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City Council Agenda Packet 10-08-2007 Special AGENDA SPECIAL MEETING - MONTICELLO CITY COUNCIL HRAlEDA JOB CREATION STRATEGIES Monday October 8, 2007 - 5:30 p.m. Mayor: Clint Herbst Council Members: Wayne Mayer, Tom Perrault, Brian Stumpf and Susie Wojchouski. 1. Call to Order. 2. Discuss iob creation stratelrles 3. Adiourn. Special Meeting - Discuss Job Creation Strategies - October 8, 2007 1. Purpose of meeting - Respond to Ollie's Question, Is Monticello City Council Supportive of Job Growth at Household Wage Levels? 2. Review recent and ongoing activities supporting job development. a. Economic Development Director position dedicated to this effort b. Purchase of Business Park. c. Fiber Optic initiative d. Support of BioScience initiative e. Extension of Utilities to Business Park and Construction of Chelsea Road f. Marketing Budget g. Support for technical education/job training initiative (Anoka Ramsey etc) h. Establishment of EDA to enhance effectiveness and connectivity between the City Council and Economic Development Commission. 3. Review Playing Field and Commitment Needed to Succeed. This Discussion leading to future development of a Economic Development Plan and more defined articulation of commitment. a. Industrial Development Competition, What is going on around us? Ollie Report. b. What does it take to place Monticello as a competitive leader for job growth at household wage-levels? Ollie Report. c. Bio-Science/High Tech Initiative - various tasks (Excerpt from Bio-Science Report attached) d. Complete Financial Management plan that incorporates necessary investments to accomplish goals. Identify sacrifices (tax impacts) required to accomplish goals. e. Provide for Utility system development to support future job deveiopment areas. f. Identify land areas suitable for job development (Speich, Koch East) and amend comp plan accordingly. g. EducationlAnoka Ramsey secondary education initiative h. Other items listed in the Economic Development Portion of the Comprehensive Plan (Draft Plan Attached). i. Establish "Brand" develop and maintain attractive image. 4. Discuss Organizational and Community Commitments Needed as a Team to Accomplish Goals. a. EDAlCouncil as a team. Work efficiently toward goals identified in Economic Development Plan. b. City Staff supports the City Council in making sometimes difficult decision on both controversial and non-controversial items. 1 Provide balanced information with agenda items comprised of data collected cooperatively and provide also a respected place in each report for dissent or minority opinion. 2 Understand that the City Council must weigh many factors in making decisions. 3 Once decisions are made, staff to remain positive regarding outcome even if decision is at variance with stated goals and regardless of professional opinion. c. Foster positive connections and encourage tapping of business network. Identify Role of the IDC - Does the City Council see a need for an Independent Industrial Development Committee? 1 Current arrangement. a. Independent group separate from City Council with City staff providing direct support and administrative assistance. b. Not a formal commission. c. Limited articulation of mutual expectations linking IDC work to City Council goals. d. City Council as liaison only. Not voting member. 2. Current arrangement. Plus a. Independent group separate from City Council with City staff providing direct support and administrative assistance. b. City Council to define in some detail the work to be done by IDC in support of City Council objectives identified in Econ Dev Plan. - articulate expectations. Mini-contract. This enables City to lend administrative support to the organization. c. Follow precepts described in 4b above. d. City Council serves as liaison only. e. IDC can also provide technical support and assistance to EDA as members of EDA subcommittees. f. Recognize connicts between IDC recommendations and City Decisions witt occur over time. Agree to disagree from time to time. See 4 b above. 3. Current arrangement but modified by having IDC work primarily in support of the work of the EDA. a. Staff and office support for activities of IDC. b. Define work to be done by IDC in support of EDA objectives - articulate expectations. C. Enables Direct influence on two members of City Council that are members of the EDA. d. IDC recommendations rise up through the EDA. e. City Council members on the EDA could determine whether or not to serve as EDA Liaison to IDC f. Effective and streamlined structure at same time. 4. IDC as Independent Special Interest Group. a. Self supporting similar to Chamber of Commerce. b. Allows room for IDC to lobby as an independent special interest group. c. No obligation to support City Councii decisions. d. City staff and City Council attendance at meetings is optional. e. Members could also serve as individuals on EDA subcommittees 5. Discuss concepts noted above and provide direction to staff and provide direction for further conversation with the IDC. Monticello Comprehensive Plan Update 2007 BIO-SCIENCE/HIGH TECH VISION FOR MONTICELLO Monticello is a center of employment, containing a wide range of employment opportunities with a growing emphasis onjobs at higher wage levels that allow more people to live and work in Monticello. GOALS FOR INDUSTRIAL LAND USE AND DEVELOPMENT · Expanding and diversifying the property tax base. · Providing jobs with an increasing opportunity for people to work and live in Monticello. · Promoting wage levels that provide incomes needed to purchase decent housing, support local businesses and support local government services. · Take advantage of opportunities to attract corporate headquarter/campuses and businesses that specialize in biosciences and technology. . Encouraging the retention and expansion of existing businesses in Monticello. The City of Monticello is committed to being II leader in the Bio-Science/High Tech Industries including investment IInd the development of II Bio Science Business Campus. ASSETS (Existing and In-Progress) · School District, Hospital District, 1-94 location, and well-maintained parks and trails. · Fiber optics network and skilled labor force (develop training center.) · Community environment and quality oflife. . Existing Monticello businesses with medical device and information technology expertise. · A community commitment including financial resources. · PrOldmity to high-education universities and technical schools as a resource. · SCSU students fur additional resources. ACTION STEPS LEADERSHIP · Prepare scope of work for an advisor including a budget and time frame. · Utilize the expertise of Anob-Ramsey Community College to develop scope of work. * The advisor must have a working knowledge and contacts within the bio-sciencelhigh tech industries, Bio-Science Medical Alley and related corporate leaders. * The advisor must have the skills to network with the political environment and the expertise to gain Bie-Science Zone (tax-free zone) designation and to seek venture capital investors. · Identify source of funding for hiring an advisor. 1 INVESTMENT AND DEVELOPMENT · IdentifY site for development of a bio-sciencelhigh tech business campus within the Comprehensive Plan Update. · Explore benefits and apply for a Bio-Science Development Public Infrastructure Grant. · Explore the option of a private developer to develop a bio-sciencelhigh tech campus with an emphasis on landscaping, green space, and pathway/trail connections. . Research the potential for development of incubator space for lease. . IdentifY incentives and investments to attract bio-sciencelhigh tech businesses. EDUCATION AND TRAINING · Explore development of a training campus partnering with Anoka-Ramsey Community College, SCSU, School District, and others. · Tour the Anoka-Ramsey Community College - Cambridge Training Campus. · IdentifY local legislators to assist in special legislative funding. · IdentifY a site for potential campus. .MARKETING . IdentifY which sectors of the bio-sciences to target. .. Utilize the expertise of Minnesota Technology, a state agency. . IdentifY which bio-sciencelhigh tech businesses or suppliers to target. .. Utilize the expertise of Minnesota Technology, a state agency. · Develop a community plan seeking assistance to begin development of a city-wide "branding" and image. 2 Ideally, the Comprehensive Plan does not have an Economic Develop- ment chapter. The Land Use Plan would be sufficient to channel market forces to meet the development objectives of the community. In reality, certain development needs cannot be met without public intervention. The Economic Development chapter of the Plan focuses on the aspects of Monticello's future that require particular attention and action by the City. These actions include: ~ Attracting jobs ~ Expanding the tax base Attracting Jobs The creation and retention of jobs is one of the most important objec- tives for Monticello. Jobs, particularly jobs with income levels capable of supporting a family, are key to achieving many elements of Monticello's vision for the future. ~ Jobs attract residents to the community. Jobs will pay a critical role in creating the type of "move up" housing sought by the City. ~ Jobs provide the income needed to support local business and govern- ment services. ~ Retention of businesses promote community stability by keeping jobs and residents in Monticello The Community Context chapter of the Comprehensive Plan contains a section on Employment. This section contains data about employment in Monticello and of its residents. Among the key findings in this section are: ~ Monticello has been net importer of employment - there are more jobs in Monticello than workers living in the community. According to the 2000 Census, 5,111 people reported working in Monticello while 4,262 Monticello residents were part of the civilian labor force. ~ The job base in Monticello is made up of a wide range of small to medium sized employers. Only five employers report more than 100 employees, Monticello Public Schools, Xcel Energy, Sunny Fresh Foods, 2007 Comprehensive Plan (DRAFT - 9/07) Econom;c Development I 5-1 Monticello- Big Lake Hospital, and Ultra Maching Company (according to listing of major employers from Minnesota Department of Employment and Economic Development). ~ Workers for Monticello businesses come primar- ily from Monticello and the surrounding region. Over 80% of people working in Monticello lived in Monticello, adjacent townships, Big Lake, or other places in Wright and Sherburne counties (2000 Census). ~ The 2000 Census found that only 26% of people working Monticello also lived in the city. ~ 69% of working Monticello residents held jobs in other places (2000 Census). More than one-third worked in Hennepin County. ~ The 2000 Census reported a mean travel time to work of 26 minutes. 45% of Monticello workers indicated travel time to work of 30 minutes or more. In 2007, St. Cloud State University conducted an as- sessment of establishing a bioscience park in Mon- ticello. The results of this study provide important insights on future job growth. The study identified a series "strengths" for attracting bioscience firms to Monticello: ~ Land availability (compared to Metro Area). ~ Access to major highways (I-94, U.S. 10 and STH 25). ~ Regional growth of employment base. ~ Development of local fiber optic system. ~ Proximity to universities. ~ Overall location. ~ Expansive park system. ~ Monticello Community Center. Many of these factors would also apply to attracting other types of businesses. The St. Cloud State study also made note of several weaknesses in attracting these business to the com- munity. The list included: ~ Lack of hotels and lodging. ~ No defined plan. ~ Small community. ~ Low tax base. Expanding the Tax Base A traditional objective of local economic development planning is the expansion of the property tax base. Under the current system oflocal government finance, property taxes are the largest source of city revenue. For this reason, it is an important aspect of economic development planning in Monticello. Understanding the Property Tax System Effective strategies to promote the growth of the tax base require a clear understanding of the property tax system. Property Valuation There are three forms of property valuation. The foun- dation of the property tax system is Estimated Market Value. This amount is the value of a parcel of property as set by the County Assessor. In some circumstances, the State Legislature limits the amount of Estimated Market Value that can be used for taxation. These adjustments result in the Taxable Market Value. The value used to calculate property taxes is Tax Capacity. Tax Capacity Value is a percentage of Taxable Market Value. The percentage factors are set by the State Leg- islature and vary by class of property. Changes in the Tax System Traditional economic development theory seeks com- mercial and industrial development as a means of building tax base. Historically, the system supported this approach. A dollar of estimated market value of commercial-industrial property carried a higher tax capacity value than residential property. Over the past twelve years, tax "reforms" by the State Legislature have changed this situation. The chart in Figure 5-1 shows how legislative changes have reduced the tax base created by commercial- industrial development. This chart is based on the tax capacity value for $3,000,000 of Taxable Market Value. The legislative changes in the rates used to set - City of Monticello tax capacity mean that this property produced 56% less tax base in 2007 than in 1997. This trend takes on additional meaning when compared to other classi- fications of property. Figure 5-2 compares the tax capacity value for the 450,000 400,000 350,000 300,000 . , ; 250,000 " ~ ~ 200,000 " 150,000 100,000 Figure 5-': Changes in Tax Capacity Value - Commercial/Industrial 50,000 o 1997 1998 1999 2000 2001 2002 to 2007 primary forms of development in Monticello. The valuations in this chart are based on assumptions about the density of development and estimated market value of new development. Changes in these assumptions will alter the results. This chart clearly illustrates the current reality for economic development strategies. All forms of development contribute tax base to the commu- nity. It is risky placing too much weight on one type of development for tax base growth. In addition, cities do not control the critical elements of the tax system. Changes in the system lead to unanticipated results at the local level. Tax base growth has implications that are unique to Monticello. The chart in Figure 5-3 shows the distribution of taxable (Tax Capacity) value in Monticello. Xcel Energy creates almost 40% of the City's tax base. While it has provided a unique asset for the community, it is essential that the tax base become more diversified. 2007 Comprehensi.e Plan (DRAFT - 9/07) E<onomlC Development I 5-3 - Figure 5-2: Tax Capacity Comparison 300,000 250,000 200,000 . , " > .?i ~ 150,000 ~ . u x . ~ 100,000 50,000 0 Industrial Retail Office Single Townhome Apt - !lWil lllIi<< liIJgk - .1m AnI's 10 10 10 10 10 10 Coverage 30% 30% 30% 3 12 Development (SF or Units) 130,680 130,680 130,680 30 60 120 EMV perSF or Unit 65 80 100 400,000 150,000 150,000 EMV 8,494,200 10,454.400 13,068,000 12,000,000 15,000,000 18,000,000 Tax Capacity 169,134 208)38 260,610 120,000 150,000 125,000 Figure 5-3: Tax Capacity Comparison X'~Efler9Y -- ". AIIOth@,TaxC.pacjty 55% Olt1ef'L.rg~r" .. City of Mont;cello Economic Development Strategies The following strategies will be used to implement the Comprehensive Plan in the area of Economic Develop- ment: 1. The City must use the Comprehensive Plan to pro- vide adequate locations for future job-producing development (Places to Work). 2. The City should adhere to the Comprehensive Plan to encourage stable business setting and promote investment and expansion of facilities. 3. The City should coordinate utility planning and manage other development to ensure that expan- sion areas are capable of supporting new develop- ment in a timely manner. 4. The City should evaluate the need and feasibility of additional city-owned business parks as a means attracting the desired businesses. 5. The City should establish a plan to evaluate the feasibility of implementing the recommendation of the St. Ooud State study and if feasible to take necessary action to attract bioscience businesses to Monticello. 6. The City will continue to work with existing busi- nesses to maintain an excellent business environ- ment, retain jobs and facilitate expansions. 7. The City will work with the Monticello-Big Lake Hospital to ensure the retention and to promote the expansion of health care services in Monticello. 8. The City will use the Comprehensive Plan to main- tain and enhance the quality oflife in Monticello as a tool for attracting businesses and jobs. 2007 Comprehensive Plan (DRAFT - 9/07) Economic Development I 5-5 - Figure 3-2: Land Use Plan Map . ~ .., g g a: i ~ I ~ i ~8 ~~ ~ ub 5~!!lC a~ ~~1;1 f : e 5! I to ~t< .~. ~~"2'~~~"3: . li 8. 1 ~ II ~ ~) ~~~[Ljo~~ U~~~i~-') ;.;. ------... !/ / / / / / . . II . 1/ r 1/ ~7/tf.. '1/ ,'It ~i .~ i If ' . ~ . ~ " I :3 8 ~ a: .9 .2 .2 .S! i ~ 5 :: 3 ~ f ~id~~B ~ . ; ~ ~. ~ 8 . ! ~ ~ ~ ~ i ~ . . ~ ~ ~ 1 ~ I .- .. . [~;.;::- . """i_-~ V <. , I II ~ ; : J ~ I N ", ~ c;j "'..::: . . :B! o ~lj qr-- ~~! . City of Mont;ceilo