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Home My WebLink About07-23-20 EDA MinutesECONOMIC DEVELOPMENT AUTHORITY City of Apple Valley Dakota County, Minnesota July 23, 2020 Minutes of the Special Meeting of the Economic Development Authority of Apple Valley, Dakota County, Minnesota, held July 23, 2020, at 5:30 p.m., at Apple Valley Municipal Center. PRESENT: Commissioners Bergman, Goodwin, Grendahl, Hamann-Roland, Hooppaw, Johnson, and Melander*. ABSENT: NONE City staff members attending virtual meeting: Executive Director Tom Lawell, Community Development Director Bruce Nordquist, Finance Director Ron Hedberg, Planner/Economic Development Specialist Alex Sharpe, and City Attorney Mike Doughtery. * Present via remote technology Meeting was called to order at 5:30 p.m. by President Hooppaw. APPROVAL OF AGENDA MOTION: by Hamann-Roland, seconded by Grendahl, approving the agenda. Ayes - 6 - Nays - 0. Commissioner Melander joined meeting via remote technology at 5:33 p.m. CONSENT AGENDA MOTION: by Grendahl, seconded by Johnson, approving the minutes of the meeting of April 23, 2020, with change*. Ayes - 7 - Nays - 0. * Change on page 3, “effective” to “affected”. REGULAR AGENDA A. CARES Act Small Business Assistance Program It is President Hooppaw’s desire to move quickly on this item and, although not a common practice, make a decision at tonight’s meeting. Community Development Director Bruce Nordquist requested action be taken on – 1. Receive draft information on CARES Act small business funding and direct staff to return to the EDA with additional information and final program design at a Special EDA meeting on/or before August 13. 2. Authorize a program to proceed as outlined with final approval coming from the EDA Executive Director and City Attorney, time being of the essence. Economic Development Authority City of Apple Valley Dakota County, Minnesota July 23, 2020 Page 2 Nordquist preceded with presentation: Program Purpose - Multiple ways (to provide assistance) and will help with this evening’s discussion. • To provide emergency assistance to small local businesses in Apple Valley adversely impacted by the COVID-19 pandemic. The program will: • Provide grants to small businesses most in need of support • Prevent business closures • Preservation of employment opportunities • Promote long-term economic vitality and reliance Funding Agency Programs • Burnsville – $20,000 grants, $1 Million total, Ehlers administered • Lakeville – $10,000 grants, $486,000 total, Self administered, and Northland administration Lakeville is using Northland for financial documents that would otherwise become public if not managed differently. • Eagan – $10,000 grants, $500,000 total, still being discussed, with CDA/NextStage Administration Eagan utilizing NextStage, a non-profit of the County, because they believe they do not have the capacity to take on the project alone. • Rosemount – Using CDA Program, $10,000 grants, still discussing total allocation • Hastings – $4,000 grants, $200,000 total. Rusty Fifield, before retiring (as Economic Development Coordinator), administered grant back in May/June and tried to address the kick-start to get businesses underway again • Community Development Agency/ Dakota County – $10,000 grants $10.4 million allocated • DEED Program – $10,000 grants $62.5 million with 27,400 applications metro/greater Minnesota. DEED Program (as of 7/22/20), split between Metro and Greater Minnesota Apple Valley Program Terms (Draft) – Received guidance from the City Attorney • Up to $10,000 grant based from COVID-19 related eligible expenses. • Funds from the Small Business Emergency Grant may only be used to reimburse an additional business expense that is a direct result of COVID-19. Trying to keep the grant program simple Program Focus - Working to facilitate discussion (w/the EDA) • Grant programs proposed by the State, County, and other cities list eligible expenses as operating, payroll, rent/lease payments, mortgage payments, utilities, suppliers and tax Economic Development Authority City of Apple Valley Dakota County, Minnesota July 23, 2020 Page 3 payments. State, county, and other cities are reimbursing various expenses; by lottery and/or 1st come – 1st served • City Attorney and staff propose focusing on reimbursing businesses for cost/expenditures that are a direct result of COVID-19. Examples of expenditures are: • Capital improvements made - something (the business) had to do to change the way business was operated because of pandemic • Personal protective equipment (PPE) acquired - masks, medical offices needing full-body suits, whatever is needed to provide services • HVAC improvements for filtration and UV lighting considered – which is being discussed, already installed, or during timeframe of grant plans have been made to install: a permanent improvement that provides a safe working environment • Newly hired staff to address COVID-19 procedures (limiting numbers of persons in business, cleaning, etc.) As replacement for any who had to leave, or as added employees for new positions (capacity counter, constant cleaning, etc.). • Planned capital improvements in the next several weeks? Where the business would benefit from the grant • Business losses not replaced by other programs. Not included in (Capital Improvements), that the City can help with. Checklist of General Criteria • Staff or 3rd party management of program? • $1 Million or less in businesses annual sales? • Business total FTE count at 25 or 50 individuals? • Locally owned for-profit & non-profit corporations? • Be in good standing with the Minnesota Secretary of State and the Minnesota Department of Revenue as of March 1, 2020? • Be in good standing with the City of Apple Valley? • Demonstrate the business was adversely affected by Executive Orders related to COVID- 19 business restrictions? • Demonstrate financial hardship, as a result, of the COVID-19 outbreak due to capital costs, personal protective equipment? Questions: Grendahl - What if someone is at $1.1 million but does not qualify; how is the amount determined? Answer – the amount is standard, but is will be set by the EDA Grendahl – does not want to spend a lot of money on 3rd party management, it’s preferred that money goes to the business Economic Development Authority City of Apple Valley Dakota County, Minnesota July 23, 2020 Page 4 Answer – staff is looking to a program that is successful, reminds that costs need to be tracked since it is a grant and COVID related. It is within staffs capability to track and take care of the grant without 3rd party intervention Grendahl – how did we come to differentiate 15 employees from 20-25 employees? Answer – to be presented shortly, look for feedback that captures that (query). Grendahl – does Capital Improvement include outdoor seating? Answer – yes, (City) has a resolution that addresses that. Melander – suggests that $10,000 makes a difference between a small business vs larger one and therefore is opposed to a lottery type system. (The grant) should help those working hard to try to stay afloat. Hamann-Roland – states that we want to keep business open, now and after a vaccine. Concerning the $400,000; is that the right number? How can we get more money on the table, to help now and later? Valued non-profits include McPhail, 360 Communities, the Zoo; will they be eligible? Is money going to the Chamber of Commerce? She likes the Northland idea (3rd party); concerned about NextStage (too busy?). Money should get out the door in a thoughtful manner. Johnson - Will there be grants less than $10,000 Bergman – please present the City list with population and amounts they will be granting, for comparison. A request for more clarification and focus on small businesses. Answer - Discussion ensues on finding numbers; there is difficulty in finding exact numbers for who (at this time) might be eligible for a grant of $10,000. Staff will continue pursue the numbers. Apple Valley has 17,000 employees; staff has the breakdown of that number by employers/business and other categories (to assist in getting answers to the EDA). Hooppaw reiterates “direct result of COVID,” need to let the public know if the information/decision is public. Other questions to consider: Business size limits? Non-profits? How to measure business expenses? Consider whether or not 3rd party is needed to assist staff. Long term impacts? Perfection? This needs to be rolled out ASAP. Answer – a team of people have been working on this and allocation of 10% is common and possibly considered. Eligibility Buckets Highest City Priorities: Economic Development Authority City of Apple Valley Dakota County, Minnesota July 23, 2020 Page 5 • To businesses with few employees and low revenue • 25 or less FTE • Types of businesses i.e. restaurants and retail? Hit hardest • Filtration and UV lights – ways forward • Other? Medium City Priorities: • Businesses with 50 FTE or less employees and high revenue • Businesses in the personal service industry? i.e. hair salons, gyms, or studios. • Other? Low City Priorities: • Businesses with many employees and high revenue • Business types like manufacturing and consulting that have had the least business interruption. • Other? Just trying to keep business open and keeping in line with what the Governor has put out. Other Considerations for Allocated Funds • Prioritize commercial and industrial tax base • Non-profit organizations, as generally eligible or as a special award? • AV Chamber of Commerce? • Convention and Visitors Bureau – CVB? • Other 501 C 3 non-profit not considered? Can be considered, (it is) up to the EDA. • Other? Qualifying Documents – Used by Others • The following are the qualifying docs being requested: (Can a third party receipt of theses docs best retain privacy of info?) • Certify that expenses claimed have not been reimbursed by other programs • Certify other documents as determined, (for example) number of employees • 2019 Federal, business tax return • Qualifying receipts for payments as previously described or pending expenditure • Evidence of employment prior to March 1, 2020, a state or federal payroll filing Dougherty – we do not need Federal Tax Returns and to keep it simple. Commissioner Grendahl suggests to continue moving forward: $400K (from CARES funding), distributed with $10K (cap per business), for City expenses, for businesses with max 25 employees, include the City Chamber, create a sub-committee instead of leaving it to staff to take care of. Move quickly to get the money out there. Goodwin agrees with Grendahl and also suggests flexibility in payment amounts. Economic Development Authority City of Apple Valley Dakota County, Minnesota July 23, 2020 Page 6 President Hoopaw suggests the City Chamber be allowed to qualify as the same level as other businesses Melander concurs. Discussion ensues on completing the action. Keep it simple, suggest the Chamber qualify (at the same level as other businesses), create a sub-committee. Comments from Edward Kearney, President AV Chamber of Commerce: Supporting the Chamber is supporting the CVB, the industry hardest hit (by the pandemic). Operating expenses or “burn rate” is about $24K - $26K/month without expenses, therefore anything is appreciated. Two House & Garden Expos (net $54K) as well as the Gala (net $32K) had to be cancelled, a projected loss of 20% or $68K over the year, a best-case scenario. Worst case is about $200K loss. He points out that most businesses [in Apple Valley] are under 25 employees. He believes the consideration (by staff) sounds fair. MOTION: by Grendalh, seconded by Melander, to allow for accepting $400,000 grant starting tonight, accept the “highest priority bucket,” allow the City Chamber to apply, allow for possible adjustment from $10K to $20K, and appoint a subcommittee to keep the list simple. Ayes - 7 - Nays – 0. B. Leasing of Space at the Education Partnership Building Community Development Director Bruce Nordquist requests to release St. Mary’s from its lease as of July 31.  A lease termination notice was received in April  St. Mary’s continues to pay but asks that if (another occupant) is found in July, if the lease could be terminated.  The space is now slotted for use in August as a (voting) precinct. President Hoopaw asks that the EDA continue to be updated on the use of the space as now it continues to be lost revenue. Commissioner Melander makes note that a lease was made and that, in general, signers should be upheld to that agreement. Grendahl believes the City needs the space, and therefore St. Mary’s should be released; otherwise she agrees with Melander. MOTION: by Hamann-Roland, seconded by Grendahl, to release St. Mary’s University from their leased space obligations, effective July 31, 2020. Ayes - 7 - Nays – 0. No EDA items of Staff updates at this time