HomeMy WebLinkAboutCCMinutes_2008_06_10 � o �
Brookings City Council
June 10, 2008
The Brookings City Council held a meeting on Tuesday,June 10, 2008 at 5:00 p.m., at City Hall with
the following members present: Mayor Scott Munsterman, Council Members Julie Whaley, Mike
Bardey, Ryan Brunner,Tim Reed,Mike McClemans, and Tom Be2dichek. Ciry Manager Jeffrey
Weldon,Assistant City Attorney Dick Smith, and City Clerk Shaxi Thornes were also present.
Update from the Lic�uor Ad Hoc Committee. Jeffrey Weldon, City Manager,repoxted the special
liquor ad hoc committee has held two meetings and has taken a considerable amount of public
testimony as it is looking at putting together an otdinance relative to the new Iaw, Senate Bill 126.
Weldon said City Attorney Steve Britzman has been working on this issue with other city attorneys
across the state,Department of Revenue staff and legislators to assist with us this issue. The
challenges have been looking at the provisions of the new law and crafting language that works well
with the system Brookings has cuxrendy in place telative to home rule, the City's operating
agxeements, and the City's override system and other provisions of the City's e�sting ordinances for
liquor licenses. As to a dxaft ordinance, he feels the Committee has waded through the major
provisions of the senate bill and have it well addressed with the exception on one provision
regarding what actually constitutes a license. Is it a license because the City of Brookings maintains
one license and promulgates thtough various leases in the form of opetating agreements as opposed
to what the state is defuung as a license? In his consideration and discussion with the state, the state
has told the City in regards to the situation with the city of Brookings and its operating agreements,
they are considering licenses to be exacting what the law says, "licenses," even though the City has a
current lease arrangement with the operating agreements. The City Attorney is of that same
opinion. The Committee had considexable discussion about that issue at their last meeting and there
seems to be fair amount of"wiggle" room for interpretation as to whether or not that was the intent
of legislative process. When looking at a literal reading or interpretation of the law,it seems to
indicate that for existing communities that have liquor licenses, that literal interpretation means that
the City of Brookings has but one license through operating agxeements and that Section 8 of the
bill may actually not apply. Weldon said there has been good discussion back and forth and it was
suggested at that last committee meeting that there may be a need to seek an Attorney General
opinion on that specific issue of the law. The Committee seemed to be inclined to consider that.
The Committee will be holding more meetings as soon as the City Attorney returns from vacation.
Weldon said in addition to Senate Bill 126,there axe a couple other new laws that were passed by the
Legislature this year relative to liquor licenses. He noted that these are not nearly as significant or as
controversial as this one,but they will need some local option ordinances to address those. The
Committee will tackle those as soon as it can get to the Council an ordinance relative to Senate Bill
126.
Weldon said the law does provide that the City must adopt the license fee within 90 days of enacting
the ordinance (for Senate Bill 126). The City Council could proceed with the language of the
otdinance and then just wait to fill in the fee amount. Determ,ning the fee of the license or this type
of an operating agreement with the restaurant license is the crux of the matter where the Corrunittee
seems to be hitting some traction pxoblems at this point.
Mayor Munsterman said the biggest thing would be for the Council is to have a discussion about
seeking an Attorney General opinion because Bzookings is a lease market and he thinks the City
probably want to stay that way and there are varying degrees and ways of how to interpret the law.
He recendy had a discussion with Yvonne Taylot, SD Municipal League Executive Director, and het
interpretation is that the City of Brookings can go with minimum per capita amount. That's the way
it was lobbied and that's the way the intent of the law was set and now there are varying degrees of
interpretation. His recommendation would be for the City to seek an Attorney General opinion
since the State Departtnent of Revenue is saying one thing and City of Brookings is saying anothex.
Once and fox all we'll know and then past that point the City can certainly,if the City is wrong in its
interpretation, then we'll know we need to go to the legislature for so the City can retain its local
option.
Bardey agreed that the City needs to pursue the Attorney Genexal's opinion. He said one of the
things that the Council needs to understand is when these bills are put together sometimes there's a
litde give and take and sometimes there are some unintended consequences. It wasn't the intent of
the comtnittees, as he attended the meetings and lobbied on this effort, that it be for our
community. It was intended for those who want licenses in fitst class comrnunities across the state -
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- that pxotects the value and that was done. It wasn't ever imagined that it would affect the City of
Brookings and its operating agreements because they're not owned. He thinks there's a diffexence
of opinion with the Department of Revenue and he thinks they are reading the bill literally, as the
City Attorney is. We need that opuiion from the Attorney Genexal's office.
McClemans said he would wait fox the Attorney's General opinion and he would continue to believe
that it's awfully hatd to sell sometivng you don't own. The licenses are leases. T'hey've worked very
well for 40 years and they still belong to the city.
Whaley said there have been some comments around town about the coirunittee and the people on
the coinmittee, and she asked the City Manager why there wasn't a broader choice. She noted that
thexe were comments about Council Member Battley,which his involvement in Pierre, serving on
the corrunittee. She questioned why there wexen't members of the BEDC or one of our legislators
also on the cointnittee. It is a concern that has been out thete and she told them she would get it
brought up because she knew thete'd be a lot of people watching tonight.
Weldon said he was asked by the City Council to put together a committee. There is a provision in
Governance and End.r Palicie.r which does allow the Ciry Manager to ask for special assistance from
Council members when developing at a poliry or looking at a specific issue. We thought as a group
it would be an exercise that would be well served outside the normal scope of the ciry council
meetings in terms of schedules and resources to be able to take the time to dive into this issue with
as much diligence as possible. We are operating on somewhat of a time limitation. The new law
does take effect on July 15C and we can begin our local adoption process as soon as possible aftex July
1S`. With the interest of the community in this issue,we wanted to take advanta.ge of this law as
soon as possible so what he wanted to do is provide somewhat of a schedule that would allow us to .
meet as soon as possible and keep this process moving so we are xeady to jump as soon after July 1g`
as possible. He noted that the city did schedule a couple meetings with a little bit too short of notice
in the interest of trying to keep the process moving. We will endeavor to do better on that in the
future. With regard to the make-up of cominittee, everybody on the City Council has workea long
and hard on the issue and he thought,when looking at who should best serve on the comtnittee,it
would be individuals who had an interest in the issue and who will be deciding the issue in its
ordinance form later on anyway. He was concerned about time element involved in bxinging up to
speed a wide variety of people thtoughout the community. It's difficult to find somebody that
doesn't have sorne sort of a vested inteYest in this issue that would stack the biases on the
committee. He thought it would be best to have a makeup, a committee of the City Council.
Council Member McClemans is new to the City Council but has had an interest in liquor issues in
the past. Mayor Munsterman and Council Member Bardey have been actively involved in the issue.
All three of those individuals are going to have an opportunity with everybody to vote on the final
product on this and he thought it would be best to speed the process along if people that were going
to be having some say in the final also wexe involved in the details upfront.
Munsterman added that these meetings are open to the public and the taped audio is available on the
website and they have just as much dialogue as anyone else on the ad hoc corrunittee. The
Cominittee has had 20 to 30 people in the audience participating in the dialogue and there aren't any
decisions made by the committee other than just to try to work through the information and bring it
to the Council for a decision. The dialogue has been there and the access is there. He doesn't know
if there is any difference between the people sitting out there and the people sitting up here, because
we're all talking and we've been able to facilitate some really good discussion.
Council Member Reed said one question he has is when the Council oxiginally had the motion to
create the ad hoc committee,he thought it would be more of a community committee. UUhen the
Council has talked about ad hoc committees befoxe,it's been more of a community comrnittee that
either the mayor or the city manager has appointed. He tivnks next time if the Council does go
through this where it creates a subgroup of the Council to look at that, to make it be clearer in the
motion. He doesn't have any problem with what was done,but he didn't think that's what we were
doing. He thought there would be citizens on the committee also. Fox the next time the Council
does something like this, he thinks it should be cleas of the make-up of the committee.
Munsterman agreed that this was a good point and something the Council needs to �ecommend at
that point.
Bartley said he thinks it's important to understand that this was a diffexent ad hoc committee than
what the Council has appointed in the past. In the past,it's been a Mayor's ad hoc committee which
would then involve other people othex than the Council. This one in particular was the City
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Manager's ad hoc committee to help him develop policy for the Council. He does think these are
two different types of ad hoc committees even though they say the word ad hoc committee; they are
two completely different separate functions.
Reed said in the City Charter when it talks about that the City Manager can also fortn an ad hoc
committee with citizens. He thinks if the council gave it a title such as a subcommittee or standing
committee would provide moxe clarity.
McClemans said what the Committee has woxked through so far is strictly legislative. The
Committee is still trying to figure out where they're at with these licenses. When the Committee gets
a better grasp on them,he's not opposed to some input fxom other people. He still has some
concerns whether the City is going to issue two licenses or ten licenses and whether it's an existing
establishment or new establishment. He thinks some guidelines from the public would help and he
thinks we need some guidelines.
A motion was made by Bartley, seconded by Whaley, to seek an Attomey General opinion regarding
questions on Senate Bill 126. All present voted yes;motion carried.
Project Insight RebOrtS• Council Member Bartley gave the following two reports:
Proie� ct Insight: Moscow, Idaho -Population 22,000; 10,000 students. One old ma.11,Mary's, Office
Depot and Wal-Mart (not super Wal-Mart),new shopping center across state line planned next year
(20 nvles)
Economic Development: 1)They have an economic development council with an administrator
that handles all economic except not retail at this time, considering it for future;2) They do have a
plan which will be provided at a later date;and 3) Fair and affordable housing commission meets
every month which is appointed by the Mayor.
Code Enforcement: 1) No specific plan other than ordinances in place;2) Complai.nt basis only;and
3) New Ordinance passed recendy (will provide a copy).
Development impact and other fees: 1)Developers pay fox new subdivisions and developments;
2)Also arterial roads; 3) Uses various fees,assessments and traditional bonding for projects;and 4)
Old sign ordinance being reviewed by Community Development and Planning Board.
Financial: 1) Urban Renewal Agency applies for various grants and CDBG as available.
Town& Gown: 1) Campus substation for fire and police. No direct reimbursement from
university. 2) Fire depaxtment is Volta.ire with 5 police staff.
Library: No direct involvement with economic development
Event Center: 1) Kiwi Dome at Campus,Community Centex in old high school which includes
senior center is managed under a contract with the non-city entity.
Unique paxtr�erships with university: Mayor and Pxesident meet every month
Project Insight: Fort Collins, Colorado-Population 140,000;25,000 srudents
Economic Development: 1) Regional and city EDC also a University/City combined effort; 2) Very
developed plan available on the internet @ fc.com/business;and 3) Currendy no funding available,
use only CDBG funding
Code Enforcement: 1) Have a detailed plan and a joint enforcement officer with the univexsity;
2) Proacrive;and 3) Currendy enforcing no moxe than 3 unrelated in housing unit
Development impact and other fees: 1)All private funded by developers;2) Street over sizing when
appropriate fox the city;and 3) Have some impact fees listed on web site @ fc.com
Financial: 1) Retail incentive over half million square feet of development. Just did a lifestyle power
center for 4 million over 20 years bonding;and 2) 2 TIF districts commercial only, no housing.
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Town and Uown: Police backup only, Fire District,no financial contribution,negotiated transit
deal.
Lic�uor Store Evaluation: Council Member McClemans submitted the following written report to
the City Council. He said this report was in regards to the report the City Council received in May
related to the liquor store and its profits. The Brookings Liquor Store recendy moved to a new
locarion. PYiot to that there was discussion of privatizing, allowing leases similar to the liquor
licenses the City has and a different ditection was chosen to go to the Brookings Mall.
Background from his written report: `7n 2001 the Liquor Store Mana�er a.rked the City Council to tour the
.rtore at the we,rt 6`�.rtreet location. Thi.r tour was conducted to look at the plans for e.x�ian,rion of the.rtore in order to
increa.re sales.After the tour, the Mayor and all.rix Council members agr�ed that ba.red on the location, expan.rion
iva,r not a rea.ronable venture. Further option.c were di.rcu.r.red,pre.rented and.rtudied r�garding the Liquor.rtor�
operation. In 2005, the City Council(Mun.rterman,Boti ed,McCleman.r, and Aeed)rva.r ready to i.crue 3 licen.re.r a.r
private individual lease.r. Due to a change of council memberr thi.r action�va.r defeated by a S-2 vote."
McClemans said it is now three years later and the City owned Liquor store has now been in
operation one full year at its new location at the Brookings Mall. Upon review of the most xecent
financial statement he is proposing that the option that was best in 2005 is still the best option for
the future.
BLS Goal is to provide a yearly 8% net profit which is equal to the 10% override charged to the
lease operators in the city. The Store's current net profit was 3.3%; the reality is that it is still the
best option to get out of the City run liquor store business. It should get in the position where it is
not in direct competition with private business. It will be more profitable to lease liquor sales to one
to three private individuals or businesses like we do for on and off sale liquor/malt beverage/wine
sales.
He reviewed the 6 year profit projection summary (Brookings Mall projectians) given to the City
Council by former City Managex,Alan Lanning. He said the City Council incorrecdy believed that
these numbers showed staying in this business was a good idea. He noted the bottom line showing
that there would be a$209,088 positive difference by leasing the sale of off sale liquor/beer/wine to
private individuals or business. These projections were put togethex with increases, a $65,000 lease
expense which he believes if$75,000. This includes misc. and lotto profits of$21,000. Taking the
projected sales, they were projecting a net profit of$1.5 million. If looking at 10%and leasing the
liquor store in the same manner,it would show we were$209,000 ahead to be out of the business.
We would have generated$1.7 million. Deduct the added lease and the profit on lotto and other
margins, there's almost a $400,000 difference.
This creates an additional$60,000 (for the years 2006-2011) to be added to the $209,088 making a
total of$269,088 difference in being out of the business. The numbexs on the summary sheet are
indicative of an 8%profit which is again our goal,which we are not meeting.
'I'he following was from a handout prepared by McClemans:
A) We have only achieved a 3.3 %profit. GOAL i.r 8%.
•Our tran.fer i.c,�'370,000.00, unth only,$105,292.DO actually from the.rtore.
•Comparing the 10% overrzde numberr of 677,934.00,you can.ree an 83%difference in�irnfitability
totaling,�307, 934.00*.
10% override numberr are calculated a.r follo�v.r:
Current 2007 o�f'.rale beer/liquor/u�ine.rale.r (4,326,822.00 x 10% _ ,$438,486.00)
Product purcha.red at the local liquor ston for,rale (2,394,480.00 x 10% _ ,�'239,448.00)
Total= ,�'677,934.00 (monthly allocation.r of override of,rale of beer and liquor)
B) The fodlowing dollar amount.r could be in the city t�za.rury:
1) Co.rt of cur�znt inventory ,B'S7G.>04.00
2) Ca.rh on hand ,8'S38,271.00
3)Profzt d�erence ,5307,934.00*
Total ,�1,422,309.00
Plea,re note that everyyear that the profit fail.r to reach the 8%goal, we are lo.ring money on the d�erence between the
goal and the actual profit percentage received a.c trart.►fer.r. For example, in 2007, the difference betaveen 3.3%
(�'105,000.00)and thegoal of 8% (,�'254,545.00).
The Liquor Stor�i.r.rtill at 3.45%.ro it i,r,ctill.rtruggling to get to half way of the j�rojected net pmfit of 10%.
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FIVE OPTIONS FOR THE B1�OOKINGS LIQUOR STOAE
1) Provide lea.re.r to 3 retail location.r in the City of Bmoking.r. Thi.r i.r the most pmfitable urith the lea.rt amount
of eac�ien.re and involvement by the City.
2) Leave the Liquor.rtore in the pre.rent location. Thi.r option rvould maacimitie the mark up on p�nduct.r,
thereby maximitizng the profit. There 2vould al.ro be no co.rt for remodeling to a ne�v location and thi.r svould
require the least amount of risk.
3� Build a new.rtore at a ne�v location, which would re.rult in reduced profit.c. The reduced profit i.r due to co.rt.r
a.rsociated with con.rtruction and oj�erating co.rt.r.
4) Lea.re a.rtore at a location owned by other.r for le.cr e.xpen.re than building a nelv.rtore. The propo.red lea.re
expen.re.r are too high and wil!reduce overall profit due to thi.r increa.red operating e.x�en.re. (Thi.r ir the option
the czty cho.re)
S) Sell the Liquor,rtore ar City owned operation. (Thi.r make.r no.ren.re to becau.re itgenerate.r revenue for the
City)."
He xeviewed a 2007 financial statement,noting"less inventory of$576,104" and"cash on hand at
$538,271." Those are both numbers and money that could have been in the city coffers at the end
of 2007 had the City allowed other people to lease the liquor store. As long as the ciry owned store
can not reach the 8%profit margin (which it has never done),we will continue to be $250,000 to
$300,000 behind every year we are operating the store.
He reviewed the first quarter 2008 financial statement citing the liquor store is averaging 3.45%.
There are several things involved in this liquor operating of liquor, malt/beer,and wine and there
are different percentages charged and also things like freight that can be charged to each
establishment.
The overall condition shows it would be more profitable for the city to have leased. It would have
been 83%more profitable last year had we been in a lease situation rather than in the operation of
the store.
He thinks at this time, the Council needs to be looking at the future. The Council has a new
legislative bill it hasn't examined on the ad hoc committee that's a beer and wine license. He's not
completely sure whethex it's a separate license which will allow grocery stores that do ovex 50% of
theit business with food to allow them to also expand into wine. He's not sure if that is a separate
license and if the Council has to discuss issuing them or if they automatically qualify. They will take
a portion of the wine business from the Ciry liquor store. The reality is even though the liquor store
would like to increase their business, that's fine. But when they incxease their business by taking
business from our other oudets,we lose money. When they don't reach their 8%net profit,we're
better off to have Casey's or one of the bars downtown or Hy-Vee or Wal-Mart—we're better off
taking the 10%mark-up. We make more money on every case of beer. He asked if the beer and
wine license was a new separate license.
Weldon said the way the law is written,the city would need an ordinance to enact it and it would be
a license that the city would have to issue to Hy-Vee, for example,if they wanted to sell wine.
McClemans asked it is something the City could do. Yes. McClemans noted if the City does issue
this new license to Hy-Vee,it will cut into the liquor store's sales volume.
McClemans said the reality of it is the 8%net is a very hard thing for them to accomplish. The 10%
ovexride on the wholesale of the baxs or the beer bought at a convenience store—that 10%is kind
of like death and t�es. It's pretty much unbeatable. The City continues to make the money and
continues to collect the money weekly and it's much cleaner and more profitable for the city,plus
you put a $1 million dollars in the bank.
He proposed that RFP's be requested for the operation of 1-3 private source (individuals or
businesses) leases to be explored. If proposals are not indicative of a change being needed than the
operation of Brookings Liquor Store can xemain business as usual fwhich is not ver�good business�.
Council Discussion:
Bardey asked when the City does the ovexride now for the 10%to the operating agreements, the
City provides some services fot that 10%. All the billing comes thxough the city. The City pays the
liquor wholesalers monthly or more frequendy, but the City pays that bill within 30 days. That gives
a little leeway to the bar owners, the operating agreements, to pay the City. We figuYe it out and bill
them. The City is basically providing a service to those facilities for the 10% override. Under
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McCleman's scenario, the City would then be charging liquor off-sale holders of operating
agreements that same 10% and would we then be paying theit bills as they got their supplies?
McClemans said the City would Yequest that in the request for pxoposals that the city would not
make those payment,but the operatoxs and bar owners would pay it in the same manner the city
does now. They pay weekly. He asked if the city pay every two weeks or monthly? He knows the
bars pay every Wednesday. He's not sute if the off-sale holders pay dixecdy to the city. The City
would have to build that into the operation of a lease.
Bill Purrington,Liquor Store Manager, said that the Store bills the bars every Monday for the
merchandise they received the week before and that bill is do at the end of the week.
Bardey asked when the Ciry pays the wholesalers.
Purrington said because of the volume of the invoices the city processes, the city pays the
wholesalers every week.
Bardey said the city is taking an override,but providing a service. If the City was to try and not do
that,it just becomes a tax. If the City doesn't pxovide any service for the 10% override,it's a tax.
Purrington said he's always considered the override a lease. That is what it costs them to lease their
license.
McClemans said he wasn't sure what he meant about a lease. The products are delivexed to
convenience stores and the bars, the bills are signed for and forwarded to liquor store and eventually
downtown (City Hall). The operator of a lease agreement can do the same thing. You are basically
handling the money week to week. You are also cash flow positive,because supposedly they are
paying the City every week. There is a certain amount of"kite",a floating from one week to the
next depending on when the bills are actually are paid. He thinks it's something that needs to be
looked at. The difference in revenue is very considerable and the City has another liquor option
corning at us that will make it even a little more tough for the Liquor Store to make 8%. He
questioned if they've ever made 8%in the old store. With the increased$75,000 rent and added
another employee,going to the new location the liquor store added another$125,000 to an
overhead. Even though they do more business, doing moxe business doesn't necessarily mean you
make more money if the overhead has gone up and that's what has basically happened here.
Bartley said there could be an argument that splitting it into three different operations would not
allow you to handle the volume of product selection that we can handle in a super store like our
liquor stoxe is at this present time. Three smaller establishments might not be able to afford that
because now we've split the pie thxee diffexent ways. It becomes a litde bit mote difficult to believe
that we can increase the ma.Yket and not risk the chance that we would lose some of the market
because people would shop elsewhere because the selection might be diffetent. That is something
that the City has to look at. We have a pretty good operation in terms of selection that he doesn't
think there will be in three smaller stores and we may see a decrease.
McClemans said he thinks most people can handle their inventory and invest whatever money they
need to turn it,whether it's one store or two stores or three stores. But the Ciry takes a request for
proposals and sees what people are willing to do. You make sure they are sound,bank bonded so
they run the place in a sensible manner. Right now, the city is in the position where it has to ask for
requests to take over the curxent lease. When the difference in an operating yeax is $307,000,he
thinks it's worthwhile to take a look at it,because just as the City doesn't want to be in the on-sale
liquor by the drink business, he doesn't know that the City needs to be override business other than
through a lease.
Bartley asked if there's an opportunity to get out of the override business all together?
McClemans said no and asked why would the Ciry do that for$400,000, for$400,000,why would
the city do that? T'hat's why the City would lease it.
Bardey asked Purrington as he looks at these figures presented in this proposal if he could provide
an analysis at the Council's next meeting? Purrington responded yes.
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McClemans clarified that he is not asking for something tonight. Purrington brought his proposals
of what business they have done and this (his report) analyzes and sums up what it's really all about.
He'd be happy to discuss the numbers and he looks forward to Purrington's report.
Munsterman said he didn't know if the Council would want the ad hoc coinmittee to take a look at
ot just have it come back to the council. Especially as one looks at the piece of legislation
McClemans was referring to; that might have the dynamic that plays into this whole thing as well.
The numbers are compelling and it was the direction the Council was headed a few years ago and
that got changed. He said he appreciates McClemans bringing it back up for the Council to take a
look at it and see if the Council needs to reassess where we are at. He thinks it's healthy to do that
no matter what.
Bezdichek said he knows when the Council looked at this;a comment about the override of 2007 of
beer and wine sales, the Council has talked about having some of the different liquor stores for
convenience. Those individuals that live on the south side of Brookings may not necessarily be
driving to Hy-Vee. It seems in theory that it does make sense if stopping at a convenience store if
there was also a liquor store/cigar shop. People probably would make purchases and may not affect
the Liquor Store. If an individual is heading to the west as far as the old Liquor Store, obviously
there were sales made thexe. It makes a litde sense that if the City's in that business, do you consider
the citizens in making it convenient with the price of gas and driving time and distance. He thinks
by convenience by having small other oudets of some private businesses,it's worth thinking about
and discussing.
Munsterman asked this item be placed on a future work session agenda for the council.
Reed added when talking about convenience,when doing retail development and if we are working
on an area that we're trying to get stores in and someone comes along and would like to put in a
liquor store or a gift shop with wine and beer with top shelf liquors—you can't do that. He thinks
we could lose an opportunity there to help a business succeed. That's why when we talk about the
idea that maybe grocery stoxes can sell wine,he can't see the Council stopping that because he
doesn't think we should limit a businesses ability to make moxe money and provide better services to
our citizens.
Brunnex said on the selection end as to having a high qualiry selection,he thinks we'll see a litde
divexsity. Some businesses will car�y just top end wines or liquor. Some other businesses may carry
a broader range. He thinks selection wise,we may stay same but be spread out more as far as whexe
there is access in town.
McClemans commented as you do this,you reach a point where it is more profitable to take the
10%rathex than it is to run a stote and he thinks that will hold true no matter what you do.
Munsterman said the Council will allow staff to check through the numbers and then get it on a
work session for another discussion and then move from thexe.
Economic DevelcZpment Land Transfer Value. Council Member McClemans xequested this
item be placed on the agenda as a policy discussion. He said he has a concern about economic
development land transfers.A number of yeaxs ago the Ciry passed a Resolution No. 79-04 which
states that City will either check with local realtors or get an apptaisal when the City sells land to
people who really don't fit the true economic development. This was brought about by the sale of a
piece of property (1.6 acres) for$10,000 an acre and the gendeman moved a building onto the
premises,never hooked up any water or sewer, and immediately sold it the building to another
person who in turn sold it to another person and there was no economic development for the city of
Brookings and the citizens took a beating. The City didn't get its money back out of the street or
the land. This resolution was brought forward with the guidelines of a$1 per square foot or$43,560
per acre. When installing water and sewer, the costs axe considerably different. The City has just
sold two pieces of pxoperty and he feels the Council needs to understand what it has done. The City
has sold two pieces of property at 25 cents per sq ft rather than a $1. A lot of money was left on the
table. He feels both these properties should have been made available to the private sector. These
don't seem to have any gteat economic development value. He was involved in visiting with one of
the individuals who went out to look at some pxoperty with the city and had no idea he would end
up with the$10,000 per square foot that as been the standard out there forever. When the City put
streets, curb and gutter, and water and sewer it ends up well over$150 on the frontage of each of
the City's properties. One of the properties the City sold was about$670 street frontage which
works out to be$100,000 plus the cost of land and the land was quite minor because the land was
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purchased 20 years ago. The City had over$106,000 into this particular lot and sold it for$30,000
and the City has to go up the road pay$15,000 per acre and pay the same kind of street costs and
make it available for the next person. Economic development is one t�ung. Private parties—that
land should Ue made available to anyone in the community. It's surplus. The other piece of
property sold had about 1,265 feet of streets and the City had well over$200,000 in this piece of
property which the City sold for$77,000. Again, the City is selling to people and the economic
development does not appear to be thexe. Up the street, the City is paying$18,000 per acre and
comparable cost of streets of$150. There's a reason this resolution was passed in 2004. Why would
the City unload property at a sub-value? He visited with Joyce Dxagseth, County Director of
Equalization, and found that these properties would be well be taxed over what they were sold for.
He feels the City needs to review and undexstand what it's doing when taking some of these smaller
pieces of property—a smaller parcel was not set up fox a large company which is what economic
development is. Because of the people in the City of Brookings who own commercial property,
they'xe not willing to sell. It's very hard to find two to four acres to build a warehouse. Those
properties are very hard to come by. They are zoned improperly. The people who own them, do
not want to sell them. At a $1 pet square foot,you'll fmd out we generally break even. That's not
always the standard corner lots. There's no reason for the city to take a loss when there's no
economic development.
A1 Heuton,Brookings Economic Development Corpoxation Executive Director,provided a quick
review of the process. Heuton said how is works is essentially the city has property for sale and the
BEDC maintains a database of both public and private properties so when people come to look,
whether it's retail, commexcial,industrial, or other, they talk to them about every piece of property
that is available in the community. If they have an interest in city propexty, the BEDC has put in
place a standard operating system that they follow that includes that business providing information
on their project, on the economic impact in terms of capital investment,jobs,benefits,properry
taxes. All that information is put into a report that they bring to the council and discuss the project
in executive session because it is a contractual matter. The Council makes a decision based on that
input and that's the price they sell it fot.
Heuton noted related to price and value,land that isn't"shovel ready" that doesn't have utilities, he
doesn't think they could sell for a$1.00/square foot in Brookings. He doesn't tivnk it will happen.
The basic process is that a business comes to the BEDC with a request and the BEDC represents
that request to the City. The BEDC puts together what they feel will be the economic impact on
that project and that's what the city council bases their decision on.
McClemans asked for clarification on the Iand type. Heuton said not shovel-ready,meaning that it is
graded and ready to build on as all sewer,water, streets axe in place.
McClemans said most sites are not ready to go. He thinks a$1.00 per square foot is at best,a very
good price for anyone to buy. When you have watex, sewer, curb and gutter, and city street in front
of the property,we can sell that all day long. He doesn't understand where such a price is available,
$15,000 an acre or$10,000 an acre with water, sewer, curb and gutter zoned commercial or
industrial—that's a pxetty good buy. At a $1.00 per square foot,if you put it on the market he is
confident it can be sold at that price.
Heuton commented that he has a different opinion based on what other communities are doing in
the area. It is the Council's purgative if they want to list their property at a $1.00 per square foot and
not have any flexibility in that price, that's what the BEDC will follow. He pointed out that they
have talked to other communities in this part of South Dakota,and their price for shovel-ready land
(close to interstates) ranges from 23 to 57 cents a square foot. If it's not shovel ready, some are as
low as 7 cents per sq. ft. and all of those prices are negotiable. They have run into this in the past
with there's been other communities that have competed for business expansions or relocations that
have offered free land and utilities to the door, and we can't compete with that at a$1.00 pex square
foot.
McClemans said he thinks that they are talking about two different"apples." One is a private
purchase fot someone to use for their private increase in financial wealth and not someone who is
bringing a 100 jobs to a community along the interstate. He asked Heuton if he was aware of
Resolution 79-04. He asked if anyone was aware this was resolution or a guideline for the city to
use.
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Heuton said both he and the Council had been aware of the Resolution and it's a guideline and it's
always been xepresented to him as a negotiable figure.
Reed asked Heuton when he puts together the scorecard on each one as the Council looks at each
property is there evex a check that he goes back and see how they've done in what the Council was
told they would do.
Heuton said there isn't. When businesses come to the BEDC,he takes what they say at face value.
If the city wants that to be monitored, that is certainly something that can be done. He has done
this in the past doing grant administration where he goes back to verify capital investment and job
creation,which is generally the measuxe. He has yet to see a state to go back on company that didn't
do exacdy what they said they were going to do and ask for money back.
Reed said he was thinking more for lessons learned and knowing what we do have to watch.
Heuton said they are in the process of working on their economic development strategy for the
community and he thinks McClemans is cotrect;there are land sales that take place that would not
be the highest priority. As he gets that strategy completed and he starts looking at the types of
industries we want to develop in the community, the Council would certainly have the purgative to
xestrict land sales to anly those types of industries. That is something they can look at as they
develop the strategy including if there are certain types of business the City wants to eliminate being
able to buy land in city industrial parks or at a reduced price.
Munsterman asked McClemans if he was recommending any changes other than to remind the
Council.
McClemans said he is hoping that everyone understands on these two properties, the City lost
around$250,000 and we're going up the hill two miles away paying$18,000 an acre and putting the
same dollax per running foot for water, sewer, curb and gutter and we're not even getting our money
back on the sale of these. These are not even economic development individuals in sense of
creating jobs. These are people who probably looked fox other places to build and it's hard to find a
place. 'I'hese are very teduced below tax assessed value and corner lots. Corner lots you don't make
any money on anyway and to sell them at these lesser prices --$15,000 per acxe with cuxb and gutter
in zoned commercial or industrial is a very good price for somebody. And if there's some more
available, to let him know.
Heuton said the calculations they look at include the land value the city paid for the ptoperty and
what the city investment was in utilities and street on one side. He noted that he might be wrong,
but wasn't suxe if the city charges any corner lot both sides. If you look at that, the City didn't lose
money,but didn't make a lot.
McClemans said the City doesn't make anything. The property was purchased at$2,000 per acre.
The$150 is a fronta.ge fee;it's not both sides. It is frontage of the lots. Just half the street is $150.
In this particular case,it was 200'x 477';it's 677 feet at$150 totally over$100,000. This property
was bought 19 years ago for$2,400 per acre. You're paying$18,000 per acxe because you have to
replace what you sell. Thexe's a cost of putting the streets in. T'his was a good policy and is
something that needs to be reviewed. He is quite sure these numbers are very accurate.
6:00 P.M. CITY COUNCIL MEETING
Consent Age�da: An executive session was added to the meeting regarding pricing strategy.
A motion was made by Reed, seconded bp McClemans,to approve the consent agenda,which
included:
A. Action to approve the agenda, as amended.
B. Action to approve the May 27,2008 minutes.
C. Action to approve the Government Access Channel Policy.
Policy for Production and Programming of Government Cable Channel9
City of Bxooking, SD
Bac�ground
Section 611 of the Communications Act authorizes local franchising authoxities to require cable
operators to set aside channels for public, educational, or governmental use.T'he City of Brookings
has secured a Government Access channel for the purpose of providing high-qualiry government
access programming in an ongoing effort to inform and educate the citizenry.
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1. Pu ose:
The purpose of this policy is to specify procedures necessary to ensure compliance with all
applicable federal, state,and local codes and regulations pertauung to the Government Access
Channel.
2. Definitions:
Fot the purposes of this policy, the following terms shall have the meanings set forth below:
Endorsement.The term"endorsement" shall mean the act of giving approval of or
support of any issue, candidate, specific person, company, and specific brand
name product or service provider for consumer use.
Govexnment Access Channel.The tertn"government access channel" shall mean a
channel intended for use by local governmental bodies for informing the public
about what is happening in local government.
Government Access Programtning.The term"government access programming"
shall mean any live cablecast, tape-delayed cablecast,pre-produced,intexactive
information, or outside-originated programming designed to provide the
Brookings television viewing area with timely, accurate,and complete
government information.
3. Eligible Programming and Program Content
3.1 Modes of Cablecast:
3.1.1 Live Cablecast.Live coverage, principally consisting of City Council,live call-in
shows, and other selected public meetings and events of general community
interest.
3.1.2 Tape-delayed Cablecast: Public meetings and/or events,which axe videotaped in
advance for cablecast at a later period, shall be permitted. These videotaped
programs shall adhere to the formatting guidelines in Section 3.2.
3.1.3 Pre-Produced Programining: Programs produced by the City of Brookings
through a contracted third party.These programs include (but are not limited to)
programs for City departments,issues related to City government, or with or
about groups/coxmnittees/boards etc. that are affiliated with City government or
which use public dollars.These programs could be either live or tape-delayed
cablecasts.
3.1.4 Interactive Information Service:Alphanumeric information consisting of program
schedules and public information shall be cablecast in order to maintain up-to-
date schedules and keep viewers abreast of said information. This service shall
operate during the 24-hour period when other programs axe not scheduled.
3.1.5 Outside-originated Progratruning: Ptogtams xelated to municipal, state, or federal
governments,which are produced by an outside source that can be purchased,
rented, or borxowed for cablecast.Also,programs disseminated through satellite
downlinks that are related to municipal, state, or federal issues may be cablecast.
3.2 Access Policy.Access to Government Cable Channel9 is].imited to city
departments/agencies. Channel9 is not intended for general public use and is not a
public access channel.
3.2.1 All public meetings of the Btookings City Council are authorized for cablecast.
3.2.2 Requests for access to Channel9 by persons other than bona fide City officials or
admiriistrators shall be reviewed for appropriateness by the Brookings City Clerk
ox designee.
3.2.3 Billboard information messages may be submitted by any City depaxtment or
agenry. Messages submitted should be consistent with the policies and intentions
of this policy and shall be cablecast at the discretion of the City Clerk or designee.
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Information provided may be edited where necessary by City Clerk`s staff to
ma�nize the impact, clarity, and effectiveness of the message.
3.2.4 Programs that meet the legal definition of obscenity, or which are defamatory,ox
which promote commercial or profit-making services, products, or businesses
shall be prohibited.
3.3 Editing Policy. The City Clerk's Department shall be responsible £or the editing of all
programxning on Channel9 and shall.be subject to the following:
3.3.1 Any public meeting cablecast on Channel9,whether live or on videotape, shall be
aired in its entitety, "gavel to gavel,"without editorial comment. Exceptions to
this policp may occur only when editing out possible recesses, for executive
sessions,to comply with legal standards of decency, or when technical difficulties
restrict production procedures.
3.3.2 Requests for messages to be included in the bulletin boaxd portion from sources
other than City departments shall be submitted in writing to the City Clerk's
Department. Editing shall be by the City Clerk's staff to provide clarity and
maxitnum utilization of pages. No paid commexcial space shall be allowed.
3.3.3 Cablecast commercialism is discouraged. Production personnel shall get tight
shots of speakers in a manner to exclude commexcial banners and logos wherever
feasible. It is further understood that a commercial name may appear, and
Channel9 cannot control its exclusion, such as hotel names or othex sponsors'
logos on speaker's podiums,etc.
3.4 Elections.The facilities and resources of the Ciry's Channel9 shall not be used for any
advertisements on behalf of a political candidate or ballot measure. Note:This does not
pteclude forums which allow the opportunity for all candidates to appear or proponents
and opponents of an issue to be repxesented;e.g., Chamber Government Affairs
sponsored debates.
3.5 Endorsements and Underwriting. Channel9 shall not be used to endorse an issue,
company, or product,with the following exceptions:
1. A company or oxganization may be recognized at the beginning and/or end of a
program for underwriting that specific program.
2. Public forums on ballot issues where all sides have equal opportunity to speak may
be cablecast
3.6 Promotions. Promotional announcements for City events shall be permitted over Channel
9. No promotional announcements for events, charities, or outside organizations in which
the City has no official financial interest or sponsorship shall be pemutted.No
commercial oriented promotions shall be considexed for cablecast.
3.7 Warranty. Channel 9, the City of Brookings,their administrators, employees,and agents
do not warrant the accuracy of any information cablecast over Channel9.
4. Program Scheduling
4.1 New Program Requests.All requests for new programming must be submitted to the City
Clerk's Department.
4.2 Program Priorities.Airtime priorities on Channel9 shall be as follows:
1. Local Governmental Body Meetings: Regular Ciry Council and other city boatds as
determined. Special Meetings; e.g., State of the City Address, City Budget Address,
City-Hosted Press Conferences, Emergency Management Announcements, Chamber
Sponsored Candidate Debates, etc.
2. Channel9 Hosted Programs;e.g.,live or taped talk shows.
3. Channel9 Produced Programs; e.g.,long-or short-forxn video programs featuring
City departments,issues relating to City government, or with or about
groups/committees/boaxds, etc., that are affiliated with City government or which
use public dollars.
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4. Non-Channel9 Produced Programs which further the missions of City departments
and City affiliated organizations; e.g.,PSAs for Community Cultural Center,National
Highway Safety Messages, etc.
5. Character generated informarion regarding City depaxttnents.
6. Character generated informarion xegarding City affiliated organizations.
5. Management R.ights
5.1 Management of Government Channel.All management and progra+�.�ming of Channel 9
shall be provided by the City Clerk's Department, City of Brookings.
5.2 Use of Equipment. City-owned video equipment shall be Yestricted to authorized City
activities, and its use shall be restricted to employees of the City Clerk's Departtnent and
the Information Technology Department or trained personnel under the direction of the
Clerk or IT Departments. Loan of equipment for personal use or outside use shall not be
permitted.
53 Retention and Ownership of Tapes. All digital and videotapes produced by and/or for the
City of Brookings shall be the property of the City.The City shall retain digital and
videotapes of staff-produced programs,meetings, and events for thxee months from date
of broadcast. At the end of that time, the tapes may be reused and the original material
erased, at the discretion of the City.
5.3.1 The digital images and tapes shall not be considered an official record of any
meeting and there shall be no liability for inadvertent erasute or omissions.
53.2 Requests for retention longex than thxee months should be made in advance of
the thxee month period to the City Clexk's Depaxtment and Information
Technology Department.
5.3.3. City produced videotapes may be made available to other stations or channels for
newscasts.
5.3.4 Copies of City Council meetings or other Channel9 programmuig may be
purchased for at the videotape fee to be determined by the Ciry Clerk that reflects
the actual cost of time and materials.
6. Copyright. Programs containing copyrighted materials will be used only if copyright cleaxance
has been obtained.
7. Decision Making, Oversight, Complaints Review. The Brookings City Clerk, or designee,is
responsible for the production,acquisition, scheduling, and cablecasting of programs on the
channel and for operating the channel facilities.
D. Action to approve the City Council's Goals.
Ca�ital Project Prioritization for 2008
�ssue/Project-Air�ort dual-track anal�sis
Policy Statement- Complete the FA.A mandated dual track analysis to resolve the airport runway
issue by year-end to decide: 1) re-align the main runway at the current site;or 2) xelocate the airport
to a proposed site southeast of Brookings.
Action ste�s:
1) Assemble all FAA mandated studies for analysis (by Aug 08)
2) Work with FAA consultants to analyze all data compiled for each of the two options of the dual
ttack for a consolidated repoxt (Aug 08)
3) Hold public hearings on consolidated report (Sept 08)
4) Make decision on preferred option (Oct 08)
5) Begin master plan study on selected option Qan 09)
Pro�ject cost/means of financing.: Runway realignment option: $13 million gross project cost, $2.5
million net cost to city. Airport relocation option: $23 million gross project cost, $2.5 million net
12 ��
cost to city (includes land sales proceeds). Federal grant funding, city sales tax revenue,land sales
for relocation option
Res�onsible�attTv�. Engineering Department, Helms/HNTB, FAA
Outcomes: Have a high quality, high performing general aviation airport to serve local business,
agriculture, commerce, and higher educational needs. Eventual master plan should accommodate
the potential for expanded corporate, charter, and passenger service. Airport should provide basic
services such as mechanical service, avionics, flight instruction, hangar rental, fueling, de-icing, and
termuial services.
2. Issue/Pro�ect-Railroad crossing safet�im�rovements
Polic�Statement: Improve the safety of all in-city railroad crossings with ciry streets through short-
term strategies that install quad-gates and other appurtenances at crossings;medium-term strategies
that accomplish grade separation at intersections where possible;and long-term strategies that
accomplish a railroad by-pass around Brookings.
Action stens:
�—
1) County Rail Authority membership be amended to include Ciry of Brookings (Aug 08)
2) Mayor works with DOT plan over the interim on study committee (Aug 08)
3) Work with legislators to redraft transportation bill for introduction during 20091egislative
session (Aug 08)
4) Maintain dialogue with DM&E and CP in preparation for new Community Parmership
agreement pending sale (Aug 08)
5) Continue building reserve for cxossing imptovements fox cxossing arms beginning with 22°a
Avenue (annual budget process)
6) Work with CP for joint funding of crossing safety improvements (2009)
Pro�ect cost/means of financing: $750,000 for gates at all five intersections as short-term priority.
Costs of inedium and long tertn strategies have yet to be detertnined. Financing partners to be City,
County Rail Authority, State DOT,and Canadian Pacific Railroad.
Res�onsible tiartv: Engineering Department, City Manager, and County Rail Authority
Outcomes: Have crossing gates installed at all five cxossings within three to five years. Begin
working implementation of inedium and long range strategies.
3. Issue/Pro�ect-Innovation Cam�us infxastructute
Polic�Statement: Install the necessary infrastructure to complete the Innovation Campus with the
exception of the street surface to the exteriot street loop; the street surface to be completed later.
Action ste�s:
1) City/BMU to design Phase II,III,and N infrastructuse for Growth Paxtnexship (by Jan 09)
2) Prepare debt financing package for Phase II- IV backed by repayment from TID #1
development (by Dec 08)
3) Phase II is bid and constructed (summer 09)
4) Phase III is bid and constructed (sutnmer 10)
5) Phase N is bid and constructed (summer 11)
PrQject cost/means of financin,g: City will issue tax increment bonds to finance Phase II - IV
backed by ta.x increment proceeds from increment generated by TID #1 ovex the duration of the
life of the district. State industrial road grants to be applied for to add to the pxoject. Phase I
financing is secured by the Growth Parmership Board. Phase II: $790,000;Phase III: $2,078,360;
Phase IV: $963,000.
Re�onsible�.artv: Engineering Department,BMU,and Growth Paxmership
Outcomes: Complete all infrastructure to 126 acre research park to attract technology related
businesses.
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4. Issue/Project- 34`h Avenue/20�' Street over�ass trans�ortation�ro�ect
Polic�Statement: Complete the engineering feasibility study, and begin planning for the
construction of an upgrade to 34`h Avenue, construction of 20`h Street extension, and an I-29
overpass for 20�' Street.
Action ste�s: �
1) Study to be completed by HDR consultants (by December 2008)
2) Public hearing/presentation on study results (by January 2009)
3) Submit project scope for inclusion to STIP (Soonest available DOT STIP application timeline
after January 2009)
Pxoject cost/means of financinP Total project cost for engineering study: $125,556;City of
Brookings: $62,778; County of Bxookings: $31,389;Private businesses: $31,389
Res�onsible�art�_ Engineering Department, HDR Engineering consultants
Outcomes: Have a completed engineering study that adequately describes the proposed project so it
can be eligible to be placed on the DOT impxovement plan to be eligible for funding and
construction.
5. Issue/Project- South trunk utilit�extension
Polic�Statement: Work with developers and BMU to pxovide the installation and financing of
major trunk water and sewet extensions south of 20``'to 32"d Street to facilitate additional
development in accoxdance with the comprehensive plan.
Action steus:
1) Work with Prairie Hills subdivision developer to identify/define need utility extensions Qune 08)
2) Have utility plans approved by City and BMU Qune 08)
3) Initiate cost recovery program for utility financing (if necessary) Qune 08)
4) Approve development agreement (Aug 08)
Pro�ect cost/means of financin� Prairie Hills' developer and BMU finances costs of utility
extensions and is repaid over time by other adjacent,benefiting propexty on a pxo rata basis as it is
developed. $750,000 total pxoject cost
Res�onsible�artv: Engineering Depaxtment, City Manager,BMU, and Mills Construction
Outcomes: Provide for all developable property south of 20�'to 32"d from Medary to treatment
plant to be serviceable with trunk watex and sewer systems.
6. Issue/Project- Storm water drainage
Polic�Statement: Complete the storm watex management master plan, and identify and prioritize
specific storm water management construction pxojects. Begin construction of said pxojects.
Action steus:
1) Consultant pxesents storm water mastex plan Qune 08)
2) Council holds public meetings/hearings on major findings/Yesults of study Quly-Aug 08)
3) Council/staff identify and prioritize construction projects (Sept 08)
4) Staff analyzes financing options for projects (Sept 08)
5) Specific projects placed in 2009 budget and in CIP (Sept 08)
Prioritized projects scheduled for construction during 2009
Project cost/means of financing, Costs are unknown until report is prepared. Means of finance axe
development fees and storm watet dtainage utility fees.
Res�onsible�artTv�. Engineering Department, storm water engineering consultants
Outcomes: Have a completed storm water master plan that prescribes,plans,identifies,and cost
estimates storm water management construction projects and best management practices. The plan
must meet the city's growth management needs relative to storm water management.
12 �
7. Issue/Pro�ect- S�ace needs analysis
Polic�Statement: Address the projected space and building facility shortage identified in the
completed space needs study. This is to be accomplished by examuung: 1) expanding current
facilities,2) replacing current facilities, or 3) combining a new facility with Brooki.ngs County.
Action ste�s:
1) Maintain dialogue with Brookings County regarding opportunities for shared space (ongoing�
2) Examine options fox City Hall remodeling and expansion (Aug 08)
3) Examine options for replacing City Hall with a new building (Aug 08)
4) Examine options for combines city/county law enforcement facility (ongoing and dependent on
County)
Pro�ect cost/means of fmancing: City Hall addition of 11,612 square feet- $1.75 million; City Hall
. xeplacement of 31,600 squa,re feet-$4.7 million;City share of joint law enforcement center- $3.0
million;Means of ftnance—sales tax debt. '
Res�o�sible�artv. City Manager
Outcomes: Expand data provided in space needs report to develop decision making tools for
remodeling, expansion, ox new construction of certain city office space.
8. Issue/Pro�ect- Swiftel Center ex�ansion
Poli�Statement: Continue to analyze the potential/feasibility of expanding the Swiftel Center for
convention, storage,and office needs as well as the possibility of partnering with a private developer
for an attached hotel.
Action ste�s:
1) Execute contracts fox validation study Qune 08)
2) Hold public meeting on results of study (Oct 08)
3) Explore options for additional private investment into expansion project (Oct 08-Feb 09)
4) Develop pxocess fox selecting hotelier partnex (Oct 08-Feb 09)
Project cost/means of financing: $6.8 million (excluding hotel); sales tax revenue bonds,BBB
revenue,private donations,private investment for hotel.
Res�onsible�artv: City Manager, Swiftel Center director, Swiftel Center Advisory Committee
Outcomes: Assemble all the necessary data to allow the Council to make a decision as to whether or
not they wish to proceed with this construction project.
Goal#1 Oualitv of Life
Strategy A (Txansportation)
Improve public transportation services. Use the Transportation Committee xeport to develop
initiatives to improve/expand public transit services.
S rategy B (Bicycle-pedestrian friendly)
Make the communiry more bicycle and pedestrian friendly. Adopt plans to promote, encourage and
construct bicycle lanes on certain streets and continue the development of comptehensive bicycle-
pedestrian pathway system that connects neighborhoods, schools,parks, SDSU and other civic and
cultural amenities.
Strategy C (Park system planning and development)
Develop a park system master plan which will guide the long-range development of the park system.
The plan should be consistent with the City's overall comprehensive plan. The plan should address
means to increase play at Edgebrook Golf Course. Identify physical improvements to existing city
parks and trail systems, evaluate property holdings and strategically identify locations for future
parkland.
Str t (Nature Park)
Complete an adoptive reuse plan to convert the old landfill into a Nature Park Preserve Area.
123
Sttateg� E (Community wellness)
Develop a community wellness iniriative which forges partnerships into a community grass-roots
coalition designed to promote health and wellness.
Strate�F (Education and literacy)
Develop a coinmunity-based partnership with Bxookings Public Schools and SDSU that emphases
education and liteYacy,pYOmotes access to technology, and uses the resources of the local libraries as
centers for lifelong learning. Facilitate redesign of educational systems to survive and thrive in a
new economy.
Strateg� G (Housing opportunities)
Implement the recommendations of the housing study to develop more diverse housing options to
meet the needs of current and future residents. Examine and address issues of neighborhood
density and character.
trate H (Wi-Fi hotspots)
Work with BMU to identify locations and install routers that can provide wireless internet service.
oal#2 Economic Develo�ment
Strateg�A (Marketin�
The Visitor Promotions Committee should complete development of a comprehensive community
marketing plan designed to promote Brookings as 1) an attractive location for special events, and 2)
an attractive location for new business development and expansion as well as its quality of residential
life.
Strateg�B (Workforce development)
BEDC should spearhead a comprehensive workforce development project to advertise,xecruit and
develop a qualified and diverse workforce to fill needed employment ranks. Work with SDSU for
specified workforce program of college graduates.
StrateQV C (Retail development)
BEDC and the City should partner on specific initiatives designed to attract and retain retail
businesses.
Strat�D (Purchase property for future development)
Seek means to purchase or otherwise acquire property that can be land banked for future resale to
encourage commercial and industrial development and investment.
Strate�E (Road system into developing areas)
The City should continue efforts to strategically identify and construct future street systems to help
develop industrial paxks or other commercial corridors.
Strateg�F (Main Avenue Improvement Project)
Construct the Main Avenue Improvement Project that includes street,utility, sidewalk and
streetscape amenities.
S ate (State property acquisition)
Exercise option to acquire state DOT parcel as a means of land banking for future
retail/commercial development (Specific strategy to Strategy D).
Strateg�H (Rail Authority membership)
Obtain membership on the Brookings Rail Authority to use as a means of improving rail service and
safety.
Strateg�I (Transportation funding legislative changes)
Lobby for legislative changes that provide local option funding mechanisms to meet local
transpoxtation challenges.
Goal#3 Partnershi�s
Strateg�A (I-29 business clusters)
Promote the development of industry clusters along I-29 among communities on or near the
interstate. Develop specific strategies for regional economic development.
12 �
Sttateg�B (SDSL�
Continue to wotk with SDSU on mutually beneficial projects. Provide input on campus master plan
as requested. Develop compensation enhancement program for college professors. Joindy
collaborate on mutually-beneficial capital projects.
Strateg�C (Intergovernmental relations)
Maintain ongoing intergovernmental xelationships and develop partnerships with state and federal
legislations, SDSU officials, school board, county board and township board officials.
Goal #4 Fiscal Res�onsibilit�
Strategy A (Reserves)
Continue the practice of officially dedicating undesignated reserves for specific pxojects.
trate B (Debt levels)
Strategically schedule issua.nces of debt so their placement accomplishes the highest level of prudent
capital investment while maintaining the highest level of financial stability.
Goal#5 Governance
Strategy A (Budget development)
Implement initiatives designed to solicit and secure public input on budgetary issues and spending
priorities.
Strategy B (Public education, openness in government)
Implement uutiatives to inform and educate the public about the workings of their city government
through various mediums such as website, cable TV,surveys and newsletters. Continue to explore
and develop live web streaming of council meetings.
Strate�C (Council training and development)
Provide ttaining opportunities such as the National League of Cities Conferences,South Dakota
Municipal League and others that invest in elected officials' education and ttaining.
E. Action to hold a special Council meeting on June 17,2008.
F. Action to authorize the Mayor to sign an agreement with First Planning District to
provide grant administrative services.
AGREEMENT FOR ADMINIS1�tATNE ASSISTANCE
THIS AGREEMENT is entexed into by and between the City of Brookings,hereinafter referxed to
as "Grantee," and the First District Association of Local Govemments,hereinafter referred to as
"District."
WHEREAS, the Grantee has entered into an agreement with the Department of Housing & Urban
Development (HUD} to receive a$357,660 Economic Development Initiative grant (Grant#: B-03-
SD-SD-0726),and
WHEREAS, the Grantee desites assistance in meeting the administrative requirements of the EDI-
SD program,
NOW, THEREFORE, IT IS AGREED that the District will provide the administrative assistance
and services as follows upon the request of the Grantee:
T'he District will assist the Grantee in the preparation of the documents and reports as follows:
• Assist the Grantee in setting up and maintaining administrative files.
� Assist the Grantee in setting up financial ledger and transaction file.
• Assist in the completion of the pxoject's Environmental Review Record and all subsequent
envi.ronmental documents.
• Assist in the completion of all periodic financial and project status reports required by the
federal government.
• Attend pre-bid,bid opening, and pre-construction meetings as requested.
• As requested by the Grantee, the District will attend all monitoring and site visits conducted
by the federal government.
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I'URTHERMORE, the District will pxovide the following liaison functions:
• Facilitate communications between the Grantee and HUD;and
• Provide information to the Grantee and other parties associated with the project about each
entiry's responsibilities.
IT FURTHER IS AGREED that the above services shall begin upon notification of grant award
from HUD to the Grantee.
IT FURTHER IS AGREED that compensation to the District for the above services shall be in the
amount of $4,000 and shall be paid upon the completion, submittal, and approval of the
environmental review.
IT FURTHER IS AGREED that the compensation schedule shall include those activities
completed by the District on behalf of the Grantee.
IT FURTHER IS AGREED that no additional administrative charges will be assessed the Grantee
by the District. All District travel, salary and office expenses are included in the lump sum
compensation figure.
IT FURTHER IS AGREED that the District will continue to provide all agreed upon
administrative services to the Grantee beyond the final compensation payment date.
IT FURTHER IS AGREED that the Gxantee will maintain the ultimate responsibility for
administering the project;the District can only assist in the administration of the g�ant.
IT FURTHER IS AGREED that this Agreement may, from time to time, be amended when
mutually agreed to,in writing, by the paxties of the Agreement.
IT FURTHER IS AGREED that this Agreement shall terminate upon completion of the grant
received by the Grantee as referenced below.
IT FURTHER IS AGREED that this Agreement may be extended or texminated prior to the
expiration date when mutually agreed to,in writing,by the parties to the Agreement.
On the motion, all present voted yes; motion carried.
Mavor's Annual State of the City Message
"Our Vision: Quality of Life by providing opportunities for people to live a better life through city
services,job opportunities,housing, retail options, and amenities.
We have five vision components at this time:
1. Smaxt&Balanced Growth—attauiing a sustainable,moderate population gxowth rate,
informed decision-making and creating additional economic diversity.
2. Economic Prosperity—capturing existing industry growth,building the next generation
economy,new business formation and creating a competitive business environment.
3. Quality Amenity Base—building qualiry of life features that will entice new residents to the
community and creating social environments attractive to new population targets.
4. Focus on the Future—creating a widely accepted community vision,partnerships and
communiry awareness.
5. Quality Physical Environment—pteserving community character, ensuring high
quality/planned future developments and creating a variety of residential, commercial and
industrial developments.
Vision Components:
•A number of goals and initiatives have been identified within these five vision components.
• There are certainly numerous priorities to implement to enable us to captuxe existing
opportunities and to position the community/area to be economically stable and growing in the
future.
• All of the council's efforts are coordinated with other economic developrnent activities and
parmers in the area.
The Mayor reviewed all the Council's goals in the Capital Project Prioritization for 2008. Note that
these are listed in the consent agenda under Item D in their entirety.
12 �
Closing Comments... We have a number of growing pains within our community. One can't help
but get excited when you take a tour around the community to see what is all going on. It d.idn't
happen by accident. It took vision,hard wotk and determination to bxing us to this point. It will
continue to take these very same components to carry us through to our future. Brookings is
known for its leadership role in innovation and cxeativity across the state. We must continue to
forge ahead with new ideas,and sensible decisions that will bring highet quality to those living in oux
region. As we grow,please keep in mind your city leadership: from the city council, to the
volunteers who serve on our city boards and commissions and our city staff. This leadership team is
dedicated to serve out the mission of the city. A mission "committed to prnviding a high quality of life for
it.r cititien.r, and fo.rtering a diverre economic ba.re, through innovative thinkz'n� .rtrategic plannin� and proactive,
fi.rcally re.rpon.rible municipal management."
Our mission (and let me emphasize this is our collective community mission) is committed to a
common cause,a common goal, and a common purpose. Nothing worthwhile is ever accomplished
without challenges and nothing worthwhile is evet accomplished without the combination of vision
with courage.
Working together,we are making a `significant'impact. Let's keep moving ahead! Thank you."
1"Reading- Ordinance No. 2$-08. First reading was held on Ordinance No. 28-08: Budget
Amendment-An Ordinance Entitled"An Ordinance Authorizing a Supplemental Appropriation to
the 2008 Budget for the purpose of providing for Additional Funds for the Operation of the Ciry.
Public Hearing:June 24`�
Public Hearing—Malt Renewals. A public hearing was held on Annual Malt Beverage Renewals:
On-Off Sale Malt Gonz Production, Inc. (Main Street Pub),408 Main Ave.; Old Sanctuary, 928 4`�
St.; Guadalajara,Village Square Mall#1;Skinner's Pub 302 Main Ave.;King's Wok, 1819 6�'St.;
George's Pizza&Steakhouse, 311 Main Ave.;Danny's, 703 Main Ave. So.;Pizza Hut,41 S 6�'St.;
Oly's Neighborhood Pub &Grill,725 Main Av. So.;Ray's Cornex,401 Main Ave.; Carpy's Pub, 700
22"a Ave. So.;Edgebrook Golf Coutse, 1415 22°d Ave. So.; Sixth Street Diner,223 6�' St.; South
Main Diner, 615 Main Ave. So.; Casino 2000, 622 25`�Ave.; Swiftel Center, 824 32"d Ave.;Mad Jacks
LTD., 1300 Main Ave. So.;PNP Pub, 318 2nd St. So.;Schoon's PNP Pub South, 1203 Main Ave.
So.; Cubby's Sports Bar& Grill,307 Main Ave.;Packa�e Beer,�off-sale�: Jim's Tap, 309 Main Ave.;
Safari Lounge,421 Main Ave.; Schoon's Pump-n-Pak, 202 S. Main Ave.; Gas N More, 600 6`� St.;
Kum& Go, 1005 6`''St.;Kum& Go, 3045 LeFevre Dr.;BP of Brookings Inc., 2420 E. 6�' St.;
Casey's General Store, 534 22"d Ave. So.;Casey's General Store, 620 8�' St. So.; Casey's General
Store, 122 West 6`�St.;Newman's Kerr McGee, 503 6`�St.;Hy-Vee Food Store, 700 22°`'Ave.;Hy-
Vee Gas,716 22°d Ave. So.;Wal-Mart Stotes, Inc., 2233 6�`St. Public hearing—no te.rtimony. A motion
was made by Whaley, seconded by Brunner, to approve. All present voted yes;motion carried.
Resolution No. 46-08—Street Maintenance Project. A motion was made by Reed, seconded by
Whaley, to approve Resolution No. 46-08,awarding bids for 2008-08STI,Street Maintenance
Pxoject. All present voted yes;motion carried.
Resolution No.46-08
Resolution Awarding Bids on 2008-08STI
Street Maintenance Project
Whereas,the City of Brookings opened bids for Project 2008-08STI Street Maintenance Project on
Tuesday,June 3,2008 at 130 pm at Brookings City Hall;and
Whereas,the City of Brookings has received the following bids for 2008-085TT Street Maintenance
Project:
Scheduk A A.phalt F.O.B. Bower Conrt�uction,Inc. ,� 42,536.00
Schedule B Overlayr Bowes Construction,Inc. j 41,942.49
Schedrrk C Ice Arena Parking Lot Bowea Conttnrction,Inc. j S7,OS3.60
Schedule D Drain Tile P�nject Bower Conrtnrction,Inc. $ 18,836.00
Tota!Prnject.• ,�160,368.69
Now Therefoxe,Be It Resolved that the low bid of Bowes Construction,Inc.fox the total of
Schedules�1,B,C,and D for$160,36$.69 be accepted.
Action to autioint the De�utX Mayor. A motion was made by Brunner, seconded by Whaley, to
appoint Tun Reed as the Deputy Mayor. All present voted yes;motion camed.
Revised Preliminarv Plat. Motion was made by Brunner, seconded by Whaley,to approve a
revised preliminary plat of portions of B1airHill and B1airHill Second Addition. All present voted
yes;motion carried.
127
Tax Incremental District Number �3,�., City of Brookings.
A. TID #3 —Resolution No. 45-08. A motion was made by Reed, seconded by Brunner, to
approve Resolution No. 45-08, a Resolution Declaring Boundaries, and Recommending Creation of
Tax Incxemental District Number Three (3), City Of Brookings.
I-Y>eldon.raid thi.r re.rodution will e.rtabli.rh the boundarie.r of the City'.r third tax increment di.rtrict in the Valley View
addition. Item B is the de.rcription of the activity and Item C i.r the development agreement. The Valley View
Addition ha.r gone th�nugh platting proce.r.r la.rtyear. Thi.r TIF i.r a hou.ring dirtrict. The other two were for
commercial or indu.rtrial. What i.r propo.red in thi.r ca.re i.r a pay-a.ryougo TIF. It i.r the type of a pdan that i.r the
lea,rt ri,rk financially to the city and doe.r not require u.r to i.r.rue any tax increment bond.r or any debt at all. The
developer will be r�,rpon.rible for financing the ca.rt.r for the infra.rtructur�and svill be reimburred over time. Similar to
other di.rtrict.r, ther�i.r a Syearp�nvi.rion which mean.r all the improvement.r mu.rt be completed in that timeline. The
amount can not exceed the amount of ap�i�nved infra.rtructure co.rt.r outlined in the pri�ject plan. A.r a hou�ing district,
Valley Vieav 2vill provide for additional.ringle family and some multi family hou�ing opportunitie.r for the community.
Thi.r project i.r intended a.r a policy to addre.r.r.rome of the i.r.rue.r relative to hou.ring a.r well a.r the city's hou�ing plan to
provide a�fordable hou,ring units for a.rector of the community. Hou.re j�rices will be limited to,�'�60,000. That
number svas reached af a determination by using the.rame.rtandard.r a,r South Dakota Hou.ring Agency u.re.r for their
loan program.r. A.r part of the financing package, the developer i.r.reeking a loan from SDHA for a Inan that svill
dovetail the increment. 1�eldon noted that Toby Morrzs,financial advi.ror with Northland Securitie.r, ha.r been
advi.ring the city on thi.r p�nnject a,r lvell a,r a.r.ri.rting the develo�ier. Morri.r and Todd Meierhenry have been�ztained by
the developerr to a.r.ri,rt with all the technical a.rpect.r.
Morri.r pointed out that the way thi.r project is.rtructured i.r that the developer i.r the borrower and there i.c minimal ri.rk
to the city. The way it sva.r put together, becau.re the debt will be paid o�'of j�rojected hou�ing, what if the hou.re.r never
get built—urill the lenderget their money back? tYlhat happen.r in thi.r.rtructure i.r the City i.r nothing more than a
pa.cr-through conduit. A.r the incr�ment come.r in from the county to the city, the city make.cpayment.r on to SD
Hou.ring on behalf of the devedoper. Should there ever be a.rhortfall, it i.c the developer'r re.rpon�ibility. The City'.r job
i.c to pa.r.r on increment until debt i.r reti�d. One of the benefit.r ivhen lvorking with SD Hou.ring i.r it'r a taxable loan
at tax exempt rates. The rate will be bet�veen 3.7%to 3.9%. The lotver intere.rt rate, the fa.rter it'c paid o�'and
back on tax role.r. Tivo of the que.rtion.r that alzvay.r come up svhen dealing rvith tax increment financing i.c how urill
thi.r impact.rchool and i.r itgoing to rai.re my taxe.r? The.rchool i.r held harmle.r.r on a ta�c increment financing under
the general fund.ride, svhether it'r done for economic development or indu.rtrial. They�vill get their money either way.
A.r economic development or indu,rtrial, the.rtate u�ill.rub.riditie that amount. Becau.re it'.r done in thi.r ca.re as hou,rin�
the que,rtion urill ri.re--doe.r it rai.re my taxe.r? The an.rwer i.rye,r. Morri.r di,rtributed a handout that illu.rtrates that
impact. The zvay it i.r calculated i,r to look at the incr•ement. Ba.red on the developer°r projectionr, he u,red.reven hou.re.r
a.r an example which�vauldgenerate,8'1,050,000 mildfon in total valuation increase. Ho�v ivill that imlbact taxe.r?
The ivork.rheet break.r it down by a multplier that�va.rprovided by the.rtate. Hou�i.r a home oivnergoing to be
�ected� The�avill be two.ridef to thi.r—one in general fund and one in.�ecial education levy. The proper y tax
impact on the general fund.ride for a,$1,050,000 in valuation increment on an AG valued prnperly, it rvould have an
increa.re of 31 cent.r on a taxable value of,$150,000. An owner occupied would increa.re 49 cent.r on a,�150,000
taxable value. On the.rpecial education levy, svhere they levy a,$1.40 per,$1000, that then become.r another impact.
The AG value to owner occupied would be 22 cent.r. Bottom line for a hou.re of a taxable value of,8'150,000 svoudd
be 72 cent.c Over time a.r the total valuation increa.re.r and increment increa.re.r the tax imj�act urill probably decrrea.re
becau.re the Brooking.r Scbool Di.rtrict ha.r a large valuation and itgmw.r atgreat rate. A.c that valuation goe.r up, the
tax impact.rhould go down. On an owner accupied hou.ce the impact would be le.r.r than,�'1.00. Knolving it would
have a tax impact on con.rtituent.r, rve were very careful to make.rure not ju.rt anyone could buy the.re home,r. A1135
lots are re.rtricted to,�'160,000. That benchmark i.r.ret by SD Hou.ring?vhich could increa.re due to inflatinn. If the
develoj�er,r.rell a hou.re for,�'200,000, that rvould violate the TIF. The point of the TIF i.r to o�.ret co.rt.r to prnvide for
affordable hou.ring.
Wleddon said the whole purpo.re of the T7F i.c to help r�duce the co.rt of the total prnject and the increment i.r the future
j�roperty taxe.r the.re r�,rident.r will be paying. In.rtead ofgoing to the city/county/.rchool, it wtll begoing to helji write
down the co.rt of their property by paying the public impmvement of their pmject. That i.r the purpo.re of doing it and
that is tvhere the benefit come.r in.
Morri,r noted that there are a feTV of the.re hou.cing TIPr in the state right no�v and they are becoming more j�opular for
a�ordable hou.ring because e�ectively u.red, they are minimal ri,rk to the city.
McCleman.r a.rked if the City ha.r a policy on TIF.r becau.re there�vill j�robably be more reque.rt.r. IYleldon re.rponded
that the City of Brooking.r doe.cn't have a zvritten policy regarding the u.re of ta.x incrr�ment fznancing. Thi.r i.r only the
third di.rtrzct the City ha.r been a.rked to cert�and the first one for hou�ing. The City ha.r been learning a.r we go.
He indicated.rome time ago that the City doe.r need to develop a policy thatgive.r u.r a better direction and guidance
12 �
about thi.r a.r a taol and defining the term.r and condition.r under�vhich the City want.r to make it available. He noted
that on the June 24`h work.res.rion the Council will hear about a preliminary feasibility for a.rimilar reque.rt for
affordable housing
All present voted yes;motion carried.
Resolution No. 45-08
Resolution Pxoviding For The Creation And Designation Of Tax Increment District Number Three,
City Of Bxookings,Defuung Its Boundaries And Approving Its Project Plan
WHEREAS, the Planning Commission has recommended the creation of Tax Incremental District
Number Three and has submitted a proposed project plan for Tax Increment District Number
Thtee.
WHEREAS, the City of Brookings has the power,pursuant to SDCL� 11-9-2(1), to create the Tax
Increment District Number Three, City of Brookings and define its boundaries.
THEREFORE,IT IS HEREBY RESOLVED:
1. Authorization. The City hereby finds that twenry-five pexcent (25%) and more of the real
property located within the boundaries of the proposed Tax Increment District'Three, City of
Brookings,is a blighted area under SDCL� 11-9-10(2), (4), (8) and 11-9-11. Further, the City
finds that the improvement of the area is likely to enhance significandy the value of substantially
all of the other real property in the District. The City also uses the powers granted pursuant to
SDCL§ 9-54 for the economic development of the Tax Incremental District Numbex Three,
City of Brookings.
2. Findings. The City Council makes the following findings:
a. Not less than 25%of the property in the District is a blighted axea;
b. Improvements to the District are likely to add millions of dollaxs assessed valuation to the
district and will significantly and substantially enhance the value of all property in the district;
c. There is a reasonable likelihood that there will be an affordable housing built in the District
by Bla.ir Hill Properties or their assigns.
d. The aggregate assessed value of the District plus the tax increment base of all other e�sting
districts in the City does not exceed ten percent of the total assessed valuation in the City.
e. 'The District is open bare land void of site improvements which impairs the sound growth of
the Ciry.
£ The District lacks water connections which substantially impairs the sound growth of the
District.
g. The District lacks sewerage connections or tteatment which substantially arrests the sound
growth of the District.
h. The District lacks streets, roads and fite protection which retards housing accommodations
and constitutes a economic liability and is a menace to the public welfare in its present
condition.
i. As demonstrated by many group meetings discussing affordable housing and sufficient
housing stock, there is substantial need for affordable housing and that the property in its
open condition and with its obsolete plating impairs and arrests the sound growth of the
city.
j. The District constitutes a blighted area as defined in SDCL Chapter 11-9.
3. Creation of Disttict. There is hereby created,pursuant to SDCL Chapter 11-9 the Tax
Increment District Number Three, City of Brookings.
4. Date of Creation. The Tax Increment District is hereby created on June 10,2008.
5. Boundaries of District. Tax Increment District Number Three shall have boundaries which shall
included the following described real property: The north one-half(1/2) of the NE 1/4 of
Section 3 Township 109 north range SO west, excluding the west 755 feet,all of Esther Heights
Addition, and the south 78 feet of the east 1.159 feet thereof and including the south half of the
abutting 20th Street right-of-way, the south half of the 20th Street South right-of-way extending
west from the Western Avenue South intersection a distance of 1.159 feet and the west 238 feet
of the Martin Boulevard right-of-way.
6. A�nroval of Pxoject Plan. A hearing by the Planning Commission concerning the creation and
boundaries of the Tax Increment District Numbex Three, City of Brookings was held on May 6,
12 �
2008. Pursuant to SDCL 11-9-17, the City hereby approves the project plan as submitted by the
Planning cotncnission. The City finds that the plan is feasible and in conformity with the master
plan (if no master plan, then plans) of the municipality.
7. A roval of Develo ment A reement. The City Council does hereby approve the development
agreement which shall set forth certain conditions set by the City..
8. Authorization to Transfer of Dedicated Public Im�rovements. The City Council the mayor and
finance officer to transfer the dedicated public woxks and improvements set forth in the TIF
Plan and Developexs Agreement in accordance with the TIF Plan and Developer's Agreement,
copies of which are on file with the finance officer and open to public inspection.
9. Officer Direction. The City hereby directs the Mayox and Finance Officex to take such action
as they deem necessary to accomplish the intent of this resolution, the TIF Plan and the
Developer's Agreement.
10. Creation of Tax Incremental Fund. There is hereby created,pursuant to SDCL 11-9-31,a Tax
Increment District Number Three Fund, City of Bxookings.
11. De osit of Tax Increm nts. All tax increments collected pursuant to Tax Increment District
Number Three shall be deposited into the Tax Increment District Number Three Fund. All
funds in the Tax Increment District Number Thxee Fund shall be used solely for those proposed
expenses in SDCL 11-9.
B. TID #3 Project Plan. A motion was made by Bartley, seconded by Brunner, to approve the
PROJECT PLAN for Tax Incremental District Number Three (3), City of Brookings.
All present voted yes;motion carried. (A copy of the complete plan is available at the City Clerk's
Office).
C. TID #3 Develo�ment A�reement. A motion was made by Reed, seconded by Brunner, to
approve the DEVELOPMENT AGREEMENT fox Tax Incremental District Number Three (3),
City of Brookings. All present voted yes;motion carried.
DEVELOPER'S AGREEMENT
THIS AGREEMENT, made on June 10, 2008, by and between the city of Brookings, a municipal
corpoxation of the state of South Dakota and the county of Brookings called the city, and Blair Hill
Propexties, Inc. a South Dakota corporation,with its principal office located at 600 Blair Hill Circle,
Brookings, South Dakota, 57006-5459, called the developer,wimess:
Whereas, the city of Brookings created Tax Increment District Number Three, the legal and map of
the axea indicated below; (MAP INSERTED HERE and Not Included in Minutes)
Whereas, Tax Increment Bond Proceeds will be used to assist in providing for certain pxoject costs;
and
Whereas, the City wishes to place certain terms on the development in exchange for tax increment
funds used for infrastructure abutting affordable housing lots.
NOW, THEREFORE, in consideration of the mutual covenants contained in this agreement, the
parties, for themselves, their successors and assigns,hereby agree as follows:
1. Agreement Relating to Installation of Roads, Curbing,Pavements, Street Lights and Fire
Hydrants. The developer shall construct, except as hereafter provided in paragraph 2, as
provided for in the subdivision, all roads, curbing,pavement and other improvements,including
all catch basins and drainage facilities, monuments, street lights, and othex impxovements of any
nature whatsoever as set forth on the final plat dated June 12, 2007, approved by the city
engineer, and accompanying constnzction plans prepared by the city engineer,and in accordance
with all present state and local laws,present unprovement ordinances and regulations of the city
of Brookings, South Dakota and in all respects complete the subdivision in accordance with all
maps,plans and specifications on file with the planning board and local laws, ordinances and
regulations. Where any such construction has been partially completed prior to this agreement,
developex agrees to complete them in accoxdance with this paragraph.
13 �
2. Tax Increment District Number Three Project Costs. The City shall undertake and construct
such public improvements as are set forth in Tax Increment District Number Three project plan
in an amount not to exceed$535,000.
3. Conditions to run with the land. As a condition of provided the tax increment bond proceeds,
the Developex agrees to provide and construct affordable housing not less than 35 family
housing units with a maximum sales price retail sales value of$160,OD0 in accordance with South
Dakota Housing Finance Agency guidelines which may be adjusted annually;and be constructed
in the subdivision to be affordable housing units. This agreement shall be filed on the real
property as evidence of said condition.
4. Acceptance of Improvements. The city shall not be responsible for road or other
unpxovemen,ts,maintenance or care until the same shall be accepted, nor shall the city exercise
any control over the improvements until accepted. Upon the proper completion of these
improvements and theix approval by the city engineer,and if these improvements then comply
with all p�esent state laws,present ciry ordinances and planning board rules,xegulations and
requitements, the city will then accept the impxovements.
5. Public Right-of-Ways. The city repzesents that it has good tide to the roads and public ways in
which the impxovements will be installed,and agrees that the xoadways and easements as set out
on its maps heretofore filed with the planning board are thereby dedicated,and that all
improvements and roads as required by the city and agreed to by the developer,including water
mains, hydrants and other appurtenances shall,upon completion and acceptance by the city,be
the property of the city.
6. General Requirements. It is agreed that the work to be performed hereunder shall be completed
within 18 months from the date of this agreement,unless the time is extended by the city,which
extension shall not be unreasonably withheld.
7. Run with the Land. This agreement shall run with the land, as shall also the covenants herein
contained,and shall be to the benefit of the city and its successor and assigns.
8. Guaxanty of Bonds. If required by bond purchase,the Developer agrees to guaranty the Tax
Increment Bonds, Series 2008 of the Ciry. It is understood that if there is not sufficient Tax
Increment Revenue for the debt service,the City will not be responsible for any shortfall.
9. Pay Agent. The City will act as the paying agent for the bonds.
10. Draw Down. The bond shall be drawn upon once the following has been completed:
10.1. Developer shall have demonstrated in writing to the reasonable satisfaction of the
City that said improvements have been made.
10.2. Developer shall have submitted invoices showing services / improvements have
been made.
11. Maintenance until Acceptance. The developer shall maintain, clean and snowplow such roads
until acceptance by the city. In the event of default of these obligations by the developer, the city
without notice to the developer,may do the same at the expense of the developer.
12. Maximum price of developed parcel. The developer shall set the price of a completed home and
lot in an amount not to exceed$160,000 in 2008 and such prices shall not exceed the
affordability index as established by South Dakota Housing Development Authority which may
be adjusted annually. 'I'here shall be no special assessments levied against any parcel for the
provision of infrastructure with the initial sa1e.
13. Homes to be constructed. The developer shall construct homes within the prescribed price
range in accordance with market conditions but shall be a variation of four different floor plans
ranging from 1,000 to 1600 fuushed square feet in size, shall be between two and three
bedrooms with one ox two bathrooms and shall include double attached garages. It is furthez
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anticipated there will be condominium and townhome units for single-family ownership
constructed within the district which shall be priced at approximately$100,000-$110,000
depending upon construction costs and market demand.
14. Termination of Agreement. Should the developer not adhere to the price restrictions of the
homes, the City reserves the right to terininate payments on the TIF Bond,regardless if there is
any outstanding principal of the bond.
Discussion of financing�lan for Innovation Campus
Weldon said one of the City's major goals for this and succeeding years is the financing and
installation of infrastructuxe foY the SDSU Innovation Campus. The Growth Partnership is the
governing body overseeing the development of this xesearch park. The first multi-tenant building is
under construction and will serve as the "flagship" building for the campus. The second building,
the Seed Tech facility,is slated to be under construction shortly thereafter.
The property xemains under ownership of SDSU/Board of Regents through a lease to the Growth
PartneYShip. The pYOperty is included in Tax Increment District#1 which includes numerous othet
developed parcels. The Growth Partnership has divided the infrastructure into foux phases. The
first phase provides for a site enttance from 22"d Avenue and a"xound-about" to the new buildirig
and associated utilities. The Growth Partnership has secured funding for this phase, advertised, and
held a bid opening fot this portion of the project. The low bidder was Bowes Construction and
construction is slated to begin soon.
Phases II and III provide for a road and utilities around the perimeter of the park while Phase N
provides fox two intersecting internal streets. The Growth Partnership is considering a modification
to Phase N which would"downgrade" these streets to serve more like traffic lanes in a parking lot.
He provided the Council with a Project Description Sheet that described the latest cost estimates of
the respective phases but does not yet include the cost of decorative street lights on the entrance to
the park from 22°d Avenue. Traditional street lights would service the rest of the streets while
"upgraded" decorative lights would service the entrance drive. These lights come with an
"upcharge" from BMU. At the time of writing this memo, this cost has not yet been determuied.
The question becomes one of determining a means of financing this infrastructure.
Pursuant to our policy,and the conventional manner would be to treat this as a privately-developed
industrial park. Like most subdivisions,the developer finances the costs of infrastructuxe to service
the subdivision,builds the pxoject to applicable city standards, and dedicates the public
infrastructure to the city to maintain in perpetuity. The developer recovers their cost through the
sale of the property for ptivate development. In"piecemeal" development of industrial parks, the
City sometimes pays for the costs of streets and storm dtainage system. On a more infxequent basis,
the City may pay for the water and sewer mains. Since this project is uniquely different from any
other development, our standard policies are problematic. BMU has indicated they will assist us
with financing associated water and sewer but only if thexe is some method of reimbursement
acceptable to the Board.
Theoretically, tax increment revenue generated from private development in the research park could
pay for such infrastructure. That can occur only if private development occurs over the duration of
the district. So far, the first two buildings axe tax exempt so they genexate no property taxes, and
thus,no increment. Tax increment revenue from private development outside the park but inside
the TIF district could also pay fox such infrastructure. Both of these development scenarios are
speculative right now but there may be a private project in the district in the early stages of
consideration that could generate tax increment revenue for the Innovation Campus research park.
However,it is most likely that such development will also wish to lay claim to such increment
meaning the list of expenditures wishing to use a limited amount of generated incxement may result
in a shortfall.
It is important to note the five-yeax"knock-down"rule is underway meaning a tax increment district
has only five years from the date of certification to complete all infrastructure projects in order to
use increment to pay for them. That means all tax increment-financed infrastructure must be
completed by May, 2012. However, the increment can be collected over the 20 year duration of the
district.
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While tax increment may be the most advantageous revenue stream to service the debt,it only
becomes available over time and up-front construction costs still need to be financed. This means
the City will need to finance Phases II-N (an aggregate amount in excess of$4 million) between
now and May,2012 and we will need to issue debt to do so. If tax increment does not materialize
from private development in the district, the City will likely need to pledge its sales tax authority to
finance the debt service. Obviously,it is in the best interest of the City to have tax increment be the
preferred revenue stream as opposed to sales tax revenue. In the event there is no increment for the
debt service,we could also, as an oprion, have BMU pay for the infrastructure out of their reserves
and not use any sales tax revenue. Of course, such costs could be off-set by any state or federal
infrastructure grants we would be successful in securing.
The City can secure a loan from the state Department of Environment and Natural Resources
(DENR) issued to BMU through the state's revolving loan fund (RLF� progtam. The City would
then reimburse BMU for the debt service by either tax increment or sales tax revenue. The
advantage is that BMU is "made whole" through this transaction and the debt does not count
against our statutory debt limit. What's more,interest rates axe lower through the SRF program and
it is tailor-made for municipalities attempting to finance infxastructure. Under this scenario, the SRF
loan would be with BMU but the ultimate responsibility for making the debt service payment would
be the City.
He has asked the City's Financial Advisor,Toby Morris of Northland Securities, to begin the
pxocess of the SRF application with First District Council of Governments. It will take several
months to work this process through the state but we will be able to have it ready for the
construction schedule of Phase II in 2009.
On a related issue, he strongly recommended the City insist on the dedication of necessary rights-of-
way and easements for this infrastructure. We simply should not finance, own,and subsequendy be
responsible for maintaining infrastructure in properry over which do not have ownership or
controlling intexest.
He noted that the purpose of his report was informational only and to ask if staff should continue to
proceed with making the necessary financing arrangements described above.
There was consensus from the Council to proceed.
Bardey noted that the speculative development may request funds from the TIF. Would that change
the picture?
Weldon noted the tax increment map;one of the things the City could do with the increment this
project would generate would be to make some necessary improvements that would service that ...
development plus the entire area. One would be to fuush putting in 25�'Avenue north of Lowe's up
to 10'�Street. That would qualify for tax increment and it's part of the City's identified master plans
for the street system and he thinks it would be important to finish that out. He recommended
connecting 25�`Avenue to 10`�Street should be the first priority on tax increment cash. He noted
that Sta.te law does allow cextain types of private improvements to be done with tax increment as
well. The parry that would generate the increment will probably request use of that increment to go
back to private improvements on the project at grade or below, typically parking lots and utilities.
That will be a policy discussion for the Council to have at the appxopriate time of whethex to allow
tax increment to be used for private projects to as offset to development costs.
Munsterman said the main point is the City Council is in the driver's seat on making those decisions.
Teresa McKnight,Executive Director of the Innovation Campus,provided the Council with a
handout. She noted the Growth Parmership has awarded the bid for Phase I infrastructure. The
GP has the oppoxtunity to work with a landscape architectute planning class and they designed the
infrastructure and front entrance. The goal of the entrance into the innovation campus off of 22nd
Avenue was to present an environment or a feeling that they've entered someplace unique or special.
She reviewed the details of their plans and that handout is available in the City Clerk's Office.
McKnight said the design of the entry rotunda area with so much glass is that it's a gathering place
for people and to have an environment whexe people can talk, collaborate and share ideas. This is
where the synergy happens in the building. It is also a connection of the second phase of this
building. The overall building design will be an Iconic-like that will set the standard for the types of
buildings that will be constructed at the irxnovation campus. She noted that employee paxking be
designed at the rear of the building and to leave the front for guests and visitors. The focus needs to
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be on the Uuilding and the activities happening within the building. The impression of the campus is
to create a sense of environment. The design keeps the visitor in suspense—there's no signage
along 22°d Avenue other than street signs. There's no identity in the double drive until the visitor
enters the two-tiexed�oundabout and that's where the SDSU Innovation Campus Sign will be
located. The intent of the design is to captuxe the visitar and give them a sense of arrival that they
are now at the innovation campus. The goal is to attract businesses into this research park and the
impressions and captures are provided in the landscaping double drive, the roundabout, the signage
and finally the Iconic building. She showed the master plan map, noting there is no roadway to seed
technology builciing now. She said that is why it is critical to get through tax incYemental funding
which will give the ability to fuush future phased inftastructure to cxeate other opportunities and to
attract other tenants,businesses, and developers.
She said the xoadway to the seed technology building will be critical because they will be ready to go
in 2009. Weldon asked if the seed technology facility was a done deal with all documents signed?
1VIcKnight said it is a done deal,but there is a funding shortage for the conceptual design of the
building. They may reduce the size of the structure due to available funding. Weldon asked if it
would be multi-tenant. She said it will be a seed commodity with seed tech reseaxchers along with
some of the commodities.
Weldon asked the Council wanted they want him and Morris to proceed in putting together a
financing plan for the project. Yes.
ADDITION - Executive Session. A motion was made by Whaley, seconded by McClemans, to
enter executive session at 7:34 p.m. for purposes of marketing and pricing strategies with the
Council, Manager,Attorney, Clerk and Steve Meyer,Brookings Municipal Utilities,present. All
present voted yes;motion carried. A tnotion was made by Whaley, seconded by Reed,to leave
executive session at 7:56 p.m. All present voted yes;motion carried.
Adjourn. A motion was made by Baxdey, seconded by Reed, to adjourn. All present voted yes;
motion carried. Meeting adjourned at 8:00 p.m.
CIT'Y OF BROOI{INGS
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�fil�°,��� Sco D. Munsterman,Mayor
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Shari T'hornes, City Clexk