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HomeMy WebLinkAboutCCMinutes_2005_06_21 3 � 0 Brookings City Council June 21, 2005 The Brookings City Council held a planning meeting on Tuesday, June 21, 2005 at 5:30 p.m., at City Hall with the following members present: Mayor Scott Munsterman, Council Members Tom Bezdichek, Michael Reitz, Tim Reed, Julie Whaley, Ginger Thomson, and Michael Bartley. City Manager Alan Lanning, City Attorney Steve Britzman, and City Clerk Shari Thornes were also present. Retail Development. Mayor Munsterman and Alan Lanning gave the following PowerPoint presentation regarding retail development in the City of Brookings. Munsterman said in November 2003 the city set a direction for sales tax revenue generation with the following steps: 1) expand economic development, 2) grow retail development, and 3) adopt a new promotional model. "Retail Development" Presentation: Imnortance of Large Retail Development Consumer Demand: • Brookings Quality of Life survey was drawn from 548 responses. They told us...some public services and community amenities are unsatisfactory, including retail shopping. • Town Hall Meeting(9/21/04) conclusion: "need to address residents leaving Brookings to shop" • "One third of the population within the Brookings trade area does NOT consider Brookings as their primary retail shopping area." 1997 Retail Leakage Study, 1/27/98 • Why do people leave Brookings to shop? 59.1%clothing& 36.7%home improvement. The number 1 stated reason for leaving was availability at 51.9%. If available, 93.4%would buy locally(Retail Leakage Study). • Effective Buying Income—Brookings' EBI is 58%. In other words, 58% of the after tax income stays in Brookings. State average is 70%. Watertown's EBI is 102%and Sioux Falls is 84% (1999 Survey of Buying Power Sales and Marketing Magazine). • If Brookings were to perform to the state average (70%EBI) of retail sales per capita spent in our community, it would add approximately$40,000,000 into our local economy—equating additional$800,000 sales tax revenue collected annually. • Brookings Present Trade Area—west to DeSmet,north to Estelline, south to Flandreau and east to MN border. Citv Qualitv of Life • Recent examples of city investment in our quality of life: Performing Arts Center, Swiftel Center, Soccer Complex, Ice Arena, Bike Trail, I'arks, Library, Aquatic Park. Known examples of future requests: SDSU Wellness Center,Boys &Girls Club • City of Brookings Capital Improvement Projects • City Budget: 45%revenue comes from sales tax ■ Projected Utility Transfer Decline into 2012 • "Consumer demand, our quality of life and city budget, indicate a need for a public/private partnership for large retail development. • We have an opportunity... Lowe's "Improving Home Improvement" ■ Each new Lowe's store equals an average investment of$18.5 million and creates up to 175 new jobs ■ $35 million annual average store sales ■ Operates more than 1,100 stores in 48 states ■ 59 year old company ■ 2°a largest home improvement retailer in the world ■ Contributes to community organizations like Habitat,United Way, and Red Cross ■ Brookings store- Total fulltime jobs 79,total part-time jobs 40, for total of 119 jobs wages ranging from $7.53 to $35 per hour. • Brookings has been successful with industrial expansion using a public/private partnership approach consisting of land acquisition and development. • The large retail development model will be patterned after our successful industrial model, using land acquisition and a publiciprivate partnership. • The City uses a"scorecard"to qualify large retail development partnerships: ■ Employment Impact: Non-Management average pay rate, Total FTE count, Management average annual salary, and Competition for existing labor pool 391 ■ Firm Characteristics: Firm Stability and Nature of firm's location in Brookings ■ Community Impact: Consumer Demand, Property Tax Generation, Sales Tax Generation, and Value of Construction Plans • Lowe's Score: Employment impact-37 points, Firm Characteristics-17 points, Community Impact—0 points, 94% out of 100% • How do we do this deal? ■ Financing Options: Legal discussion on bonds, etc. or Interdepartmental loans ■ Projected Increase of Net Sales Tax Revenue from Lowe's Development- $700,000 ■ Ordinance for large retail development—creates a model and a procedure for large retail development • Future Large Retail Development Plan ■ Land development—K-Mart/Big `O building and Lot, Dept. of Transportation Property ■ Large retail development requires a public/private partnership to set the stage for future additional growth in the retail sector. Once we get a Lowe's, others traditionally follow. ■ Timeline for development: • June 21 St Special Council Planning Meeting—Retail Development Discussion � June 28�' Action Council Meeting—first reading of new ordinance with Lowe's Development Agreement • July 5�'Planning Council Meeting—Lowe's Development Discussion • July 12`h Action Council Meeting—second reading of new ordinance with Lowe's Development Agreement and approve land purchase agreement Todd Meierhenry,Danforth, Meierhenry&Meierhenry, L.L.P.,Bond Counsel for the City of Brookings,reviewed a draft retail development ordinance with the City Council. First and second readings are scheduled for June 28th and July 12�'. Martin Maca asked the following questions: 1) Does the city have data on how the 2lumber yards and hardware stores would be impacted? • Better statistics would be desirable; however, the Department of Revenue has limited information. • Thomson noted that the Watertown Menard's did not appear to create a negative impact on other businesses in Watertown. The two older lumberyards still remain today. 2) The selected area is one of the most congested areas and poorly designed for vehicles. Is something planned to alleviate these problems? � The State Department of Transportation (DOT) is slated to redo the portion from 22"d Avenue to the bridge in 2009. If this proposed development occurs in that area, the DOT will have to take a serious look at that corridor. 3) Why is the timeline such a fast track? • Meierhenry has seen the process in many cities and the procedure is much shorter in other communities. Brookings is holding at least 2 more meetings on the issue than he has ever seen (scheduled dates: 6/21, 6/28, 7/S, 7/12). • Lanning noted that the City has been working on this for 7 months trying to get everything in place. He asked how much time is appropriate to consider something like this before you make a decision. The City also needs to work within the timeline of the big retailer. He noted that they have been very patient. Lowe's plans to start construction in spring 200b and finish spring 2007. Tom Manzer asked the following questions: 1) What constitutes large retail? • Large retail is defined in the goals of the retail ordinance (i.e. expanding tax base, provide permanent jobs). 2) There was mention of businesses that follow a Lowe's development. Would they be considered a part of the large retail or a development unto themselves? 392 • Lanning said the city will reach a point where it doesn't have to provide incentives. However, it takes an extraordinary effort (incentives) to start. Lowe's is that catalyst for the City. 3) From an economic development standpoint when incentives are provided there are also guarantees and/or stipulations based on the industry meeting certain criteria. What type of guarantees would there be in this type of ordinance that requires retail development to meet that criteria? • Lanning said the ordinance allows the Ciry to develop criteria as it goes along. • Mike&artley said this is new to us—big retail- and what it can do for us in the future. It will take a lot forward thinking. In order to make us think of Brookings as a destination, Lowe's is a kingpin. He said he could hardly believe the City could have an opportunity of this magnitude: it is an amazing opportunity. Businesses will also grow around Lowe's. We will have a challenge to loeate them. . He noted that the city is not discounting the fees and permits; this is strictdy a land deal. This is a great investment with a 20%return on the money that pays for itself in S years. The City has not met the challenges of aging capital improvement needs/equipment. The City has to rely on sales tax revenue as its primary funding source. This development is a really good opportunity to satisfy consumer demand. The City is also committed to invest in the downtown streetscape and continue to invest an the retail in this community. The streetscape will also return sales tax revenue. This retail development is a bold move and new move for us. It is new territory— scary, but also exciting. The City will experience secondary spending not seen before. As with the Cabala's model in Mitchell, shoppers will eat and shop elsewhere in town while at the big retailers. The City is also committed to get the shoppers downtown. This development can have some really positive effects. He hopes that everyone jumps on bandwagon to grow the community. He further noted that SDSU has moved to Division 1. Students are attracted to schools based on what the community offers. He congratulated Alan Lanning and Vision Developers for this public/private partnership. Joseph Oye asked about land availability for other businesses that will fill in next to Lowe's. Will there be cost effective space? There are 4-S properties that could be redeveloped. There is also opportunity for DOT property east of the bridge. Ginger Thomson said the city and groups have commissioned multiple surveys asking citizens what they want and over and over citizens have requested more "retail shopping opportunities." Their second highest demand was home improvement. Lowe's wants want to locate in Brookings. The City needs sales tax revenue to fund capital improvement projects. We have an opportunity to bring in$700,000 per year in sales tax. It seems like a win-win situation for everyone. Todd Meierhenry explained that he is Bond Counsel from Sioux Falls and represents most cities in bonds, the SD Building Authority,and most school districts. The economic and demographic trade numbers in Mitchell now that they have Menard's, Super Wal-Mart and Cabala's is amazing. Shoppers and employees have stopped commuting to Sioux Falls and have started commuting into Mitchell. The future survival for municipalities is their ability to generate sales tax to pay for services. Brookings doesn't have a forty $400,000 houses built annually or a$40 million heart hospital to generate the property tax that Sioux Falls can. Sioux Falls is projecting to be a 250,000 population. If Brookings doesn't do something to create retail activity,people will hop to Watertown or Sioux Falls. Activity breeds activity. 39 � Economic Develonment Model. • BEDC MARKETING PLAN: Ron Einspahr reviewed the BEDC Marketing Plan created by Dwaine Chappel. Matt Kurtenbach said the BEDC has accepted the plan and plans to use it as reference to development action to move forward. • JOINT POWERS AGREEMENT/TECHNICAL SERVICES AGREEMENT: Lanning provided the Council with updated agreements that provide a legal mechanism for others to participate in the regional economic devetopment model. The TSA spells out services available to communities for their contribution to the model. Steve Watson, Regional Representative for the Governor's Office of Economic Development, applauded the Mayor and City Manager for their regionalized approach to economic development. He said the Technical Services Agreement provides additional value to participating communities because it gives them immediate value and results. Munsterman requested action on June 28'h. Bartley requested waiting until the new BEDC Executive Director had an opportunity to work through the agreements and until we are ready with the rest of the model. The item will be scheduled for the July 26�' agenda. Executive Session. A motion was made by Reitz, seconded by Reed, to enter into Executive Session at 7:30 p.m. to consult with legal counsel regarding contractual matters with the Council, City Manager, City Attorney, City Clerk, and Brookings Municipal Utilities Staff present. A motion was made by Thomson, seconded by Whaley,to leave Executive Session at 7:55 p.m. No further action was taken. A joint meeting with the Utility Boaxd and the City Council will be schedulect in the next month. Executive Session. A motion was made by Thomson, seconded by Reitz,to enter into Executive Session at 8:02 p.m. to discuss marketing and pricing strategies with the City Council, City Manager, City Attorney, and City Clerk present. A motion was made by Reed, seconded by Whaley,to leave Executive Session at 8:11 p.m. No further action was taken. Adiourn. A motion was made by Bartley, seconded by Whaley,to adjourn. All present voted yes; motion carried. Meeting adj ourned at 8:20 m. �.TY�f City of Broo O'aAr'���NCp9,o e�0 �.'�� p'py'?� N� ��9 �!y ti f c°so•••••..�p;�o�� D. M terman,Mayor A . ari Thornes,Brookings City Clerk ,