marketing Review (1993)
- December 11, 1995 report submitted by Brad Hoffman
- Modified Tax Increment Plan
- Opinions from Steve Bubul, Kennedy & Graven (note: opinion requested on September
6th has not been received)
As the Council discusses the Heritage Center, it would be useful for the Council to establish its
vision for this facility. Since none of the current council was serving at the time the Heritage
Center was created, a broad determination of goals for the facility would set the direction for
staff. A brief review of some of the materials indicates varying opinions during the formation on
the need for subsidies and the purpose of the facility. The Marquette report reflects an evaluation
6301 Shingle Creek Pkwy, Brooklyn Center, MN 55430 -2199 • City Hall & TDD Number (612) 569 -3300
Recreation and Community Center Phone & TDD Number (612) 569 -3400 • FAX (612) 569 -3494
An Affirmative Action /Equal Opportunities Employer
of the facility and its parts that raises a number of issues. Some of the issues have been addressed
and others have not. The Marquette report indicates that the Inn cannot, under current
configuration ever hope to be self - sufficient. Another area not addressed in the Marquette report
directly, is the need for capital funds as the facility ages. Several examples of large capital needs
have been identified in the council tours of the facility such as the carpet in the Carriage Hall and
the carpet in the Inn connector. I feel that the Council would facilitate its own review and the
staffs response to the Council, if the Council identified the goals for the facility and the
parameters within which options could be explored to meet those goals.
Examples of the types of issues to be resolved would include:
- are there any facets of the facility that are off - limits to change
- ie. Is complete discontinuance of the Inn and restaurant an option, without
regard to whether that would be a desirable option
- what is /are the primary purposes to be achieved:
- ie. Historic preservation
- community facility
- support for tourism, hotels, and image of Brooklyn Center
- operating self-sufficiency with or without regard to use
As the Council and staff review efficiencies or strategies for the Heritage Center, we need to
know what
t the mission of the facility is from the Council's perspective. Portions of the facility
can be closed or expanded in an effort to impact the financial picture, but that must ultimately
relate to the reason for operating the center in the first place.
On a more specific note, I have begun the process of identifying specific operational changes that
might impact the revenue and expense streams at the Heritage Center. Some of those ideas are
included in Ms. Bergeland's October 3rd memorandum. The beginning thrust of that process was
to be an examination of the Inn. My thought was to deal with the peripherals first and then the
main enterprise of the conference operations. As indicated in the Marquette study, the present
configuration will not be profitable at the Inn. Improvement, if it can be achieved in the
peripheral operation, will advance the overall planning for the conference portion. As the council
is aware and is set forth in the opinions from Mr. Bubul, there are limitations on how the City
can proceed until the bonds have been retired. The essence of the restriction is that the City must
operate the venture and be ultimately at risk for profit or loss. We can lease space, but not the
entire operation. This precludes simply renting the Inn or conference center out for operation
except under terms that provide for compensation for services rendered. We can provide payment
based on net revenues, but only if at least 50% of the total compensation is for a fixed fee.
Alternatively, we can contract for a per unit service fee. Additionally, the term of the contract
may not exceed 3 years under some conditions and 5 under others. We cannot sell the facility
until the bonds are retired. Leasing is also not an option for the conference center and Inn without
retirement of the bonds. The bonds may not be called until the years 2000 and 2001 at the earliest
and will be retired in 2003 and 2004.
As indicated above, some of the Marquette study recommendations have been implemented and
others have not. Advertising has been reduced for the Inn and will be impacted more
substantially in 1997 regardless of the direction taken on the Inn. The relationship with D'Amico
needs to be fully explored and evaluated to reduce complexity and hence cost, as well as to
explore options. Pricing of packages has begun. The City will be allocating fewer Finance
Department personnel time to the Heritage Center.
I
I __
EARLE BROWN HERITAGE CENTER FUND
OPERATING HISTORY
Actual Actual Actual Actual Actual Actual As of
1990 1991 1992 1993 1994 1995 6/30/96
Operations:
Revenues 347,866 586,986 795,157 1,812,093 2,248,111 2,385,465 1,226,917
Expenses ** 777,548 946,110 1,129,884 1,896,903 2,372,953 2,516,593 1,197,984
Net Income (Loss) (429,682) (359,124) (334,727) (84,810) (124,842) (131,128) 28,933
Trans from Other City Funds:
Tax Increment District 429,700 359,125 334,727 84,810 124,842 - -
Net Surplus /(Deficit) 18 1 - - - (131,128) 28,933
L fr Other Funds:
Net Proceeds /(Payments) - - - 305,479 83,726 206,550 (164,738)
** Excludes Depreciation on Contributed Assets
EARLE BROWN HERITAGE CENTER
Estimated Projected
1985 1986 1 987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997
Tax Increment Fund_
Revenues:
Tax Increments $ 182,962 $ 376,890 $ 927,802 $ 925,071 $ 976,539 $ 1,377,594 $ 1,379,425 $ 1,508,964 $ 1,234,763 $ 1,660,156 $ 2,206,942 $ 1,412,981
Bond Proceeds $ 5,167,364 5,996,855
Other 680,000 899,395 217,312 398,893 205,408 336,327 280,000 100,000
i
Expenditures
Debt Service Requirements (509,617) (182,962) (326,890) (431,710) (429,908) (820,387) (1,433,178) (1,047,863) (1,297,653) (1,331,656) (1,363,277) (1,210,000) (1,240,000)
Other (82,574) (25,681) (1,042) (72,270) (44,025) (1,200) (1,200)
Capital Outlay (2,362,644) (1,383,419) (645,778) (1,146,702) (5,215,219) (4,632,762) (380,729) (137,590)
Tax Increment Fund Surplus /(Deficit) 2,975,103 (484,024) (378,466) (251,717) (4,514,648) (4,476,610) 5,477,968 504,618 210,269 110,837 352,854 995,742 171.781
Earle HerItage Center Operations_
Operating Revenues 347,866 586,986 795,157 1,812,093 2,248,111 2,385,465
Operating Expenses (777,548) (946,110) (1,129,884) (1,896,903
(2,372,953) (2,516,593)
Operating Surplus /(Deficit) - (429,682) (359,124) (334,727) (84,810) (124,842
(131,128)
Net Surplus /(Deficit) 2,975,103 (484,024) (378,466) (251,717) (4,514,648) (4,906,292) 5,118,844 169,891 125,459 (14,005) 221,726
Operating Loan from Other Clty_Funds:
Beginning Balance - 305,479 389,205
Proceeds from Current Year Borrowing 305,479 83,726 206,550
Ending Balance $ - $ - $ - $ - $ $ - $ $ - $ 305,479 $ 389,205 $ 595,755
Other includes bond issuance costs, attorney fees for the Earle Brown Commons bankruptcy, and
Hennepin County Administralice Charges to the tax increment district.
0
EARLE BROWN TAX INCREMENT DISTRICT FUND
HISTORY OF TIF DISTRICT
CONSTRUCTION PERIOD
Actual Actual Actual Actual Actual Actual
1985 1986 1987 1988 1989 1990
Beginning Fund Balance $0 $2,975,103 $2,491,079 $2,112,613 $1,860,896 ($2,653,752)
Tax Increments $182,962 $376,890 $927,802 $925,071 $976,539
E.B. Commons Bankruptcy Settlement
Sale of Bonds $5,167,364
Land Sale 529,600
Community Development Block Grant 680,000 100,000 200,000 20,000
Interest Income 260,315 217,312 198,893 179,025
Other 9,480 6,383
Total Revenues $5,847,364 $1,082,357 $594,202 $1,326,695 $1,130,479 $976,539
Debt Service Transfer - Bonds of 85 $509,617 $182,962 $326,890 $431,710 $420,000 $430,000
Debt Service Transfer - Bonds of 91
Debt Service Transfer - Bonds of 92
Internal Borrowing Interest 9,908 390,387
Transfer to M.S.A. Fund 593,069
Transfer to Special Assessment Fund 2,139
Services and other charges
E.B. Commons Bankruptcy
Infrastructure Capital Outlay 1,437,644 1,383,419 645,778 551,494 41,715
Earle Brown Heritage Center:
Operating Subsidy 429,700
Capital Outlay 925,000 5,173,504 4,632,762
Total Expenditures $2,872,261 $1,566,381 $972,668 $1,578,412 $5,645,127 $5,882,849
Ending Fund Balance $2,975,103 $2,491,079 $2,112,613 $1,860,896 ($2,653,752) ($7,560,062
TWHISTS
9/4/96
EARLE BROWN TAX INCREMENT DISTRICT FUND
HISTORY OF TIF DISTRICT
POST- CONSTRUCTION PERIOD
Actual Actual Actual Actual Actual Estimated Proposed
1991 1992 1993 1994 1995 1996 1997
Beginning Fund Balance ($7,560,062) ($2,441,219) ($2,271,328) ($2,145,869) ($2,159,874) ($1,807,020) ($811,278)
Tax Increments $1,377,594 $1,379,425 $1,508,964 $1,234,763 $1,660,156 $2,206,942 $1,412,981
E.B. Commons Bankruptcy Settlement 280,000 95,000
Sale of Bonds $5,996,855
Land Sale 336,327
Community Development Block Grant
Interest Income
Other 5,000
Total Revenues $7,374,449 $1,715,752 $1,508,964 $1,514,763 $1,760,156 $2,206,942 $1,412,981
Debt Service Transfer - Bonds of 85 $475,000 $308,102 $560,000 $600,000 $640,000
Debt Service Transfer - Bonds of 91 728,732 620,000 640,000 650,000 645,000 620,000 600,000
Debt Service Transfer - Bonds of 92 250 560,000 640,000
Internal Borrowing Interest 229,446 119,511 97,653 81,656 78,277 30,000
Transfer to M.S.A. Fund
Transfer to Special Assessment Fund
Services and other charges 82,574 25,681 1,042 2,293 1,200 1,200
E.B. Commons Bankruptcy 72,270 41,732
Infrastructure Capital Outlay
Earle Brown Heritage Center:
Operating Subsidy 359,125 334,727 84,810 124,842
Capital Outlay 380,729 137,590
Total Expenditures $2,255,606 $1,545,861 $1,383,505 $1,528,768 $1,407,302 $1,211,200 $1,241,200
Ending Fund Balance ($2,441,219) ($2,271,328) ($2,145,869) ($2,159,874) ($1,807,020) ($811,278) ($639,497)
TIFHIS S 9/4/96
CITY OF BROOKLYN CENTER
EARLE BROWN HERITAGE CENTER
FINANCIAL STATEMENTS
FOR THE MONTHS AND PERIODS ENDED JULY 31, 1996 & 1995
Finance Department
Earle Brown Heritage Center
Statement of Revenues 8 Expenses
For the Months and Periods Ended July 31, 1996 8 1995
July July YTD YTD
1996 1995 1996 1995
Operating Revenues
Convention Center 50,887 32,745 427,789 361,892
Catering Operations 88,010 24,692 724,702 649,330
Inn on the Farm 20,910 4,561 148,171 149,631
Earles 2,785 9,150 32,297 28,417
Commercial Office Rentals 8,989 82,404 65,534 64,595
Total Revenues 171,581 153,552 1,398,493 1,253,865
Operating Expenses
Personal Services 69,331 62,608 431,785 440,799
Administrative Services 3,976 4,327 27,832 30,289
Supplies 7,454 6.425 47,052 46,257
Services & Other Charges 29,455 31,365 204,393 204,838
Utilities 13,604 4,626 73,950 70,790
Property Taxes 4,578 5.591 32,042 39,838
Interest Paid to the City 2,995 2.918 21,383 15,832
Capital Outlay 3,195 25,238 12,296 81,045
Catering Expenses 66,985 70,754 561,092 567,687
Total Expenses 201,573 213.952 1,411,825 1,497,375
Net Income (Loss) (29,992) (60,400) (13,332) (243,510)
Earle Brown Heritage Center
Convention Center
Statement of Revenues & Expenses
For the Months and Periods Ended July 31, 1996 & 1995
July July YTD YTD
1996 1995 1996 1995
Operating Revenues
Room Rentals 34,546 26,767 261,270 234,883
CMP Room Rentals 2,304 290 36.516 19,968
Total Room Rentals 36,850 27,057 297,786 254,851
Equipment Rentals 10,774 1,911 84,833 57,579
CMP Equipment Rentals 691 110 12.019 7,262
Total Equipment Rentals 11,465 2,021 96,852 64,841
Event Labor & Services 2,377 3,607 31,916 41,063
Other 195 60 1,235 1,137
Total Revenues 50,887 32,745 427,789 361,892
Operating Expenses
Personal Services
Salaries & Wages 37,639 33,115 240,454 246,356
Payroll Taxes 6,647 4,526 34,900 36,900
Employee Benefits 1,925 5,317 13,560 18.529
Total Personal Services
46.211 42.958 288.914 301,785
Supplies
General Operating Supplies 3,507 3,020 18,632 23,343
Repair & Maint. Supplies 1,157 1,185 14,080 9,510
Total Supplies 4,664 4,205 32.712 32.853
Services & Other Charges
Professional Services 632 0 1,850 3,012
Administrative Services 2,209 2,404 15,463 16,828
Telephone Services 1,344 4,803 10.304 14,380
Advertising /Printing 3,396 4,780 22,294 45,553
Repair & Maintenance 4,289 4,231 36,310 7,791
Equipment Rental 5,823 776 31,938 24,407
Contractual Services 1,932 1,290 11,146 8,801
Insurance 981 847 6,872 5,927
Other 1,047 1,089 10.313 12,342
Total Services /Charges 21,653 20,220 146.490 139.041
Utilities 10,796 3.530 57.935 56,5069
Interest Expense 1.498 1.459 10.692 7,916
Capital Outlay 3.195 24.191 12,296 69,612
Total Expenses 88,017 96.563 549.039 607,776
Net Income (Loss) (37,130) (63.818) (121,250) (245,884)
Earle Brown Heritage Center
Catering Operations
Statement of Revenues & Expenses
For the Months and Periods Ended July 31, 1996 & 1995
(June 17 - July 14)
July July YTD YTD
1996 1995 1996 1995
Revenues
Food 70,843 68,256 621,751 561,196
Wne 4,999 4,753 28,727 22,186
Liquor 5,720 3,736 31,507 23,576
Beer 4,102 2,486 19,948 19,405
Miscellaneous 2,346 995 22,769 9,192
Service Charges 0 2,178 0 13.775
Total Revenues 88.010 82,404 724,702 649,330
Cost of Sales 18,352 16,542 172,962 154,022
Gross Profit 69,658 65.862 551,740 495,308
Expenses
Payroll 22,138 26,665 171,785 196,250
i Employee Benefits 4,491 7,440 34,245 48,502
! Supplies, Laundry & Rentals 3,921 7,052 39,347 45,112
Marketing 1,917 626 3,270 7,202
General & Administrative 259 1,510 6,998 10,987
Utilities 179 1,104 4,195 7,578
Amortization 596 596 4,173 4,173
Equipment Leases 251 150 1,266 1,044
Insurance 833 822 7,094 7,265
Accountina Fees 884 785 7,254 6,252
Interest Expense 9 113 253 806
EBHC Catering Expenses 8,155 2,349 42,779 16,141
Capital Outlay 0 0 0 0
Total Expenses 43.633 49.212 322,659 351.312
Income before Management Fee 26.025 16.650 229,081 143.996
Base Management Fee 5,000 5,000 35,000 35,000
Incentive Fee 0 0 30,471 27,353
Total Management Fees 5.000 5,000 65,471 62,353
Net Income (Loss) 21,025 11,650 163,610 81,643
Earle Brown Heritage Center
Inn on the Farm
Statement of Revenues & Expenses
For the Months and Periods Ended July 31, 1196 & 1995
July July YTD YTD
1996 1995 1996 1995
Operating Revenues
Room Rentals 19.362 21,172 118,316 124,017
Facility Rentals 690 1,340 11,349 9,280
Equipment Rentals 258 221 2,844 2,389
Meal Sales 440 1,617 12,931 11,439
Meal Service Charge 64 271 1,943 1,872
Other 96 71 788 634
Total Revenues 20,910 24,692 148,171 149,631
Operating Expenses
Personal Services
Salaries & Wages 15,235 14,492 94,197 94,981
Payroll Taxes 2,644 1,825 13,354 13,332
Employee Benefits 409 404 2,818 2,468
Total Personal Services 18,288 16.721 110,369 110,781
Supplies
General Operating Supplies 2,103 679 7,512 6,257
Repair & Maint. Supplies 108 210 1.296 2,085
Total Supplies 2.211 889 8,808 8,342
Services & Other Charges
Administrative Services 1,104 1,202 7,728 8,414
Food & Beverages 1,240 1,577 11,633 9.238
Food & Beverages - Catering 0 1,896 7,945 10,196
Telephone Services 690 409 4,026 3,479
Advertising 275 383 6,107 12,429
Repair & Maintenance 920 749 4,213 2,861
Contractual Services 666 489 3,364 3,190
Property Taxes 2,060 2,504 14,419 17,529
Insurance 393 354 2,710 2,478
Other 3,165 3.957 9.174 9,483
Total Services /Charges 10,513 13.520 71,319 79,297
Utilities 2,119 936 11.589 9.971
Interest Exoense 1,497 1,459 10.691 7.916
Capital Outlay 0 1.047 0 8.323
Total Expenses 34,628 34,572 212.776 224,630
Net Income (Loss) (13,718) (9,880) (64,605) (74,999)
Earle Brown Heritage Center
Earles
Statement of Revenues & Expenses
For the Months and Periods Ended July 31, 1996 & 1995
July July YTD YTD
1996 1995 1996 1995
Operating Revenues
Food Sales 2,290 3,694 24,874 22,552
Liquor Sales 495 867 7,423 5,865
Other 0 0 0 0
Total Revenues 2,785 4,561 32.297 28.417
Operating Expenses
Personal Services
Salaries & Wages 1,319 871 8,030 6,813
Payroll Taxes 235 122 1,130 981
Employee Benefits 96 99 689 612
D'Amico's Wages /Benefits 1,272 0 11,782 8,018
Total Personal Services 2.922 1,092 21,631 16,424
Supplies
General Operating Supplies 165 113 1,760 231
Repair & Maint. Supplies 0 0 0 0
Total Supplies 165 113 1,760 231
Services & Other Charges
Property Taxes 0 0 0 0
Administrative Services 221 240 1,547 1,680
Professional Services 236 1,187 4,047 5,285
Repair & Maintenance 0 0 0 0
Contractual Services 170 80 671 508
Food /Liquor COS 945 0 10,249 5,730
Insurance 65 0 456 0
Other 0 0 0 0
Total Services /Charges 1.637 1,507 16,970 13.203
Utilities 0 0 0 0
Capital Outlay 0 0 0 0
Total Expenses 4,724 2,712 40.361 29.858
Net Income (Doss) (1,939) 1,849 (8,064) (1,441)
Earle Brown Heritage Center
Commercial Office Rentals
Statement of Revenues & Expenses
is For the Months and Periods Ended July 31, 1996 & 1995
July July YTD YTD
1996 1995 1996 1995
Operating Revenues
Office Rent 8,959 8,735 62,712 60,984
Cleaning Services 30 415 2,822 2,874
Other 0 0 0 737
Total Revenues 8,989 9,150 65,534 64,595
Operating Expenses
Personal Services
Salaries & Wages 1,531 1,497 8,754 9,483
Payroll Taxes 284 249 1,461 1,686
Employee Benefits 95 91 656 640
Total Personal Services 1,910 1,837 10.871 11,809
Supplies
General Operating Supplies 256 849 2,467 2,714
Repair & Maint. Supplies 158 369 1,305 2,117
Total Supplies 414 1,218 3,772 4,831
Services & Other Charges
Property Taxes 2,518 3,187 17,623 22,309
Professional Services 20 48 80 222
Administrative Services 442 481 3,094 3,367
Repair & Maintenance 322 1,598 2,590 11,387
Contractual Services 616 689 3,830 4,148
Insurance 190 133 1,331 935
Other 98 0 940 1,056
Total Services /Charges 4,206 6,136 29,488 43,424
Utilities 689 160 4,426 4,250
Capital Outlay 0 0 0 3,110
Total Expenses 7.219 9,351 48,557 67,424
Net Income (Loss) 1,770 (201) 16,977 (2.829)
August 22, 1996
EBHC WEEKLY SALES RECAP
WEEK:33
YEAR TO DATE BOOKINGS (1995 -2000) Facility/Catering $ 1,082,443.00
BUDGET FOR THIS WEEK TO ACHIEVE GOAL: $ 1,198,324.00
DIFFERENCE: $ - 115,881.00
YEAR TO DATE OVERVIEW (1996): Facility/Catering $ 1,770,161.00
BUDGET FOR YEAR: $ 1,888,176.00
DIFFERENCE: $ 118,015.00
PERCENTAGE OF BUDGET ACHIEVED: 93.73%
NEED TO SELL WEEKLY TO ACHIEVE BUDGET $ 5,975.00
EBHC WEEKLY SALES
ACCUMULATED
THOUSANDS
600
500
400
300
200
100 -
OT - -
1 5 9 13 17 21 25 29 33 37 41 45 49
WEEK
� 7994 1995 1996
94:308725 95:345892 96:416019
Sheetl
s
EARLE BROWN HERITAGE CENTER
SALES BY SALES MANAGER
1996
WEEK: 33
NAME FACILITY F &B TOTAL
JUDITH 2400 29750 8000 38300 68050
MARK 900 131383 0 163654 295037
MARY JO 0 81753 0 191567 273320
CRAIG 800 88715 4590 131861 220576
ALAN 4800 84418 11000 179342 263760
WK TOTAL ,, .7'::8900 23590 b,.<, '.,,.; 32490
YTD T0TAI,N,,MW Wp416019.PSOPP4 24 <: Q82443
Page 1
EARLE BROWN HERITAGE CENTER
YEARLY BOOKINGS 1990 -1996
FACILITY /CATERING COMBINED
1990 1991 1992 1 1993 1994 1995 1996 1996 +/-GOAL +! -% GOAL
GOAL
1 5672 11096 3475 12200 20355 13305 22650 36308 -13658 62%
2 9877 11096 9900 27450 32730 20455 53395 72616 - 19221 74%
3 10986 11496 20625 30650 41955 27010 98530 108924 -10394 90%
4 13265 15401 31225 41300 55255 42410 118223 145232 -27009 81%
5 15552 17226 39075 82300 61305 54385 140220 181540 -41320 77%
6 19956 30576 47775 94450 67955 58785 183412 217848 -34436 84%
7 22672 30576 51225 95950 76205 71280 215427 254156 -38729 85%
8 28955 34751 59100 114250 84110 97405 235228 290464 -55236 81%
9 32333 39394 64125 121750 117185 114290 282134 326772 -44638 86%
10 38954 44144 69000 125250 12635 132290 338043 363080 -25037 93%
11 42222 51169 74450 124900 139895 138365 382592 399388 16796 96%
12 4346 55619 80175 128770 145045 147840 401140 435776 -34636 92 %
13 47256 55619 92675 131020 147545 156665 430187 472164 -41977 91%
14 58985 67219 92675 141520 152970 158345 446319 508472 -62153 88
15
61672 720 105500 151258 158120 153295 467910 544780 -76870 86%
16 65888 76174 115500 167633 163495 173838.6 488065 581088 -93023 84%
17 66672 80224 123625 175833 166995 183788.6 511403 617396 - 105993 83%
18 66672 84174 141775 179583 175645 186238.6 560088 653704 -93616 86%
19 66672 85824 152525 178883 181985 190288.6 623042 690012 -66970 90%
20 77572 94274 160025 181783 203060 209762 656483 726320 -69837 90%
21 77572 104674 160025 191033 206880 223762 686911 762628 -75717 90%
22 89422 108374 165525 200333 218365 231332 752504 798936 -46432 94%
23 89422 114724 168525 219463 223310 241157 781071 835244 ' -54173 94%
24 98679 117824 193125 222763 230140 252762 818516 871552 -53036 94%
25 98679 121549 193125 224013 235340 267502 877381 1 907860 -30479 97%
26 104275 123449 194575 233363 254115 284612 900131 1 944168 -44037 95%
27 109425 125274 214850 235513 262715 290360 914666 980476 -65810 93%
28 109425 134324 223450 240963 267765 300085 925466 1016784 - 91318 91%
29 110978 148169 235075 259563 279420 303422 963714 1053092 -89378 92%
30 113218 153319 235075 268663 282720 315967 977829 1089400 - 11.1571 90%
31 119788 158469 240475 279713 290360 326792 1,043,724 1125708 -81984 93%
32 119788 168669 253700 285913 295151 344422 1,057,953 1162016 1 - 104063 91%
33 127313 173694 285275 296743 308725 345892 1,082,443 1198324 1 - 115881 90%
34 134538 173694 286975 302813 319125 357317 1234632 - 1234632 0%
35 140263 175095 292300 319343 338025 361887 1270940 - 1270940 0%
36 162268 194594 295150 321943 345325 368217 1307248 - 1307248 0%
37 162268 215894 298200 354893 1 353450 382467 1343556 - 1343556 0%
38 171740 221094 302000 337943 1 367675 398492 1379864 - 1379864 0%
39 174365 225644 306050 339213 374750 405437 14167172 - 1.4E +07 0%
40 176714 230244 317700 339813 387025 411687 1452480 - 1452480 0%
41 177965 233394 319000 350663 395530 429427 1488.788 - 1488788 0%
42 179214 235444 341050 360613 408055 433089.5 1525096 - 1525096 0%
43 181589 239494 350250 380063 435655 438294.5 1561404 - 1561404 0%
44 184189 241484 350250 384188 439080 448789.5 15987712 1.6E +07 0 %
45 185861 241984 357400 392213 438905 459369.5 1634020 - 1634020 0%
46 196311 250734 380650 395338 446180 472869.5 1670328 1670328 0%
47 197222 250734 380650 404163 454310 474544.5 1706636 - 1706636 0%
48 199654 263384 390000 417063 471515 488900.5 1742944 - 1742944 0%
49 200200 276534 396650 420788 475410 495763 1779252 - 1779252 0%
50 201185 280684 411625 446038 486295 508398 1815560 - 1815560 0%
51 202986 286384 426175 451538 494670 522098 1851868 - 1851868 0%
TOTAL 52 203085 283381 426175 458923 497695 536823 1888176 1888176 0%
EARLE BROWN HERITAGE CENTER
YEARLY BOOKINGS 1990 -1996
FACILITY ONLY
1990 1991 1992 1 1993 1994 1995 1996 1996 +l- GOAL +1 - -% GOAL
GOAL
1 5672 11096 3475 12200 20355 13305 3570 10692 -7122 33%
2 9877 11096 9900 27450 32730 20455 16020 21384 -5364 75%
3 10986 11496 20625 30650 41955 27010 36305 32076 4229 113%
4 13265 15401 31225 41300 55255 42410 49678 42768 6910 116%
5 15552 17226 39075 82300 61305 54385 57638 53460 4178 108%
6 19956 30576 47775 94450 67955 58785 75848 64152 11696 118%
7 22672 30576 51225 95950 76205 71280 85345 74844 10501 114%
8 28955 34751 59100 114250 84110 97405 90095 85536 4559 105%
9 32333 39394 64125 121750 117185 114290 104030 96228 7802 108%
10 38954 44144 69000 125250 126350 132290 128680 106920 21760 120%
11 42222 51169 74450 124900 139895 138365 144449 128304 16145 113
12 43468 55619 80175 128770 145045 147840 149943 138996 10947 108%
13 47256 55619 92675 131020 147545 156665 157591 149688 7903 105%
14 58985 67219 92675 141520 152970 158345 164650 160380 4270 103%
15 61672 72624 105500 151258 158120 153295 175531 171072 4459 103%
16 65888 76174 115500 167633 163495 173838.6 182350 181764 586 100%
17 66672 80224 123625 175833 166995 183788.6 191388 192456 -1068 99%
18 66672 84174 141775 179583 175645 186238.6 205949 1 203148 2801 101
19 66672 85824 152525 178883 181985 190288.6 241856 1 213840 28016 113%
20 77572 94274 160025 181783 203060 209762 252597 224532 28065 112%
21 77572 104674 160025 191033 206880 223762 268197 235224 32973 114%
22 89422 108374 165525 200333 218365 231332 281952 245916 36036 115%
23 89422 114724 168525 219463 223310 241157 287177 256608 30569 112%
24 98679 117824 193125 222763 230140 252762 297322 267300 30022 111%
25 98679 121549 193125 224013 235340 267502 314447 277992 36455 113%
26 104275 123449 194575 233363 254115 284612 323362 288684 34678 112%
• 27 109425 125274 214850 235513 1 262715 290360 329387 299376 30011 110%
28 109425 134324 223450 240963 267765 300085 335837 310068 25769 108%
29 110978 148169 235075 259563 279420 303422 348662 320760 27902 109%
30 113218 153319 235075 268663 282720 315967 359703 331452 28251 109%
31 119788 158469 240475 279713 290300 326792 395263 342144 53119 116%
32 119788 168669 253700 285913 295151 344422 407119 352836 54283 115 %
33 127313 173694 285275 296743 308725 345892 416019 363528 52491 114%
34 134538 173694 286975 302813 319125 357317 374220 - 374220 0%
35 140263 175095 292300 319343 338025 361887 384912 384912 0%
36 162268 194594 295150 321943 345325 368217 395604 - 395604 0%
37 162268 215894 298200 354893 1 353450 382467 406296 - 406296 0%
38 171740 221094 302000 337943 367675 398492 416988 - 416988 0%
39 174365 225644 306050 339213 374750 405437 427680 427680 0%
40 176714 230244 317700 339813 387025 411687 438372 - 438372 0%
41 177965 233394 319000 350663 395530 429427 449064 - 449064 0%
42 179214 235444 341050 360613 408055 433089.5 459756 - 459756 0%
43 181589 239494 350250 380063 435655 438294.5 470448 - 470448 0%
44 184189 241484 350250 384188 439080 448789.5 481140 - 481140 0%
45 185861 241984 357400 392213 '438905 459369.5 491832 - 491832 0%
46 196311 250734 380650 395338 446180 472869.5 502524 - 502524 0%
47 197222 250734 380650 404163 454310 474544.5 513216 - 513216 0%
48 199654 263384 390000 417063 471515 488900.5 523908 - 523908 0%
49 200200 276534 396650 420788 '475410 495763 534600 - 534600 0%
50 201185 280684 411625 446036 486295 508398 545292 - 545292 0%
51 202986 286384 426175 451538 494670 522098 555984 - 555984 0%
TOTAL 52 203085 283381 426175 458923 497695 536823 556000 - 556000 0%
INN ON THE FARM OCCUPANCY RATE PERCENTAGES
August 23, 1996
MONTH 1990 1991 1992 1993 1994 1995 1996
JANUARY 16 40 43 44.8 53.8 46.7
FEBRUARY 30 46 58 58 55.5 54.0
MARCH 40 54 48 64 67.4 70.0
APRIL 20 46 42 46 67 68.0 60.0
MAY 11 38 58 56 59.3 74.1 70.9
JUNE 25 52 54 60 78 86.0 71.6
JULY 18 41 43 60 79.6 77.0 72.5
AUGUST 35 51 64 65.1 80 80.6
SEPTEMBER 33 51 55 65 73.6 73.3
OCTOBER 37 70 64 71.5 83.2 76.5
-NOVEMBER 47 41 49 54.5 63.3 80.0
DECEMBER 22 37 52 47.5 63.7 55.5
AVERAGES 27.56% 42.75% 51.75% 56.22% 67.88% 70.64 %
IFAUSERSMPFILESUNWOCCU RATE. RPT)
TA E
A-
C
AN HISTORIC RESTORATION
INN•EXHIBIT HALL-CONVENTION CENTER
MEMORANDUM
TO: Michael McCauley
FROM:Tudith Bergeland
RE: Earle Brown Heritage Center Options
DATE: October 3, 1996
Many options have been discussed in the past few months regarding profitability at the Heritage
Center, how we reach it, what the components should be to accomplish these tasks, and how we
revamp existing utilizations to accomplish this mission. As requested, following is a recap of
the possibilities being considered:
CONVENTION CENTER:
- Convert more commercial office space to rentable meeting rooms (D Barn, H
Barn).
• - Rearrange current administrative offices for the Center in order to utilize existing
offices as rentable meeting rooms (move to D Barn or Inn).
- Renegotiate the current catering contract with D'Amico to lower or eliminate
accounting costs, consider the possibility of unit pricing as opposed to current system.
- Build the G Barn into additional meeting room availability.
- Purchase additional land for parking to support current and future meeting needs.
In 1990 the original layout of the facility included two rooms, Carriage Hall and
Captain's /Estate. Since that time, as need arose and space became available within the
Commercial Office buildings, rooms have been converted to additional meeting space (Tack,
Blacksmith, the Loft, Suite 130 in the H Barn, and most recently the removal of the wall in
Morgan/Belgian). The addition of rental space and higher occupancy has created a positive cash
flow. To date 1996 no money have been borrowed to fund the operation.
Two commercial office leases expire in 1997. Bell Mortgage at the end of June, and the
North Metro CVB at the end of August. Blumentals lease expires at the 'end of February 1998
and the Chamber's at the end of 1998. These buildings could be converted in to additional
meeting space which has historically shown a greater profit base.
Example: The old EDA office space (Suite 130) in the H Barn was converted this year
to meeting space for Corporate Learning Center. The rental agreement was written for a year
at $1,250 per month (total of $15,000). Previous income: 0.
Corporate Learning Center has many training meetings which require larger rooms.
They rent both Blacksmith and Tack on a regular basis in addition to Suite 130. They have also
indicated a desire to acquire other training rooms /buildings as we can make them
6155 Earle Brown Drive, Brooklyn Center, MN 55430
(612) 569 -6300 FAX: (612) 569 -6320
McCauley /October 3, 1996 - Page 2
available. We believe there are other corporate users of the facility who may have interest in
"purchasing" meeting space on a corporate use contract (such as Medtronic, US West, etc.)
Caution: We have established a nitch in the small meetings market because of the
interesting restoration of historic buildings (alternative meeting space) coupled with the
exceptional service clients receive. The Minneapolis Convention Center is pushing hard for
additional exhibit and meeting space. Their small meeting spaces would be directly competitive
with us for clients. Are we tannin g g the risk of "over building"? Historically we have proven
that the only way to get to the profitability mode is to make more rental space available. The
client base seems to be there to support expansion.
CATERING:
- Continue with the D'Amico Management contract as it currently exists
- Renegotiate the current catering contract as accounting services are moved to
EBHC to save the accounting fees (approximately $12,000 annually)
- Change to a unit pricing concept (base plate charge /grouped by party size)
- Hire staff (chef, banquet, bar, wash, etc.), manage catering in -house as opposed
to an outside management contract
The change three years ago to owning the catering operation and hiring out the
management of that operation has been a very profitable move for the center. While the fee for
management runs approximately $120,000 yearly, the profit margin for the center has increased
to approximately $220,000.
There is duplication between catering and facility that we are currently working to
eliminate, or at least greatly reduce. One of those areas is accounting in that D'Amico charges
a monthly fee for handling payrolls, payables and receivables while the City charges the facility
for many of the same functions. We need to consolidate these costs but this will require a
change in the contractual arrangement with D'Amico.
Consideration is being given to the concept of unit pricing. Discussions have occurred
with our DCI (D'Amico) partners and we are currently looking at just how this would work and
what the ramifications would be for both parties. I spoke extensively with Chris Bigelow of the
Bigelow Companies, a sports, entertainment and convention food service consultant (also an
instructor at the facility management school I attended in 1995 and 1996). Following are his
comments:
Unit pricing in the catering industry is not a "standard practice" issue because the
incentive to maintain quality disappears and client contact ceases to exist. The catering company
in essence becomes a wholesale supplier. The unit pricing concept is a common institutional
vehicle at colleges, universities, prisons, etc. where quality and versatility of menu are not of
major importance. Unit pricing is a big advantage to the food company because they have a
base dollar per person without the accountability for product strength.
•
McCauley /October 3, 1996 - Page 3
Hiring our own staff and removing the management agreement would create several
problems. The referral relationship we have with DCI would not long exist in any formal
manner and would impact bottom line. A Food and Beverage Director to oversee the operation
would be needed (at a cost of up to $60,000 including benefits). Current catering staff may not
stay with the facility (losing valuable client relationships). The pool of talented chefs and wait
staff currently available to draw upon for larger events would no longer be available. Staffing
dollars would be most costly under City pay scales.
Discussions with Mr. Bigelow and other professionals within the facility management
industry have indicated that the current management fee paid on gross sales is completely
acceptable. Generally catering companies want to realize a minimum of $150,000 from a
catering management contract with $200,000 for services being more reasonable. The profit
margin this facility currently realizes is in line with or a little better than that which most
companies are doing. Chris' comment was that he "doesn't know of any company doing any
better ". (There was strong feeling, however, that the development of the Metropolitan as a
meetings and event site was a direction competition with this facility because the incentive to
refer no longer existed - an issue I raised with DCI when they first notified us of this purchase.)
COMMERCIAL OFFICE:
Bell Mortgage lease n the D B 1
o am expires June 30, 99 7
- North Metro Minneapolis CVB lease in the H Barn expires August 31, 1997
- Blumenental Architecture lease in the H Barn expires February 28, 1998
- Brooklyn Community Chamber lease in the H Barn expires December 31, 1998
- Historically we have converted commercial space to meeting space at a greater
profit every time, tenants have moved out of the buildings.
- Corporate Learning Center (owned by Larson, Allen, Weishair) leases Suite 130
in the H Barn (former EDA office), rents additional meeting rooms, and is actively seeking
more rental space at this facility.
Decisions need to be made regarding the advisability of turning office space into meeting
space. One component of that decision should include the possibility of moving the Center's
administrative office and opening that space into additional meeting facilities. Consideration
needs to be given client accessibility to the front office. One way to meet that need would
be to create a "sub- office" where the concession stand now exists. Concessions do not make
money at this facility due to the lack of volume traffic. That space may well be better utilized
as office support (copies, directions, message center, etc.)
Moving the administrative offices to the D Barn does create a barrier for the client since
it is so far removed from the meeting space. Staff will do a lot of additional running to keep
tabs on their events and it will be difficult for clients (both prospective and repeat) to find our
offices if moved to the D Barn.
McCauley /October 3, 1996 - Page 4
An alternative worth considering would be to move the administrative offices, and
perhaps the Chamber and Bureau offices as well, to the Inn. We are looking at this financial
feasibility.
INN ON THE FARM BED AND BREAKFAST and EARLE'S:
- Leave the concept as originally designed, remove administrative salary dollars from
its budget, and accept the financial loss as a cost of doing business
- Lease the facility to an outside B &B operator
- Contract out the reservations, housekeeping, etc. to an area hotel
- Contract out rooms to corporate clients and reduce the level of service provided
- Revamp the rooms into an executive office complex with hired secretarial staff
- Revamp the rooms into small meeting space
- Revamp the rooms into office space for the Center's administration /sales, Chamber
and North Metro office (creates additional meeting space for the Convention Center)
- Close the Inn and Earle's altogether
In an effort to determine the impact of the Inn on the Convention Center, and vise versa,
a concerted effort was made to determine the percentage of Inn bookings related to facility
events. For the months August through December 1996, that figure is 59% as of today with the
expectation that the percentages will go up as further bookings come in for those months.
Adding July and August to the equation creates a 54% upwardly moving figure.
The decision regarding how to proceed with the Inn is extremely complicated. In an
effort to explore all avenues, I asked Mr. Jim Klaus of Marquette Advisors (company who did
the management audit in 1993) to "discuss the facility progress three years later". A copy of
his letter, which summarizes that discussion, is attached.
Items discussed which are not outlined in his letter include:
Do a comparative analysis of other Inns our size, then raise room rates
accordingly while maintaining the corporate rate at its current level (or slight
increase)
- Create themed weekend packages; i.e. Chamber Orchestra, cooking schools,
mystery theatre, etc. (A concept we have discussed internally.)
- Become a "boutique" Inn (like the Archer house) where furnishings, throws,
quilts, decorations, etc. are all for sale.
- Sell more items from the desk or create a gift shop area and include quilts,
Christmas ornaments, T shirts, etc.
- Liquor sales by the bottle to Inn guests
- Consolidate duties (i.e. night desk clerk also responsible for laundry)
- Close the Inn for two or three weeks in January for "vacation" (or during least
busy time to save staff dollars)
While these options would be a source of some additional revenue, certainly it will not
bring the Inn to a profit point alone.
i
McCauley /October 3, 1996 - Page 5
In an earlier memo last fall, I listed those costs allocated to the Inn which would not "go
away" if the Inn were closed. Included were Heritage Center staff salaries, City administrative
salaries charged to the Inn, property taxes, insurance, interest, utilities (some portion of current),
maintenance contracts, repair, etc. That figure runs between $90,000 and $100,000 yearly -
approximately the amount the Inn is deficit yearly.
Under a lease agreement with an outside provider, these costs would have to be
reallocated in some manner. No lease holder would financially agree ree to absorb these costs. In
that case, does it not make more sense to retain the Inn in it's current form and continue to
develop the facility /overnight accommodation level which currently exists.
A lease arrangement would detach the Inn from the Convention Center. A private
operator would need to live on site which would require removing one or two overnight rooms
from inventory and decrease income levels. The historical room would probably have to be
relocated. Unless the lease holder agreed, the small business meeting space would no longer
be available. A liquor license and insurance issue would need to be addressed for Earle's. I
have, however, begun exploring a lease arrangement with a private operator and will continue
this avenue until solid answers are available.
Under a contract arrangement for services and reservations, another entity (possibly a
hotel) would provide front desk, reservation and housekeeping service for a per room per night
fee. The Inn would continue to receive a room rate over and above the service fee which would
go to provide maintenance and utility cost coverage. You were a part of the meeting recently
held to begin exploration of this option. I will continue to work that
g p p i angle until we have some
financial numbers to look through.
Another possibility s contracting the rooms b selling them in blocks of space to
Y g Y g P
corporations (i.e. MECC, US West, Medtronic). If this concept frees us from overnight
coverage by virtue of the company providing dial up overnight security, the Inn salary level
would go down between $20,000 and $30,000 yearly. Drawbacks include difficulty of
maintaining part-time housekeeping staff should occupancy become sporadic. This concept also
assumes that the corporate world would be willing to pay higher dollars for a unique overnight
room which provides no more service than the limited service hotel properties.
Revamping the Inn into all small meeting space does not generate enough revenue
through room rental or food and beverage income to make this a viable alternative. (See the
Marquette Advisor's letter.) I have done some preliminary investigating regarding the executive
office environment. The unique atmosphere would attract some individuals but the lease costs
and the second floor accessibility issue seems to preclude this direction.
McCauley /October 3, 1996 Page 6
Moving the current administrative offices and those of the H Barn tenants into the Inn
is a very new concept which hasn't been sufficiently explored yet to show its financial viability.
We are working on it and should have some preliminary numbers in the next few days.
On additional option not addressed so far: Pursue a management arrangement for the
entire complex through the private sector. A copy is enclosed of a lease agreement between
Brown County, Wisconsin, and the Green Bay Convention and Visitor's Bureau regarding the
arena in Green Bay. The CVB then hired out the management to a private entity (PMI). I have
talked with David Rosenwasser, PMI, regarding the arrangement. The North Metro CVB had
at one time expressed interest in this concept for EBHC. Both the President of the Board of
Directors for the Bureau and its Executive Director have copies of the same contract. In follow
up conversations however, I don't find an ongoing interest level in such an arrangement at this
point.
This is a length discourse. I've tried to bullet all the options available for consideration
and then give you an overview of each piece and its impact. Of course we need to discuss all
this further, at your convenience. Please let me know if there is additional information needed
or areas explored which are not addressed here.
JB
cc: Brad Hoffman
7,
*HE VALDATI(1N Caoup MINNEAPOLIS
THE Hosi , iTmATY GaouP Sx:xrru -"
THE CORPORATE AND INVESTI1ENT GaouP
THE AvixrION GaouP
September 24, 1996
Ms. Judith Berglund
Earle Brown Center
6155 Earle Brown Drive
Brooklyn Center, MN 55430
Dear Ms. Berglund:
This letter summarizes our conversation from the consultation which we conducted
regarding the Inn on the Farm. In our 1993 study, we commented that the Inn was too
small, and lacked adequate food and beverage facilities to function as a true boutique inn.
We also indicated that there was room for some revenue growth in the form of additional
weekday corporate demand. However, we stated that the Inn was incapable of supporting
its cost structure as a city- operated facility, even at 100 percent occupancy.
In the intervening period, corporate rate programs have indeed improved occupancy at the
Inn. A restaurant has been added for weekends to enhance tourist appeal. As a result,
operating performance has improved. Nevertheless, the Inn continues to lose money, as
does the new restaurant. The basic cost structure of the Inn has not changed.
During our consultation we discussed ways to further reduce or eliminate the operating
deficit at the Inn. The corporate rate structure appears to be functioning well. However,
it appears that rack rates, particularly for weekend business, may be lower than necessary,
given the quality of the rooms and the addition of the restaurant. We recommend
surveying other boutique inns in the region to determine the going rate for such business
and the facilities and amenities offered.
We also recommended that efforts be enhanced to track group business booked at the
Convention Center as a direct result of guests first attracted to the Inn. While this would
not change the financial performance of either facility component, it would be useful in
evaluating the true benefits of the Inn.
410 YOUNG QUI \LAX BUILDING
81 SOUTH NINTH S "rREET
MINNEAPOLIS, NIIXNEsoTA 55402
PHONE: (6192) 335 -8888 FA.r: (612) 334 -3022
Ms. Judith Berglund
September 24, 1996
Page 2
While an increase in rack rates would improve performance to a limited degree, it would
not be sufficient to eliminate the operating deficit. We continue to believe that the only
option under which the operating deficit would be eliminated with the operation of the
facility as an inn maintained, would be a sale or lease of the facility, assuming that an
interested party could be found. Of course, such an arrangement would alter the level of
control which Earle Brown Center management would have over the operations and
availability of the Inn.
We also discussed other options for use of the Inn. The design of the space is impractical
for total dedication to meetings business only. Similarly, conversion into leased office
space may be impractical. One option, which we suggested be explored if closure of the
Inn is pursued would be to relocate the administrative offices of the Earle Brown Center
into the Inn space. This would require less extensive alterations at the Inn and would
open considerable additional meeting space within the main conference center.
I hoe that this summary is useful to y ou in continuing to evaluate options to improve
P az3' Y g rove P P
performance at the Inn. If you have any additional questions, please feel free to call.
Sincerely,
James M. Klas
Senior Vice President
Hospitality Group
INFORMATION GATHERED REGARDING FUNDING
OF
PUBLIC ASSEMBLY FACILITIES
ST. CLOUD CIVIC CENTER:
1 % food and beverage tax (approximately $700,000 yrly)
5% hotel /motel tax ($580,000 in 1994 - 40% to facility /60% to convention bureau)
User fees (same rates as 7 years ago)
The f &B tax and TIF financing take care of the brick and mortor (buildings)
The hotel tax is used to offset refurbishing like carpet, furnishings, etc.
The user fees cover day to day operations like utilities, salaries, etc.
Liquor is contracted out and generates at 31 % return of gross to facility.
Use approved list of caterers who pay 5% of gross to facility to cover linens, etc.
Facility uses part -time concessions manager to service coffee and concessions.
City also subsidies approximately $150,000 yearly to baseball stadium, ice arena, and
golf course.
MINNEAPOLIS CONVENTION CENTER:
1/2 % sales tax (goes to state and is paid back to facility)
2% lodging tax and properties with more than 50 rooms
3 % food and beverage tax
3 % entertainment tax
Generates approximately $34,000,000 yearly. Used to retire debt, build up capital outlay
fund, subsidize the facility operation, and other miscellaneous.
Facility originally projected to loose $2,000,000 yearly.
Shortfall has run $1,100,000 up to $2,000,000 from 1992 through 1995 and is projected
at $800,000 for 1996.
ST. PAUL CIVIC CENTER:
6% hotel /motel tax split two ways:
3 %: approximately $200,000 to $250,000 to Civic Center
approximately $50,000 as a rental subsidy to use for special promotions
3 %: 95 % to the Convention Bureau
5 % to the City for services rendered
Parking garage of 1,700 stalls which generates income from monthly and daily parkers
Expansion being subsidized by a 1/2% sales tax of between $8,000,00049,000,000
over the next 30 years. Split as follows:
40% to Civic Center
Facility Subsidy Information /Page 2
St. Paul Civic Center (continued)
50% to St. Paul neighborhoods
10 % to the city
Money made from revenues is kept by the facility for operations and capitol outlay.
WILLMAR CIVIC CENTER:
Function is primarily as a hockey arena 7.5 months a year.
Balance of time are "dry floor events" such as concerts, dinners, etc.
Majority of revenues generated from the dry floor events.
Ice time charges to users not high enough to cover costs of services.
$80.000- $140,000 yearly cost from tax revenues
A 2 % hotel /motel tax goes directly to the Chamber and Bureau, not facility.
DULUTH ENTERTAINMENT AND CONVENTION CENTER:
A 3% hotel /motel tax was instituted in Duluth in 1964.
Facility gets 65% of that tax (approximately $460,000) which is in turn designated
• for capital improvement projects - about 7% of the total budget of $6,000,000.
Base revenues come from catering, concessions, parking, and exhibit services. All
of which are in -house (owned by the facility) and charged to the clients. The facility
will make approximately $350,000 in 1995 (a deficit of $110,000 without the aid of the
hotel /motel tax).
MANKATO CIVIC CENTER:
Legislature passed law instituting a 1/2% sales tax on all purchases in the City of
Mankato. Cap on the maximum expenditure was $25 million. $21.5 million was spent
on the building and $3.5 million was placed in a reserve fund to cover ongoing capital
expenditures and any yearly deficit amounts. Facility opened in February 1995. Tax
applies until bonds are paid off - at least twenty years from now.
Daily operating expenses are funded by facility revenues generates primarily by concerts
as well as shows and banquets. A depreciation fund covers expenses for equipment re-
placements.
Facility Subsidy Information - Page 3
LACROSSE CIVIC CENTER:
Governed by a 1.0 member board appointed by Mayor for specific terms.
City collectes 5% room tax distributed by:
2% for administration
3% for bureau and center (bureau 59 %, center 39 %) ($300,000)
Capital improvements request listed by urgency for council determination
Catering: Keep list of acceptable who pay center 10% of gross which covers
kitchen, coolers, electrical, etc. Caterers bring in own dish ware.
GREEN BAY ARENA:
Arena 35 years old. Seats 7,000 with 30,000 sq.ft. exhibit space. County owned,
bureau managed through private management firm. Bureau indemnifies county against loss and
contracted private mgmt to assist in development of tourism in Green Bay and manage center.
Center losses deemed okay because of economic impact on hotels and shopping. Bureau in
charge of how space is rented. No funds from bed tax. Facility breaks even because it does
all its own trade and event /consumer shows.
•
•
i EARLE BROWN HERITAGE CENTER
6155 Earle Brown Drive
Brooklyn Center, MN 55430
MEMORANDUM
TO: t Michael McCauley and Brad Hoffman
FROM: udith Bergeland
RE: �apital Outlay for 1997 Budget
DATE: July 1, 1996
The capital outlay budget section for the convention center is very large. Included in the total
is replacement carpet for Carriage Hall, Tack Room, and the Lower Level Hallway. These
items we have discussed already. The additional projected costs cover ADA compliance issues
which Council will have to make a determination regarding. Clay Larson has been through
the facility with me regarding a University of Minnesota memorandum containing ADA
information. The items on capital outlay for 1997 are a direct result of the discussion.
What we are still working on is two fold:
• The energy management system needs upgrading or replacement. As you know, there
is an ongoing history with this system and the difficulty of delivering heating and cooling to
the buildings involved. Because of the complex nature of the system, there is no easy answer.
Basically that means we do not yet have all the options and pricing needed to present an
answer to you. Presently we have bids from $18,000 to $140,000 depending on the "fix"
involved. We are, however, in a position where the boards (chips) required to run the system
are no longer being made. Purchase has been made of what we can get our hands on to keep
the system going until a decision can be made. Updates will be forthcoming as soon as
information is available.
MN Telecommunications is a client of three years running. Their event generates
approximately $20,000 in revenue plus full house at the Inn for one night. They can to made
the Heritage Center their permanent home. Our telephone lines are maxed out for their event.
In order to continue to accommodate them, we need to change from regular US West
g g ,
individual telephone lines to one TSI US West line (which has multiple lines within). The cost
lies in the initial equipment and hookup. Once that service is in place, the monthly line cost
will be less than the amount we currently pay US West for individual lines. After a period of
start -up, we will be in a savings mode. What those exact figures are isn't available right now
because we are waiting for replies from the service companies.
Please keep this information in mind as you look at this first draft of the budget. As soon as
• we have received any further cost estimates, you will receive it too.
• PROPOSE CAPITAL OUTLAY EXPENDITURE PLAN
1997 Currently Budgeted:
Recarpet CH, Tack and LL Hall
Recarpet Inn link
Replace three computers and one printer
Replace electric carpet extractor and attachments
Purchase electronic door closures for lower level Hall and Tack
Upgrade alarm system and signage to meet ADA
Purchase Carter Hoffman food transport unit
Additional Needs:
Finish chiller enclosure
Replace energy management system (separate Inn /CC)
Parking lot expansion
Build G Barn convert office space into meeting space
Yearly Replacements:
20 Tables
40 Chairs
Miscellaneous AV Equipment
Signage
Christmas Decor
Kitchen Smallwares
Computer Replacement /Upgrades
1998 Finish chiller enclosure
Parking lot resurface
Replace administration office carpet
Replace pony (small carpet extractor)
Replace four two -way radios
Replace manlift
Replace hot water booster pumpes (2)
Divide wall for Morgan /Belgian
Replace Tack sound system and augment lighting
Fresh air hookup for Tack Room (system units 22 and 23)
Add heat coil to fresh air duct (eliminate freeze ups)
Replace trade show booth
Replace face on Inn marquee at Summit Drive North
Replace wide area vacuums
Replace office chairs with posture correct furniture
Yearly Replacements:
20 Tables
40 Chairs
• Miscellaneous AV Equipment
S ignage
Christmas Decor
Kitchen Smallwares
Computer Replacement /Upgrades
•
1999 Parking lot patch
Replace outdoor fountain pumps
Telephone system }
Digital D -Mark } simultaneously
Satelite Dish
Replace automatic hard floor scrubber/buffer
Replace portable marquees
Replace carpet in Inn main room, Sunroom and Earle's
Replace microwave in Inn kitchen
Upgrade administrative office work stations
Yearly Replacements:
20 Tables
40 Chairs
Miscellaneous AV Equipment
S ignage
Christmas Decor
Kitchen Smallwares
Computer Replacement /Upgrades
2000 Replace staging and dance floor
Replace motor to electric divider wall in CH
Replace Blacksmith carpet
Purchase (replace) automatic carpet scrubber
Replace four two -way radios
Replace hot water booster pumps
Replace LL Hall wall coverings
Refurbish two Inn rooms (carpet, furniture, a/c units)
Yearly Replacements:
20 Tables
40 Chairs
Miscellaneous AV Equipment
Signage
Christmas Decor
Kitchen Smallwares
Computer Replacement /Upgrades
2001 Replace restroom partitions
Replace wet /dry vacuum
Replace computer printer
Replace rotunda doors
Replace CH doors to Green
Replace Sunroom chairs (Inn)
Replace wide area vacuum (double vac)
Yearly Replacements:
20 Tables
40 Chairs
Miscellaneous AV Equipment
S ignage
Christmas Decor
Kitchen Smallwares
Computer Replacement /Upgrades
2002
Parkin lot arch
Parking P
Replace four two way radios
Replace hot water booster pumps
Replace double vacuums
Purchase upright piano
Replace five fan coil units, upper level Inn (three thru roof,
two thru interior drywall)
Refurbish two Inn rooms (carpet, furniture, a/c units)
Yearly Replacements:
20 Tables
40 Chairs
Miscellaneous AV Equipment
S ignage
Christmas Decor -
Kitchen Smallwares
Computer Replacement /Upgrades
2003 Parking lot resurface
Replace C &E carpet
Replace well pump for outdoor sprinkler system
Replace dishwasher in catering kitchen
Yearly Replacements:
20 Tables
40 Chairs
Miscellaneous AV Equipment
Signage
Christmas Decor
Kitchen Smallwares
Computer Replacement /Upgrades
2004 Replace hot water booster pumps
Replace CH and Tack carpet
Refurbish two Inn rooms (carpet, furniture a/c units
Yearly Replacements:
20 Tables
40 Chairs
Miscellaneous AV Equipment
Signage
Christmas Decor
Computer Replacement /Upgrades
2005 Parking lot patch
Replace double vacuum
Replace compactor
Replace CH sound system
Replace convection oven in catering kitchen
Yearly Replacements:
20 Tables
40 Chairs
Miscellaneous AV Equipment
S ig nage
Christmas Decor
Kitchen Smallwares
Computer Replacement /Upgrades
2006 Replace hot water booster pumps
Replace administration office carpet
Replace Earle's Room furnishings
Replace large outdoor marquee on Earle Brown Drive
Refurbish two Inn rooms (carpet, furniture, a/c units)
Yearly Replacements:
20 Tables
40 Chairs
Miscellaneous AV Equipment
Signage
Christmas Decor
Kitchen Smallwares
Computer Replacement /Upgrades
2007 Replace six boiler and chiller pumps
Replace four boilers
Replace outdoor fountain pumps
Refurbish Inn fireplace (install gas log ?)
Yearly Replacements:
20 Tables
40 Chairs
Miscellaneous AV Equipment
Christmas Decor
Kitchen Smallwares
Computer Replacement /Upgrades
2008 Parking lot patch and resurface
Replace hot water booster pumps
Replace double vacuum
Replace Blacksmith carpet
Replace energy management system
Refurbish two Inn rooms (carpet, furniture, a/c units)
Yearly Replacements:
20 Tables
40 Chairs
Miscellaneous AV Equipment
S ignage
Christmas Decor
Kitchen Smallwares
Computer Replacement /Upgrades
2009 Replace automatic hard floor scrubber/buffer
Replace Inn refrigerators and freezers
Replace Inn Sunroom chairs
Yearly Replacements:
20 Tables
40 Chairs
Miscellaneous AV Equipment
S ig nage
Christmas Decor
Kitchen Smallwares
Computer Replacement /Upgrades
2010 Replace hot water booster pumps
Replace LL Hall wall coverings
Yearly Replacements:
20 Tables
40 Chairs
Miscellaneous AV Equipment
Signage
Christmas Decor
Kitchen Smallwares
Computer Replacement /Upgrades
2011 Parking lot patch
Replace double vacuum
Yearly Replacements:
20 Tables
40 Chairs
• Miscellaneous AV Equipment
S ignage
Christmas Decor
Kitchen Smallwares
Computer Replacement /Upgrades
2012 Replace hot water booster pumps
Replace CH and Tack carpet
Yearly Replacements:
20 Tables
40 Chairs
Miscellaneous AV Equipment
S ig nage
Christmas Decor
Kitchen Smallwares
Computer Replacement /Upgrades
i 2013 Parking lot patch and resurface
Replace chillers
Yearly Replacements:
20 Tables
40 Chairs
Miscellaneous AV Equipment
Signage
Christmas Decor
Kitchen Smallwares
Computer Replacement/Upgrades
2014 Replace hot water booster pumps
Replace double vacuum
Replace administration carpet
Yearly Replacements:
20 Tables
• 40 Chairs
Miscellaneous AV Equipment
Signage
Christmas Decor
Kitchen Smallwares
Computer Replacement /Upgrades
2015 Yearly Replacements:
20 Tables
40 Chairs
Miscellaneous AV Equipment
Signage
Christmas Decor
Kitchen Smallwares
Computer Replacement /Upgrades
•
2016 Yearly Replacements:
20 Tables
40 Chairs
Miscellaneous AV Equipment
S ignage
Christmas Decor
Kitchen Smallwares
Computer Replacement /Upgrades
2017 Parking lot patch and resurface
Replace hot water booster pumps
Replace roofs on Inn, D, C, H and E
Yearly Replacements:
20 Tables
40 Chairs
i Miscellaneous AV Equipment
Signage
Christmas Decor
Kitchen Smallwares
Computer Replacement /Upgrades
EARLE BROWN
HERITAGE CENTER
OPERATIONS AND
MARKETING REVIEW
FINDINGS, CONCLUSIONS
& RECOMMENDATIONS
SEPTEMBER 1993
•
MAR UE11"E A THE S
R _
PROFESS10NAL REAL ESTATE SERVICES
Consulting Services Division
• 700 Northstar East • 608 2nd Ave. So. • Minneapolis, N N 53402
Phone: 612-333-6515 • FAX: 612-338-2216
EARLE BROWN HERITAGE CENTER
OPERATIONS AND MARKETING REVIEW
TABLE OF CONTENTS
Letter of Transmittal
Page
BACKGROUND 1
CONCLUSIONS & RECOMMENDATIONS 2
FACILITY PROFILE 10
PERFORMANCE EXPECTATIONS 13
•
PROFILE OF BUSINESS 15
MARKETING ISSUES 22
OPERATIONAL ISSUES 25
COMMUNITY IMPACT 31
PARTNE s
MAR
Brooklyn Center Economic Development Authority
City of Brooklyn Center
6301 Shingle Creek Parkway
Brooklyn Center, MN 55430
Pursuant to our engagement letter dated April 30, 1993, we are pleased to present the
accompanying report entitled "Earle Brown Heritage Center - Operations and Marketing Review:
Findings, Conclusions and Recommendations."
This report presents a summary of the tasks which we performed in studying the operations and
marketing efforts of the Earle Brown Heritage Center; the conclusions which we have drawn
from our analysis; and our recommendations to improve future performance. As in any study
of the operations of an on -going business, the operating profile continues to change and evolve,
even as the study and reporting process are underway. Indeed, operations at the Earle Brown
Heritage Center are being steadily improved and refined by management on an overall time line
which is largely consistent with the profile of comparable facilities during their initial operating
years. As a result, recommendations presented in this report may in several cases, either
already be in place or under consideration. Such recommendations are included to reinforce the
importance of the actions which management has taken or which they may be about to take.
We consider the Earle Brown Heritage Center in its present state to be a high quality, well
managed facility of unique value to the community, which is making steady progress toward a
stabilized position in the competitive market and a corresponding peak in potential operating
performance. Certain characteristics, both of the facility itself and of its ownership by the City
of Brooklyn Center, affect the speed with which the Center approaches these goals and its
ultimate ability o achieve them at the desired level. W he potential exists y s red 1 e e. a believe that t p s s to
overcome or at least mitigate ga a the limitations which these characteristics impose, together with
certain operational refinements, to improve the prospect of achieving the desired performance
within the desired time.
We would like to thank the management and staff of the Earle Brown Heritage Center and the
representatives of the Brooklyn Center Economic Development Authority and the City of
Brooklyn Center who provided assistance in this study for their ready cooperation and candor.
SPEMM:BER 24, 1993
MARQUETTE PARTNERS
W .
Stephen W. Sherf James M. Klas
• Vice President Associate
Hospitality Consulting Group
700 Northstar East • 608 2nd Ave. So. • Minneapolis, NIN 5:5402
Valuation
Phone: 612- 333 -6316 • FAY: 612.338 -2216 ! = netwarkhc.
BACKGROUND
Marquette Partners was engaged to study the operations and marketing
efforts of the Earle Brown Heritage Center and to develop recommendations in these
areas that will improve the financial success of the facility. To accomplish this
objective, we have performed the following tasks:
- Toured the facility;
- Interviewed key management and sales personnel;
- Reviewed historical operating results and utilization
patterns;
- Reviewed current staffing levels;
- Reviewed event evaluation forms;
- Interviewed five former users of the facility to gain
greater insight into evaluation form comments;
- Interviewed seven potential users who have not yet tried
the facility; and,
- Gathered data on competing facilities to evaluate
relative strengths, weaknesses and pricing policies.
The recommendations which we have developed are presented in
summary form in the following section. A detailed discussion of our findings,
conclusions and recommendations for various facility components and operational and
marketing issues is presented in the body of this report.
-1-
•
CONCLUSIONS AND RECOMMENDATIONS
Per ormance
The Earle Brown Heritage Center consists of three components, which
operate largely independently of one another. Although management is unified,
providing certain operating efficiencies, each component provides, at best, limited
support for the others.
The Inn:
Attractive and popular among users
too small to support cost structure
to; small to provide effective lodging support for the
convention center
The Convention Center:
- Large, attractive primary space, popular for consumer
shows and social functions (particularly with exterior
grounds)
- Lack of lodging limits effectiveness as a convention
facility
- Ancillary meeting space and technical capabilities
inadequate for a pure conference center
- Operating subsidies typically required for facilities of
this type
The Office Space:
profitable, though not enough to balance losses in other
components
Tenant mix offers no significant support for other
components
-2-
•
Performance (continued)
The Convention Center is the anchor of the complex. The initial
feasibility study for the Convention Center clearly stated that operating subsidies
would be required. This is typical for such facilities. This does not mean that a goal
of breakeven operations is impossible. However, such a goal must be recognized as
ambitious and difficult to attain. Since various management changes have occurred,
first for the overall complex, then for the Inn and most recently the catering
arrangements, progress has been steady and encouraging.
Certain "expenses" of the Earle Brown Heritage Center are effectively
paper transfers within City accounts rather than actual cash costs. Only a fraction
of the $42,000 overhead allocation paid by the complex for City administrative
services represents actual increased cash costs to the City. In other words, if the
Center did not exist, City administrative costs would change very little. In addition,
real estate taxes of $63,000 are paid by the complex, some of which accrues to the
City. Any payment to the City or expense allocation not based on a cash outlay is
. a transfer only. The City does not reap any true increase in revenue, nor are any
operating costs actually reduced. The Earle Brown Heritage Center, in turn, does
not in fact require subsidy for these amounts.
Usage of the Center by the City is treated in the opposite manner from
the administrative allocations and real estate taxes. The City does not currently pay
for use of space at the Center. Payment by the City for space used would be a paper
transfer in the same manner as the costs described above. Money would only be
moving from one City account to another. However, the lack of payment, is
inconsistent with the way that intra -city expenses are handled.
Both consistency and a clear understanding of actual cash costs are
recommended. Treatment of overhead allocations, taxes and City payment for
facility use should be handled on a consistent basis, with either all reflected in the
accounts or none. In either case, the difference between transfers and actual cash
outlays should be clearly understood.
-3-
•
Revenue
The Convention Center has a high fixed cost structure typical of such
facilities. While the potential remains for further refinements in certain cost
components, significant improvement in operating performance will require increased
revenue rather than cost reduction. Convention centers have a practical maximum
occupancy of 60 to 65 percent. The Carriage Hall achieves occupancy levels of over
70 percent on weekends. Otherwise no space at the Center achieves occupancies over
50 percent. Belgian and Morgan are used 15 percent of the time or less on
weekdays. Potential for increased revenue is available from:
Increased corporate business (motivational seminars,
sales training and other less technical functions)
Increased social functions, particularly corporate social
functions
Increased flat show business, particularly consumer
shows
Primary potential for increased utilization comes from corporate and
social segments. A 50 percent increase in corporate, wedding and social business
would increase room rental revenue alone by over $109,000, based upon current
averages. The physical capacity exists for such an increase. Achieving that level of
growth will depend largely upon marketing efforts and price positioning. Increases
in flat shows are likely to be limited. However, the average revenue per event for
such business makes even a small increase valuable. Similarly, an increase in state
association business is likely to have little impact on facility performance, although
it would increase the economic impact of the Center upon the community as a whole.
For the Inn, unlike the Convention Center, increased revenue will not,
indeed cannot, yield a breakeven performance level under the cost stricture in place.
Successful boutique inns have restaurants which provide another source of revenue,
in addition to room rental. Without a restaurant, the Inn cannot compete effectively
with boutique inns in the area which have fine restaurants that complete the
"getaway" experience.
s
-4-
Revenue (continued)
The Inn is essentially a Bed & Breakfast facility, which is incapable
even at 100 percent occupancy of supporting 24 -hour staffing on an hourly wage
basis, in addition to the other operating costs incurred by or allocated to the
operation. Operations of this size are typically run by couples or families, often as
a secondary rather than primary source of income. Sale or lease of the facility,
assuming an interested party could be found, is the only viable means of eliminating
the losses at the Inn. An alternative which would allow the City to retain somewhat
greater control would be a permanent live -in manager. This would reduce, but by
no means eliminate operating losses. Management is also exploring the potential to
create restaurant facilities at the Inn, which could further alter the performance
profile. Reallocation of marketing dollars and other cost containment measures alone
will have a only a limited impact.
Marketing:
The total 1993 communications budget equals slightly over $140,000,
28 percent of which is allocated to the Inn, commensurate with its proportion of total
complex revenue. However, marketing expenditures for the Inn are of little
incremental value at this stage in the project's evolution. While the Inn should be
included as a tag on marketing for the Convention Center, actual cash expenditures
for Inn marketing should be minimal and allocations should be eliminated. Marketing
budgets should be developed based upon the needs and resources of the Convention
Center.
Over 75 percent of current business is generated from non - advertising
related sources (word of mouth, attendance at prior events and people driving past
the facility). Corporate and social functions are typically generated by direct sales
efforts. However, awareness of the Earle Brown Heritage Center in the Twin Cities
area is still limited, particularly outside of the northwestern suburbs. To increase
utilization on a cost effective basis, several steps should be taken.
•
- 3 -
Marketing (coadgued)
- Reduce production costs for new material
- Refocus public relations efforts to attract high profile
events to the Center likely to be attended by corporate
executives and upper - income bracket individuals
- Place greater reliance on the recently expanded sales
staff to generate business and increase awareness in the
Twin Cities area
- Reallocate advertising expenditures to increase Twin
Cities awareness, particularly outside of the
northwestern suburbs
- Improve highway signage in the immediate area to call
more attention to the facility and its uses
A reduction in total marketing costs and focus on direct sales and
public relations events designed to bring key individuals and companies to the Center
offers the best opportunity to improve facility performance. Consideration should
also be given to changing the name of the complex from "Heritage Center" to more
accurately reflect its actual uses.
Pricing
Pricing at the Convention Center is general competitive with other
convention facilities in the Twin Cities. However, the division of catering from other
facility costs and the policy of charging for nearly all equipment and ancillary
services creates an unwanted v addition,
ted perception that the facility is expensive. In
the administrative difficulties for users in planning and paying for functions with two
different entities - Center management and D'Amico Catering, are a disincentive.
Ad hoc efforts to package functions and increase cooperation between catering and
Center management are a positive step but should be extended further.
•
-6-
PliCing (eoetinuedl
Several packages should be developed with predetermined per - person
prices. Packages should include specific catering menus, basic AN equipment and
room rental, tailored for various types of functions and group sizes. Potential users
should still have the option of designing their functions on an "a la carte" basis.
However, prepackaging will streamline communications, eliminate false price
perceptions and simplify sales efforts for many functions. It will also improve
management's ability to ensure proper price positioning relative to the competition.
Communications
As referenced earlier, there are only limited opportunities to improve
facility performance by reducing operating costs. However, the most effective way
to identify costs which can be reduced and ensure appropriate margins as utilization
increases is to improve the formal communication process during the preparation of
P P g P P
the annual budget and subsequent monitoring of performance. Informal
communication takes place on a frequent basis within the full - time, on - site staff and
between the staff and the City. Because of the gap between the time the annual
budget is first prepared, the time it is finalized and the actual operating year, specific
formal communication policies are recommended.
Facility management should be fully responsible for
develop an initial budget with an agreed upon
P g
bottom line performance level
•
Budgets must be based upon all relevant data including
g P � g
p lanned wage rates as well as hours
Facility management should formally resent the bud
• Y g YP et g
to representatives of the City and Economic
Development Authority, with full documentation for
each major cost and revenue category
•
-7-
Co mmunications (continued)
The budget presentation should be scheduled to allow
the City and Economic Development Authority
adequate time for review
- Following review, comments, questions, required
changes in overall targets and suggested adjustments in
individual categories should be discussed between the
City and facility management, prior to any actual
changes in the proposed budget
Following final budget approval, facility management
should prepare forecasts on a monthly basis, reflecting
current conditions
Theo
facility should be adjusted
operating profile of the fac s o �
P gP Y
based upon revised forecasts to ensure performance
approximates overall budget goals as closely as possible
Development of budgets for the following year should
expressly consider actual and forecasted operating
performance
A clearer definition of bottom line responsibility for facility
management and a more formalized process for budget development, adjustment and
monitoring should aid both management and the City in achieving ultimate
performance goals.
•
-8-
Community Impact
Brooklyn Center is unique in having the only public exhibit hall /civic
center facility in the Twin Cities suburbs. For outstate cities, exhibit halls are civic
and economic focal points for the community, improving tourism, providing needed
assembly space and enhancing community identity and quality of life. The Earle
Brown Heritage Center provides similar benefits, not only for Brooklyn Center but
for the northwestern metro area.
Individuals and companies in the area are able to hold their business
and social functions within the community, often when it would not otherwise be
possible. Visitors attending those functions whether from within the Twin Cities or
elsewhere have the opportunity to spend money at other businesses in the community
and to become familiar with the amenities the community has to offer. The City
itself has a focal point for festivals and gatherings.
The impact of a facility like Earle Brown differs in a suburban setting,
from comparable facilities in outstate communities. By objective criteria, such as
increased tourism spending, the impact is more limited. By subjective criteria, such
as enhanced community identity, the impact is perhaps even greater. By either
measure, the Earle Brown Heritage Center is an important community asset.
Although they will have little effect on facility performance, continuing efforts to
increase the value of that asset, through increased association business and increased
community oriented activities, should continue to be an important part of the
operating strategy of the complex.
•
-9-
FACILITY PROFILE
The Earle Brown Heritage Center is a truly unique facility, or group
of facilities, portions of which are not typically owned by a public entity. The Inn,
office space and even the Convention Center are entrepreneurial ventures that
function in a competitive environment. These circumstances create operational
challenges which must be recognized.
The Center consists of three components which operate largely
independently of one another. Although management is unified, each component
provides, at best, limited support for the others:
The Inn
The 11 -room Inn is attractively designed and furnished. Although its
local market exposure is still somewhat limited, it is very popular with its users and
has established a solid weekend demand base. More recently, businesses in the
surrounding area have increased their usage of the Inn on weekdays, both for
overnight guests and small meetings. Corporate usage has increased, in part due to
a standardized corporate rate policy and increased marketing efforts.
The Inn is designed to be, and functions well as, a bed & breakfast.
It lacks adequate food and beverage facilities and is too small to function as a true
boutique inn. Bed & breakfast facilities are typically run by couples and families
with no payroll, limited marketing, and very low overall operating costs. Such
facilities often provide secondary rather than primary income for their owners.
In its current form, the Inn cannot support the cost structure under
which it operates. There is still room to increase revenue, primarily through further
increases in corporate weekday business. However, the payroll cost of a manager,
supported by 24 -hour staffing, actual and allocated marketing costs and other
operating costs which would be lower or non - existent in a private setting, exceed the
revenue capacity of the Inn, even at 100 percent occupancy. The Inn also has far too
few rooms to adequately support the Convention Center.
•
-1Q-
•
Assuming an interested party can be found, sale or lease of the Inn is
the only viable means of eliminating the operating losses entirely. An alternative
which would allow the City to retain greater control would be a permanent, live -in
manager. The reduction in payroll costs, combined with reduced marketing expenses
and other cost containment measures could reduce, though not necessarily eliminate,
operating deficits, if weekday utilization continues to improve. Management is also
exploring the potential to create restaurant facilities at the Inn, which could further
alter the performance profile. However, viable revenue growth and cost containment
under the current structure are likely to have only a limited impact upon operating
deficits at the Inn.
The Convention Center
The convention center is an attractive, accessible, average -sized exhibit
hall with supporting space of mixed quality and utility. The Center is most
comparable to civic center /exhibit halls in outstate cities, which are designed as
multi- purpose facilities. The Center, in combination with its attractive grounds, is
most effective for consumer shows and large social events, including corporate
parties, weddings, reunions and similar functions. Most such functions are weekend
oriented.
Comparable facilities in outstate cities often house conventions for
smaller state associations and secondary meetings for larger groups. However, the
Convention Center, without a sufficient number of adjacent hotel rooms, must
function primarily on a day -use basis, unable to capture a significant share of the
more lucrative multi -day conventions or large corporate meetings. The in -house
technical capabilities of the Center are below the standards of corporate conference
centers. In addition,,the ancillary meeting space, particularly the smaller breakout
rooms such as Belgian and Morgan, are of below average quality. While such
characteristics are common for civic centers, they reduce the effectiveness of the
Center in competing for the corporate day -use business which is its most viable
weekday market.
-11-
This does not reclude the capture of corporate demand. Indeed the
P P �P
Center as been successful to -date in capturing corporate business and is continuing
to increase its penetration. The facility is best suited to motivational seminars, sales
training and various other types of non - technical functions, particularly for larger
groups. Growth in corporate meetings combined with continued growth in social
business represent the greatest potential for increased facility utilization. Efforts to
increase flat shows and association business will also be valuable, since even a small
increase in the number of functions would have a significant impact on revenue.
However, they represent secondary, rather than primary sources of future growth
potential.
The recent changes in he 'n a w' 11 have a
g t cater arrangements X
g g
substantial, positive impact on Convention Center performance. The new
arrangement should increase both the flexibility of Center management in pricing
functions with catering components, and the overall catering revenue available.
Close cooperation between Center management and the contract catering manager and
a clear understanding of priorities will be important in capitalizing on the increased
opportunities available.
The Office Space
The office component essentially operates completely independently of
the Inn and the Convention Center. The profitability of the office space partially
offsets the operating losses of the balance of the complex. However, the office space
cannot generate sufficient operating profits alone to cover other facility components.
On a long -term basis, attempts to attract tenants most likely to make use of other
facility components is a desirable goal. Nevertheless, the office space is unlikely to
provide significant direct support for the Inn or Convention Center. Maintaining its
profitability should remain the primary goal.
-12-
PERFORMANCE EXPECTATIONS
Although the Earle Brown Heritage Center is comprised of three
distinct components, the Convention Center is the anchor of the facility. The initial
feasibility study for the Convention Center indicated that not only capital costs, but
on -going operations, would have to be subsidized, which is the case with nearly all
civic centers and exhibit halls. Communities support both the capital costs and a
portion of the operating costs for such facilities in return for the benefits they provide
to the community, such as jobs, increased tourism and associated spending.
However, facilities of this kind are ideally located within walking distance of lodging
facilities large enough to support them.
Although it is less obvious, exhibit space in private facilities is
subsidized as well. Function space in hotels and conference centers generates even
less revenue directly than in public facilities. However, private hotels and conference
centers can derive sleeping room revenue from meeting participants and attendees at
various social events directly, because their lodging is connected.
Neither option is available to the Center, with only 11 rooms available
under joint management and within walking distance. While the scenario would
differ markedly if a full service hotel were located in close proximity, no such facility
exists. Consequently, the Center is left primarily to compete for day business, which
is more price sensitive and often requires the same amount of set-tip time and
administrative effort as a multi -day function. Therefore, this type of, meetings
business is the least profitable.
Expectations of breakeven operations notwithstanding, the lack of
synergy among the various facility components and the operating profiles typical of
such facilities will make achieving such a goal difficult, although not necessarily
impossible. The inability of the Inn to operate at a breakeven level has already been
discussed. The Convention Center, as the anchor of the complex, will need to
operate at or near a breakeven level for the complex as a whole to have any
opportunity to achieve such a goal.
-13-
Trends in operating performance to date are moving in the right
direction. However, the inflexible cost stricture of convention facilities places the
focus for improved financial performance on maximizing revenue. Despite some
structural inefficiencies and certain cost centers which could be improved, increased
revenue is the only realistic means to improve the financial performance of the
Convention Center and the complex as a whole.
Certain other considerations must be incorporated into any assessment
of overall facility performance. While the Earle Brown Heritage Center's financial
statements indicate that a subsidy in the approximate amount of $335,000 was
required in 1992, this information alone is somewhat misleading. Much of the
$42,000 overhead allocation of City expenses that have been absorbed by the
Heritage Center should be considered as an offset, since actual costs to the city have
not increased by anything approximating this amount. While it is trite that the
Heritage Center would need to pay for the services provided by the City if it were
not City owned, it is. There are operating inefficiencies inherent in City ownership
which have a negative impact on financial performance. Positive impacts should not
be ignored. Further, $63,000 in real estate taxes are paid by the facility. Some,
though not all, of which accrues to the City.
Payments such as these are transfers, rather than actual cash outlays.
The City has no more "spent tax dollars to subsidize these expenses than it has
received tax revenue or expense reimbursement from the complex. The net effect is
zero. While there may be internal accounting and, presentation issues which support
the current structure, an accurate assessment of actual facility performance should
include a clear understanding of real cash outlays versus internal transfers.
On the other side of the equation, the use of Heritage Center facilities
without reimbursement by the City should not be overlooked. This too is a positive
impact of City ownership. For an accurate assessment of facility performance, the
treatment of City usage should be consistent with the treatment of expense allocation
and other payments to the City.
-14-
PROFILIE OF BUSINESS
The sources of business at the Convention Center in 1992, shown
below, indicate that approximately half of rental income is derived from the corporate
sector. Shows contribute six percent of the functions but over 20 percent of the
rental revenue.
1992
BUSINESS COMPOSITION
Segment Events Percent Rent Percent of Average
of To Total Rent Rent /Event
Corporate 200 58% $152,000 47% $760
Weddings 48 14 39,000 12 $804
Social 39 12 29,000 9 $742
Religious 32 9 25,000 8 $771
Show 19 6 68,000 21 $3,608
Other 5 1 9,000 3 $1,800
3 100% $322,000 100% $938
Source: Earle Brown Heritage Center
Total revenue generally tracks closely with rental income on a month
to month basis. However, the gap is narrowest in March, when ancillary revenue
tends to be lowest, and greatest in December, when catering revenue is particularly
high. These figures are illustrated graphically on the following pages.
-15-
0
1992
BUSINESS COMPOSITION
240
5
19
32
48
39
I
Events
Corporate Weddings 0 Social Religious M Show Other
i
Source: Earle Brown Heritage Center
1992
BUSINESS COMPOSITION
$152,000
$9,000
$39,000
$29,000 $68,000
$25,000
Rent
Corporate Weddings Social 0 Religious 0 Show Other
Source: Earle Brown Heritage Center
1992 Revenue Comparison
Total vs Room Rental Revenue
70
60
v�
4 50
40
30 ............ .................... .................. .
10
o �
A 0 'I
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Months
Total Revenue Room Rental Revenue
Source: Marquette Partners
I I
�I
1991 Revenue Comparison
Total vs Room Rental Revenue
r-,
70
.. 60 —
........ ............ .
0 50
..............................
.......... ...............................
..........
E 40
vw
O 30 - _
10 -
O
Q
0
Jon Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Months
Total Revenue Room Rental Revenue
Source: Marquette Partners,
Usage records (shown below) indicate that even the most popular
rooms are used less than 50 percent on weekdays. Utilization on weekends is
generally, though not entirely, higher. Utilization figures are also presented
graphically on the following page. Overall occupancy at the Center was 44 percent
in 1992, up from 33 percent in 1991, according to Center records.
1992
CONVENTION CENTER
FACILITIES UTILIZATION
Room Weekday Weekend
Utilizat Utilization
Carriage A 41% 68%
Carriage B 44 78
Captain's 46 44
Estate 46 44
Tack A 34 40
Tack B 29 39
Belgian 13 27
Morgan 15 37
Blacksmith 25 16
Source: Earle Brown Heritage Center, adapted by Marquette Partners
Unlike office buildings or even hotels, convention facilities t es are
structurally incapable of achieving 100 percent occupancy for all available space. A
practical overall capacity for a facility of this type is 60 to 65 percent. With the
exception of the Carriage Hall on weekends, no component of the Convention Center
approaches such utilization levels. Indeed the capacity exists for an increase in
overall utilization of 50 percent above current levels. It is this excess capacity which
must be filled to enable the Convention Center, and the complex as a whole, to
achieve the financial performance desired.
-20-
0
1992 Convention Center
Facilities Utilization
0.9
0.8
0.7
0.6
0.5
0.4
03
0.2
0.1
0
Carriage A Captain's Tack A Belgian Blacksmith
Carriage B Estate 'Pack B Morgan
Meeting Space
.i Weekend Utilization
Weekda Uhlizaho nd
� y n W �
•
MARKETING ISSUES
The Earle Brown Heritage Center is in the process of successfully
establishing its position among the various exhibition and conference facilities
available in the Twin Cities area. Its facilities complement dictates that it focus on
day meetings, social events, exhibitions and shows. It takes several years to fully
develop such business and to begin to benefit from repeat business and word of
mouth experience. Business has improved at the Convention Center each year since
opening, a trend which is continuing in 1993. Review of the Center's previous
advertising budgets indicates efforts to promote the facility have been spread locally,
regionally and nationally. In 1992, $11,800 was spent on national media, $3,800 on
regional media and $17,600 was spent on local advertising.
1992 MARKETING BUDGET
Convention Center
S Communications 1992 Budget Allocation: $96,825
Target Market Media Budget Percent
Local Corporate $17,000 52.0
Regional Corporate 4,000 12.0
National Corporate 12.000 36.0
$ 33.000 100.0
Wedding $2,000
Trade Shows $1,500
Associations $1,200
Inn On The Farm
Communications 1992 Budget Allocation: $31,825
-22-
The total communications budget for 1993 is $140,285, of which 72
percent is focused on, the Convention Center and 28 percent is focused on the Inn.
While this split is in proportion to the revenues generated by each operation, the Inn
cannot afford extensive marketing, as previously discussed, and will benefit little
from such efforts. The Center, on the other hand, can increase its business by
another 40 to 50 percent and significantly improve its financial performance, before
it begins to encounter capacity constraints.
Advertising expenditures notwithstanding, review of the comment cards
from users of the Center reveals that the vast majority of the bookings originated
from three sources:
- familiarity through attendance at a prior event (35 0)
word of mouth (24 %)
people driving past the facility (18 %)
It is important to note that none of these categories is directly related
to advertising efforts. It appears that people are impressed with the facilities, once
they have the opportunity to visit the Center; a notion that was confirmed by the sales
personnel that we interviewed. In addition, all of the categories above clearly pertain
to business from local sources.
The interviews we performed to gather information on the general
awareness of the Center among Twin Cities area corporations revealed a relatively
low awareness among meeting planners. While, generally, companies prefer to stay
in the area of their business, larger corporations, such as 3M, Honeywell and others,
hold meetings at facilities throughout the metropolitan area, including the Riverwood
Conference Center approximately 30 miles west of the Twin Cities.
-23-
Due to the easy access provided by I -694 and I -94, all companies near
the northern loop of the beltway, as well as downtown Minneapolis can be targeted
for corporate meetings business. This promotion is most effectively accomplished
by direct contact by sales personnel, rather than through advertising. Public relations
events designed to attract key individuals are another useful tool.
The Heritage Center has an extensive selection of high quality
marketing materials already developed. Consequently, future production costs should
be lower than historic levels. Increased emphasis on direct sales efforts and targeted
public relations events should further reduce the reliance on advertising. Remaining
advertising dollars should be reallocated to focus primarily on increased awareness
within the greater Twin Cities area. This should include improved signage, to the
extent possible, along highways adjacent to the complex.
The key in all cases is to attract potential users to the facility. The
facility clearly sells itself. In addition, the strongly positive tenor of comment cards
indicates that users are satisfied, not only with the facility, but with the service they
receive. Opportunities to display the quality of facilities and service at the Center
must be maximized to build utilization to a practical capacity and provide the greatest
potential for breakeven performance.
Consideration should also be given to changing the name of the
complex from "Heritage Center" to a more accurate and informative, or at least less
misleading moniker. Current marketing efforts are forced, not only to create
awareness, but often to overcome confusion.
-24-
OPERATIONAL ISSUES
Labor Costs
Overall labor costs are high at the Convention Center on a
proportional basis, due to the relatively low business volume. The Center does not
appear to be over - staffed, either with full -time or part -time personnel. The nature
of a convention tuon center requires a high fixed .cost of operations which cannot be
reduced when business is slow. In addition, higher hourly wage rates are paid by the
City than are typically paid in the industry, which creates another structural
inefficiency. n average, erage, wage rates area approximately 15 -20 percent above
Y g PP Y
P
industry averages, which translates into an additional cost of $7,000 for the first
seven months of 1993 at the Convention Center. The graphs on the following pages
illustrate the relatively fixed nature of labor costs at the Center. Total payroll
typically ranges between $20,000 and $30,000 per month, regardless of business
volume. As emphasized previously, such a cost structure requires increases in
revenue to substantially improve bottom line performance.
• Coordination and Pricin :
The separation of the catering component from the balance of the
facility has caused operational difficulties historically. Under the new arrangements
with D'Amico, the difficulties have been partially mitigated. However, additional
steps need to be taken.
During the initial planning stages, when the sale is made, simplicity
is one of the critical factors in completing the sale Event r r 1
p g e t ega d ess of the
type of function want clear YP a communication, clear pricing, and streamlined planning.
Similarly, invoices issued at the conclusion of an even r h 1 in f
Y t are the last point o contact
for the function, leaving a lasting impression. Again, both clarity and price
perception are important.
•
-25-
1992 Operational C
50 Payroll vs Room Rental Revenue
40
30
0
o
A �' 20
10
0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Months
— Payroll Room Rental Revenue
1993 Op erational Compankon
_ Payroll vs Room Rental Revenue
50
40
0
a
30
a�
- 20
10
0
Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec
Months
® Payroll ® Room Rental Revenue
Although it is common to deal with caterers in addition to the sales
representative who coordinates the overall function, the need for separate contracts
and separate invoices is uncommon and introduces undesirable complications. In
addition, separate pricing for the catering component and space rental, combined with
add -on charges for essentially all ancillary equipment and services, creates an
unwarranted perception that the Center is expensive. The Center is, in fact,
competitively priced for typical meetings, once all of the costs are added together and
spread over total attendees. The Center is most competitively priced for larger
groups. However, the lack of packaged pricing on a per - person basis makes it
difficult for a customer to make an appropriate comparison, difficult even to
determine overall cost in some cases.
Both the pricing concerns and the coordination problems faced by
customers in dealing with two entities are already being alleviated on an ad hoc basis
by facility and catering management. Contracts and invoices are being mailed
together when possible. Representatives of the caterer and Center make an effort to
meet with users together. These efforts should be strengthened and expanded to
• develop a variety of packages to meet the needs of different types of users for
different types of functions. There will always be customers who do not fit standard
criteria and need to make arrangements on an a la carte basis. However, for the
majority of patrons, prepackaged options will make the decision to use the Heritage
Center much easier to make.
Facility management and catering management should work together
to develop standardized packages, including menu options, space rental and basic
equipment, at pre -set prices on a per - person basis. Discounts for larger groups can
be built into the packages. Packaging will strengthen the sales effort at the initial
point of contact and reduce the potential for miscommunication. Although rental
income will vary to a greater degree from group to group and may, in some cases,
be lower, the offsetting improvements in customer service and simplified sales efforts
should boost overall utilization.
s
-28 _
COMPETITIVE ANALYSIS
IDS Northland Thunderbird Radisson Convention Market
Attribute Earle Brown Oak Ridge Inn River-wood Hotel South Center Square
Day Rate No inclusive $55 $60 $50 none none none none
Room Charge Flat charge Included $99 Included Based on Based on Based on Based on
rooms and rooms and F &B F &B
F &B F &B
A/V Rented Included Included Included Rented Rented Rented Rented
Meals Charge Breakfast Continental Breakfast Charge Charge Charge Charge
Lunch breakfast Lunch
Breaks (2) Lunch Breaks (2)
Breaks (2)
I
source: Marquette Partners
Communication
At present, the Center manager submits a budget in June to the City
and Economic Development Authority, along with documentation for their review.
The City and Authority make revisions based on their interpretations and constraints
and then submit the budget for city council approval in November or December.
During this process, there is little formal contact between management and the City,
so that both parties are making decisions without complete information. For
example, hourly labor is budgeted in terms of hours only by the manager, without
the wage rates, which are added later by the City. Also, revisions to the budget may
be made by the City without prior consultation with the manager.
In order to effectively control facility performance, management must
be fully responsible for bottom line performance and must have the necessary
information to plan and execute performance goals. Budgets should be prepared by
management to meet a specific bottom line target, agreed upon in advance.
Submission of the budget should include both written documentation and oral
presentation in a formal setting, to explain the reasoning behind key figures.
Adequate time must be available for review and revision. Following review, any
necessary adjustments should be made in coordination with management to ensure
their full knowledge, understanding and ability to execute.
However, a more formalized budget development process is only the
i between t development and the
first step. Due to the time lag bet ee budge period covered, p p
operational and market circumstances can and do change. To ensure that the
budgeted performance goals are met despite the changing circumstances, a regular
forecasting process on a monthly basis should be developed to enable management
to foresee potential problems - or opportunities. Such a process has the added
advantage of improving the available information for preparing future budgets.
Refinements in the process for developing and monitoring operating
budgets will do more than simply help ensure costs are controlled effectively. As
mentioned several times in this report, cost control is only a small part of the effort
needed to improve facility performance to the desired degree. Refinements,
particularly in forecasting on a regular basis, will improve the ability of management
to react to changing market conditions to maximize revenue as well as control costs.
•
-30-
COMMUNITY IMPACT
The spending and income generated by the Earle Brown Heritage
Center and the enjoyment of its use benefit residents and businesses, not only in
Brooklyn Center, but throughout the northwestern suburbs. Brooklyn Center is
unique among Twin Cities suburbs in having a multi -use public facility. Not even
Bloomington, with its extensive array of hotels, offers a similar facility. While
several Twin Cities area hotels have function space of equal or greater size, none are
located in the northwestern suburbs and few are as well designed for exhibit oriented
functions. Indeed, it is highly unlikely that a facility comparable to the Convention
Center would be developed elsewhere in the northwestern suburbs by either private
or public entities.
The Convention Center provides the same subjective benefits as
comparable facilities in outstate cities. It serves as a focal point for community
identity and a gathering place for a wide variety of events, both public and private.
Residents of Brooklyn Center can meet , shop and celebrate within their own
i community, often when the only alternative would be facilities in other parts of the
metro area. Facilities such as the Center add to the attraction of the community for
both prospective residents and businesses.
The Center provides objective benefits to the community as well. Full-
time and part-time employment opportunities are available to area residents. Visitors
to various functions, whether corporate, social, consumer show or other, come from
throughout the Twin Cities and even greater distances, spending their money not only
at the Center, but at surrounding hotels restaurants and shops. Even those who do
not make purchases outside of the facility in connection with the function they attend
gain an increased familiarity with the City and the many things it has to offer.
The Inn is also effective in attracting additional spending to the
community. Although a large proportion of corporate demand accommodated at the
Inn could easily choose other lodging within the City, weekend get -away business and
other tourist demand attracted to the Inn would be unlikely to stay in Brooklyn Center
if the Inn were not available. Such visitors are very likely to visit restaurants and
shops in the surrounding area.
i
-31
As mentioned previously, cities support the development and on -going
operations of multi - purpose facilities such as the Heritage Center for the economic
and civic benefits they provide. Although they are not expected to have a significant
effect on the financial performance of the Heritage Center, continued efforts to
increase association business, exhibitions and community events are valuable for the
impact they can have on the surrounding community.
Promoting the Center to state associations should not only be the job
of Center management, but of the Convention & Tourism Bureau as well. The
possibility of Brooklyn Center developing its own convention and visitors bureau has
been raised in the past. Such a move would be designed to focus staff and financial
resources more closely upon developing potential convention demand.
While the suggestion was made that the word "Heritage" was not the
most accurate representation of the facilities and services the Center has to offer, it
is accurate i n w Heritage Center is a art of
u r one important respect. The Earle Brown Hent g p
the historical and cultural heritage of the City of Brooklyn Center. In developing and
. maintaining the Center, the City as a whole continues to preserve that heritage in a
manner which also provides concrete benefits to the community on an on -going basis.
•
-32-
•
Heritage Center Report
Focus on Finances
•
Prepared for
Brooklyn Center City Council
by
G. Brad Hoffman, Community Development Director
December 11, 1995
•
Introduction
The Earle Brown Heritage Center (Brooklyn Farm) is Brooklyn Center's most significant
historic landmark. Minnesota Statutes Section 138.644, Subd. 11, declared the Heritage
Center a state historic site because of its association with Earle Brown and because of the
distinctive nature of the buildings and the site. Even today, the Heritage Center is one of the
best known landmarks in all of northwest Hennepin County. The farm has represented the
cultural and historic center of Brooklyn Center since the community's beginnings.
In 1984, the City Council made a determination to acquire the remaining buildings and
preserve them. A citizens task force was established to look at different uses for the buildings.
Initially, the EDA accepted development proposals from the private sector for the site. Only
one proposal was submitted and was subsequently rejected. The task force spent
approximately two years considering different development concepts. The concepts that were
considered included a senior center, retail space, office space, senior housing, as well as the
present inn, office and multi - purpose center.
The current use was selected because it was believed to offer the best potential to generate
revenue sufficient enough to offset operating costs. It was also selected because it made the
farm open to the greatest number of people and it created a metro -wide attraction to Brooklyn
Center.
The Heritage Center has now been open for five years. While there has been tremendous
growth in the use of the facility, revenues have not overcome operational expenses. The
principal problem is one of size, according to the Marquette Partners' management study.
The facility requires a minimum level of staffing to service the events being held. The same
minimum level of staffing could adequately service larger events if the space was available.
Each year the Heritage Center has been open, there has been a significant change to the
operation of the facility. For the most part, these changes have closed the gap between
revenue and expense. The Earle Brown Heritage Center, as currently organized and operated,
at very best might come close to break -even some years only. It will not be able to sustain a
positive cash flow position. The ongoing maintenance of the facilities will vary considerably
from year to year, and such fluctuations will make it difficult to operate consistently in the
black.
This report is intended to provide the Council /EDA with options to close the gap between
revenue and expenditures. Areas considered in this report include possible expenditure
• reductions, potential revenue increases, other non - property tax revenue sources and
reorganization.
Heritage Center Report 2
2
Revenue Increases
THE INN ON THE FARM
The Inn on the Farm has been recognized as one of the ten best inns in the United States. At
the same time, it is one of the most reasonably priced facilities of its type. The current
weekday corporate rate is $70 per night. An increase to $80 per night would still keep the Inn
competitive with its competition (primarily the Holiday Inn). Also, an increase for individual
rooms from $100/120 per night to $120/140 per night at a 70% occupancy would generate an
additional $15,000 per year.
The Inn has been experiencing occupancy rates in excess of 70% in 1995. A rate increase
would generate additional revenue without a corresponding increase in expenditures.
CONVENTION CENTER
At the Convention Center, the current direction is to offer a "complete meeting package".
This is becoming more of the norm within the industry. A meeting package is simply a price
per person for room, AV equipment and meals. Meeting planners prefer the package as
opposed to a bill for the room, for food, and for AV equipment being billed separately. It is a
defined package with some variables. Currently, the Heritage Center is priced at $35 per
person. Riverwood, the Ra.disson South, the Northland Inn and Scanticon are all priced
significantly higher. Raising the meeting package by $7 will generate approximately $35,000
and the Heritage Center's package price would still be lower than its major competition.
OTHER REVENUE SOURCES
Brooklyn Center currently imposes a six percent room tax on all hotels and motels. In 1994,
the tax generated $421,014, of which the Convention Bureau received $199,982. In 1995, I
would estimate the tax to be $442,000, of which the tourism bureau will receive
approximately $210,000 with the balance going to the City's general fund.
In 1995, a new 60 unit motel has come on line. In addition, I anticipate the construction of a
70 to 100 unit suites hotel to be on line in 1997. The Comfort Inn should generate $40,000 to
$43,000 annually. The proposed new hotel should generate $80,000 to $120,000 annually.
The Council /EDA has two options it can consider. First, the City's three percent room tax it
receives from the new hotel and the proposed hotel could be dedicated to the Heritage Center.
Assuming the new hotel is built, by 1999, the revenue generated would be between $60,000
and $80,000 annually. The positive side of this is that it would provide steady, annual non-
property tax revenue. The revenue could stabilize the Heritage Center from fluctuations due
primarily to capital outlay and probably generate sufficient funds to pay off its operating debt
Heritage Center Report 3
and, over time, build reserves to deal with long -term capital expenditures that eventually will
• be needed at the Heritage Center. The down side of this proposal is the general fund would be
deprived of the revenues for other uses.
Second, the Tourism Bureau, by virtue of Minnesota Statutes, Section 469.190, must use its
tax for the purpose of marketing the City as a tourist or convention center. In 1995,
promotional- related expenditures totaled almost $92,000. The City has an operating
agreement with the Tourism Bureau to undertake such promotional activities. With the new
hotels on line, the Tourism Bureau will receive approximately $240,000 to $270,000 by 1998.
The City could renegotiate its contract with the Bureau to provide up to $50,000 in
convention- related ads featuring the Heritage Center. If the Tourism Bureau agreed to placing
such ads, the Heritage Center could reduce its advertising budget by a corresponding amount.
If the Tourism Bureau was not inclined to renegotiate its contract, the City would have the
option to withdraw from the Bureau and start its own bureau. If that route were selected, the
City must give notice to the Bureau by June 30 to be effective December 31, 1996. The City
could also elect to decline this option. Dependent upon a new contract, this option transfers
approximately 55 % of the Heritage Center's advertisement budget to the Tourism Bureau.
TAX
One option the City/EDA could consider would be the transfer of the property taxes paid by
the Heritage Center back to the operation. Currently, the Heritage Center pays approximately
$65,000 in property taxes which go to the Earle Brown TIF district. This option would last
• only for the life of the TIF district. This option, while it does provide a significant reduction
in expenditures, does not address the long -term needs of the Heritage Center. It would
require an administrative charge by the EDA with a subsequent pass through to the Heritage
Center.
Heritage Center Report 4
•
3
Reorganization
The catering operation represents the single largest opportunity to reduce the overall expenditures
at the Heritage Center. Today, there are two different entities working out of the facility.
D'Amico's manages the catering operation owned by the EDA. Last year, D'Amico's was paid
$140,143 in various fees. With the presence of the two entities on site there is a great deal of
duplication of efforts including administration, contract production, sales and billing. As currently
organized, customers deal with two different people for food and room and they receive two
different bills which tends to give the appearance that the Heritage Center is more expensive than
its competition. It is also cumbersome and confusing to clients.
A facility operated by a food and beverage manager would provide:
• On -site management and decision making over food production
• Eliminate duplication of costs including sales, fmance and operations
• More customer service oriented (i.e., less confusing, one contract, one check)
• Create staff accountability to the facility as a whole
. • Provide significant cost savings
By reorganizing the catering operation, the Heritage Center will realize an overall reduction in
staff size. At the same time, the reorganization will provide better use of existing personnel. For
example, salespeople will focus on marketing the facility only. Currently, the salespeople not only
market the Center, they also service the client through the event. In fact, they coordinate all
details of the event. Other duplication can also be reduced in labor costs with event setup done by
combining the two labor pools. The direct cost reduction with reorganization would be
$119,268.
Eliminate
a. Management fee $112,510
b. 2 catering sales position 65,216
c. 1 chef position 33,012
d. Purchasing agent 10,141
e. Clerk typist 7,910
f. Accounting fee 13.320
Subtotal $242,109
•
Heritage Center Report 5
Add
a. Food/beverage director* ($57,625)
b. Two (2) conference service coordinator positions* (65.21
Subtotal ($122,841)
Total Reorganization Gain $119,268
*Salaries include benefits.
The conference service coordinator positions would:
• Operate as event manager
• Act as primary source of contact for all events (catering and facility)
• Assist with scheduling of decorators, security, entertainment, etc.
Adding the positions would:
• Provide continuity with client regarding details of events
• Allow better, more efficient use of sales staff
• Provide better control over client requests for room changes and additional free
services
• Keep higher paid staff positions down in number
• Provide on -site technical expertise during an event
• Process billings faster; better cash flow
Reorganization would require the EDA to hold an on sale liquor license. D'Amico's holds the
license at this time. Minnesota Statutes, Section 340A.601, Subd. 5, allows a municipality to
issue a license only to a hotel, restaurant or club. The City's liquor ordinance defines a hotel as an
establishment where lodging is provided with no less than 100 rooms. A restaurant is defined as
having a seating capacity for no less than 150 people at one time. The reorganization assumes
that the Heritage Center operates a hotel and/or a restaurant to meet the state statutory
requirement.
It should be noted that there would be some costs associated with the reorganization. Some of
the costs would include several new computers, as well as other items yet to be identified. If the
Council wants to pursue this option, it would be necessary for staff to develop a full
implementation plan (business plan). An implementation plan would include a schedule for our
takeover of the catering management. It would also include a detailed cost analysis of the
takeover expense and revenue potentials.
•
Heritage Center Report 6
4
Cost Reduction
ADVERTISING COST REDUCTIONS
The Heritage Center retains a full-time advertising agency. We have identified our most
productive ads. In the future, an agency would be used only for the development of a specific ad.
Staff currently produces much of the work in the ads. By moving the work in- house,
expenditures would be reduced by $20,000.
INTEREST
Assuming the Council/EDA wishes to pursue the reorganization of the Heritage Center and
catering and it is successful, it is estimated that interest rates could be reduced as much as $7,000.
Heritage Center Report 7
•
5
Recap of Options
Revenue
a. Inn rates (increase) $15,000
b. Convention Center meeting package (increase) 35,000
c. Lodging tax
1. City's 3% dedication of new hotel/motel* 60,000
d. Property tax (transfer) 65,000
Reorganization $119,268
Cost Reduction
a. Advertising
1. Tourism Bureau contract $50,000
2. Agency fees 20,000
*By 1999, this number could range from $60,000 to $80,000, assuming the proposed hotel is built.
Heritage Center Report 8
•
6
Recommendations
It is staff's recommendation that the Inn's rate increase and the new meeting package increase be
implemented as soon as possible. It is also recommended that the agency fees for advertising be
deleted and that staff be directed to renegotiate the current Tourism Bureau contract. If
implemented, the gap between revenue and expenditures could be closed by approximately
$120,000.
It is also recommended that the three percent the City will receive from the lodging tax from the
new motel (Comfort Inn) and the proposed hotel be dedicated to the Convention Center, much
the same as other communities do. However, the money should be used primarily for debt
reduction and to build a reserve fund to offset large capital expenditures at the Heritage Center.
Finally, the Council should direct staff to bring forward a plan to reorganize the catering operation
at the Heritage Center. This area of operation offers the single largest opportunity to make the
Heritage Center profitable and needs to be considered.
•
Heritage Center Report 9
0 •
EBHC EXISTING ORGANIZATION CHART
General Manager
Innkeeper Sales DirectorOperations �-GIM .aict
(DOS) Director J�A m it Contrail
. Catering
.......... . .... -- -----------
Mgrs
E 9 Service
Admin Sales M C hef Asst. Innkeeper Sale 3 Maintenance 2 Mgr.
.. . .......... .........
Head Housekeeper Hostess(s) Night Pt. Maint. R eceptionist Pt. Adman Production Waftstaff Barstaff
Audldor(s) support KA. Staff
Pastry Chef
Sous Chef
Housekeeper Painter Steward(,,)
Supo .
Pt , A
pprt
................ ................ . ... ... ....
EBHC PROPOSED ORGANIZATION CHART
General
Manager
Fiamce Receptionist Admfrdw
Controller 3eaeoQy
Sales Director Operations F/e Director Innkeeper
(DOS) Director
Sales Mgrs Maintenance [:onl Svc Coord Svc Mgr . Chef Asst. Innkeeper
Sales Support Pt. Malnt. ( Crew Chlef l Event Coord Production Hostess Housekeepers
Painter Crew /Janitor Waitstafi II ear staff Steward Ng ht Au daor
___._ �__.__.. �...._.__� _..�
li
•
THE BROOKLYN CENTER ECONOMIC
DEVELOPMENT AUTHORITY
MODIFIED EARLE BROWN FARM REDEVELOPMENT PLAN
AND MODIFIED EARLE BROWN TAX INCREMENT
FINANCING DISTRICT
•
THE BROOKLYN CENTER ECONOMIC
DEVELOPMENT AUTHORITY
MODIFIED EARLE BROWN FARM
i REDEVELOPMENT PLAN
AND
MODIFIED EARLE BROWN
TAX INCREMENT FINANCING DISTRICT
i TABLE OF CONTENTS
MODIFIED EARLE BROWN FARM REDEVELOPMENT PLAN Paze
Statutory Authority 1
Legal Description and Map of the Project Area 1
Public Purpose 3
Goals and Obljectives 3
Development Activities 5
Public Improvement Plan 5
Land Use 7
Environmental Impact 8
Acquisition, Relocation and Clearance Activities 8
Project Administration 8
Rehabilitation Program 8
Relocation Program 9
Maintenance of the Project Area 9
MODIFIED EARLE BROWN FARM TAX INCREMENT FINANCING DISTRICT
Findings of Fact 9
. State of Objectives 10
Properties to be Included in the Tax Increment 10
Financing District
Acquisition Plan 10
Relocation Plan 12
Tax Increment District Finance Plan 12
Estimated Project Costs 12
Anticipated Development 12
Estimated Project Costs 19
Revenue Sources 19
Impact on Taxing Jurisdictions 20
MODIFIED EARLE BROWN FARM REDEVELOPMENT PLAN
STATUTORY AUTHORITY
The statutory authority for the activities proposed in the Earle Brown Farm
Redevelopment Plan is conferred upon the Brooklyn Center Economic Development
Authority (EDA) by the Minnesota Economic Development Authorities Act ( !Minn.
Stat Sections 4.69.090 through 4 69-10 8 ) Sat Sections Minesota Housing
469.047)
Redevelopment Authorities Act, (Minn
More specifically, Minn Stat Section 469.027 establishes the requirement that a
redevelopment plan be prepared by an HRA prior to undertaking property
acquisition, relocation, and redevelopment.
LEGAL DESCRIPTION AND MAP OF THE PROJECT AREA
The modified Earle Brown Farm Redevelopment Area is illustrated by Figure 1.
The Redevelopment Area is being expanded as a result of this modification to
include property near the Brookwood development. The Property Identification
Numbers of the parcels contained within the Project area and a boundary
description are as follows:
02- 118 -21 -11 -0001 35- 119 -21 -43 -0002
02- 118 -21 -12 -0001 35- 119 -21 -43 -0004
• 02- 118 -21 -12 -0002 35- 119 -21 -43 -0005
02- 118 -21 -12 -0003 35- 119 -21 -43 -0006
02- 118 -21 -12 -0004 35- 119 -21 -43 -0007
02- 118 -21 -12 -0005 35- 119- 21 -43- 0009
02- 118 -21 -12 -0006 35- 119 -21 -44 -0001
02- 118 -21 -12 -0007 35- 119 -21 -44 -0007
02- 118 -21 -21 -0003 44- 119 -21 -44 -0006
Beginning at the Northwest corner of Tract A, Registered Land Survey No. 1300,
thence North 50 degrees 26 minutes 13 seconds West along the Westerly extension
of the Southerly right of way line of John Martin Drive to its intersection with the
Westerly right of way line of Shingle Creek Parkway, thence Northeasterly along
said Westerly right of way line to a point of intersection with the Westerly
extension of the Northerly boundary line of Lot 1, Block 2, Brookdale Corporate
Center, thence Easterly along said extension of said Northerly boundary line of said
Lot 1, Block 2 to the Northeast corner of said Lot 1, Block 2, thence South 87
degrees 14 minutes 38 seconds East a distance of 704.75 feet, thence South 4
degrees 05 minutes 50 seconds iVest a distance of 16.90 feet to the Northerly right
of way line of Earle Brown Drive, thence Southerly and Westerly along the Easterly
and Southerly right of way line of said Earle Brown Drive, extended across Summit
Avenue North, continuing and to the most Westerly corner of Tract M, Registered
Land Survey No. 1325, thence continuing Southwesterly along the extension of said
right of way line of said Earle Brown Drive to the Southwesterly right of way line
of John Martin Drive, thence Northwesterly along said right of way line of said
John Martin Drive to the point of beginning.
PUBLIC PURPOSE
The Brooklyn Center City Council has determined that public intervention is
necessary in the Earle Brown Farm Redevelopment District in order to remedy
conditions of economic obsolescence, physical blight, under utilization of land and
extensive soil corrections which the private sector has not been willing or able to
accomplish. Numerous traffic hazards and pedestrian conflicts exist and need
correction.
The Earle Brown Farm, a state historical site, is in dire need of extensive
restoration work in order to preserve it as a functional, economically viable
development for future generations. A survey conducted by Ms. Sharon Schmickle
of the University of Minnesota in 1981 for the City of Brooklyn Center indicates
that 77.9 percent of those Brooklyn Center residents surveyed favored the
preservation of the Earle Brown Farm site. Further, 75.4 percent of those
surveyed favored the City of Brooklyn Center taking an active role in preserving
the farm buildings and 51.5 percent favored the use of tax dollars to preserve those
buildings.
SOCIAL, PHYSICAL AND ECONOMIC OBJECTIVES
GOALS AND OBJECTIVES
Goal A: To provide decent, safe and sanitary housing for persons of low and
moderate income.
Objective A -1: Promote development of 269 rental units
A -2: Promote availability of 20% of new units for low and moderate
income persons
Goal B: To provide governmental - assistance _to eliminate slum and blight to
include: inadequate street layout, incompatible use or land use
relationships, overcrowding of buildings on the land, excessive dwelling
unit density, obsolete buildings not suitable for improvement or
health, safety and general
he ea
' i hazards to
conversion, or other identified Y
well being of the community.
Objective B -1: Physically rehabilitate the Earle Brown Farm buildings
B -2: Arrange buildings and uses on the Farm site so as to preserve
"Mall" area which is an architecturally significant space within
the Farm site
B -3: Seek a re- use(s) of the Farm site that will, to the extent
possible, be consistent with other goals, preserve the interior
spaces and character of the buildings
B -4: Preserve on the site historic memorabilia and provide
informational display(s) (s) ex lainin the history of the site.
. y explaining
3
Goal C: Provide an on -going benefit to the residents of Brooklyn Center and
those who may frequent the area.
Objective C -1: Seek a re -use of the Farm buildings that will maximize access
and /or use by the general public
C -2: Program activities (tours, cultural events, etc.) at the site
that will be open to the general public.
C -3: Allow, as necessary, off -site directional signage for the Earle
Brown Farm to increase public awareness of the Farm's
location and historic character.
Goal D: Arrive at development on and adjacent to the Farm site that is
appropriate to the locational setting of the Farm site.
Objective D -1: Seek well - designed development on land adjacent to the Earle
Brown Farm that will preserve important sight lines leading to
and from the Farm site
D -2: Seek through land covenant and /or official controls an
appropriate scale of development adjacent to the Earle Brown
Farm site
D -3: Seek development on and adjacent to the Farm site that will
bring about land uses compatible with other land uses in the
area
D -4: Seek development that will meet regional as well as local
needs and demands thereby drawing a wider segment of the
public to the Farm site and to adjacent businesses..
Goal E: Arrive at a rehabilitation and re -use of the Earle Brown Farm site that
is economically viable and /or accomplishes public goals at minimum
public expense.
Objective E -1: Solicit proposals from metropolitan developers that provide
designs and uses consistent with public goals and enumerate
project costs and public financial participation in a manner
that can be readily compared
E -2: Select a design and development proposal that maximizes
public benefits for the least public cost
E -3: Select means of financing that minimize dependence on the
property tax increment generated within the district.
Goal F: Improve the aesthetic character of the district for both automobile
travelers and pedestrians.
Objective F -1: Install streetscape improvements such as decorative lighting,
S trees, sidewalks, benches, planters, signals, etc., that will
enhance the visual experience of those traveling within the
public right -of -way
4
F -2: Provide low- interest loans to area businesses for rehabilitation
of deteriorated buildings and sites within the tax increment
financing district
F -3: Seek through land covenants, official controls, site plan
reviews, and financial incentives, the . highest quality of
building design and landscaping with new developments in the
district.
Goal G: Increase the amount of land available for high density residential
development. (This statement, however, should not be interpreted to
preclude the use of such lands for an appropriately structured
commercial development such as office buildings.)
Objective G -1: Consider proposals for the Earle Brown Farm property that
may include high density residential development.
Goal H: Traffic Considerations
DEVELOPMENT ACTIVITIES
The following development and redevelopment program would be anticipated and
would be supportive of the goals and objectives of the Redevelopment Plan:
* Retail Development
200,00 square feet of gross retail space
1,200 parking spaces
* Housing for the Elderly
* 269 units
* 269 parking spaces
* Redevelopment
PUBLIC IMPROVEMENT PLAN
The following physical improvements will be made in the Earle Brown Farm
Redevelopment Area by the City of Brooklyn Center to support private
construction activities, improve traffic circulation, encourage better land use,
create an aesthetically pleasing environment, and foster the social objectives
outlined in the Redevelopment Plan.
• 1. Street Improvements
A. Traffic Signals
a. Shingle Creek Parkway and Summit Avenue
b. Shingle Creek Parkway and John :Martin Drive
• C. Summit Drive and Earle Brown Drive East
d. Summit Drive and Earle Brown Drive West
e. John Martin Drive and Earle Brown Drive
B. Road Improvements
a. Bituminous Resurfacing of Shingle Creek Parkway
between I -94 and John Martin Drive
C. Water System Improvements
D. Sanitary Sewer System
a. Sanitary Sewer System Evaluation study of all sanitary
sewers within the district
E. Streetscaping and Sidewalk (See Figure II)
F. Earle Brown Farm Renovation
a. Renovation and preservation of the Earle Brown Farm
with the Barn and Hippodrome being used as a
multipurpose conference banquet facility.
LAND USE
The Redevelopment Plan would not change the land use pattern in the Tax
Increment P
nt Financing District except that the Earle Brown Farm site would be
rehabilitated and used in a manner more intense than its present underutilized
state. No street relocations are contemplated. Development of most remaining
vacant parcels is expected to be of a commercial nature, either retail or high -rise
office. There is also the potential of high -rise residential development adjacent to
the Earle Brown Farm site on land which is presently zoned I -1 and designated in
the City's Comprehensive Plan for high -rise office.
The Earle Brown Farm historic site, as described in the state register of historic
places, is contained on an 11.5 acre parcel. An office building of approximate
1920's vintage that was used by Earle Brown is located on an adjacent 3.5 acre
parcel. These parcels are being acquired by the City for redevelopment. In
addition to the historic Earle Brown Farm site, there is excess land area which will
be sold for private development. Any private development on these parcels will be
in appropriate aesthetic and functional relationship to the rehabilitated Earle
Brown Farm site, whether the overall land use be of a commercial or residential
nature.
To better insure that the land use in the vicinity of the Earle Brown Farm site is
compatible with the rehabilitation of the Farm and with surrounding developments,
the City will solicit proposals for redevelopment of the Farm site. These proposals
should set forth various uses that could occupy each of the existing farm buildings.
Such proposals should also specify site improvements on a site and landscape plan
and the cost of all building and site improvements. An evaluation of the land use
as well as other aspects to these proposals will be made by the Planning
Commission and the Earle Brown Farm Task Force advisory to the City Council.
Evaluation of development /redevelopment proposals will be made in light of the
City's Comprehensive Plan. The Plan presently recommends high -rise office use on
7
• the land where the Earle Brown Farm site presently exists and on adjacent property
north of Summit Drive. Proposals which involve alternate uses, if chosen, will have
to contain a la d use analysis g
n 1
justifying an amendment to the City's Comprehensive
n y sis
) Y
Plan. One such land use has been obtained from BRW, Inc.
ENVIRONMENTAL IMPACT
The environmental impact of the proposed redevelopment activities is expected to
be minimal and, on balance, positive. Beneficial effects of the redevelopment
project include:
- Restoration and re -use of a historic site listed on the Minnesota Register of
Historic Places
- Aesthetic enhancement of public rights -of -way within the district
- Pedestrian traffic in the district will be better accommodated
-Land with unstable soil will be improved to make it buildable for high
density housing
- Preservation of wetlands adjacent to development
Possible adverse effects resulting from redevelopment activities include:
- Potential development of land. not in accordance with the City's current
Comprehensive Plan. It should be noted that the City does not intend to
approve such development without a review and amendment of the
Comprehensive Plan.
ACQUISITION, RELOCATION AND CLEARANCE ACTIVITIES
It is the intent of the EDA to acquire the Earle Brown Farm in order to assure its
renovation and preservation. Professional property appraisers will recommend a
fair market value for the property, and the owner will have a right to obtain
independent appraisals. No condemnation will take place. Businesses and residents
whose property acquired and are dislocated because of such acquisition will be
assisted with their relocation.
PROJECT ADMINISTRATION
The Earle Brown Farm Redevelopment Project will be administered by Mr. Gerald
G. Splinter, City Manager, under the direction of the EDA.
REHABILITATION PROGRAM
It is proposed that the EDA assist in the rehabilitation of deteriorated commercial
structures within the District. Financial assistance may be provided in the form of
low interest loans and possibly matching grants. All rehabilitation performed under
this program will meet the requirements of state and local building codes.
8
RELOCATION PROGRAM
All relocation activities of the Earle Brown Farm Redevelopment Project will be in
conformance with the Minnesota Uniform Relocation Act (M.S. 117.50 -.56) and a
relocation plan will be provided.
MAINTENANCE OF THE PROJECT AREA
Activities proposed for the Earle Brown Redevelopment Project Area will be
maintained by the City of Brooklyn Center and the Brooklyn Center EDA through
the use of Tax Increment Financing, Community Development Block Grant funds,
Municipal State Aid Roadway funds, special assessments � and other sources of
revenue.
MODIFIED EARLE BROWN FARM TAX INCREMENT FINANCING DISTRICT
FINDINGS OF FACT
1. The Earle Brown Farm Tax Increment Financing District is a Redevelopment
District. The proposed District meets the qualifications set forth for a
Redevelopment District in Minn Stat Section 469.174, subd. 10(a)(2). That
the following conditions are reasonably distributed throughout the District.
a. One hundred (100) percent of the Parcels within the Earle Brown
Farm Redevelopment District are occupied by buildings, streets,
utilities, or other improvements.
b. At least twenty (20) percent of the buildings are structurally
substandard as defined by Minn Stat Section 469.174, subd. 10(b).
Eight (8) of the sixteen buildings within the district are determined to
be substandard.
C. At least another thirty (30) percent of the buildings are in need of
substantial renovation or clearance in order to remove existing
conditions such as inadequate street layout, vehicular and pedestrian
safety hazards, parking inadequacies, incompatible land uses or land
use relationships, overcrowding of buildings on the land, obsolete
buildings not suitable for improvement or conversion, or other
identified hazards to the health, safety, and general well being of the
community. Specifically, five (5) buildings, or 31 percent of all
buildings in the district are in need of substantial renovation.
.Determinations were made by on site inspections and subject to a
structural analysis report.
The Earle Brown Complex is in need of immediate renovation in order to assure its
preservation. The preservation of this historic site has been given a high priority
by the residents of Brooklyn Center according to the 1981 Brooklyn Center
Resident Survey. Certain properties maybe unsuitable for development without
public assistance because of the need for extensive soil corrections.
Vacant buildings occupy other parcels.
9
STATE OF OBJECTIVES
The objective of the EDA for the improvement of the Earle Brown Farm Tax
Increment District are set forth in the accompanying Redevelopment Plan. The
Plan is being modified at this time to permit use of some of the increment
generated within the original Earle Brown Farm Tax Increment District to be
utilized for other purposes within a wider geographic area.
PROPERTIES TO BE INCLUDED IN THE TAX INCREMENT FINANCING
DISTRICT
The Earle Brown Farm Redevelopment Area is illustrated by Figure III. The
Property Identification Numbers of the parcels contained within the Project area,
and a boundary description are as follows:
02- 118 -21 -11 -0001 35- 119 -21 -43 -0002
02- 118 -21 -12 -0001 35- 119 -21 -43 -0004
02- 118 -21 -12 -0002 35- 119 -21 -43 -0005
02- 118 -21 -12 -0003 35- 119 -21 -43 -0006
02- 118 -21 -12 -0004 35- 119 -21 -43 -0007
02- 118 -21 -12 -0005 35- 119 -21 -43 -0008
02- 118- 21 -12- 0006 35- 119 -21 -44 -0001
02- 118 -21 -12 -0007 35- 119 -21 -44 -0007
02- 118 -21 -21 -0003 44- 119 -21 -44 -0006
• Beginning at the Northwest corner of Tract A, Registered Land Survey No. 1300,
thence North 50 degrees 26 minutes 13 seconds West along the Westerly extension
of the Southerly right of way line of John Martin Drive to its intersection with the
Westerly right of way line of Shingle Creek Parkway, thence Northeasterly along
said Westerly right of way line to a point of intersection with the Westerly
extension of the Northerly boundary line of Lot 1, Block 2, Brookdale Corporate
Center, thence Easterly along said extension of said Northerly boundary line of said
Lot 1, Block 2 to the Northeast corner of said Lot 1, Block 2, thence South 87
degrees 14 minutes 38 seconds East a distance of 704.75 feet, thence South 4
degrees 05 minutes 50 seconds West a distance of 16.90 feet to the Northerly right
of way line of Earle Brown Drive, thence Southerly and Westerly along the Easterly
and Southerly right of way line of said Earle Brown Drive, extended across Summit
Avenue North, continuing and to the most Westerly corner of Tract M, Registered
Land Survey No. 1325, thence continuing Southwesterly along the extension of said
right of way line of said Earle Brown Drive to the Southwesterly right of way line
of John Martin Drive, thence Northwesterly along said right of way line of said
John Martin Drive to the point of beginning.
ACQUISITION PLAN
Property will be acquired within the Earle Brown Farm in order to accomplish the
renovation objectives set forth in the Redevelopment Plan. Properties to be
acquired include 35- 119 -21 -44 -0001 and 35- 119 -21 -44 -0002. All acquisition
activities will be according to applicable state and federal regulations. A
professional appraiser will recommend fair market value for each property to be
acquired and owners will have the right to obtain independent appraisals and
contest the offer in a court of law.
10
RELOCATION PLAN
No relocation activities are anticipated during the proposed project. Should
relocation become necessary, it will be done in accordance with the Minnesota
Uniform Relocation Act. One (1) business and one (1) resident are located within
the boundaries to be acquired.
TAX INCREMENT DISTRICT FINANCE PLAN
The financial feasibility of the proposed redevelopment program described earlier,
utilizing a Tax Increment Financing Program will be analyzed in this section. Tax
increment financing will be used for the acquisition and renovation of the Earle
Brown Farm, its maintenance, the streetscaping plan, and necessary soil
corrections.
ESTIMATED PROJECT COSTS
The estimated project costs are based solely upon those projects involving
expenditures on the part of either the City or EDA. Table I represents the total
redevelopment costs including the cost of acquiring all privately held land within
the district. The costs also include interim finance costs based upon assumptions
outlined in this section under "Revenue Sources ".
ANTICIPATED DEVELOPMENT
1. Construction of 130,000 square feet of retail (Target) is anticipated
along Shingle Creek Parkway between the intersection of Summit
Drive on the north and John Martin Drive on the south. Current
zoning is C -2. It is anticipated that construction will begin in the
summer of 1985. See Figure IV.
2. Construction of 269 units of apartments. The project is to be
constructed on the Earle Brown Farm site. The land is presently
zoned I -1 and will necessitate a rezoning to R -7. Construction to
start in the spring of 1987. See Figure V.
.3. Construction of 67,000 square feet of retail on the parcels located on
Summit Drive and Earle Brown Drive. Present zoning is C -2.
Construction to begin in 1988. See Figure VI.
4. Renovation of the Earle Brown Farm. Acquisition is anticipated by
the summer of 1985. Renovation of the existing building will start in
the spring of 1986. See Figure VIII.
5. Traffic Light Installation. See Figure IX.
• TABLE I
ESTIMATED PROJECT COSTS
Acquisition S 3,260,000
Restoration 8,300,000
Trust Fund 750,000
Administration 240,000
Professional Services 150,000
Fees and Permits 66,000
Streetscape 985,000
Public Improvements (area -wide) - 1,300,000
Utilities (area -wide) 200,000
Parking Ramp 1,500,000
Furniture, Fixtures and Equipment 650,000
Miscellaneous 500.000
Subtotal 517,901,000
Financing Costs:
Issuance S 45,000
Discount 1[ $19 per S1,000. 127,300
Capitalized Interest - 1,956,409
. Total Costs 520,029,709
Less:
Land Sales S 650,000
CDBG Funding 1,000,000
Assess ment /MSA 1,300,000
Investment Earnings 400,000
TOTAL BONDING COSTS $16,679,709
REVENUE SOURCES
The primary revenue source for the acquisition and redevelopment of the Earle
Brown Farm and the streetscaping plan for the District will be tax increment
financing bonds. Also available for the acquisition of the Earle Brown Farm are
Community Development Block Grant Funds and land sales.
The primary revenue source for other public projects will be special assessments,
Municipal State -Aid Roadway Funds and local roadway funds. Possible future
redevelopment loans and soil correction projects would be funded with tax
increment dollars but such projects would not be bonded for.
For the acquisition of the Earle Brown Farm, it is anticipated that 51,000,000 in
Community Development Block Grant Funds would be available. Land sales for the
development of rental units are estimated at 5650,000.
�9
• The estimated captured value is based upon development completed and fully
assessed by 1991. In addition to the capture of the increment for new
development, it is anticipated that additional increment will be obtained for
increased values, both new and existin g development, develo ment during he life of the district.
g
It is assumed that assessed values will increase at three (3) percent annually.
Y
Based upon the estimated assessed value captured (see Table II) within the district
a bond issue for twenty (20) years at ten (10) percent with four (4) years of interest
payment only would result in a maximum bond issue of $7.4 million.
While the Tax Increment and Redevelopment District is established for a maximum
period of twenty -five (25) years, it is the desire and intent of both the City and the
EDA to terminate this District at such time when reserve funds are of a sufficient
amount to assure the completion of the project and the retirement of all
indebtedness associated with the project. (See Addendum B - Cash Flow Analysis).
IMPACT ON TAXING JURISDICTIONS
The impact of the creation of the Earle Brown Farm tax increment financing
district on other taxing jurisdictions was discussed in the original tax increment
financing plan. The City does not expect that this modification will have any
impact on taxing jurisdictions beyond what has been previously disclosed.
BR291 -019
•
20
KENNEDY & GRAVEN
CHARTERED
Attorneys at Law JAMES J. THOMSON
470 Pillsbury Center, Minneapolis, Minnesota 55402 LARRY M. WERTHEIM
, ROBERT A. ALSOP
(612) 337 - 9300 BONNIE L WILKINS
BRUCE M. BATTERSON JOE Y. YANG
RONALD H. BATTY Facsimile (612) 337.9310 —
STEPHEN J. BUBUL
JOHN B. DEAN DAVID L. GRAVEN (1929.1991)
DANIEL J. GREENSWEIG
DAVID J. KENNEDY OF COUNSEL
CHARLES L. LEFEvERE
J OHN M. LEFEV D RE, JR. WRITER'S DIRECT DIAL ROBERT C. A
ROBERT L. D IDS N
ROBERT J. LINDALL WELLINGTON H. LAW
ROBERT C. LONG 337.9228
JAMES M. STROMMEN CURTI B. O
AR
CORRINE H. THOMSON T. JAY A. PEARSON
T. AV SALMEN
MEMORANDUM
June 5, 1996
TO: Brad Hoffman`
Michael McCauley
Judith Bergeland
FROM: Steve Bubul
• RE: Earle Brown Heritage Center
You asked me to summarize the limitations applicable to leases and contracts entered into by the
Brooklyn Center Economic Development Authority (the "EDA ") in connection with the Earle
Brown Heritage Center and the Inn at the Farm (collectively, the "Facilities ").
The Facilities were financed with proceeds of the City's $5,250,000 General Obligation Tax
Increment Bonds, Series 1985A (the "1985 Bonds," since refunded) and $6,050,000 General
Obligation Tax Incremen Rnnds Se ries 1491 Q (the "1991 Bonds "l The 1:1 C. :T� �;; C:C;;;rt
_ �. ,. r
"essential function bonds," as the Facilities are owned by the EDA performing its essential
governmental functions.
In order to prevent the Bonds from becoming "private activity bonds ", the Facilities must be
deemed to be a governmental use. ' Under federal laws and regulations, bonds are considered
to be used for a private use if more than 2570 (in the case of the 1985 Bonds) or 10% (in the
case of the 1991 Bonds) of the proceeds are used for any private business use.
• '. A bond is a "private activity bond" only if it meets both a private use test and a private
security test. Existing contractual arrangements probably create private security for the Bonds,
so the Bonds must avoid meeting the private activity test in order to remain tax exempt.
Avoiding private use raises two questions. First, to what extent may the EDA contract with
private entities to operate the facilities? Second, to what extent may the EDA lease or sell the
Facilities to private entities?
A. Management Contracts
Federal rules provide "safe harbor" guidelines under which the EDA may contract with private
businesses without resulting in the Facilities being treated as a private business use. Following
is a summary of the current guidelines:
Generally, a management contract must provide reasonable compensation for services rendered.
The contract must not provide for any compensation or services based on a share of net profits.
Compensation bases on a percentage of gross revenues or expenses, but not both, is generally not
considered based on a share of net profits.
Permitted Arrangements
The compensation system in each management contract must fall into one of the following
categories:
1. 50% of the compensation for each annual period is based on a periodic fixed fee. The
fixed fee may increase by an objective external standard, such as Consumer Price Index.
2. All compensation is based on a capitation fee or a combination of a capitation fee and a
P P P
periodic fixed fee (not relevant in this situation).
3. All compensation is based on a per -unit fee or a combination of a per -unit fee and a
periodic fixed fee. The contract must have a fixed term no longer than 3 years including
renewals, cancelable by the EDA at the end of the second year. A per unit fee is a fee
based on a unit of service provided, for example, a stated dollar amount for each car
parked.
A fourth option, allowing a two -year contract where compensation is based on a percentage of
gross or adjusted revenues, is available only during a facility's initial start -up period. That option
would no longer apply to the Facilities.
If the EDA wishes to pay service providers for the Facilities based on a share of net revenues,
that arrangement would be possible only in the context of option 1 above: that is, at least 50%
of the compensation would have to be a fixed fee, with the balance based on net revenues.
Term
Unless specified otherwise above, the contract term may not exceed 5 years, and the EDA must
have the right to cancel by the end of the third year. In all cases, cancellation must be permitted
without penalty or cause. Termination penalties include: a limitation on the FDA's right to
compete with the service provider; a requirement that the EDA purchase equipment, goods or
-- ;
services from the service provider; and a requirement that the EDA pay liquidated damages for
• cancellation of the contract. However, a requirement effective on cancellation that the EDA
reimburse the service provider for ordinary and necessary expenses or a restriction on the EDA
against hiring key personnel of the service provider is generally not a contract termination
penalty.
No related parties
The private party must not have any relationship with the EDA that substantially limits the
FDA's ability to exercise its rights, including cancellation rights, under the contract. No more
than 20 percent control in voting rights by either party over the other is permitted. The EDA and
the private entity may not be related persons or part of the same controlled group (as those terms
are defined in federal law and regulations).
As a final note, proposed regulations issued by the Internal Revenue Service would modify these
safe harbor guidelines generally allowing longer contract terms under certain compensation
systems. However, it is uncertain when the new regulations will be become final, and unlikely
that the final regulations will be applicable to outstanding bonds. Nevertheless, we will keep you
posted on any changes that might affect the Facilities.
B. Sale and Lease
• Sale or lease of the Facility (or a portion thereof) to a private entity constitutes a change in use
from governmental to private. Such a transfer can occur without rendering the Bonds taxable if
all the following conditions are met:
1. As of the date of issue of the Bonds, the City and EDA reasonably expected to use
the proceeds for a governmental use for the entire term of the issue.
2. The proceeds of the Bonds were used for a governmental use for at least 5 years after
the later of the date of issue of the Bonds or the date the Facilities were placed in service.
3. Any agreement between the new user and the EDA are bona fide and arm's- length,
and the new user pays consideration equal to the fair market value of its use of the Facilities.
4. No circumstances are present that indicate an attempt to avoid directly or indirectly
the requirement of Sections 103 and 141 to 150 of the Internal Revenue Code or the conditions
of these "change in use" rules.
5. The City and EDA take one of the following remedial actions:
(a) Redeem the "nonqualified Bonds" - -the portion allocable to the changed use - -at the
earliest call date after the change in use, or if the Bonds are not callable within 90 days of the
• change in use, establish an irrevocable escrow is established within that time period to defease
the Bonds. If the Facilities are sold at a loss (i.e., the sale proceeds are less than the proceeds
- = -- 3
of the nonqualified Bonds), the City must use its own funds to redeem or defease the entire
amount of the Bonds, unless the sale proceeds are less than $5,000,000.
(b) Use the disposition proceeds for an alternative governmental use. The disposition
proceeds must be allocated to expenditures for the alternative use within one year after the
change in use. Any proceeds not applied to the qualified alternative use must be used to redeem
a pro rata share of the "nonqualified Bonds." If the proceeds are less than the proceeds of the
nonqualified Bonds, the City must use its own funds to redeem a pro rata share of the
nonqualified Bonds.
(c) The Facilities are used for an alternative governmental use. (In the context of a sale,
this would mean the Facility is sold to another governmental entity that uses them for a
governmental purpose.)
I assume the City could comply with requirements 1 through 4 above regarding the Facilities and
Bonds. In the case of a sale, the City could also take one of the "remedial actions" described
in item 5 (most likely, application of the sale proceeds to defease the Bonds). The only difficulty
would be if the Facilities were sold at a loss: the City would have to redeem part of the Bonds
with other funds, unless the sale proceeds are less than $5,000,000 (which seems unlikely unless
the sale involved only a portion of the Facilities).
It would be more difficult for the EDA to lease all or part of the Facilities. The lease would
constitute a change in use requiring one of the remedial actions described in item 5 above.
Within 90 days after entering the lease, the Bonds allocable to the leased area would have to be
defeased. However, the City would receive lease payments over time, and would not have
sufficient money up front to fund a defeasance escrow. Therefore, the City would have to fund
the escrow from other funds.
The same problem occurs if the City chose to use the "disposition proceeds" for an alternative
government use, as described in 5(b). The allocation of disposition proceeds must occur within
one year after the change of use. This is not possible with lease payments to be received in the
future, more than one year after the change in use.
Consequently, a lease of the Facilities to the private entity is probably not a realistic option
unless and until the Bonds are paid or defeased.
As a final caveat, up to 10 percent of the proceeds of the 1991 Bonds, and 25% of the 1985
Bonds, may be used for a private business use without constituting a "change in use" or rendering
the Bonds taxable. A portion of the Facilities could be leased within these limitations.
As with the management contract rules, the change of use rules would be modified by proposed
regulations that are not yet effective. The proposed regulations would in some respects be more
permissive regarding change in use, in others less so, and could be applicable to outstanding
bonds. Again, we will keep you posted on any changes.
•
5 = --
=_- 4
I hope this discussion helps; given the complexity of federal regulations, there is no simple
. explanation of almost anything related to tax exempt bonds. Feel free to call me if any points
need clarification.
cc: Charlie LeFevere
•
5
•
MEMORANDUM
TO: Stephen J. Bubul, Attorney at Law
FROM: Michael J. McCauley, City Manager
DATE: August 23, 1996
SUBJECT: Earle Brown Heritage Center
Thank you for your letter of August 19, 1996, regarding the use of bond proceeds. I have asked the
finance department to prepare a matrix of the operating deficit transfers that have been made. I will
also be having Mr. Hoffman assemble the current plan. After those materials have been compiled,
I would ask that you review those materials and advise with respect to the specifics that have been
undertaken by the City whether or not, under the tax increment financing plan, the expenditures that
have been made from tax increment financing district revenues have been used for authorized
purposes. In reviewing your opinion of August 19, it appears that it is acceptable to use tax
increment for operating costs of the Heritage Center, provided the plan authorizes these
expenditures. I anticipate having these materials assembled within the next week and would
appreciate being advised by you, upon the receipt of the subsequent memo that will accompany the
actual documents, as to the time frame within we might expect you to have an opportunity to fully
review the documents so as to give an opinion as to the specific expenditures that have been made.
Thank you for your assistance in this matter.
cc: Mayor and Council Members
Charles Hansen, Finance Director
Brad Hoffman, Community Development Director
MEMORANDUM
TO: Stephen J. Bubul, Attorney at Law
FROM: Michael J. McCauley, City Manager
DATE: September 6, 1996
SUBJECT: Earle Brown Heritage Center
Attached please find a copy of the original redevelopment program and tax increment plan and the
modified redevelopment plan and modified tax increment financing plan along with a spreadsheet
prepared by the Finance Department showing the actual balances and use of tax increment proceeds
and bond proceeds. As indicated previously, I would appreciate your review of these materials and
opinion as to the appropriate use of tax increment revenues and bond proceeds. This would be an
expansion of the opinion that you issued on August 19 regarding these matters. I appreciate your
i prompt attention to this request.
Attachment
KENNEDY & GRAVEN
CHARTERED
STEPHEN J. BUBUL 470 Pillsbury Center, Minneapolis, Minnesota 55402
Attorney at Lain
Telephone (612) 337 -9300
Direct Dial (612) 337 -9228 Facsimile (612) 337 -9310
August 19, 1996
Michael J. McCauley
City Manager
City of Brooklyn Center
Community Development Director
6301 Shingle Creek Parkway
Brooklyn Center, MN 55430
RE: Earle Brown Heritage Center
Dear Mike:
I apologize for the delay in responding to your July 24, 1996 letter; vacation plans and deadlines
on other financings have intervened.
You asked me to elaborate on the acceptable uses for (1) proceeds of the City's $5,250,000
General Obligation Tax,Increment Bonds, Series 1985A (the "1985 Bonds," since refunded by
the $4,275,000 General Obligation Tax Increment Refunding Bonds, Series 1992A, referred to
as the "1992 Bonds ") and $6,050,000 General Obligation Tax Increment Bonds, Series 1991A
(the "1991 Bonds "), and (2) annual collections of tax increment. Specifically, you asked what
types of expenses these 'funds may be used for, particularly whether such funds may be used to
pay operating deficits of the Earle Brown Heritage Center as opposed to capital costs.
As to the bond proceeds, the short answer is that there should be no proceeds available at this
time; all proceeds of the 1985 Bonds and the 1991 Bonds have previously been allocated to pay
project capital costs. At the time the City issued its 1991 Bonds, all costs of the project to date
were analyzed, separating costs attributable to purely public portions of the project from those
that constituted private , uses. All costs since the initial 1985 Bonds were issued had been
financed from internal City or EDA funds. The 1991 Bonds were allocated to repay the internal
loans. (See attached description of bond proceed uses and Certificate as to Use of Proceeds).
Assuming the City's accounting records reflect the reimbursement described above, all bond
• proceeds are considered to have been spent. (Written evidence of that reimbursement allocation
is critical: without it, the proceeds would not be considered spent and would be subject to yield
Michael McCauley
Page 2
August 19, 1996
bond proceeds and may be used subject to whatever restrictions apply to that fund or account.
For example, if proceeds were used to repay a loan from the EDA general fund, moneys now in
the general fund could be used to pay operating costs of EDA -owned facilities, including the
Heritage Center.
On a related note, use of tax exempt bond proceeds for operating as opposed to capital costs
raises complex tax questions. Generally, such expenditures are treated a "working capital
financing," subject to complicated rules governing when the proceeds are considered to have been
spent. Suffice it to say that use of long -term bonds to finance working capital is problematic and
usually inadvisable.
As to the tax increment generated from the Earle Brown Farm TIF District, the EDA may apply
such moneys toward operating costs of the Heritage Center, subject to certain conditions.
The general rule (Minnesota Statutes, Section 469.176, subd. 4) is that tax increment may be
spent only in accordance with a tax increment financing plan, for uses authorized in the
underlying development and redevelopment statutes. An EDA may use increment to pay "public
redevelopment costs" pursuant to Minnesota Statutes, Sections 469.001 to 469.047 (the HRA
statute, under which the Earle Brown Farm redevelopment project was established). The term
"public redevelopment costs" includes all costs that the EDA is authorized to incur under the
HRA statute in connection with a redevelopment project, which includes the cost of operating
a project. Therefore, tax increments may be used to pay ongoing operating costs of the Heritage
Center.
The only caveat is that such expenditures must be authorized in the tax increment financing plan
for the TIF district from which the expenditures would be paid. The most recent version of the
plan for the Earle Brown Farm TIF District in our files is dated February 1, 1991. That plan
authorizes a total of w20,000.0'JO in connection with the Earle Brown Farm, including $750,000
for an item designated "Trust Fund." It is not clear to me what that term means, but perhaps it
could be construed as an intent to maintain an operating reserve. If the EDA wishes to use
increment for operating deficits, it would be prudent to clarify the TIF Plan budget. As long as
the modification does not increase the total tax increment expenditures in the plan, the
modification can be approved simply by resolution of the EDA without public hearing and notice
to the county and school district.
Similarly, if the goal is to use increment from the Brookwood TIF District (which is also pledged
to pay the 1991 Bonds), a plan modification would be advisable.
Michael McCauley
Page 3
August 19, 1996
Of course, this discussion assumes there is sufficient tax increment above and beyond the amount
needed to pay debt service on the 1991 and 1992 Bonds. Increment from the Earle Brown and
Brookwood TIF Districts is pledged first to those obligations.
I hope this letter answers your questions. If you need more information, please let me know.
Very truly yours,
Ste he J
P
cc: Brad Hoffman
Charlie LeFevere
APPENDIX 11
CITY OF BROOKLYN CENTER, MINNESOTA
EARLE BROWN FARM PROJECT
COMPUTATION OF TAX - EXEMPT ELEGIBLE COSTS
Project Costs per Appendix 1 $15,200,736
Less: Designated Taxable Costs X650,1031
Net Designated Tax - Exempt Costs $10,550;633
Less: Net Proceeds of 1985 Bonds* (4,640,6331
Net Tax- Exempt Costs Eligible to Finance $ 5,910,000
COMPUTATION OF BOND PROCEEDS SUPPORTABLE DEBT
1991 Bonds Par Amount $6,050,000
Less: Issuance Costs (50,000)
Allowance for Discount (90,000
Net Bond Proceeds $5,910,000
* 1985 Bonds Par Amount $ 5,250,000
Less: Allowance for Discount (99, 750)
Less: Capitalized Interest (509,61Z)
Net Bond Proceeds $ 4,640,633
Prepared by
SPRINGSTED Incorporated
December 28, 1990
Page 6
(EDAEBF) CITY OF BROOKLYN CENTER
ECONOMIC DEVELOPMENT AUTHORITY
EARLE BROWN FARM - PROJECT TO DATE SUMMARY
Program 1965 1986
Ntimtler Daecriptlon 1987 1988 1989 1990 Project
Actual Actual Actual Actual ACtunI Actun) To DaLo
$2,209,593
00 Lend Acquisition --------- --- - - - - --
'-- - --'-- --- - - - - --
--- ------
000 Interest Expense 44,645 $2,209,593
920 Oenerel Administration 14,305 $36,072 44,645
9 21 operation and Maintenance 14,101 16,652 3 3 S7,7 $5 $69,506 250,151
,77557 6,016
923 storm Sewer (06 -00) 144,185 (85 42,565
924 Phase I Streetscape (86 -09) ,467) 2,039 50,710
925 Summit Drive Sidewalk (06-14) 73,074
10,031 73,074
926 Phase II Streetscape (86 -15) 44,690 6 10,031
3
9 27 Commons Water System (86 -20) ,707 51,397
5041 580,6623 23 155017
928 Phase III Streetscape (86 -21) , 39, 1,501 17 80,073
929 Jim Ryan Agreement 5,041 ,
740,681
9,695
930 Earle Brown Commons 17,761 275 27,731
931 8treetecape Planning 958,118 1,616 4,751
34,716 1,596 964,485
93 2 E.B.F. Market Study 11,221 421 36,312
933 E.D.F. Restoration 11,642
9
934 E.B.F. Management Start -up 301,557 4,714,9'/9 4,43/,06, 1453,601
935 Bed and Breakfast 104,585 433,758 538,343
936 S:C.P. Street Impr (85 -26) 4,845 4,845 yy
522,049 b
n --- - - - - -- --- - - - - -- --- - - - - -- --- - - - - -- 522,049
--- - - - - -- --- - - - - -- -- - - - - --
TOTAL BUDOET
S2, 362, 644 $1,383,419 $645,779 $1,146,702 $5,225,127 $4,437,065 15,200,736
m $
• ......... -
I
CERTIFICATE AS TO USE OF PROCEEDS
$8,050,000
CITY OF BROOKLYN CENTER, MINNESOTA
GENERAL OBLIGATION TAX INCREMENT BONDS,
SERIES 1991A
This Certificate has been prepared, and is being executed and delivered, in
connection with the issuance by the City of Brooklyn Center, Minnesota (the
"Issuer") of its General Obligation Tax Increment Bonds, Series 1991A (the "Bonds')
In the aggregate principal amount of =8,050,000. The undersigned Brad Hoffman,
Executive Director of the Economic Development Authority for Brooklyn Center
(the "EDA ") does hereby certify as follows:
1. I am the duly qualified and acting executive director of the EDA.
2. The proceeds from the sale of the Bonds will be expended on the date
of initial delivery thereof to reimburse the EDA for costs incurred by the EDA in
connection with (a) the acquisition, rehabilitation and equipping of the Earle Brown
Heritage Center (the "EBHC "), a convention center owned and managed d b th
g y e
EDA, (b) the Inn on the Farm the "Inn" a
( ) bed and breakfast facilit y owned and
managed by the EDA, and (c) certain streetscaping and public utilities (the
"Streetsca in located ed within n the Earle Brown Farm Redevelopment Project;
"
(together, the Facilities ").
3. The amounts reimbursed to the EDA will be used by the EDA to repay
loans made by the Issuer to the EDA to finance capital costs of
proceeds used b
P the Facilities.
Bond
P y the EDA to repay such loan will not be
sinking fund for the bonds and will be deposited in the funds of e he o lssuer l ffrom
which such loan was made.
4. A portion of the costs of acquisition and construction of the
Facilities was financed with proceeds of the Issuer's $5,000,000 Government
Obligation Tax Increment Bonds issued in 1985 (the "1985 Bonds") pursuant to the
Internal Revenue Code of 1954 (the "1954 Code").
5. To the extent that the EBHC and the Inn have been or will be from
time to time subject to management or food services contracts between the EDA
and a third party manager or caterer, or are leased to any entity other than a
political subdivision of the State of Minnesota, the present value of all payments
made to or for the benefit of the EDA or the Issuer in connection with any such
contract or lease, in the aggregate will not exceed an amount equal to ten percent
(10 %) of the present value of the proceeds of the Bonds (calculated on the basis of
the yield on the Bonds) and twenty -five percent (25 %) of the present value of the
proceeds of the 1954 Bonds (calculated on the basis of the yield on the 1954 Bonds).
6. Other than any management contract, food services contract or lease
described above, the EBHC and the Inn will not be used in the trade or business of
any person other than by short -term rentals on a rate -fee basis.
7. The Streetscaping is not used in the trade or business of any person
and is owned and maintained by the EDA.
1
Dated this 21st day of March, 1991.
. ECONOMIC DEVELOPMENT AUTHORITY
OF BROOKLYN CENTER
i�
BY:
Brad Hoff
Executive Director
2
, .Itate'g,r►c direc - - - - -- - -- _ - -.---- --- _._ —._. _.
'r, Recognition • • • •
uncovered her
even engineer -
P ace Glut Intenstifies ('Odes ' Battles Over Convettions
ion from a staff
► a more central By R OBERT BFIMER Richard Krieg, executive director of the Institute for Mel
maker of docu staff Reporter of'rue W Al.l. S J01111NA1. ropolitan Affairs.
ems. As part of Kansas City, Mo., tried almost everything to hold on /c, �r,� , j "It's a thoroughly irrational market," says Ifey
4;.
ated an employ- to the annual Fulu•e Farmers of America convention: It �•�. ";, wood Sanders, a professor of urban administration ai
generous sever - doubled the size of its convention center's exhibit space )1 _ Trinity University in San Antonio. With so much span
.:�
in case of some- to 400,000 square feet and then agreed to provide the " available, many cities' expansion plans won't bring it
space rent -free. It offered free use of the nearby Kemper �' if the dollars to make the building worthwhile, predict
sports and concert arena, as well as $55,000 in food sub- Mr. Krieg. Adds Louis Pavledes, director of the civi+
IfNEXPECfED sillies. Local businesses promised $360,000 and free use _ center department for Detroit: "You will see sonu
the acquisition of a 24 -acre site to Kansas City North as a year -round ;' major shakeouts and you will see some cities getlinl
ut by BancTec, headquarters. out of the business."
But despite all that, after 70 years in Kansas City, the �, Already, there are warning signs. Bookings for 1999 it
'ms maker, and farmers convention will move to Louisville, Ky., hi 1998. 1` �,'„ Baltimore, which recently tripled its convention space
nt dismissal of "It's like the Cleveland Browns moving ff to Baltimore," ! are 33`70 lower than for 1998. And at a convention center it
s Ms. Reed puts g Providence, R.I., opened in 1993, the total spending w . says Kansas City Mayor Emanuel Cleaver.
ad file foresight /.,,•. i
g Across the nation, the competition for conven- ,"; convention visitors has yet to outpace the annua
negotiate that lions is intensifying, driven by a glut of convention ,.,_!! ! debt costs on the building, concedes Theodor
'I have this nice space. Lilies are using hefty incentives'and big tear r, . '' ,� /� Przybyla, acting director of the convention cente.
t and 1'rut start keting budgets to steal business from one another. At.. authority.
s" as a trainer the same time, the cities are continuing to expand - r +h,� , Big players like Las Vegas, Chicago, Orlando ;lit(
ilding corporate their spaces, afraid of being squeezed out if they e n f' ��_ t Atlanta, which offer interesting sights, hub all port
don't keep up. I 1 r and more marketing might and hotel space, un
In these uncer
The city of i,c►s Angeles last month persuaded the going to win out over smaller cities, Messrs. Kriei
l e. se Reed 50,000- member National Association of Music Mer- �` / a and Sanders predict. Las Vegas, whose 3.9 millim
ions research of chants to desert nearby Anaheim, Calif., the conven- t � I € _f square feet of combined convention space give it Ili
vest her well in lion site (or 25 years, by offering more booth space , _ " most in the nation, spends $.19 per square foot u
��� �� w
e reneurshi and charging less Than the -usual 30 cents pe
h r± :, :,_ �,_ "° " ti leased convention space annually to market the city
ring consultant square foot. Both Los Angeles and Anaheim are Mr. Krieg estimates. Orlando is next at $32.
out marketing, currently expanding their exhibit space. Bill RusseN Some conventions have always moved aroun
and curriculum Chicago recently lured the spring convention of from year to year, often to accommodate differen
;s taken classes Comdex away front Atlanta by promising more space, c ► ► constituencies or to provide attendees with na+
books, starting though the giant autumn computer show will remain € � , , places to visit. Of those that have stayed in n
o
Ili I,as Vegas. 'rhe Radiological Society is considering ;x A sim of convention centers that are expanding or y t � ?�.l place, some would be difficult to steal. Comdex offi
even before her moving its 60,000- person convention —which has been ooltsilring expansions over the next four years cials say they keep their fall show in Las Vegas br
gnilion' in Chicago for 40 of the past 50 years —to Florida be cause it's too large to move, and National Restau
So advanced b INCREASE IN so. Fr .
INCREA6
cause Orlando is offering cheaper lease rates, labor rant Association executives say they stay In Chicag ,
i 11 -year hiatus costs and hotels. Chicago 1,000,000% Las Vegas 30 0,000 1 for the same reason.
manager in the For the winning cities, there's plenty of money to 8alt 900,0 Orlan 400,000 But other conventions are vulnerable, and not)()(]
apartment of be made. The average Conventioneer spends $'210 it understands that better these days than officials t
000 600
rvlce she mas Anaheim , San Diego 900,000
day on hotels, food and other items, according, to the Kansas City. Since 19' -8, Future I arnaers of Ameria
volunteering for International Association of Convention and Visitor -` New Orleans 1,400,000 Sea , :' .,l > 100,000•, ij has brought tens of thousands of young farmers I
inns. She then Bureaus. Comdex, which draws '200,000 people, pro- Lot Angeles 160,000 San Francisco 400,000 Kansas City. For many, the convention was theh firs
—in marketing. vides a $280 million boost to the Los Vegas economy. taste of lute big city, and city officials welcomed Ili
uu reorganized, But many cities may end up losing money. In the 'Just usable exhibit and meetinpapace j chance to play host and affirm the city's f►erilage .a
rate- and public- 11 U.S. cities with the most convention space, capaci an agricultural center.
s. That meant ly will grow 21% between 1995 and 1998, says the Institute of convention facilities are planned In San Diego, San "When the FFA comes to town with their blue jackal,
o take on more for Metropolitan Affairs at Roosevelt university in Chica- Francisco, Sealtie, Chicago, New Orleans, San Antonio it's really a breath of fresh air," says 75- year -old .lame
other part of the go. In 12 other large cities, capacity will grow 12 during and many other cities. Leathers, who for 30 years has run the local volume€
that time, and similar expansion Is taking place in small- Yet attendance is growing only about 1 % a year at group that helps organize the convention. "We're in lov
Be. adaptable er cities and towns across the country. Major expansions trade shows and .1% a year at association slows, says Please Tarn to Page K7, Column 4
)n as`..a problem
mean� doing
ll� ' CUC thflt, ��riQ�9, M 1.S ' a { g Y P >at�s £ ; € 4 g '
t IV pti • z ri 3 t t a
t �.
�iis ��lteaays.
--^ - tr 7 0 7 'ir 7
space u1ut I ntensifies _
t
Battles Am
New Fox Kids Files
Ong Cities I .,19 $.
�a1a�,T1 With SEC' �' °� Conventions THE MOST
o apse . • H � �
Continued FYrom Page BI TO
.:
$ 150 Mill inIP0 with them." y'
-Y• Now Fuji's But Louisville offered a larger conven
FRA C no
HedgeofNew tion center —one million square feet —and -
ssh that may By a W M-L S• "ZT ,T StOff Re"rTer a bigger arena. It also offered a package of
:ores, in -store LOS ANGELES — Fox Kids Worldwide incentives, though neither Louisville au-
'ioto contests, Inc-, horities nor FFA officials c•• the new children's entertainment will disclose ' •..+.irr,r::
details.
s of the South company formed by the merger of Fox When FFA officials
eluded in TV Children's Network and closely held Saban lals ultimately chose
.dd. Entertainment Inc., Is seeking to raise SI50 Louisville, Kansas City felt betrayed. The
illion through a loss is expected to cost Kansas City's
a only reason mn initial public offer hotels, restaurants and retailers S14 mil -
image. The ing, according to a filing with the Securi- : ,;tip .
ties and Exchange Commission. lion. "Kansas City birthed the FFA," says r ',
a bitter 16- . Mayor Cleaver. "It's an unfortunate dis-
:odak. long a Fox Children's Network, a unit of play of disloyalty."
consumers. Rupert Murdoch's News Corp., agreed to And it may not be Kansas City's last ' yl
i very public, merge with Saban Entertainment earlier
. this month. Saban produces popular- TV - setback. One of the city's largest remain- ,,;�• ;<<;;;
ally blocking P ing conventions, the Vocational Industrial
uc market. shows for youngsters, including ",14ighty ' Clubs of America, is considering moving to
Morphin Power Rangers" and "X then," id - ,�,jj
;n certainly and'also supplies a large amount of pro- Texas because officals in Houston are �n(,6 n
y help," says g'ramming to Fox. offering more incentives. Kansas City has NETJETSZ
Fox Children's Network targets young- '
McMillan & already leased its convention hail to the
sultans. �� stets from two to 11 years old. group at a fraction of its regular rate, but
1 that's just Fox and Saban. which have long had Wayne Chappell. president of the Kansas
close ties, want to combine their kids' TV City convention bureau, vows that this
, inky, partic Production. distribution and programming
time the city won't be outbid.
.•g
to Amen-
any. In 1991, operations to compete more successfully
against other powerhouses in the market. Blockbuster Reshuffling F RACTIONAL OWN ERSHIP TAII.
:ssan Motor Rivals include Time Warner Inc.'s Warner Viacom's Blockbuster Entertainment FROM THE INDUS
'.3 American- • Bros. unit and Walt Disney Co. Group, which recently brought in new
'o tnof The companies believe that the kids' management to rejuvenate the video and Cal! Executive
=fin Y TV market is one of the world's fastest- music chain's operations, has resruffled 1- 800 -821 -_
growing, spurred by the growing appetite agency duties for the second time in less
eing Ameri- of international broadcasters and satellite than a year.
kfu'ed. U.S. channels.
se products The SEC filing Young & Rubicam, which landed the
, ive them as g Provides a rare glimpse Blockbuster video stores account in Febru-
into the growth and profitability of Fox ary. will now share creative duties with
"corge Ro- Children's Network and Saban Entertain- former Blockbuster agency Bernstein Rein Esc
=0 & Ash ment. where financial details to date of Kansas City. Y&R and Bernstein Rein public. will also share creative duties for Block-
aessing the haven't been available to the bli
ae far more According to the filing, FCN Hold- buster music stores. Previously, creative X1 f �tr
ing Inc., the parent company of Fox and media - buying duties for the music side
campaign Children's Network, had revenue of 5168.9 of Blockbuster's business were handled by NEW ExcLati
's, after all, million for the fiscal year ended July 2, the Chicago office of Foote Cone & Belding, C (.' S T O li BOOT ,fit K E
consumers 1995, and net income of 516.5 million. a unit of True North Communications:
:pact on the . Privately owned Saban Entertainment had FCB, which has handled the music account
y contrast,. revenue of 5242.5 million and net income of since Jury 1995, is estimated to have lost �£ '
that same $44.7 million for the fiscal year ended May about S20 million in billin
automobilek
31, 1995 gs.
take then . In addition, Young & Rubicam has
If the two companies were already retained all media planning and buying <_�� a � r �,. �,.� -`-•"" _-
�ing them- ' combined, they would have reported a total duties for Blockbuster video stores and
not being a of 5327.1 million in revenue and 571.4 video- product advertising. Bernstein Rein
'.ir. Rosen- million in net income on a pro - forma basis picks up media duties for music stores and
ended July 2, 1996, the music products, which were previously
grand cam- for the fiscal year
s stiff com- filing said. handled by FCB.
Fox Children's Network broadcasts 19 Bernstein Rein has been assigned cre-'
:s Pouring half -hours per week and is the highest- ative and media duties for a new vid
t corporate rated block of kids' programming among marketing effort aimed at kids. Bernstein
is 116 -year the four major networks.
any fruits Rein also picks up all field- marketing work
i any fruits The filings also reveal the impor- for both music and video stores, which had
=ad of i lance of "Mighty Vlorphin Power been split between Y&R and FCB. New ads°&
Rangers" and toy licensing agreements created by Bernstein Rein for the music
:can for the newly combined comp any. F t
"Power and video stores are expected to break in
Rangers," whose ratings have been declin- the fourth quamer. The remaining appoint-
ing for the past three years, accounted for ments are eff Jan. 1.
44`,'c of Fox Kids Worldwide Inc.'s revenue
sties/.ABC on a pro -forma basis for the fiscal year Kellwood Approves Buyback
:ie change ended July 2, 1996.
�e shorter A total of 35% of the newly com- ST. LOUIS — Kellwood Co. said direc-
t Capital bined companies' pro -forma revenue is to I0 a of the hea a repurchase Of roughly Alden Shoe Company 1
, 'Co., the derived from toy licensin; a m erchan � PP 1 n•.,^ \; ,,. ;..i
- +:�:,.•. :,,,,�..�:_ _ .. _ Million common sharps rn „
�rcra +;, .- . �� -
City of Brooklyn Center
A great place to start. A great place to stay.
•
October 17, 1996
Mr. Paul Moe
Department of Trade and Economic Development
500 Metro Square
121 7th Place East
St. Paul, MN 55101
RE: LOGIS
Dear Mr. Moe:
You have asked for a statement of the City's position on a potential LOGIS building in Brooklyn Center and
the use of bonds for its construction. The City Council has taken the position that the City, itself, would not
issue tax exempt financing for a building occupied by LOGIS. The basic rationale behind the City Council's
position is that the small amount of vacant commercial land remainin g P Y for development in Brooklyn Center
• would best be used for projects increasing the City's tax base. The proposed LOGIS facility would be tax
exempt and result in a net decrease in taxable roe rather than an increase. It was the tax t status exempt P ,
P rtY P
of the property that primarily influenced the City's decision not to use City resources to be involved in
issuing bonds. A separate issue was presented to the City Council with respect to whether the City Council
would authorize another municipality to issue bonds in Brooklyn Center. The Council indicated that it
would not be in favor of authorizing another political subdivision to issue bonds in the City of Brooklyn
Center.
The City of Brooklyn Center is a member of LOGIS and would anticipate a continuing relationship as part
of the joint powers agreement for LOGIS. Many of the City's computer applications and technology needs
are met through its participation in LOGIS. The Council's position on tax exempt financing, as indicated
above related to the issue of tax exemption and does not reflect on the City's participation in LOGIS or the
value in the services obtained from LOGIS.
Sincerely,
Michael J. McCauley
City Manager
MJM:sk
• cc: Mayor and Council Mem bers
6301 Shingle Creek Pkwy, Brooklyn Center, OLIN 55430 -2199 • City Hall & TDD Number (612) 569 -3300
Recreation and Community Center Phone & TDD Number (612) 569 -3400 • FAX (612) 569 -3494
An Affirmative Action /Equal Opportunities Employer
a
Fire Department
• 1997 Budget
Policies: + Respond in a timely and efficient manner to all emergency calls
+ To conduct fire inspection in commercial, industrial and rental units to comply
with current city fire and life safety codes and to work with owners of commercial
industrial and rental properties to maintain and reduce fire and life safety hazards
in all property in Brooklyn Center.
+ To work with school children and adults to educate them in fire safety.
The purpose of this Department is to respond to fires and emergencies in the city. We
also inspect all commercial, Industrial and rental units to see that they comply with current
fire and life safety codes. We also work with schools and industry to teach fire safety
awareness to children and adults. Most of this is done with volunteer members of the
Fire Department.
The proposed budget for the Fire Department has increased over 1996 by approximately
8.5% or $55,000, this increase was driven by two major factors, one is the requested pay
for the Volunteer Firefighters for drills, work details and truck inspections /checks. This
proposed pay would bring us close to par with other fire departments in the first &
second ring suburbs, and would help us to recruit more volunteers, the other large item
is the rebuilding of our present Scott Air Pac's or breathing apparatus. The balance of
the budget tries to hold the line similar to 1996 with a few items requesting some
additional funding due to increased operating cost. I would like to point out even with the
requested increase your Brooklyn Center Volunteer Fire Department is still a phenomenal
savings over a paid department.
Proposed 1997 Fire Department Budget 132
Personnel full & part time 394,502
Supplies 34,850
Consulting 4,300
Communications 8,430
Repair /Rental /Maintenance 4,000
Schools /Training /Conferences 22,350
Central Garage Rentals /Repairs 142,097
Capital Outlays 97,341
Proposed 1997 Fire Department (132) Budget Total $707,870
•
CITY OF BROOKLYN CENTER
1997 BUDGET
• REQUEST FOR ADDITIONAL PERSONNEL
1. Department Fire
2. Department Number: 132
3. Position Title: Pay Plan for Volunteer firefighters for drills, work details
truck checks and regular and recruit firefighters while attending fire vocational
schools.
4. Number Required: 6640 Hours 5.Pay Grade$10.00 Per Hour
6. Salary or Wage Range: From $ To $10.00 per hour
7. 1st Year Cost: $66,400
8. Indicate Need for Position(s)
( ) New Operation ( ) Expanded Services (X ) Increased Work
9. List below the job duties to be performed in the requested position(s).
Members of the fire department would receive $10.00 per hour while attending drills, work
details and when attending vocational training for firefighter I & II, 1st responder haz -mat and
while working around the stations, checking trucks, repairing equipment doing general fire
department maintenance.
10. Specify how the above listed job duties are currently performed.
Currently members of the Fire Department are not receiving and pay of performing work
around the stations, attending drills and attending vocational schools. We are the only Fire
Department in the 1st and 2nd ring suburban communities that don't receive pay for
preforming the above mention duties, in addition most other departments receive pay for
each fire run, we are not requesting run pay.
11. Explain the need for this position in detail.
SEE ATTACHED SHEET.
12. Additional cost associated with requested position(s):
Contractual Services $ 0 Supplies $ 0
Capital Outlays $ 0
TO: MICHAEL McCAULEY CITY MANAGER
FROM: RON BOMAN FIRE CHIEF
SUBJECT: VOLUNTEER FIREFIGHTER PAY PLAN FOR
DRILLS, WORKDETAILS & TRUCK CHECKS
DATE: JUNE 28, 1996
The Brooklyn Center Fire Department has been unique in the fact that over the years its
members have not received any pay for fire calls, training drills, work details /truck checks
or attending vocational classes. The rest of our North Suburban Mutual group which
consists of 22 other fire departments receive an hourly rate of $8.00 to $15.00 per hour
while preforming fire department functions including fire run pay.
While Brooklyn Center has over the years preformed all of the training drills, work details
and trucks checks for no remuneration to the members and saved the City hundreds of
thousands of dollars over its 47 years of operation, I feel we have to start a volunteer pay
plan in 1997 in order to attract and keep volunteer firefighters on our department.
I have met with other Fire Chiefs in adjoining cities and discussed some the items that
have worked for them and one of the items they stated that helped them was when they
started to advertise the volunteer firefighter positions as part paid positions; they said they
started to receive more firefighter applications during recruitment periods.
It is my personal feeling that we are competing for peoples time during a period when
families have both the people working, as well as having children that are active in outside
actives such as dancing, baseball, football hockey and many other actives, and when we
are trying to recruit members and explain to them they will have to put in' between 150
and 200 hour of training to become a member and in additional will have to commit every
Monday night
for training a well a 2 work per month and in addition will have
Y 9 s s o k details
9 p
to respond to 33% of all fire /emergency calls their available for, and we expect them to
commit all this time for no compensation, it is no longer reasonable in the 1990's we also
have to factor in that getting people to volunteer there time for anything is becoming more
difficult each year.
I do not feel it is any longer reasonable to expect we can continue recruit and retain
volunteer firefighters without implementing a minimal pay plan for our volunteer firefighters.
I am recommending that we budget for drills, workdetail /truck checks and training school
only, I am not recommending we do anything with or about our fire run pay, and keep
this at the volunteer level with no pay for fire runs.
i
City of Brooklyn Center
A great place to start. A great place to stay.
•
To: Mayor Kragness and Council Members Carmody, Hilstrom, Mann, and Nichols
From: Michael J. McCauley _
City Manager
Date: October 18, 1996
Re: Tax Increment Financing
The attached materials outline the 3 major tax increment districts (2 100 & 2101 have been
combined) in Brooklyn Center. A number of issues will be discussed on Monday night,
including:
1) options for dealing with Brookdale: due to the significant decrease in the value of
Brookdale, it does not contribute to the district
- options include
• - taking selected parcels out of the district in 1996 and putting
them back in 1996 (or 1997)
- if the values are not changed, the first $20+ million of
new activity /construction will not provide any increment
- this option would require action by the end of October to
start the process to modify the district
- waiting to see if base year will decrease due to appeals currently
pending, but this will not result in the same decrease as taking the
parcel out now and bringing back in at current values
2) 5 year rule for use of the 2102 district means that obligations must be incurred within 5
years of the district's creation (1994)
- options include special legislation or issuing more bonds (more bonds without a
project would be expensive and potentially for no benefit)
3) for district 2102, 15% must be spent on housing anywhere in the City (this may have
been satisfied at current bond levels with the Lynn River area acquisitions for housing)
6301 Shingle Creek Pkwy, Brooklyn Center, MN 55430 -2199 • City Hall & TDD Number (612) 569 -3300
Recreation and Community Center Phone & TDD Number (612) 569 -3400 • FAX (612) 569 -3494
An Affirmative Action 1 Equal Opportunities Employer
• 4) in district 2102, 75% must be spent within the district, but 25% may be spent in the
project area, which is larger than the district
5) each parcel in the district must benefit or it is out of the district (5 year)
•
•
• MEMORANDUM
To: Michael J. McCauley, City Manager
From: Brad Hoffman, Community Development Director
Date: April 12, 1996
Subject: Brooklyn Center TIF District Status Report
There are currently three (3) tax increment financing districts in Brooklyn Center. The first is a
housing district with a housing project area and the others are redevelopment districts with
redevelopment project areas. The first district was established in 1982 and the last in 1994. All
districts may exist up to 25 years.
A total of 292 parcels of the City's approximately 8,994 taxable parcels are in one of the TIF
districts. However, the parcels included in the TIF districts currently captures 44.19% of the
City's total tax capacity. The actual TIF in 1995 was 5.12% of the citywide tax capacity.
District 2100 Brookwood
Established 1982
• Termination Date 2007
District Type Housing
Project Area Type Housing
Number of Parcels 13
Location See map
Project Description 170 units of senior housing
Project activity • Land acquisition and write down
;930,000 Street development and storm drainage
Project Cost/Debt bond issue in 1983
Bonds Outstanding In 1992, the TIF generated sufficient cash
to call the bonds. The district is debt free.
Base Tax Capacity $550
Current Captured Capacity $159,138
TIF $211,965
Other Comments' The district boundaries were modified in 1994
to capture TIF in the Earle Brown Farm District
(2101)
•
Memorandum to Michael J. McCauley
April 12, 1996
Page 2
District 2101 Earle Brown
Established 1985
Termination Date 2010
District Type Redevelopment
Pro Area Type e Redevelo
YP ment p
Number of Parcels 35
Location See map
Project Description Historic preservation of Earle Brown Farm
Project Activities • Land acquisition
• Land write -down
• Traffic signal lights
• Project area landscape node
• Building restoration
Project Cost/Debt . Project cost $13.3 million
• Bonds
1985 - $5,250,000
1991 - $6,050,000
1992 - $4,270,000 (refunding of 1985)
Miscellaneous loans /debt - $1.8 million
as of 1995
Current Bonds Outstanding Approximately $10,445,000
Base Tax Capacity $788,112
Current Captured Capacity $965,395
TIF $1,285,868
Fiscal Disparity Non - contributing
Other Comments • Projects not completed but contemplated that
are to be completed when current debt is retired
or deemed appropriate include:
• Parking ramp - $1,500,000
• Administration - 10% of costs
• Trust fund - $750,000
• G Barn - $700,000
• Bonds on the $6 million issue are callable in
2001 and the $4,270,000 bond issue is callable in
the year 2000. If run to maturity, the smaller
issue is retired in 2003 and the larger issue is
retired in 2004. The 2004 payment is the largest
bond payment at $1,467,750.
Memorandum to Michael J. McCauley
April 12, 1996
Page 3
District 2102
Established 1994
Termination Date 2119
District Type Redevelopment
Project Area Type Redevelopment (virtually citywide)
Number of Parcels 244
Location See map (multi -area district)
Project Description General redevelopment to be determined
Project Activities Acquisition of Premier Mechanical and Brookdale
Motel, 69th and Brooklyn Boulevard, Brookdale
pond, and others to be determined, including 15%
housing fund
Project Expense Approximately $1,000,000
Bonds Outstanding Approximately $4,560,000, including capitalized
interest
Base Tax Capacity $8,294,355
Current Captured Capacity $105,522
TIF $143,415
Fiscal Disparity Non - contributing
Other Comments There are a number of dynamics in play that will
affect the base value, including Brookdale. In
addition, several developments will be key to
creating a cash flow to this district, including the
Carlson deal and the Steffens project
Up through 1994, TIF monies have been used in the Earle Brown district to offset operational
shortfalls. Since the opening of the Heritage Center in 1990, the TIF district has contributed
$1,333,204 to the Heritage Center. The payments to the Heritage Center are as follows:
1990 $ 429,700
1991 359,125
1992 3 34, 727
1993 84,810
1994 124.842
$1,333,204
To date, the Earle Brown TIF district has not been charged for any administrative expenses.
Administrative expenses are limited to ten percent of the total tax increment expenditures. The
TIF district has over $16 million in bond payments between 1996 and 2004. Of that amount, ten
percent less the cost of bond issuances ($117,282) can be claimed as administrative costs.
Administrative costs would go to the EDA general fund for use determined by the EDA.
Memorandum to Michael I McCauley
April 12, 1996
Page 4
Other activities that can be undertaken by the EDA with TIF monies from the Earle Brown
district include the purchase of land, the construction of a parking facility, and construction of a
"G" Barn, as had been anticipated with the restoration of the Heritage Center. Also, the district
may spend up to 25% of the total TIF dollars outside of the TIF district but within the
redevelopment project area. The project area includes virtually all of Brooklyn Center with the
exception of several blocks in the northeast corner of the City. TIF funds can be used to fund any
activity or project for which the EDA and/or HRA are authorized. Such projects include the
purchase of land, the provision of public infrastructure, interest rate reduction programs, the
clearing of sites, and so forth. As the Council/EDA contemplates specific uses for the use of any
TIF monies, staff will have to respond to the appropriation of that use and how that activity or
project needs to be structured to meet statutory requirements.
One anomaly to be aware of relative to the use of TIF funds is the 15% housing- related activity
requirement of our new TIF district (2102). The district was established under special legislation.
The authorizing legislation gives the Council the authority to define "housing activity ". So, for
the 15 % that must be used the Council has ea i
t latitude for its use.
Projects for which there has been some discussion or support from Council include the acquisition
of properties south of 66th along Willow Lane and east of 252; the redevelopment of the 69th and
Brooklyn Boulevard area, Brookdale, and specifically the storm water retention pond, the
acquisition of residential properties, both single- and multi - family, and the redevelopment of
Brooklyn Boulevard.
AVAILABLE TIF FUNDS
Brookwood - 2001
Assuming property taxes generated holds constant and a capitalization rate of approximately
6.9% annually, the Brookwood district has a net present value of approximately $422,000. The
cash flow from the last four years of the district is about $850,000.
Earle Brown 2101
Using the same assumption for this district as the Brookwood district, the net present value of an
approximate $10,500,000 cash flow is about $4,756,000. During 1996, TIF district 2101 will
make bond payments on three bond issues totaling $5,523,512.50. The 1985 bond issue will be
retired as of February this year. Funds currently available to make the required bond payments
total an estimated $5,466,134.11. Available funds do not include tax increment revenues that will
also be received in 1996.
District 2102
This district is just starting. The TIF growth potential is significant. Dependent upon a
redevelopment of Brookdale, the district could generate in excess of $2 million per year. The
Memorandum to Michael J. McCauley
April 12, 1996
Page 5
district has issued $4 million in bonds. The proceeds from the bond issue are available. To date,
the proceeds have been used to repay the EDA for the acquisition of the Premier Mechanical
property and the Brookdale Motel. Approximately $3 million is available for redevelopment
projects to be authorized in the future by the City.
During 1996, TIF district 2102 will make a bond payment of $224,246.25. Funds currently
available for the bond payment total $465,613.79. This doe not include an estimated 1996 tax
increment revenue of $143,000.
EXHIBITS
Exhibit A Earle Brown TIF District Total Payment Schedule
Exhibit B 1992 Earle Brown TIF Bond Schedule
Exhibit C 1991 Earle Brown Bond Schedule
Exhibit D 1995 TIF Bond Schedule
Exhibit E Map of TIF Districts 2100 and 2101
Exhibit F Map of TIF District 2102
Exhibit G Potential Redevelopment Projects
EARLE BROWN TAX INCREMENT DISTRICT
ANNUAL DEBT SERVICE
TOTAL OF 1991 AND 1992 BOND COMBINED
AVAILABLE
YEAR TOTAL PAYMENT DEBT SERVICE FUNDS
1996 $5,523,512.50 $5,466,135.11
1997 $1,236,897.50
1998 $1,256,045.00
1999 $1,309,987.50
2000 $1,333,075.00
2001 $1,380,011.25
2002 $1,405,285.00
2003 $1,438,420.00
2004 $1,467,750.00
•
Exhibit A
CITY OF BR &LYN CENTER
DETAIL OF DEBT SERVICE REQUIREMENTS
TAXINCREMENT TAXINCREMENT
Bonds of 1985 Refunding Bonds of 1992
Interest Rates Interest Rates
Average 8.0542% Average 5.329%
Minimum 6.30% Minimum 4.50%
Maximum 8.10% AVAILABLE Maximum 5.60% AVAILABLE
DEBT SERVICE DEBT SERVICE
YEAR Principal Interes TOTAL FUNDS Princ Interest TOTAL FUNDS
1996 4,475,000 187,065.00 4,662,065.00 4,662,065.00 * 4,475,000 406,687.50 4,881,687.50 4,822,435.21 **
1997 405,000 210,510.00 615,510.00
1998 465,000 190,470.00 655,470.00
1999 540,000 166,312.50 706,312.50
2000 615,000 137,400.00 752,400.00
2001 695,000 103,473.75 798,473.75
2002 785,000 64,035.00 849,035.00
2003 765,000 21,420.00 786,420.00
4,475,000 187,065.00 4,662,065.00 4,662,065.00 8,745,000 1,300,308.75 10,045,308.75 4,822,435.21
* Refunding completed in 1996.
** Combined 1985 bond issue and 1992 refunding issue.
Exhibit B
. CIT* BROOKLYN CENTER •
DETAIL OF DEBT SERVICE REQUIREMENTS
TAX INCREMENT
Bonds of 1991
Interest Rates
Average 5.978%
Minimum 4.70%
Maximum 6.00% AVAILABLE
DEBT SERVICE
YEAR principal Interes TOTAL FUNDS
1996 375,000 266,825.00 641,825.00 643,698.90
1997 375,000 ' 246,387.50 621,387.50
I
1998 375,000 225,575.00 600,575.00
1999 400,000 203,675.00 603,675.00
2000 400,000 180,675.00 580,675.00
2001 425,000 156,537.50 581,537.50
2002 425,000 131,250.00 556,250.00
2003 550,000 102,000.00 652,000.00
2004 1,425,000 42,750.00 1,467,750.00
4,750,000 1,555,675.00 6,305,675.00 643,698.90
Exhibit C
CITY OF OKLYN CENTER i
DETAIL OF DEBTTRVICE REQUIREMENTS
TAXINCREMENT
Bonds of 1995A
Interest Rates
Average 6.790%
Minimum 6.00%
Maximum 6.75% AVAILABLE
DEBT SERVICE
YEAR Princ jpal Interes TOTAL FUNDS
1996 224,246.25 224,246.25 465,613.79
1997 298,995.00 298,995.00
1998 298,995.00 298,995.00
I
1999 225,000 292,245.00 517,245.00
2000 265,000 277,478.75 542,478.75
2001 330,000 259,397.50 589,397.50
2002 330,000 238,607.50 568,607.50
2003 330,000 216,992.50 546,992.50
2004 350,000 194,552.50 544,552.50
2005 360,000 171,122.50 531,122.50
2006 360,000 147,362.50 507,362.50
2007 385,000 122,585.00 507,585.00
2008 385,000 96,693.75 481,693.75
2009 400,000 70,200.00 470,200.00
2010 415,000 42,693.75 457,693.75
2011 425,000 14,343.75 439,343.75
4,560,000 2,966,511.25 7,526,511.25 465,613.79
Exhibit D
TIF Districts 21 00 & TIFDist -96
2101 2100
2101
2102
® Lakes & Streams
.......... .
Parcel s
Rights of way N
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.111!. A �` • • •
POTENTIAL REDEVELOPMENT PROJECTS
•
The following is a partial listing of redevelopment projects or areas that have been discussed by
the Council, citizen, and/or staff over the past few years.
1. Redevelopment and expansion of Brookdale
2. Redevelopment of Brooklyn Boulevard area north of I -694
3. Redevelopment of the Willow Lane area between I -694 and 67th Avenue North
4. Redevelopment of Northbrook Shopping Center
5. Redevelopment of Builder's Square area
6. Redevelopment of the Lynbrook Bowl area
7. Development of senior housing
8. Housing renovation/redevelopment throughout the City
9. Redevelopment and/or cleanup of the City's apartment complexes
10. Redevelopment of the Joslyn Pole yard
11. Grocery store
12. Humboldt Square
13. Westbrook Mall
14. Humboldt Square
15. Development of undeveloped land in the industrial park
•
•
Exhibit G
'a
M E M O R A N D U M
DATE: October 17, 1996
TO: Michael McCauley
FROM: Stephen Baker
RE: Tax Increment Projections
CC: Brad Hoffman
At your request I have reviewed portions of the Springsted TIF status analysis
dated October 14, 1996. You have asked me to respond to several different
elements of this report. These areas include: projected 1997 increment to be
collected in district 2102, increases in captured tax capacity from new
construction and differences between my analysis and the Springsted report in
potential captured tax capacity for 1997. Other areas of analysis relate to the
potential impact on district revenues from dropping out specific tax parcels that
have experienced a decline in value since the base year of 1994. These parcels
could potentially be brought back in at the lower assessed value of 1996 or 1997.
• 1 have reviewed Mr. Winkelhake's revised report dated October 14 and I
• believe that the projections for district 2102 - 2149 are consistent with my
expectations.
1 have also reviewed the assumptions utilized in the Springsted report
pertaining to growth in assessed valuation due to new construction. I believe
that given the status of the Denny's and TGIF /Carlson Suites properties it
would be safe to assume that an additional $1,000,000 of new value
originally projected to come on line in 1998 pay 1999 will in fact come on line
one year earlier and be on the tax rolls for 1997 pay 1998. This should result
in an additional $46,000 of captured capacity in district 2149 in 1998.
A review of three potential options for district(s) 2102 - 2149 follows.
Option One - Leave district parcel configuration as currently structured.
Due to the decline in the assessed value of Brookdale it will take a significant
increase in valuation before district 2148 will capture any "new" tax capacity.
The total negative tax capacity for this district for payable 1997 is approximately
$1,016,926. This represents approximately $22,100,000 of assessed value.
Additional declines in 1997 payable 1998 valuations will further increase this
shortfall. Assuming that the taxable valuations of the parcels outside of
Brookdale Mall are stable it is likely that approximately $22,000,000 to
• $25,000,000 of any new value created at Brookdale will result in zero captured
increment dollars.
• Option Two- Drop out selected parcels and bring back in at 1996
payable 1997 assessed values.
An examination of all parcels in the district would be required to identify all
parcels where assessed valuation has declined since 1994. The short list of
parcels to drop is: Brookdale and Sears. Bringing these two parcels back into
the district at the 1996 assessment would result in net gain in captured capacity
of approximately $ 1,197,757. This would theoretically bring district 2148 into the
black for payable 1998. However, any further declines in the assessment in 1997
could again push this back into the red.
Option Three - Drop out selected parcels in 1996 but wait until 1997
to bring them back in.
Again an examination of all parcels in the district would have to be made to
identify all parcels that have declined in value since 1994. Again the short list is
Brookdale and Sears. Bringing these two parcels is likely to result in a net gain to
district 2,148 of $1,341,567 in tax capacity. Also, due to significant drop in sales
it is likely that the 1997 assessed value of the Kohl's store will be reduced below
the base year. This makes Kohl's a candidate to be dropped in '96 and brought
back in '97. Additionally it should be examined whether it is practical to drop out
and bring back in city owned parcels like the former Brookdale Motel and
Premier Electric; this could result in eliminating a portion of the $39,593 tax
• capacity deficit in district 2147.
Any of these scenarios should be approved by Gerald Pahl at Hennepin County
in advance. This will eliminate any risk of running afoul of county procedures or
having some unanticipated factor interfere with the expected result.
1 include a list of all parcels with substantial loss in tax capacity from 1994 to
1996 in the district(s).
•
2
Tax Parcels in TIF Districts 2102 -2149
With Substantial Loss in Tax Capacity 1994 to 1996
�A,k ry
=��Q���k � ° �'�� 4���R� �� ���. , . P a� �p � u�� x.� 4���X CA►R� � 9 9
Dis trict 2147
11 36- 119 -21 -13 -0111 C $284,400 $13,082 C E $0 $0 ($284,400) ($13,082)
11 36-119-21-13-0112' LC $108,000 $4,968 LC E $0 $0 ($108,000) ($4,968)
11 36- 119 -21 -13 -0079 CC $171,300 $7,880 CC $150,000 $5,300 ($21,300) ($2,580)
11 36- 119 -21 -24 -0046 A $244,000 $8,296 A $200,000 $6,800 ($44,000) ($1,496)
11 36- 119 -21 -24 -0047 A $2,990,000 $101,660 A $2,950,000 $100,300 ($40,000) ($1,360)
11 36- 119 -21 -13 -0080 CC $207,300 $7,936 CC $191,300 $7,200 ($16,000) ($736)
D istrict 2102
279 27- 119 -21 -33 -0010 A $1,189,000 $40,426 A $190,200 $6,467 ($998,800) ($33,959)
279 27- 119 -21 -33 -0067 C $176,300 $8,110 C E $0 $0 ($176,300) ($8,110)
279 27- 119 -21 -33 -0100 LC $321,800 $14,803 LC $228,700 $10,520 ($93,100) ($4,283)
279 27- 119 -21 -33 -0060 C $230,100 $10,585 CC $209,900 $8,055 ($20,200) ($2,530)
D istrict 2148
281 02- 118 -21 -32 -0008 C $47,019,700 $2,162,906 C $22,309,100 $1,026,219 ($24,710,600) ($1,136,687)
281 02- 118 -21 -23 -0015 A $5,292,000 $179,928 A $2,001,000 $68,034 ($3,291,000) ($111,894)
281 10- 118 -21 -12 -0056 A $1,975,000 $67,150 A $267,000 $9,078 ($1,708,000) ($58,072)
281 03- 118 -21 -44 -0026 C $8,825,900 $405,991 C $7,810,000 $359,260 ($1,015,900) ($46,731)
281 03- 118 -21 -14 -0024 CC $1,778,000 $80,188 CC $1,600,000 $72,000 ($178,000) ($8,188)
District 2149
286 02- 118 -21 -31 -0056 C $4,531,300 $208,440 C $4,162,900 $191,493 ($368,400) ($16,947)
286 02- 118 -21 -31 -0055 LC $2,124,600 $97,732 LC $1,812,900 $83,393 ($311,700) ($14,339)
286 02- 118 -21 -13 -0024 C $993,100 $45,683 C $787,900 1 $36,243 ($205,200) ($9,440)
286 35- 119 -21 -24 -0003 LC $762,300 $35,066 LC $600,0001 $27,600 ($162,300) ($7,466)
286 35- 119 -21 -22 -0052 C $585,300 $26,924 CC $527,100 $22,647 ($58,200) ($4,277)
286 35- 119 -21 -22 -0008 CC $682,900 $29,813 CC $593,900 $25,719 ($89,000) ($4,094)
10/17/96
1994 Brookdale assessed values and tax capacity:
Mall Parcels $49,147,300 $2,260,775
Department Stores $28,206,500 $1,297,499
Midas, Union 76, Penney's TBA & $2,191,800 $ 100,822
Ground Round
Totals $79,545,600 $3,659,096
•
1996 Brookdale assessed values and tax capacity
VsF Mall Parcels $24,125,000 ' $1,109,750
Department Stores $32,602,900 $1,4991,733
Midas, Union 76, Penney's TBA & 82,142,500 $ 98,555
Ground Round
Totals $58,870,400 $2,708,038
EARLE BROWN HERITAGE CENTER FUND
OPERATING HISTORY
Actual Actual Actual Actual Actual Actual As of
1990 1991 1992 1993 1994 1995 6/30/96
Operations:
Revenues 347,866 586,986 795,157 1,812,093 2,248,111 2,385,465 1,226,917
Expenses "* 777,548 946,110 1,129,884 1,896,903 2,372,953 2,516,593 1,197,984
Net Income (Loss) (429,682) (359,124) (334,727) (84,810) (124,842) (131,128) 28,933
Transfers - from Cit y Funds:
Tax Increment District 429,700 359,125 334,727 84,810 124,842 - -
Net Surplus /(Deficit) 18 1 - - - (131,128) 28,933
Loan_from Other Funs;
Net Proceeds /(Payments) - - - 305,479 83,726 206,550 (164,738)
' I
"` Excludes Depreciation on Contributed Assets
•
EARLE BROWN HERITAGE CENTER
Estimated Projected
198 1 986 1 19 1989 1990 1991 1992 1993 1994 1995 1996 1997
Tax_ Increment. Fund:
Revenues:
Tax Increments $ 182,962 $ 376,890 $ 927,802 $ 925,071 $ 976,539 $ 1,377,594 $ 1,379,425 $ 1,508,964 $ 1,234,763 $ 1,660,156 $ 2,206,942 $ 1,412,981
Bond Proceeds $ 5,167,364 5,996,855
Other 680,000 899,395 217,312 398,893 205,408 336,327 280,000 100,000
Expenditures
Debt Service Requirements (509,617) (182,962) (326,890) (431,710) (429,908) (820,387) (1,433,178) (1,047,863) (1,297,653) (1,331,656) (1,363,277) (1,210,000) (1,240,000)
Other" (82,574) (25,681) (1,042) (72,270) (44,025) (1,200) (1,200)
Capital Outlay (2,362,644) (1,383,419) (645,778) (1,146,702) (5,215,219) (4,632,762) (380,729) (137,590)
Tax Increment Fund Surplus /(Deficit) 2,975,103 (484,024) (378,466) (251,717) (4,514,648) (4,476,610) 5,477,968 504,618 210,269 110,837 352,854 995 171.781
Earle _Brown Herltage Center Operatlons:
Operating Revenues 347,866 586,986 795,157 1,812,093 2,248,111 2,385,465
Operating Expenses (777,548) (946,110) (1,129,884) (1,896,903
(2,372,953) (2,516 593)
Operating Surptus /(Deficit) - (429,682) (359,124) (334,727) (84,81 ( 124,842) (131,128)
I
Net Surplus /(Defich) 2,975,103 (484,024) (378,466) (251,717) (4,514,648) (4,906,292) 5,118,844 169,891 125,459 (14,005) 221,726
-
Operating Loan from Other City Funds:
I
Beginning Balance - 305,479 389,205
Proceeds from Current Year Borrowing 305,479 83,726 206,550
Ending Balance $ $ $ - $ - $ - $ - $ - $ $ 305,479 $ 389,205 $ 595,755
Other includes bond issuance costs, attorney fees for the Earle Brown Commons bankruptcy, and
Hennepin County Administratice Charges to the tax increment district.
EARLE BROWN TAX INCREMENT DISTRICT FUND
HISTORY OF TIF DISTRICT
CONSTRUCTION PERIOD
Actual Actual Actual Actual Actual Actual
1985 1986 1987 1988 1989 1990
Beginning Fund Balance $0 $2,975,103 $2,491,079 $2,112,613 $1,860,896 ($2,653,752)
Tax Increments $182,962 $376,890 $927,802 $925,071 $976,539
E.B. Commons Bankruptcy Settlement
Sale of Bonds $5,167,364
Land Sale 529,600
Community Development Block Grant 680,000 100,000 200,000 20,000
Interest Income 260,315 217,312 198,893 179,025
Other 9,480 6,383
I
Total Revenues $5,847,364 $1,082,357 $594,202 $1,326,695 $1,130,479 $976,539
Debt Service Transfer - Bonds of 85 $509,617 $182,962 $326,890 $431,710 $420,000 $430,000
Debt Service Transfer - Bonds of 91
Debt Service Transfer - Bonds of 92
Internal Borrowing Interest 9,908 390,387
Transfer to M.S.A. Fund 593,069
Transfer to Special Assessment Fund 2,139
Services and other charges
E.B. Commons Bankruptcy
Infrastructure Capital Outlay 1,437,644 1,383,419 645,778 551,494 41,715
Earle Brown Heritage Center:
Operating Subsidy 429,700
Capital Outlay 925,000 5,173,504 4,632,762
Total Expenditures $2,872,261 $1,566,381 $972,668 $1,578,412 $5,645,127 $5,882,849
Ending Fund Balance $2,975,103 $2,491,079 $2,112,613 $1,860,896 ($2,653,752) ($7,560,062)
TIFHISTALS 9/4/96
EARLE BROWN TAX INCREMENT DISTRICT FUND
HISTORY OF TIF DISTRICT
POST- CONSTRUCTION PERIOD
Actual Actual Actual Actual Actual Estimated Proposed
1991 1992 1993 1994 1995 1996 1997
Beginning Fund Balance ($7,560,062) ($2,441,219) ($2,271,328) ($2,145,869) ($2,159,874) ($1,807,020) ($811,278)
Tax Increments $1,377,594 $1,379,425 $1,508,964 $1,234,763 $1,660,156 $2,206,942 $1,412,981
E.B. Commons Bankruptcy Settlement 280,000 95,000
Sale of Bonds $5,996,855
Land Sale 336,327
Community Development Block Grant
Interest Income
Other 5,000
Total Revenues $7,374,449 $1,715,752 $1,508,964 $1,514,763 $1,760,156 $2,206,942 $1,412,981
Debt Service Transfer - Bonds of 85 $475,000 $308,102 $560,000 $600,000 $640,000
Debt Service Transfer - Bonds of 91 728,732 620,000 640,000 650,000 645,000 620,000 600,000
Debt Service Transfer - Bonds of 92 250 560,000 640,000
Internal Borrowing Interest 229,446 119,511 97,653 81,656 78,277 30,000
Transfer to M.S.A. Fund
Transfer to Special Assessment fund
Services and other charges 82,574 25,681 1,042 2,293 1,200 1,200
E.B. Commons Bankruptcy 72,270 41,732
Infrastructure Capital Outlay
Earle Brown Heritage Center:
Operating Subsidy 359,125 334,727 84,810 124,842
Capital Outlay 380,729 137,590
Total Expenditures $2,255,606 $1,545,861 $1,383,505 $1,528,768 $1,407,302 $1,211,200 $1,241,200
Ending Fund Balance ($2,441,219) ($2,271,328) ($2,145,869) ($2,159,874) ($1,807,020) ($811,278) ($639,497)
TIFHIST.XLS 9/4/96
TIF Districts 2100 101 TIFDistrids2 -12 -
0 •
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85 E. SEVENTH PLACE SUITE t00
SAINT PAUL, MN 55101 -2143
612 -223 -3000 FAX: 612-223-3002
•
SPRINGSTED
Public Finance Advisors
October 14, 1996
Mr. Mike McCauley, City Manager
City of Brooklyn Center
6301 Shingle Creek Parkway
Brooklyn Center, MN 55430
Dear Mr. McCauley:
Please find enclosed Springsted Incorporated's updated analysis on the City's existing tax
increment financing districts. Since our August 2, 1996 report, we have received the final pay
1997 property valuations from the City and Hennepin County. These valuations are virtually
identical to the preliminary values we received from the City in July with one major exception.
Earlier City records had inadvertently shown the Kohls property (EMV= $4,162,900) as being
located in TIF Subdistrict 2148 (Brookdale, ISD 281). Since the captured net tax capacity of
this subdistrict is negative, the taxes being paid on this property were not translating into tax
increment.
•
It has since been discovered that the Kohls ro ert is actual) located within TIF district
p p y y # Sub
2149 (ISD 286). Since this subdistrict Is healthy and currently generating Increment, the
inclusion of this property increases the tax increment from this subdistrict by approximately
$242,000 per year.
With this adjustment, it is now projected that TIF District 2102 (2102/2147/2148 /2149) can
adequately meet all current and projected future obligations without any internal City loans.
Additionally, sufficient increment should be available to fund the 15% housing - related
requirement mandated by the special legislation enacted when the district was created, even if
none of the unspent 1995 bond proceeds are used for housing purposes.
The reverse side of this adjustment is that the captured net tax capacity of Subdistrict 2148
(Brookdale) is further diminished and still warrants further attention. If you have any questions
on the adjustments described above, please talk with Steve Baker or give either of us a call.
Sincerely,
Robert D. Thistle Mark Winkelhake
Senior Vice President Vice President
Enclosures
SAINT PAUL, MN MINNEAPOLIS, MN . OVERLAND PARK, KS BROOKFIELD, Wl WASHINGTON, DC 10W.A CITY, IA
UO / �;y % a0 11:10 ra.i 011 11J JuuL Jrri11Vl,JLY.11 LiVI,. LgjUUZ%UUJ
85 F- SEVENTH PLACE, SUITE 10 SPMGSTED
SAINT PAUL, MN 55101 -2143 PWCFtll =Adtisors
612 -223 -3000 FAX: 612-223-3002
MEMORANDUM
TO: Mike McCauley
FROM: Bob Thistle
Mark Winkelhake
DATE: August 29, 1996
SUBJECT: TIF subdistrict 2147 (Willow/252, ISD #11)
TIF subdistrict 2148 (Brookdale)
In our recent analysis of the City's existing TIF districts, it was noted that the net tax values, n it o f
TIF subdistricts 2147 and 2148 are both currently less than their original base , a
tax increment is being generated by either subdistrict. The decrease in values has been, to a
large degree, a function of successful tax petitions filed by property owners in the subdistricts
• (including Brookdale). Unless significant development occurs or base values are adjusted
downward, it is unlikely that these two subdistricts will generate any increment in the near
future. In an attempt to restore both of these subdistricts to a positive status, three potential
options come to mind which the City might consider.
• The first option would be to eliminate those parcels which are now producing the largest
drag on the subdistricts. Since we are within five years from certification of the TIF district,
these parcels could then be added back to the subdistricts at their current (lower) values.
Both of these actions would require the City going through the normal tax increment
notification and public hearing process.
This option would be relatively easy to accomplish and is allowable under current tax
increment statutes. Some coordination and communication with staff at Hennepin County
would be necessary and advisable. The largest potential downside to this strategy is that it
might be considered by some to be abusive in nature. If this option is pursued, it is
suggested that the State Auditor's Office, the Department of Revenue and Hennepin County
be contacted and informed of the situation and the unusual circumstances surrounding the
proposed actions.
• A second option would be to seek special legislation to adjust the base value of the
subdistricts or take other appropriate action. This option would be more time consuming
and costly than the first option, could not be attempted until the next legislative session, and
may not pass at all. However, if successful it would eliminate any potential implication of
abuse, and would also allow the City to attempt to correct any deficiencies in the original
special legislation that was obtained when the TIF district was established. Additional
provisions to consider in any new special legislation might include an extension of the
• knock -down and expenditure periods.
VOA �y �U 11.10 FaA OlL �.:J JUVL U UJi UUJ
• Mike McCauley
August 29, 1996
Page 2
•
• The last option would be to simply wait and hope that base values drop on their own as
sufficient prior years tax petitions become successful. This would appear to be a riskier
option that could take years to transpire. It is also possible that new development could
occur in the subdistricts in the years before the base values are adjusted downward. In this
case the subdistricts might still have no positive captured value and therefore no tax
increment.
If base values were later reduced, you could have the situation where prior year's tax
increment was missed. Adjustments to current year taxes can sometimes be made in order
to reimburse tax increment districts for missed increment payments, but such adjustments
are optional and subject to County discretion.
The first two options would appear to be viable alternatives that the City may wish to pursue. If
you would like to further discuss these or other options, please feel free to give us a call.
•
TIF Districts Status Analysis
City of Brooklyn Center, Minnesota
October 14, 1996
f
Nome Office:
85 East Seventh Place
Suite 100
St. Paul, MN 55101 -2143
(612) 223 -3000
Minneapolis Office: Iowa Office:
120 South Sixth Street 30 Dunu 99 en Court
Minneapolis, MN 55402 -1800 Iowa City, IA 52240 -2831
(612) 333 -9177 (319) 351 -4614
Wisconsin Office: Washington Office: Kansas Office:
• 16655 West Bluemound Road 1850 K Street NW 4500 College Boulevard
Suite 290 Suite 215 Suite 110
Brookfield, WI 53005 -5935 Washington, D.C. 20006 Overland Park, KS 66211 -1799
(414) 782 -8222 (202) 466 -3344 (913) 345 -8062
City of Brooklyn Center, Minnesota
Existing Tax Increment District Analysis
Status Summary
TIF District 2100 & 2101
• Number (Name): 2100 (Brookwood) 2101 (Earl Brown)
Type: Housing Redevelopment
Year Established: 1982 1985
• Revenues include projected increment, delinquent increment (96) and interest earnings.
• Expenses include debt service (85A, 91A, 92A), internal loan repayments & adm. fees.
• Principal amount of internal City loans is currently $1,807,483 (as of 12/31/95).
• If projected increment is held constant, internal loans are entirely repaid by 2004.
Net tax increments collected thereafter equals approximately $9.9 million.
• If projected increment inflates at 2.0 %, internal loans are entirely repaid by 2001.
Net tax increments collected thereafter equal approximately $12.8 million.
• TIF districts appear healthy and should meet financial obligations over life of districts.
TIF District 2102
• Number: 2102
• Subdistricts: 2102 (Brooklyn Blvd. /69th) 2147 (Willow /252, ISD #11)
2148 (Brookdale area) 2149 (Willow /252, ISD #286)
Type: Redevelopment
Year Established: 1994
• Revenues include projected increment and interest earnings.
• Subdistricts 2102 and 2149 are currently generating increment and anticipate
four new developments in 1996 and 1997.
• Subdistricts 2147 and 2148 are not generating increment due to market value
reductions on selected parcels (current value < base value).
• Expenses include debt service (95A), projected pay -as- you -go obligations, and
administrative /housing fees.
• If no inflation is built into projected increment, the TIF district should meet all current
and projected obligations. Net tax increments collected in excess of outstanding
obligations should equal approximately $3.6 million over the life of the TIF district.
• If projected tax increment inflates at 2.0 %, net tax increments collected in excess of
outstanding obligations should equal approximately $5.1 million over the life of the TIF
t
district.
• Subdistricts 2102 and 2149 appear relatively healthy and should meet financial
• obligations of the district over the long term. Further analysis and monitoring of
subdistricts 2147 and 2148 is recommended. Alternatives should be explored which
May help these subdistricts produce increment in future years (i.e. elimination and
re- addition of selected parcels in the Brookdale area, etc.).
City of Brooklyn Center, Minnesota
Existing Tax Increment District Analysis
Assumptions and Conclusions
•
The City of Brooklyn Center currently has three (3) existing tax increment financing districts. A
brief summary of these TIF districts is shown below.
Number Name Tvoe Established Termination
2100 Brookwood Housing 1982 2008
2101 Earl Brown Redevelopment 1985 2011
2102( *) General Red. Redevelopment 1994 2119
( *) TIF District #2102 is actually made up of four (4) separate sub- districts
numbered 2102, 2147, 2148 and 2149.
General Assumptions
For each district, projections of tax increment were made based on current valuation
information, known adjustments to base values, and projected development as provided by
Hennepin County and City staff. Local tax rates were assumed to remain constant at 1996
levels and tax collection rates were set at 95% (approximate City -wide average).
Projected development was held at conservative levels and only includes new projects which
have currently received preliminary or final City approval. Tax increment projections for each of
• the City's three districts are detailed in the accompanying Schedules 3, 4A and 4B.
Projected cash flow reports were also prepared showing how tax increment and other available
sources of revenue match up against existing expenses, including debt service payments,
internal loan repayments, pay -as- you -go obligations and other fees. Each of these cash flow
reports are summarized as follows.
TIF District 2100 & 2101 Cash Flow
Schedule 1A (Scenario A) and Schedule 1B (Scenario B) are combined cash flow reports for
TIF Districts 2100 and 2101. Revenues include projected tax increment for the life of the
districts, delinquent increment collected in 1996 and estimated interest earnings. Expenses
include debt service payments on outstanding tax increment bonds (Series 85A, 91A and 92A),
administrative fees, and the repayment of two internal City loans used to finance activities in the
TIF districts (see footnote c).
Conclusions
Scenario A assumes tax increments from both TIF districts are held constant at pay 97 levels.
Under this assumption, the internal City loans would be repaid at the end of 2004. Net tax
increment collected over the remaining life of the TIF district would be approximately
S9,948,000. These funds would be available for eligible purposes assuming such expenditures
are specified in the TIF plans for the districts.
Scenario B assumes tax increments from both districts inflate at 2.0% annually beginning in
1998. In this case internal City loans would be completely repaid at the end of 2001, with
excess net tax increment of approximately $12,852,000 becoming available over the remaining
life of the districts.
Generally speaking, TIF Districts 2100 & 2101 appear to be in a healthy position. Projected
revenues should be sufficient to cover current debt service and internal loan repayment
requirements. Excess increments should be available in the later years of the districts.
TIF District 2102 12147 / 2148 / 2149 Cash Flow
} Schedule 2A (Scenario A) and Schedule 2B (Scenario B) show cash flow reports for TIF District
j 2102 (encompassing 2102, 2147, 2148 and 2149). Revenues include projected tax increment
through 2011 (final bond payment on 2/1/2011) and estimated interest earnings. Expenses
include debt service payments on outstanding tax increment bonds (Series 95A), projected pay-
as-you-go obligations, and administrative /housing fees.
Due to various market value adjustments on properties in 2147 and 2148 (Brookdale area), no
tax increment is currently being received from these two sub - districts. Because of the
uncertainty of valuations in these two sub - districts no increment has been r
p ojected in future
years.
Special legislation enacted in conjunction with establishment of the district allowed the City to
be exempt from any loss of LGAMACA caused by establishment of the district, provided that
15% of the increment from the district was used for housing- related activities. The cash flows
show 15% of projected increment being deducted for housing /administrative purposes.
It has been assumed (by City staff) that a portion of the currently unspent bond P roceeds from
the 1995 issue will be expended on housing - related activities and will qualify towards the 15%
requirement, however, this figure has not been quantified at this time. It has been assumed
that the 15% deduction shown in the cash flows is a combination of both housing and
l administrative fees.
Conclusions
Scenario A assumes tax increments from the TIF district are held constant with no inflationary
factor applied. Under this assumption, all indicated obligations could be sufficiently covered
over time, with approximately $3,571,000 in excess net tax increment available over the life of
the TIF district. These funds would be available for eligible purposes assuming such
expenditures are specified in the TIF plan for the district.
- Scenario B assumes tax increments from the district inflate at 2.0% annually beginning in 1998.
In this case excess net tax increment available over the life of the TIF district would be
F
approximately $5,064,000.
Subdistricts 2102 and 2149 appear to be in relative) health positions. Further analysis i
PP y y p s
recommended with regards to the status of properties in subdistricts 2147 and 2149. The lack
of increment from these two subdistricts is a direct result of decreases in current property
values resulting from legal actions taken by selected property owners. Options to rectify this
situation should be explored, including special legislation or elimination and re- addition of
selected parcels from the subdistrict.
Vat,$ k10 -4 4 M+aMM INN" P IN, 1 010+0
Schedule 1A
City of Brooklyn Center, Minnesota
Projected Tax Increment Cash Flow Report
TIF Districts 2100 & 2101
Scenario A (Tax Increment Held Constant at Pay 97 Levels)
Revenues Expenses
Projected Projected Interest Internal Internal Year -End Year -End Year -End
Calendar TIF TIF Delinquent Earnings (b) 1985A 1991A 1992A TIF Admin. Loans Loans D/S Fund TIF Fund Loans(c)
Year #2100(a) #2101(a) TIF @ 5 0% Debt Service Debt Service Debt Service Fees Principal Interest Balances Balances Outstanding
(1) ( (3) ( ( ( ( ( (8) ( ( ( (12) (13)
1995 1,303,392 0 1,807,483
1996 201,367 1,221,575 784,000 60,604 473,305 641,825 109,811 5,000 1,026,445 77,654 1,236,898 0 781,038
1997 251,883 1,161,098 0 40,478 0 621,388 615,510 5,000 186,611 5,803 1,256,045 0 594,427
1998 251,883 1,161,098 0 40,558 0 600,575 655,470 5,000 138,551 0 1,309,988 0 455,876
1999 251,883 1,161,098 0 40,783 0 603,675 706,313 5,000 115,689 0 1,333,075 0 340,187
2000 251,883 1,161,098 0 40,879 0 580,675 752,400 5,000 68,848 0 1,380.012 0 271,339
2001 251,883 1,161,098 0 41,075 0 581,538 798,474 5,000 43,771 0 1,405,285 0 227,568
2002 251,883 1,161,098 0 41,180 0 556,250 849,035 5,000 10,741 0 1,438,420 0 216,827
2003 251,883 1,161,098 0 41,318 0 652,000 786.420 5,000 (18,451) 0 1,467,750 0 235,278
2004 251,883 1,161,098 0 41,440 0 1 0 5,000 235,278 0 0 1,214,143 0
2005 251,883 1,161,098 0 35,325 0 0 0 5,000 0 0 0 2,657,449 0
2006 251,883 1,161,098 0 35,325 0 0 0 5,000 0 0 0 4,100,755 0
2007 251,883 1,161,098 0 35,325 0 0 0 5,000 0 0 0 5,544,061 0
2008 251,883 1,161,098 0 35,325 0 0 0 5,000 0 0 0 6,987,367 0
2009 0 1,161,098 0 29,027 0 0 0 5,000 0 0 0 8,172,492 0
2010 0 1,161,098 0 29,027 0 0 0 5,000 0 0 0 9,357,617 0
2011 0 580,549 0 14,514 0 0 0 5,000 0 0 0 9,947,680 0
3,223,963 18,057,496 784,000 602,183 473,305 6,305,676 5,273,433 80,000 1,807,483 83,457
(a) Tax increment held constant at projected pay 97 levels.
Assumes District #2101 receives one -half year of collection in 2011.
(b) Total interest earnings based on one month of interest on previous year -end D/S fund balance plus six months of interest on 11sl half TIF collection (50 %).
No interest had been calculated on TIF fund balances. It is assumed that such funds will be spent as received and not accumulated as shown above.
(c) Oustanding internal loan balances as of 12/31/95 include:
Internal loan #1 (rate = 7.0 %) $1,109,340
Internal loan #2 (rate = 0-0 %) 698,143 (MSA1General Fund)
$1,807,483
Prepared by: Springsted Incorporated (10/14/96)
w w &'A#f 1110104_� 1 4 *"MMw WwwwM I woo 6000 W"**
� ,d ►�•» r r
Schedule 113
City of Brooklyn Center, Minnesota
Projected Tax Increment Cash Flow Report
TIF Districts 2100 & 2101
Scenario B (Tax Increment Inflated at 2.0% Beginning in 1998)
Revenues Expenses
Projected Projected Interest Internal Internal Year -End Year -End Year -End
Calendar TIF TIF Delinquent Earnings (b) 1985A 1991A 1992A TIF Admin. Loans Loans D/S Fund TIF Fund I oans(c)
Year #2100 (a) #2101 (a) TIF @ 5.0% Debt Service Debt Service Debt Service Fees Principal Interest Balances Balances Outstanding
(1) (2) ( ( (4) ( ( ( ( ( (10) (11 (12) (13)
1995 1,303,392 0 1,807,483
1996 201,367 1,221,575 784,000 60,604 473,305 641,825 109,811 5,000 1,026,445 77,654 1,236,898 0 781,038
1997 251,883 1,161,098 0 40,478 0 621,388 615,510 5,000 186,611 5,803 1,256,045 0 594,427
1998 256,921 1,184,320 0 41,265 0 600,575 655,470 5,000 167,518 0 1,309,988 0 426,909
1999 262,059 1,208,006 0 42,210 0 603,675 706,313 5,000 174,200 0 1,333,075 0 252,709
2000 267,300 1,232,166 0 43,041 0 580,675 752,400 5,000 157,495 0 1,380,012 0 95,214
2001 272,646 1,256,809 0 43,986 0 581,538 798,474 5,000 95,214 0 1,405,285 67,942 0
2002 278,099 1,281,945 0 44,856 0 556,250 849,035 5,000 0 0 1,438,420 229,422 0
2003 283,661 1,307,584 0 45,775 0 652,000 786,420 5,000 0 0 1,467,750 393,692 0
2004 289,334 1,333,736 0 46,692 0 1,467,750 0 5,000 0 0 0 2,058,454 0
2005 295,121 1,360,411 0 41,388 0 0 0 5,000 0 0 0 3,750,374 0
2006 301,023 1,387,619 0 42,216 0 0 0 5,000 0 0 0 5,476,232 0
2007 307,043 1,415,371 0 43,060 0 0 0 5,000 0 0 0 7,236,706 0
2008 313,184 1,443,678 0 43,922 0 0 0 5,000 0 0 0 9,032,490 0
2009 0 1,472,552 0 36,814 0 0 0 5,000 0 0 0 10,536,856 0
2010 0 1,502,003 0 37,550 0 0 0 5,000 0 0 0 12,071,409 0
2011 0 766,022 0 19,151 0 0 0 5,000 0 0 0 12,851,582 0
3,579,641 20,534,895 784,000 673,008 473,305 6,305,676 5,273,433 80,000 1,807,483 83,457
(a) Tax increment held constant at projected pay 97 levels.
Assumes District #2101 receives one -half year of collection in 2011.
(b) Total interest earnings based on one month of interest on previous year -end D/S fund balance plus six months of interest on 1st half TIF collection (50 %).
No interest had been calculated on TIF fund balances. It is assumed that such funds will be spent as received and not accumulated as shown above.
(c) Oustanding internal loan balances as of 12/31/95 include:
Internal loan #1 (rate = 7.0 %) $1,109,340
Internal loan #2 (rate = 0.0 %) 698,143 (MSA/General Fund)
$1,807,483
Prepared by: Springsted Incorporated (10/14196)
1 N a.,rgt kr•,, 1 flru wl WAr. »+a Mhs+W4 too" h"1111111 No" 00-WrM
• •
Schedule 2A
City of Brooklyn Center, Minnesota
Projected Tax Increment Cash Flow Report
TIF District 2102 / 2147 / 2148 / 2149
Scenario A (No Inflation)
Revenues Expenses
Projected Projected Projected Projected Bond Procds. Other TIF Admin. & Pay -As- Pay -As- Pay -As- Year -End Year -End
Calendar TIF TIF 11F TIF Interest Interest 1995A Housing Fees You -Go You -Go You -Go D/S Fund TIF Fund
Year #2102 #2147 #2148 #2149 Earnings (a) Earnings (b) Debt Service @ 15.0% (Carlson) (Sunlite) (Other) Balance Balance
( (2) ( (4) (4) ( ( ( ( ( (1 (11) ( (
1995 468,054 0
1996 45,496 0 0 90,748 160,960 5,356 224,246 20,437 0 0 0 298,995 226,936
1997 18,291 0 0 505,433 51,730 14,339 298,995 78,559 0 0 0 298,995 439,175
1998 18,291 0 0 734,325 0 14,989 298,995 112,892 64,475 138,415 0 517,245 373,753
1999 28,897 0 0 853,067 0 18,106 517,245 132,295 105,525 138,415 0 542,479 355,109
2000 28,897 0 0 853,067 0 20,849 542,479 132,295 0 138,415 0 589,398 397,815
2001 28,897 0 0 853,067 0 21,045 589,398 132,295 0 138,415 0 568,608 461,506
2002 28,897 0 0 853,067 0 20,958 568,608 132,295 0 138,415 0 546,993 546,726
2003 28,897 0 0 853,067 0 24,328 546,993 132,295 0 0 0 544,553 776,170
2004 28,897 0 0 853,067 0 24,318 544,553 132,295 0 0 0 531,123 1,019,035
2005 28,897 0 0 853,067 0 24,262 531,123 132,295 0 0 0 507,363 1,285,603
2006 28,897 0 0 853,067 0 24,163 507,363 132,295 0 0 0 507,585 1,551,850
2007 28,897 0 0 853,067 0 24,164 507,585 132,295 0 0 0 481,694 1,843,990
2008 28,897 0 0 853,067 0 24,056 481,694 132,295 0 0 0 470,200 2.147,515
2009 28,897 0 0 853,067 0 24,008 470,200 132,295 0 0 0 457,694 2,463,498
2010 28,897 0 0 853,067 0 23,956 457,694 132,295 0 0 0 439,344 2,797,779
2011 28,897 0 0 853,067 0 23,880 439,344 132,295 0 0 0 0 3,571,328
457,739 0 0 12,420,377 212,690 332,777 7,526,511 1,931,723 170,000 692,075 0 7,770,319
(a) Based on the following assumptions Interest Annual
Amount Balance @ 5.0% Interest
Unspent bond proceeds (12/31/95) 3,477,619
Distribution of proceeds (6/1/96) (443,000) 3,034,619 72,450
Distribution of proceeds (12/31/96) (1,500,000) 1,534,619 88,510 160,960
Distribution of proceeds (7/1/97) (1,000,000) 534,619 38,365
Distribution of proceeds (12/31/97) (534,619) 0 13,365 51,730
(b) Other interest earnings based on one month of interest on previous year -end D/S fund balance plus six months of interest on 1st half TIF collection (excluding pay -as- you -go payments).
No interest had been calculated on TIF fund balances. It is assumed that such funds will be spent as received and not accumulated as shown above.
Prepared by: Springsted Incorporated (10/14/96)
M f9►..�+..dN I� 1 i IIMM�+sul �:I i MMM� M�wM � i111lp� IMrM11M �w � � .�,( c . +r i '
Schedule 2B
City of Brooklyn Center, Minnesota
Projected Tax Increment Cash Flow Report
TIF District 2102 12147 / 2148 / 2149
Scenario B (Tax Increment Inflated at 2.0% Beginning in 1998)
Revenues Expenses
Projected Projected Projected Projected Bond Procds. Other TIF Admin. & Pay -As- Pay -As- Pay -As- Year -End Year -End
Calendar TIF TIF TIF TIF Interest Interest 1995A Housing Fees You -Go You -Go You -Go D/S Fund TIF Fund
Year #2102 #2147 #2148 #2149 Earnings (a) Earnings (b) Debt Service @ 15.0% (Carlson) (Sunlite) (Other) Balance Balance
(1) (2) (3) (4) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13)
1995 468,054 0
1996 45,496 0 0 90,748 160,960 5,356 224,246 20,437 0 0 0 298,995 226,936
1997 18,291 0 0 505,433 51,730 14,339 298,995 78,559 0 0 0 298,995 439,175
1998 18,657 0 0 749,012 0 15,264 298,995 115,150 65,765 141,183 0 517,245 382,765
1999 29,475 0 0 870,128 0 18,439 517,245 134,940 104,235 144,007 0 542,479 375,146
2000 30,065 0 0 887,531 0 21,528 542,479 137,639 0 146,887 0 589,398 440,347
2001 30,666 0 0 905,282 0 22,109 589,398 140,392 0 149,825 0 568,608 539,579
2002 31,279 0 0 923,388 0 22,415 568,608 143,200 0 152,822 0 546,993 673,647
2003 31,905 0 0 941,856 0 26,623 546,993 146,064 0 0 0 544,553 983,414
2004 32,543 0 0 960,693 0 27,100 544,553 148,985 0 0 0 531,123 1,323,643
2005 33,194 0 0 979,907 0 27,541 531,123 151,965 0 0 0 507,363 1,704,957
2006 33,858 0 0 999,505 0 27,948 507,363 155,004 0 0 0 507,585 2,103,679
2007 34,535 0 0 1,019,495 0 28,466 507,585 158,105 0 0 0 481,694 2.546.377
2008 35,226 0 0 1,039,885 0 28,885 481,694 161,267 0 0 0 470,200 3,018,906
2009 35,931 0 0 1,060,683 0 29,375 470,200 164,492 0 0 0 457,694 3,522,709
2010 36,650 0 0 1,081,897 0 29,871 457,694 167,782 0 0 0 439,344 4,064,001
2011 37,383 0 0 1,103,535 0 30,354 439,344 171,138 0 0 0 0 5,064,135
515,154 0 0 14,118,978 212,690 375,613 7,526,511 2,195,119 170,000 734,724 0 7,770,319
(a) Based on the following assumptions: Interest Annual
Amount Balance @ 5.0% Interest
Unspent bond proceeds (12/31/95) 3,477,619
Distribution of proceeds (6/1/96) (443,000) 3,034,619 72,450
Distribution of proceeds (12/31/96) (1,500,000) 1,534,619 88,510 160,960
Distribution of proceeds (7/1/97) (1,000,000) 534,619 38,365
Distribution of proceeds (12131/97) (534,619) 0 13,365 51,730
(b) Other interest earnings based on one month of interest on previous year -end D/S fund balance plus six months of interest on 1st halt TIF collection (excluding pay -as- you -go payments).
No interest had been calculated on TIF fund balances. It is assumed that such funds will be spent as received and not accumulated as shown above.
Prepared by: Springsted Incorporated (10/14/96)
Schedule 3
• City of Brooklyn Center, Minnesota
TIF Districts 2100 (Brookwood) & 2101 (Earl Brown)
Projected Tax Increment
Pay 96 Pay 97
Total Adjust. Total
TIF District 2100 (ISD #286)
Current Net Tax Capacity 159,688 39,922 199,610
Base Net Tax Capacity 550 0 550
Captured Net Tax Capacity 159,138 199,060
Local Tax Capacity Rate (a) 133.1960% 133.1960%
Tax Increment Spread 211,965 265,140
Collection Rate 95% 95%
Tax Increment Collected 201,367 251,883
S TIF District 2101 (ISD #2861
Current Net Tax Capacity 1,753,507 (47,794) 1,705,713
Base Net Tax Capacity 788,112 0 788,112
Captured Net Tax Capacity 965,395 917,601
Local Tax Capacity Rate (a) 133.1960% 133.1960%
Tax Increment Spread 1,285,868 1,222,208
Collection Rate 95% 95%
Tax Increment Collected 1,221, 575 1,161, 098
(a) Projected pay 97 tax capacity rate held constant at pay 96 level.
Prepared by: Springsted Incorporated (10/14/96)
Schedule 4A
City of Brooklyn Center, Minnesota
TIF District 2102 / 2147 / 2148 / 2149
• Projected Tax Increment (footnotes on next page)
Projected Projected
Pay 96 Pay 97 Pay 98 Pay 99
Total Change Total Change Total Change Total
i
2102 (Brooklyn Blvd /69th)(ISD #2791
Current Net Tax Capacity 833,827 (20,214) 813,613 0 (d) 813,613 7,880 (d) 821,493
Base Net Tax Capacity P Y 800,022 0 800,022 0 800,022 0 800,022
Captured Net Tax Capacity 33,805 13,591 13,591 21,471
Tax Capacity Rate (Local< Frozen) 141.6690% 141.6690% 141.6690% 141.6690%
Tax Increment Spread 47,891 19,254 19,254 30,418
Collection Rate 95% 95% 95% 95%
Tax Increment Collected 45,496 (27,205) 18,291 0 18, 10,606 28,897
r 291 �
2147 P ion of Will w /25
D #11
( ort o 2)(1 S 1
Current Net Tax Capaci
180,854 (19,404) 161
0 161,450 0 161
Base Net Tax Capacity 206,375 (5,322) (a) 201,054 0 201,054 0 201,054
Captured Net Tax Capacity (25,522) (39,604) (39,604) (39,604)
Tax Capacity Rate (Frozen) 136.3040% 136.3040% 136.3040% 136.3040%
Tax Increment Spread p 0 0 0
Collection Rate 95% 95% 95% 95%
Tax Increment Collected u 0 0 0 0
21.48 Brookdale I
D #281
Current Net Tax Capacity 4,816,201 (943,677) 3,872,524 0 3,872,524 0 3,872,524
Base Net Tax Capacity 5,076 422 186 7
( ,9 2 b 4 889 450
O 0 4,889,450 0 4,889,450
Captured Net Tax Capacity (260,221) (1,016,926) (1,016,926) (1,016,926)
Tax Capacity Rate (Local <Frozen) 139.2760% 139.2760% 139.2760% 139.2760%
Tax Increment Spread 0 0 0 0
Collection Rate 95 % 95% 95% 95%
Tax Increment Collected -:J 0 0 0 0
2149 (Portion of Wi11ow /252)(ISD #286)
Current Net Tax Capacity 2,283,252 304,682 2.587,934 180,890 (efg) 2,768.824 93,840 (efg) 2,862,664
Base Net Tax Capacity 2,211,535 (23,039) (c) 2 0 2,188,496 0 2,188,496
Captured Net Tax Capacity 71,717 399,438 580,328 674,168
Tax Capacity Rate (Local<Frozen) 133.1960% 133.1960% 1311960 %0 133.1960%
Tax Increment Spread 95,524 532,035 772,974 897,965
Collection Rate 95 % 95 %, 95% 95%
Tax Increment Collected 90,TZ871 414,685 505,433 228,892 F 734,325 118,742 853,067
(Note: Footnotes are shown on next page.
r
z
Prepared by: Springsted Incorporated (10114/96)
Schedule 4B
City of Brooklyn Center, Minnesota
• TIF District 2102 / 2147 1 2148 / 2149
Projected Tax Increment (footnotes)
- Base Value Adjustments
Original Adjusted EMV Class. NTC
r Development Name / PID# 94/95 EMV 94/95 EMV Change Rate Change
(a) Beacon Bowl (36- 119 -21 -13 -0027) 282,100 166,400 (115,700) 4.60% (5,322)
(b) Lutheran Broth. (02-118-21,-23-0016) 2,926,900 1,250,000 (1,676,900) 4.60% (77,137)
Conroy Otto (02- 118 -21 -23 -0022) 852,400 778,300 (74,100) 4.60% (3,409)
KFC Nat. Mgnt.(03- 118 -21-41 -0016) 322,600 289,000 (33,600) 4.60% (1,546)
McDonalds (03- 118 -21-41 -0020) 802,600 665,900 (136,700) 4.60% (6,288)
Daytons (02- 118 -21 -32 -0011) 6,061,500 4,875,000 (1,186,500) 4.60% (54,579)
Mervyns (02- 118 -21 -32 -0012) 6,232,800 5,276,000 (956,800) 4.60% (44,013)
(186, 972)
(c) Sunlite (35- 119 -21 -13 -0011) 408,500 122,000 (286,500) 4.60% (13,179)
L. RiverApts.(36- 119 - 21-42- 0007 +) 1,470,000 1,180,000 (290,000) 3.40% (9,860)
(23,039)
Current Value Adjustments
Increase Increase in Increase Increase in
in 97/98 in 97/98 in 98/99 in 98/99
Development Name / PID# EMV NTC EMV NTC
(d) Gas Station (27- 119 -21 -33 -0100) 0 0 171,300 7,880
(TIF District #2102)
(e) Denney's (portion 35- 119 -21-42 -0003) 446,700 20.548 170,000 7,820
(TIF District #2149)
(f) Carlson Suites (35- 119 -21 -24 -0003) 1,107,700 50,954 1,370,000 86,020
(TIF District #2149)
It is assumed that 8170,000 is reimbursed to the developer on a pay -as- you -go- basis.
(g) Sunlite (35- 119 -21 -13 -0011) 2,378,000 109,388 0 0
(TIF District #2149)
It is assumed that increment through 2002 is reimbursed to the developer on a pay -as- you -go- basis.
Totals for #2149 (e -g) 3,932,400 180.890 2,040,000 93,840
R
Prepared by: Springsted Incorporated (10114/96)
City o f Brooklyn Center
A great place to start. A great place to stay.
•
MEMORANDUM
TO: Mayor Myrna Kragness
Councilmember Kathleen Carmody
Councilmember Debra Hilstrom
Councilmember Kristen Mann
Councilmember Charles F. Nichols, Sr.
FROM: Michael J. McCauley, City Manager
DATE: October 18, 1996
SUBJECT: 10/21/96 Council Work Session Agenda Item V. 1)
The City Council had indicated that at this work session it wished to review its approach to
commissions and how the Council communicated with commissions. By the first of the year, the
• Council has directed that a proposed schedule be in place for annual meetings between the City
Council and each commission separately.
•
6301 Shingle Creek Pkwy, Brooklyn Center, MN 55430 -2199 • City Hall & TDD Number (612) 569 -3300
Recreation and Community Center Phone & TDD Number (612) 569 -3400 • FAX (612) 569 -3494
An Affirmative Action /Equal Opportunities Employer
City o f Brooklyn Center
A great place to start. A great place to stay.
•
MEMORANDUM
TO: Mayor Myrna Kragness
Councilmember Kathleen Carmody
Councilmember Debra Hilstrom
Councilmember Kristen Mann
Councilmember Charles F. Nichols, r.
FROM: Michael J. McCauley, City Manager
DATE: October 18, 1996
SUBJECT: 10/21/96 Council Work Session Agenda Item V. 2)
Two issues were previously placed on a work session agenda, but there was insufficient time to
address the items. Councilmember Carmody had asked that they be taken off at that time. I wanted
• to at least bring the items up so that if we wished to continue them, that decision could be made or
they could be addressed at the October 21 work session. The first issue relating to Adopt -A -Park
relates to an opinion issued by Charlie LeFevere. That opinion addressed whether the City should
prohibit certain groups from being eligible to participate in the Adopt- A- Street/Park program. There
are two conflicting decisions in different states. In one state the decision not to allow the Ku Klux
Klan to participate in the program was upheld; in the other state the prohibition was struck down.
The issue relating to the Historical Society request was whether the Council wished to give a formal
response to the Historical Society request to use the storage area under the water tower at the
Heritage Center.
•
6301 Shingle Creek Pkwy, Brooklyn Center, MN 55430 -2199 • City Hall & TDD Number (612) 569 -3300
Recreation and Community Center Phone & TDD Number (612) 569 -3400 • FAX (612) 569 -3494
An Affirmative Action /Equal Opportunities Employer