Loading...
HomeMy WebLinkAboutCCMinutes_2005_07_12 "t V `T Brookings City Council July 12, 2005 The Brookings City Council held an action meeting on Tuesday,July 12,2005 at 5:30 p.m., at City Hall with the following members present: Mayor Scott Munsterman, Council Members Tom Bezdichek,Michael Bartley, Tim Reed,Julie Whaley, Ginger Thomson, and Michael Reitz. City Manager Alan Lanning, City Attorney Steve Britzman, and City Clerk Shari Thornes were also present. Consent Agenda. Action to hold a special council meeting on July 19, 2005 was added to the agenda. A motion was made by Reed, seconded by Whaley, to approve the consent agenda which included: A. Adoption of the agenda as amended. B. Action to approve the June 28,2005 City Council Minutes. C. Action on Resolution No.60-05,awarding Bids on Project 2005-IOSTI Parking Lot Project. RESOLUTION NO.60—OS RESOLUTION AWARDING BIDS ON PROJECT 2005-lOSTI PARKING LOT PROJECT Whereas,the City of Brookings has received the following bids for Project 2005-IOSTI Parking Lot Project. Bowes Consri-uction,Inc. $67,061.33 Myrl&Roy's Paving,Inc. $77,014.73 Now Therefore,Be It Resolved that the low bid of Bowes Construction,Inc in the amount of $67,06133 be accepted. D. Action to award contracts on farm land rent(Landfill)to Dan Luze at$54.50 per acre for 109 acres and to Edward Telkamp at$31.00 per acre for 18 acres,both contracts commencing January 1, 2006 for a term of three(3)years with a two(2)year option to renew for a total of five(5)years. Quotes were opened on June 14,2005 and no other quotes were received. E. Action on Resolution No.59-05,establishing charges for collections and disposal of refuse in the city of Brookings,South Dakota. RESOLUTION NO.59-05 ESTABLISHING CHARGES FOR COLLECTIONS AND DISPOSAL OF REFUSE IN THE CITY OF BROOKINGS,SOUTH DAKOTA. Be It Resolved By the City of Brookings As Follows,TO WIT: I. Monthly charpes For Familv Domestic Units The cost of collection and disposal of refuse for family domestic units shall become a charge against the occupant of each dwelling and shall be payable monthly together with other public service charges as defined by this City. A fair and reasonable charge for the collection of refuse at each regular collection time,from each domestic unit shall be fifteen dollars and no cents($15.00) plus sales tax per month. The monthly charge shall be based on one automated cart provided by the City or one or more fly tight container(s)provided by the citizen far those areas not yet served by the automated collection system. The monthly charge shall be based upon once a week pickup for garbage and refuse and once a week pickup for recyclable material. A fair and reasonable charge for a second automated cart provided by the City for the collection of garbage and refuse shall be three dollars($3.00)plus sales tax per month. Yard waste(grass and leaves)will be collected once per week. The yard waste will be collected 'm special bags sold by the city at various locations. A fair and reasonable charge for the bags to cover the cost of the bags,the collection and composting activity shall be eighty cents($.80)per bag. The various locations may charge an agent's fee. II. Monthly Charaes for Commercial Establishments The cost of collection and disposal of refuse from commercial establishments or the public schools or any other institution or facility not otherwise classified herein shall become a charge against the occupant of such commercial establishment and shall be payable monthly together with other public services as defined by this City. A fair and reasonable charge for collection of the contents shall be a minimum charge for collection of the contents shall be a minimum of thirty dollars ($30.00)plus sales tax per month for five(5)carts with an additional charge of three dollars ($3.00)plus sales tax per cart thereafter. Apartments and other institutions or facilities utilizing containers for trash receptacles,shall be charged seventy-seven dollars($77.00)plus sales tax per month for a one and one-half(1 '/2)cubic yard container,ninety-nine dollars($99.00)plus sales t�per month for a 2 cubic yard container, one hundred twenty dollars($120.00)plus sales tax per month far a 3 cubic yard container,one 405 hundred forty-two dollars($142.00)plus sales tax per month for a four(4)cubic yard container, one hundred sixty-four dollars($164.00)plus sales ta�c per month for a five(5)cubic yard container,one hundred eighty-six dollars($186.00)plus sales tax per month for a six(6)cubic yard container,two hundred eight dollars($208.00)plus sales tax per month for a seven(7)cubic yard container and two hundred thirty dollars($230.00)plus sales ta�per month for a eight(8) cubic yard container. Said charges shall be based upon a twice a week pickup. The charges for each additional pickup per week at the same location,with the necessity of moving the collection vehicle shall be twenty-five dollars($25.00)plus sales tax for one and one-half cubic yard container,thirty dollars($30.00)plus sales tax for a two(2)yard container,forty dollars($40.00) plus sales tax for a three(3)yard container,fifty dollars($50.00)plus sales tax for a four(4)yard or larger container. III. Monthlv Charges for State Institutions The cost of the disposal of refuse from a state institution or facility located within the city,where the institution or facility maintains its own collection service,shall be at the same rate or charge imposed upon licensed commercial garbage haulers,as provided in Paragaph II and which rate or charge shall be imposed on each load whether the same be a partial or full load. The director of solid waste management shall keep a monthly record of the number of loads brought to the sanitary landfill each month by a state institution and said institution shall be billed at the end of each calendar month on the basis of the number of loads of refuse brought to the sanitary landfill during the prior month. IV. Charges for Use Each commercial hauler and each commercial establishment hauling its own garbage,rubbish and waste material shall pay to the city for the use of the sanitary landfill,per vehicle load,the following charges: A. For loads of refuse material not requiring additional compaction or processing, such as roofing,concrete or trees,the sum of$18.25 per ton plus state sales tax will be charged. Minimum fee will be$5.00 for 540 pounds of material. B. For loads of waste material requiring additional compaction or processing(paper, food waste,plastic,lumber,grass,leaves,etc.)the sum of$36.50 per ton plus $1.00 per ton state fee,plus state sales tax will be charged. Minimum fee will be $5.00 per 260 pounds of material. V. Landfill Char eg,.s for Special Waste Each hauler of special waste,including tire,asbestos and petroleum contaminated soil,shall pay to the City of Brookings for the use of the landfill,the following charges,plus state sales ta�c: (a)For Tires Passenger car tires $2.00 Light pickup tires $3.00 Truck tires $7.00 Tractor tires $20.00 (b)For Asbestos Per bag $5.00 Per ton $37.50 (c)For petroleum contaminated soil � Waste oil(per ton) $10.50 Gas(per ton) $ 7.50 Mixed Gas&Diesel(per ton) $ 7.50 Diesel Soil(per ton} $ 7.50 VI. Tires No tires will be collected on city garbage routes. Tires may be disposed of at the landfill at the prices listed in Paragraph V.(a) VII. A�pliances White goods having freon will be ten dollars($10.00)per appliance,plus state sales tax. VIII. Mobile Homes Mobile homes will be one hundred dollars($100.00)per home,plus sales tax. IX. Effective Date All charges established by this resolution will be effective January lst,2006. F. Action to approve a taxicab license for Student Rides,Inc.,James Williams,owner. Hours of services from 9:00 p.m.to 2:00 a.m.on Thursday,Friday and Saturday starting immediately at a flat fee of$5.00 per person anywhere in Brookings city limits. G. Action to hold a special City Council meeting on July 19,2005 with the Utility Board at 5:30 p.m. and the Hospital Board at 4:30 p.m.(tentative). All present voted yes;motion carried. Ordinance No. 18-OS—Conditional Use. A public hearing was held on Ordinance No. 18-05,a conditional use to expand a mobile home/manufactured housing park on a portion of land in the E '/z, SE '/4 of Section 35- � 06 T110N-RSOW(1700 Block of Medary Ave. South). No comments were received.A motion was made by Reed, seconded by Bartley,to approve. All present voted yes; motion carried. Ordinance No. 19-OS—Rezonin�. A public hearing was held on Ordinance No. 19-05,rezoning Lots 120- 131, and 200,Onaka Village,Indian Hills Addition from a Residence R-3 District to a Residence R-2 District; and Lots 33, and Lots 37-41, Wahpeton Village, Indian Hills Addition from a Residence R-3 District to a Residence R-1B District; and Lots 34-36,Wahpeton Village,Indian Hills Addition from a Residence R-3 District to a Residence R-2 District(Indian Hills Road and Division Ave.). No comments were received. A motion was made by Reitz, seconded by Reed,to approve. All present voted yes; motion carried. Ordinance No.20-OS-Rezoning. A public hearing was held on Ordinance No. 20-05,rezoning the N '/z of Lot 3 and all of Lots 4, 5, 6, 7 and 8,Block 1,Peterson's First Addition from a Business B-2A District to a Business B-2 District(Main Ave. and 7`�'Street). No comments were received. A motion was made by Whaley, seconded by Reed,to approve. All present voted yes; motion carried. Ordinance No.21-05—Conditional Use. A public hearing was held on Ordinance No. 21-05, a conditional use to establish a Major Home Occupation(transmission repair)on Lot 6, Block 12, Parkdale Home Association Third Addition(901 ls`Ave.). Public HearinQ: Brad Winker said he has a transmission shop on the property that has been there 27 years. He bought the business from his father and thought it was "grandfathered"in. The easiest thing the Council could do is approve this request. He is not bothering anyone and not hurting anyone. He threatened legal action if this was not approved. Bezdichek asked Winker how long he planned to continue the business at that location, suggesting an approval based on 3-S years until he could retire or relocate. Winker said the conditional use can't be granted in that manner. He noted that the ordinance had changed from when he started business. Jackie Lanning, City Engineer, said Mr. Winker's application is considered a new request because he is a new owner. The previous permit granted to his father was not transferable. The Planning Commission reviewed this request based on current ordinances and cited several reasons for denying this request. Steve Britzman, City Attorney, said the special exception granted to Francis Winker was to him only. There is no legal link between the two individuals under current zoning law. Bezdichek questioned why this wasn't resolved 13 years ago? Britzman said either City officials didn't know or the problems associated with the property had reached a point where it has to be dealt with. Bezdichek asked if the City monitored home businesses annually. No, only when rules are violated. Britzman said this issue is not limited to bringingproperty into compliance. There are other issues related to the condition of the property that prompted this issue coming before the City Council. �artley cited the SO%rule for home occupations. Winker said only 30%of his garage was used for the business and the remainder is for personal use. Bartley noted that the permit doesn't allow for external storage. Winker responded that only personal items were stored outside. Bartley said another requirement of a home occupation is to reside at the premise. Winker said he now lives there as of Mcry 1 S, 2005. He resided next door for two years. Bartley cited concerns such as noise, vibrations, chemicals, etc. Winker said he hadn't had a complaint in 27 years. David Kneip said the area is notperfect, but can't imagine that the Council couldn'tpass this and let him continue business. Citv Council Discussion: Bezdichek agreed that the property hasn't been maintained like it should be,but this is true of other areas of town as well. He recommended a compromise to revolve this situation that didn't result in closing the business down immediately. Whaley said there are other areas of town that are in worse shape breaking ordinances without getting fined. He should be allowed to continue his business. Bartley asked if all the concerns cited by the Planning Commission should be listed in the ordinance. No,the ordinance covers all of those issues and doesn't ha�e to be restated. The City Engineer noted two other areas of non-compliance pertaining to parking and signage. A motion was made by Bezdichek, seconded by Reed,to table for 30 days. Discussion: City staff will work with the applicant to try to resolve all issues during this time and the action item widl return to City Council on August 9`h. Bezdichek,Reed,Reitz and Thomson voted yes; Bartley, Whaley and Munsterman voted no; motion passed to table for 30 days. � 07 Ordinance No.24-OS—Airport Board Requirements. A motion was made by Thomson, seconded by Reitz,to approve the first reading of Ordinance No. 24-05, an Ordinance revising the composition and residency requirements for members of the Airport Board. All present votes yes;motion canied. Second reading on 7/26/O5. Ordinance No.25-OS—Airnort ZoninE. A motion was made by Bartley, seconded by Thomson,to approve the first reading of Ordinance No. 25-05, an Ordinance amending the Brookings Airport Zoning Ordinance. All present voted yes; motion carried. Public hearing on 7/26/O5. Ordinance No.23-OS—Brookin�s Airnort Name. A motion was made by Thomson, seconded by Reed,to approve the first reading of Ordinance No. 23-05,an Ordinance revising the name of the Brookings Airport. All present voted yes; motion carried. Second reading on 7/26/O5. Resolution No. 54-OS—Bid Award. A motion was made by Reed, seconded by Reitz,to approve Resolution No. 54-05,Resolution Awarding Bids on Project 2005-07STA Alley Assessment Project. Public HearinQ: Tom Manzer, owner of 924 4`"St. and 41 S Medary Ave., said he recently learned this item would be on the agenda and that city staff recommended not to accept the bid. He citied his disappointment not being informed by the city. He said his neighbors remain supportive of the project even with the higher price. Alan Lanning said there was enough of a cost difference for the four projects to raise concerns. The City must reject in total or keep the bids in total. City Staff felt the cost was too high to feel comfortable proceeding. David Kneip represented another group expressing disappointment and recommended the project continue. The bids were opened on June 21, 2005 and are good for 30 days. A motion was made by Reed, seconded by Bezdichek,to table action until the special city council meeting on July 19,2005. Discussion: Pat Guss, 142415`Street, cited major drainage problems in her block. She commented that the project won't probably be cheaper next year. Paul Melby, 142815`Street,provided handouts on oil prices and street bid projects from 2004 and 2005. He felt$23 was a reasonable bid for this project and to get it done to fix the drainage problems, help property values, and assist maintenance for the city. He requested the Council not deday action on the issue. Tom Manzer said he appreciated the work that staff has done looking out for everyone, including those opposed. He suggested the city could lower the 10 percent interest rate to lighten 1he burden on those that have expressed concern about price. The City Engineer clarified that there is no protocol to hold another hearing or provide property owners with another mailing. There is also no legal requirement to ver�signatures on informal petitions. On the motion to table-all present voted yes,except Whaley,Reitz and Bartley voted no;motion carried to table until7/19/O5. Ordinance No.22-05—Economic Develoument Retail Fund. A motion was made by Bartley, seconded by Munsterman,to approve Ordinance No.22-05,an Ordinance establishing the Large Retail Economic Development Investment Fund,providing for its funding; providing for its use and providing for its rules and regulations. A motion to amend was made by Bartley, seconded by Reed,to delete the following sections: Section 3. Fundin�. � � � �e: D) The fund may also be funded by the proceeds of bonds or other obligations issued and secured by sales tax revenues imposed under 10-52. ^�'� �-�T � o � , , , . Public Discussion: Ladell Swiden, Chamber President, read the following Policy Statement adopted by their Board.• Brookings Area Chamber of Commerce& Convention Bureau Policy Statements—Retail Incentives The Brookings Area Chamber of Commerce&Convention Bureau is a mutual benefit association made up of business and professional people who believe that the organization's purpose is to help them help each other through the implementation of policies and programs that foster economic growth. The Chamber believes that business development practices should include incentives for businesses whose markets produce in flows of new money to the local Brookings economy, and that such new money inflows provzde tangible community benefits in the form of new employment opportunities and a larger tc�base. In most cases, retail and service firms do not realize the majority of their business from outside of the local trade area, and thus do not create comparable economic benefits. The Chamber faces internal conflict when some members would benefrt from City provided incentives that would expand their market opportunities, while other members woudd be damaged by publicly-subsidized retail competitors, especially when overall economic community economic benefits are d�cult to quantify. This internal con,flictplaces the Chamber's business members at odds with each other, and has the potential of damaging the usefulness of the organization itself. If inembers on either side of the issue choose to terminate their memberships fn the organization because of actions the Chamber took or did not take, the organization's usefulness to its business members has been compromised. Nevertheless, the Chamber recognizes that product and service selection are integral components for expanding Brookings trade territory, and for that reason, the Chamber does not oppose the Retail lncentive Ordinance. The Chamber's position is contingent upon the Council's revising the spirit and wording of the ordinance to make it applicable to any size retail establishment that frts the general purposes and intent of the ordinance, and in the Council's removal af language in the ordinance that permits the use of the special non-ad valorum tax(imposed on motel rooms, alcoholic beverage,prepared foods and entertainment tickets) as a funding source for the Fund established by the ordinance. The Chamber's position is also contingent on deleting Section 6 of the proposed ordinance, referring to a specific business. The Chamber further observes that business by nature accepts risk willingly, but does everything in its power to understand and mitigate risk When the authoritative public sector introduces new riskfactors with little or no warning, negative business reactions are normal. The public sector needs to assure citizens that the factors that it introduces will not create the unintended result of discouraging more private investment decisions than are encouraged, or worse, cause damage to the economic value of existing private investment. Proposed, Chamber Staff, 7/7/OS Adopted, Board of Directors, 7/I1/OS Bezdichek asked if the Chamber was favorabde with the "large retail"reference. No, their support is contingent to equal treatment to all size companies. Gary Aguair said the City Council is entrusted by the voters with a heavy responsibility. He said when scheduding meetings, it should be taken into account the number of people that would attend. He also thought it was impolite to make people to wait an hour. He felt the entire process is flawed because it was moving too quickly, bypassing economic development channels, and should not go through the City Manager or Mayor's o�ces. We don't hire a city manager to be our economic development director. There is no reason to rush through to name one individual company. He recommended opening it up and accepting all comers to see who wou�d accept the lowest subsidy. Most would welcome Lowe's to the community, but object to a special deal bypassing the regular process where citizens get infarmed. Citizens are just coming to grasp with what this means. He strongly urged the Council to talk to constituents. Lanning said in the traditional process, the Brookings Economic Development Corporation negotiates privately with a developer until reaching an agreement ending with Council action on a land deal at one meeting. In this case, confidential negotiations did occur until such time at that information could be made public. A motion to amend was made by Reed, seconded by Bezdichek,to remove LARGE in front of Retail in Ordinance Title and Section IA and anywhere else an the document. All present voted yes; motion passed. 40 � Public Discussion on the Main Motion as amended.• Tom Dobbs, 131 Jefferson Avenue, offered his views as a professional economist for 35 years who has studied public policies for economic development. I3ased on that experience, he said the proposed subsidy is an i11 advised public policy. There are a number of appropriate ways of promoting economic development, but subsidizing a capital expenditure for a retail business is not one of them. He made the following points: 1) Only the market can determine what a particular piece of property is worth. 2) At some point there will be a business that offers a price for that property along the interstate. 3) For the Ciry Council to decide the price and give to any business at a subsidized price ds fundamentally unfair to other businesses in the community. Munsterman asked if his views on industrial development were the same. Dobbs said those are also controversial, but there are better ways than subsidies such as infrastrucZure investment and education. There is still room for debate. Incentives for industrial development are greatly over used. But there is no precedence for retail subsidies in economic development literature. The exception to the rule would be if a subsidy could tip the balance in bringing something in. Reed asked if industrial development lands deals are voted on by the BEDC Board. Yes. Harry Jones, 40 years in hardware and giftware retail on Main Avenue, said he didn't envy the position of the City Council. He was on the Planning Commission for the first mall reaoning. The two malls (22"d Avenue) didn't slow the leakage or extend the Brookings trade lerritory. He cited a Reader's Digest article "Play Ball, Or Else", in where a prominent person received a�3 million subsidy for a stadium and over 7 years, the value of that investment rose from$200 to$700 million. It was a sweet deal of corporate welfare. Cities and states are spending huge amounts of taxpayers'money. Al Kurtenbach, Daktronics Inc., currently employs 1,600 people, many are young people and SDSU graduates. SDSUgraduates about 1,200 every year and Brookings employers are not able to keep many in town. Those we do keep are still looking for shopping alternative. It is our good fortune to have these young people in town. It is unfortunate that most leave 4 years later. We've tried to keep those lifetime payrolls in Brookings with all of us benefiting. Today, 25 year olds are different—they like alternatives in shopping. He would prefer more to stay in Brookings rather than driving to Watertown or Sioux Falls to shop. Marie Kurtenbach—Cooper, owns 3 d�erent businesses, asked about questions raised on July S`"wanting to know what Siou�City and Fargo paid to get Lowe's. Lanning said they were not called. Lanning said a recent ICMA member survey found that 72%offered retail development incentives. Munsterman followed citing several cities across the country that have provided financial incentives for large retailers. George Ust said he isn't against Lowe's because everyone has the right to come here. He does have a problem with the city of Brookings funding them. Referring to Council packet, he cited a problem with statistics of why people Zeave Brookings to shop. He asked if there was anything more current than the 1997 study. Munsterman said they are using 1999 numbers and the EBI(Effective Buying Income)for Brookings has been 58%for the last 20 years. Ust asked how the City came up with$2.5 million number. He has been unsuccessful in attempts to contact Lowe's representatives. He asked if the City Manager did the negotiations on his own. Did he have professional advice such as a commercial realtor or lawyer? Who did he get advice or assistance from? Lanning said he didn't need assistance because he has done similar deals before. The$2.SM is the number Lowe's gave based on the Brookings market for a$20 million annual grossing store. That is the incentive they require to come here. Lesser incentive amounts failed in their real estate committee earlier this year. He did not negotiate a specific list of incentives. They were sent a generic checklist with no numbers attached. A Memorandum of Understanding was brought to the City Council outlining the amount of incentives required to bring them here. Lanning had worked with a consultant for Lowe's responsible to assemble new store packages, who provided him with the initial investment requirements and projected store revenues of$35Mper year. He later worked with the Lowe's real estate manager who clarified that Brookings would be considered a "rural"market with a$20Mannual projected income and the incentive amount didn'tchange. Ust commented that in any transaction, everything is negotiated. He still didn't think the city needs to pay a penny for Lowe's to move here. This is a prime location. Any business will evaluate the market and if the result is positive, will come regardless incentives. He felt the City could have gotten a better deal. Glenn Kuschel, Larson Manufacturing employee, said he has worked with Lowe's for 16 years. They have 1,087 stores with 10 distribution centers. The company has been in business 53 years. They have a$38 billion payroll for 125,000 employees. Lowe's currently has one store in South Dakota(Rapid City) and one in Minnesota. Lowe's stores draw people from a large area. If a Lowe's is located in Brookings,people from Sioux Falls, Watertown, Huron and Marshall would come. Lowe's is Larson's largest customer buying 1 410 million storm doors per year. They are paying most of our wages in town. Lowe's is a good community supporter. They don't service what they sell and they hire local installers. If they decide to locate in Marshall instead of Brookings, Marshall will draw from other areas including Brookings. Citizens are shopping elsewhere now depriving us of sales tax revenue. Seize the opportunity to get them here. On the method, he had no opinion. Munsterman read the following letter dated July 12, 2005 from Dale Larson, owner of Larson Manufacturing: Brookings City Council, After reviewing the presentation of the proposed Lowe's addition to Brookings,I felt it was appropriate to share some insight into Larson Manufacturing's history with Lowe's. The newspaper story about Lowe's considering Brookings was a complete surprise to us, both because of the size of this market and also because their site selection process is highly confidential for competitive reasons. Although the impact of where a new Lowe's store is eventually built in this region has little impact on Larson,we are very familiar with Lowe's as a company and thought some first hand experience might be beneficial in your decision making process. Larson Manufacturing has been working with Lowe's since 1987,when we began selling them doors as a regional vendor. Today Lowe's is Larson's largest customer with displays in over 1,000 stores throughout the country. Lowe's format,which focuses on premium brands and innovative products, is a great match for the Larson product line. Their target consumer is generally more upscale than the other Big Box Do-It-Yourself retailers. This is primarily due to their focus on fashion and features. They have worked with store layout, lighting, and merchandising to create more of a retail environment versus a warehouse feel. Our experience tells us that they have a long-term focus in each market and a proven track record to be a strong draw to consumers from the region into their stores,even from larger cities such as Sioux Falls. We also know they work and cooperate with local businesses and contractors for installation and service work, such as plumbing, appliances,and millwork products. The purpose of sharing this information with the Council was intended to help verify your selection of Lowe's as a quality retailer for the Brookings market. We understand that Lowe's receives subsidies in many markets,but we are not in a position to comment on the details of the city's proposal. Although we understand the concerns of the local retailers,we know Lowe's will soon locate in this region of the country. We feel it will be better for Brookings to have Lowe's locate here rather than lose the opportunity to a similar market such as Watertown,Marshall or Huron,which will further diminish shopping opportunities in Brookings. Sincerely, LARSON MANUFACTURING COMPANY O.Dale Larson CEO Bezdichek commented on 2005 Lowe's demographics stating 20-25%of their market comes from their 71 smaller format stores (i.e. 90,000 sq.ft.). For Lowe's, I-29 and I-90 must be important to them. Brookings is their likely choice because Sioux Falls already has a Home Depot and Menard's. They would likely be coming to Brookings here anyrvay. Kevin Ohm questioned why the first information provided on the deal was off by$IS million. He also doesn't believe that shoppers from Huron and Marshall will come to Brookings if Lowe's comes. Duane Bymers recited a portion of a recent Sioux Falls Ar,�us Leader article. Bezdichek cited Lowe's product sales statistics (11%appliances, 9%lumber, 7%seasonal, 6%flooring& paintin�which he felt would compete with local businesses. He said the Council needs to keep in mind that in order for Lowe's to be profitable, it will put some businesses out of business. Todd Brost asked the reason for the new handout provided at the meeting. Munsterman said this was his presentation to the Chamber Board the day before. Brost said two more stores are starting up in Minnesota and none gave subsidies to Lowe's. One provided infrastructure to the developer and TIFFfinancing, but not directly to Lowe's. Are there places where they've asked for subsidies and have been rejected? Bartley clarified that Owatonna, MN, had three other industries looking at property and no offers were needed or mentioned because the City had already done an infrastructure incentive for another retailer— Cabella's. Owatonna, with its 24,000 population, suffers from similar retail leakage because of competing Rochester and Mankato. They are losing their downtown to the leakage. The decision to finance a$4-S 411 million tax in,frastructure to encourage a Cabella's store to locate was a bold move. That action spurred other developments. Lowe's also benefitedfrom the infrastructure investment. This was a case of a city using an incentive to spur the development;same with Mitchell. Brost said Mitchell only ended up with same sales tax increase as Brookings in the last nine years. Munsterman said the city budget, in light of sales tc�revenue, has not grown. The entire budget has been stagnant since 2000. The City has a declining utility transfer. The 1 S%increase in sales tax of$368,000,000 is not enough to make up the loss. We have shopping happening outside of Brookings. We know this happens and why it happens. Retail developments are needed to keep consumers happy and bring people to Brookings. The retail development model is an important aspect of the retention of dollars. We can't afford to take care of citizen needs if the money doesn't stay in town. We won't be able to do this much longer. Bartley said in the final analysis he believes this is the right action for city and its growth. Munsterman contacted Rapid City lumber yards to gather information about the impact on existing business after Menard's and Lowe's arrived. One business was up 23%last year and is up 18%this year. That owner felt there had been no negative effect on his business. He also said they were concerned when Menard's came in the 1990s. But what that owner found was if he retained trained employees, didn't panic, evaluated their business, looked for niches, and evaluated their strengths, the projected SO-70%loss impact was not even close. He has 2 hardware stores, a farm&ranch store, a discount store, and home center. Those businesses have never been busier and are 3 blocks away from Lowe's. Munsterman said the projected 30% impact in sales shift could be high. The projected average of$70,000 per year doesn't include additional revenue from other development. Brost asked how secure the investment was and could the city afford to lose that money. Can the City afford $2.7SMon one store and an ordinance in that makes it possible for others to apply? Dennis Bielfeldt said what is proposed puts our money at risk. This issue has the potential of dividing us as a community. He asked the Council to take time to hear everyone's concerns and to defer the vote. David Kneip said a free market system will drive businesses to come and build if it is needed. He asked if the $2.SM incentive included the$250,000 in landfill fees. He was opposed to the city subsidizing a business to come here to compete. He questioned the city's proposal to buy the land for$3.1Mand sell at$600,000. Now the Council wants to alter the ordinance to allow any business to apply for an incentive. The discretionary tax formula is offered to every business wanting to expand their business. He questioned the City Council's decision to recruit a business that would compete with local businesses. Curt Ness said the report shows 58%of the Brookings "EBI"stays in town. What is the income in Brookings? Munsterman said the average per capita income for Brookings is$31,DDO and Walertown is $26,000. Ness said about$18,000 stays in Brookings and$12,000 goes somewhere e1se. In Watertown, all $26,000 stays in town. What do we do to keep the money in Brookings? He citied a personal example in where his family drove to Sioux Falls and spent$8,000 on various items to purchase of construction items, and stops several stores and a restaurant. With a Lowe's, his family would have done their shopping in Brookings. There are a number of people who represent the norm of Brookings (i.e.people driving to Watertown and Sioux Falls for most purchases). The City needs to look at what is needed to keep those shoppers here. The city can regain the$2.SMinvestment in Lowe's. Lowe's said they won't come here if they don't get the incentive. He is concerned that if Lowe's goes to Marshall, the Brookings "EBI"could drop to 52% Bezdichek said there is a difference between Watertown and Brookings due to the number of owner occupied houses (Watertown and 70%and Brookings at 51%). Rental owners may not make as many purchases for home repairs. Chad Meyers, SDSUstudent, said this issue could be clarified by a referral action, that way the city could decide. Bezdichek said the Councdl has faur decision options: pass, defeat, refer or table. Todd Meierhenry, Bond Attorney for the City, said as ordinance is a neutral procedure for the Council to follow for any retail opportunities. In these types of incentive projects, the City Council could have done lhis more quickly. Brookings has held more public hearings than any other cities he has seen. Nothing with the Lowe's action has been out of the ordinary. A publicly traded business will not disclose financial data. More often in deads he has seen, the City Manager, Mayor or Economic Director negotiate the specific terms, the Economic Development Board approves the deal, and City Council approves a resolution to transfer funds. This is one of the more open public comment economic development projects that he's ever been involved with. The ordinance will give the Council a roadmap for retail development projects. The second document � 12 determines if the city purchases land for economic development. The third document determines if the City widl provide an incentive to Lowe's. Barbara Ramsay Helm noted that the leakage demographics that 59%wanted clothing. She asked i,f'clothing retailers were approached. Home improvements are less than SO%of that same study. She noted the high number of rental property and questioned how many students would frequent a hardware store. Lanning said since December, he sent 18 inquiries to national retailers, several of which were clothing. All responses were negative except for this deal, which he didn't initiate. Bezdichek said thought it would be difficult to attract a "brand name"national retailer to Brookings. Many downtown men's and women's clothing stores have not been successful. Amanda Mattingly questioned why Lowe's was selected. She urged the Council to take more time and pursue other options. Bartley said over the last 30 years the Brookings community has seen a retail shift in businesses. Yery little of the malls are still retail and the downtown hasn't changed much. Brookings hasn't had any `big shock' effects. Bringing in Lowe's may be a shock effect. It may take a `�ump start"to get retail development spurred and off-center in Brookings. Shop-at-home promotional efforts have met with moderate success. The great things now happening in Owatonna may happen in Brookings if we get started. The question is how and when we start. No one has shown another way to make it happen. We need this in Brookings and it's an opportunity to grow. Others businesses will follow Lowe's. Why wasn't it a clothing store? Why Lowe's? It's because Lowe's is the first bzg opportunity. The City Council and citizens must decide whether to take the opportunity or not. He noted the City has had many inquiries from other new businesses due to the proposed Lowe's store. Munsterman said the leakage studies cite lumber and clothing are the top consumer demands. Watertown grosses$79Mand Brookings grosses$21M. We have more people in our town, but business leaves here and everyone knows that. Mattlingly said she selected Brookings to live because of the small home town atmosphere. Vicky McDougall used to work for a business put out of business from a big box. She knows a Lowe's will hurt other businesses because she has seen it firsthand. She stressed the importance of supporting local businesses and doesn't understand why people don't find what they need in this town. Brookings was built on small businesses. Coercing a big box to come and destroy this community is not right. Julie Pedersen asked if the ordinance passes and Lowe's comes, what happens when Target and Shopko call? Munsterman responded that under this ordinance, the Council would have that option. Pedersen asked how they will pick and choose, including small business opportunity. Munsterman said whoever will have the most positive impact. Chad Dorothy urged the Council and City Manager to continue on the project. He said Bartley "hit the nail on the head." Brookings must do something to bring business into this town, otherwise it won't survive. Small businesses need to change or close. He recently did home improvements and found it cheaper to do business with a Sioux Falls competitor than locally. He had his materials delivered from Sioux Falls cheaper than buying local. Beyond Lowe's, it's the businesses thatfollow afterwards. MarkKelsey asked if the ordinance has anything to do with the Lowe's contract. No. Lewayne Erickson said to look at the projected frgures. He understood the projected revenue to be$35M in sales with$700,000 in annual sales tax. Now it is$20M and if the leakage and sales shift is factored in, it could be only$320,000 in sales tax. Why would we spend$2.5 million as an incentive for a retail business with 79 employees with average salaries of$22,000 per year? Munsterman said the scorecard separates management from non-management when evaluating salary impact. Erickson said the key to economic development is to provide jobs in Brookings and retain talent. Is this the type of business that will help economic development in this community? After committing$2.5 million, will there be anything left for any other economic development in this community? Munsterman said the Council evaluated the projected Lowe's sales tax revenue impact and its value to the community. He asked if all the new industrial development businesses that made promises about job creation to get incentives always fulfrlled their promises. The Council will do the best job possible to determine if there is positive impact from any retail business. Brian Darnall said he has seen many Commissioners and Mayors come and go and all,felt they had the city's best interests at heart. Eventually they would frx what they were working on, so he never felt compelled to � 413 speak. But he has heard more facts or figures in last 2 weeks and doubted if any were right. He likened the situation with Lowe's to the musical the "Music Man." Adam Zobel, SDSUstudent, asked where any additional retail development would be located. Bartley said the city has worked to increase the number of business districts. The discussion of this project has spurred more possibilities. Many existing sites near Lowe's could redevelop, change, or get torn down. Some properties that already exist could now be more valuable to tear down to become something edse. But none of that discussion started until they heard of Lowe's proposed participation. Brookings has more land to be redeveloped than one first expects. Munsterman also noted the Dept. of Transportation property on the northeast intersection of I-29. Reitz said that this has been a very di�cult topic for him. He doesn't want to have to give a retail incentive. He would rather be able to "sell"Brookings than have to pay money for a business to come in, but he is also a realist. When looking at the City's General Fund, something needs to be done to increase the budget to keep the same quality of life. Forty-five percent of the city's budget is from tc�es. Increasing retail to increase sales taxes seems like the logical place to start. Reitz doesn't think the increase of retail is the only fix; there is a much larger problem that needs to be addressed. The Utilities transfer has dropped from$3M in 1997 to$1.78 in 2005. But those numbers are completely accurate because City General transfers$433,000 back to the Utility Departments for things such as fire hydrants, street cleaning, and lights. Yet the Utilities have incurred a debt of$39 million and will pay a total of$54 million when the bonds are due in 2020. That is a$1 S million loss in interest that the city will never see again. Added to that is $10.6 million they have lost in operating costs,(averaging$1.5 million per year for the last 7 years) and they plan the trend to continue unti12010. It will be 2047 before all the money that has been lost is paid back. That is 42 years from now and it doesn't consider any capital improvements that will be needed. That's just the PCS side, a business that should be private and is competing with private businesses that your tcrres and mine are paying for. The Utilities spent$250,000 on an advertising program; a public entity advertising utilities to consumers who have no choice where they get them from. In most places that would be considered fraud, waste, and abuse of public funds. Reitz said the retail incentive package for Lowe's is $2.5 million, that worst case scenario will be paid for in 10 years and we're hoping for a 6 year payback. It also generates secondary spending that isn't accounted for anyrvhere in the projections. Reitz would love to have Lowe's in Brookings, but doesn't like the fact that we have to pay for them to come. But gdven the circumstances that this town is in, he doesn't see arry other choice. Reitz said he is split on the issue, but based on his own belief, input from neighbors, input from meetings, and what's best for Brookings, he plans to vote for it because it may get referred. Then, we can let the people decide if this is the direction they want Brookings to move. Reed said this ordinance will help the Council examine retaid development options. In order to have a net positive impact on city revenues and the community as a whole, the Council must examine this issue. Bezdichek believes businesses are built on service and pricing. When a business starts, it doesn't make much money. But once accomplished and successful, it is a wonderful feeling. He disagreed with this type of incentive over property tax reductions. Whaley said she has been in retail for 25 years. Existing businesses in town need to step up to the bat and not run from the big boxes. They need to change their attitude and service. When she worked at a local lumberyard, customers would bring in a competitor's ad. She urged that business to increase selection to meet consumers'needs. A good example of keeping up with change is Runnings who offers a large selection and is doing well as a result. She cited a recent example in where she solicited bids for a garage. The docal price was$3,S00 and Sioz�Falls was$2,000 delivered. Another problem is customers waiting a long time for estimates from Brookings businesses. Service and quality ofproduct are keys to success. That is currently not getting done in this town. People get in their cars and drive away. The Council is looking at Brookings future 30 to 40 years down the road. Bartdey said the Council is looking at the big picture with what this ordinance can do. It has been modified slightly to include all comers, all of which will be looked at with a keen eye. This is a big responsibility of the City Council. If the school district suffers from businesses taking the property tax increment funding incentives, then that loss is offset because of the new jobs and children brought to town. Brookings has great businesses and all hcrve worked hard. He doesn't like it that the Council has to jumpstart something. But, the Council must look at the bigger picture in order for Brookings to compete regionally. Lowe's is something bigger. The population ofBrookings has grown and we now need more and larger retail in town (i.e. Lowe's, Target, Kohl's). He noted that medical care is also changing dramatically. To get more people coming to the communit}; Brookings must offer choices in all its services,programs and amenities to include retail. The Council must examine how to reverse the current retail and sales tax revenue trends. They must � 14 consider how to get more children in the school district and more jobs for citizens. The Council is looking at the big picture to jumpstart the sales tax revenue. Retail incentives to bring in Lowe's is a bold move and a hard decision for the City Council. The increased sales tcrz revenue will allow flexibility and growth for the future of Brookings. On the main motion as amended; Bartley,Munsterman,Reed, Reitz and Whaley voted yes,Bezdichek voted no, and Thomson abstained. Motion Carried. Develonment A�reement—Lowe's. A motion was made by Bartley, seconded by Whaley,to approve a Development Agreement between the City of Brookings and Lowe's Home Centers, Inc., a North Carolina Corporation. Discussion: Alan Lanning said the document outlines terms to enter into an agreement for Lowe's to come,for the ciry to purchase the property and sell at a reduced price, and deliver the property to Lowe's. Britzman said the agreement also needs to be approved by the Lowe's management. He speculated that some minor revisions mcry be necessary after their review, but the major issues will not be revised. Public Comment.• Gary Aguiar asked if this development agreement is arising out of the ordinance. Could the Council have done this any at time without the ordinance? Meierhenry said yes, with 24 hours advance notice, the City Council could have taken this action without the ordinance. State law provides that the Council can act if notice of the meeting is posted 24 hours in advance and the notice identifies what is being discussed. The City has the power to enter into any agreement for economic development purposes. Aguiar asked who is parying for Meierhenry's services. Lanning responded that the City is paying, which was agreed to by the City Council. Aguiar asked if the Council didn't need to pass the ordinance to enter into this agreement, why pass it. If the ordinance is referred, would the agreement still be in place? Yes. Munsterman said Ordinance 22-OS creates a criteria and guide for the City Council to make future decisions. Aguiar said he doesn't see any criteria about judgments as to where the money should go. How will the Council make decisions about competing offers? Why is there such a hurry to do this today? This is not the way democracy works. Be deliberative, explain things;government can never operate at the speed of business. Munsterman said the Council is doing this. Aguiar said not what is according to law, but rather in good faith. Donna Ramsay said there is a procedure for voting and questioned why Council Member Thomson abstained on the previous vote. Asked if she owned stock in Lowes, Thomson responded yes. Thomson said she asked the City Attorney if she could abstain without reason and he said yes. Ramsay said she would like a reason for not voting. Council members are on the Council to make decisions for the people who elected her. Thomson recently accepted a job as a business developer for Home Federal Bank responsible for creation of new businesses in town. She doesn't want the bank to suff'er,from a decision she makes. Ramsay said everyone takes a risk when going into business. Independent business owners have been shut out in order to make a deal with a corporation who has every economic resource available to them. Local businesses don't have that choice. The reason that the citizens elected council members was to make tough choices. David Kneip questioned if an appraisal had been done, if the property returned to the city if Lowe's fails, demolition plans and costs, and total incentive costs. Kneip thought the deal was moving too fast with too many unanswered questions. He suggested hiring local brokers to do the work. Lanning said the city will purchase the land and sell to Lowe's for$618,000, delivering the property ready for building with a mcz�imum exposure of$250,000 for demol ition costs for a total package of$2.75M. Dennis Bielfeldt said purchase of a building without risk messes up any normal transactions when arriving on a price. This process goes around the free market system and doesn't allow it to set the price of the property. Transparency of the deal is also very important. If the City establishes this type of incentive, businesses must be able to apply and the Council openly review the specifrc criteria. Dan Little asked if the Council passes the incentives, what are the guidelines on the competing offers? How has this been studied from a competitive standpoint; is Lowe's the only game? Munsterman said there is no competitor within Lowe's realm. Are other companies potentially interested? Lanning said the City is working with one property that was begun by someone else and asked the city to assist. Are there companies wanting to come in? What study is there to show this is the best possible return on sales tax revenue? Public discussion was closed. 415 Council Discussion: A motion to was made by Thomson, seconded by Bezdichek,to table action on the Development Agreement until the next action meeting on July 26,2005. Munsterman agreed that the Council could table and slow down. Transparency of the deal is very important and the City has tried to do that as much as possible. Will this $2.SM give the biggest bang for the buck? Reed questioned if holding action for 2 weeks was enough time. He suggested a true impact study may be needed. Who could Lowe's bring in? What retail could be attracted? The City needs to look at a performance agreement to minimize risk. Tabling won't help this. What if this process was opened up to other businesses? Who and at what price would be willing to purchase the land. That won't be answered in two weeks. Bezdichek asked the City Attorney to explain election referral procedures on the already passed ordinance and any tabled items. Referral could begin once publication occurs;there is a 20 days period in which to submit petitions on a referral. He suggested that all actions and publications could be coordinated to avoid two elections. If petitions are submitted,the City Council would determine the timing of an election. On the motion to table, all present voted yes; motion carried to table to July 26,2005. Resolution No.61-05—Lowe's site. A motion was made by Bezdichek, seconded by Whaley,to approve Resolution No. 61-05, a Resolution authorizing the purchase and conveyance of real property for Economic Development purposes; authorizing the expenditure of funds for the purchase of the real property and for the costs for demolition of the existing improvements to the real property and site preparation and development, and authorizing the documents to effectuate the terms and intent of this Resolution. All present were given an opportunity to b heard. A motion was made by Reed,seconded by Thomson,to table action on Resolution No. 61-OS until July 26,2005. All present voted yes to table to July 26, 2005. Resolution No.62-OS—Bond Issue. A motion was made by Bezdichek, seconded by Reitz,to approve Resolution No. 62-05,a Resolution declaring intent to reimburse expenditures with proceeds of Bond Issue. A motion was made by Reed, seconded by Thomson,to table action on Resolution No. 62-OS until July 26, 2005. All present voted yes to table to July 26,2005. Housin�Studv Survev. Lanning said another part of the Economic Development Model is to embazk on a housing study. The previous study was done by First Planning District in 1995. The study will show what type and level of housing is needed in our community. Funding for the study would come from the City Manager's contingency fund. Council agreed to schedule action on July 26�`. Adiourn. A motion was made by Thomson, seconded by Reed,to adjourn. All present voted yes;motion carried. Meeting adjourned at 9:45 p.m. City o q�� c��r o,�� D, sterman,Mayor �T ���:�o= N: �> ��z'Y "�.i,�" s,City Clerk 114'