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HomeMy WebLinkAbout06-21-2011 Council Economic Development CommitteeAGENDA City of Iowa City City Council Economic Development Committee Tuesday, June 21, 2011 8:00 a.m. Lobby Conference Room City Hall 1. Call to Order 2. Consider approval of the April 19, 2011 Economic Development Committee meeting minutes 3. Consider a recommendation to the City Council for administrative authority for Towncrest Design Assistance and Facade Improvement programs 4. Presentation by Englert Executive Director; request for renewal of funding 5. Consider a recommendation for renewing a contract with the National Development Council 6. Update on CDBG Economic Development projects 7. Staff time 8. Committee time 9. Adjournment MINUTES CITY COUNCIL ECONOMIC DEVELOPMENT COMMITTEE APRIL 19, 2011 LOBBY CONFERENCE ROOM, 8:30 A.M. Members Present: Regenia Bailey, Matt Hayek, Susan Mims Staff Present: Wendy Ford, Jeff Davidson, Tom Markus Others Present: Marc Moen, Gigi Wood, Gregg Hennigan, Nancy Quellhorst RECOMMENDATIONS TO COUNCIL: Mims moved to recommend to the City Council to proceed with an agreement pursuant to the City Manager's Letter of Intent for redevelopment of 118 E. College Street. Hayek seconded the motion. Motion carried 3-0. Mims moved to approve the City Manager's Economic Development Policy statement as discussed. Hayek seconded the motion. Motion carried 3-0. CALL MEETING TO ORDER: The meeting was called to order by Chairperson Bailey at 8:32 A.M. CONSIDER APPROVAL OF THE MINUTES OF THE FEBRUARY 15, 2011 ECONOMIC DEVELOPMENT COMMITTEE MEETING: Mims moved to accept the February 15, 2011, meeting minutes as presented. Hayek seconded the motion. Motion carried 3-0. CONSIDER A RECOMMENDATION TO PROCEED WITH AN AGREEMENT PURSUANT TO THE CITY MANAGER'S LETTER OF INTENT FOR REDEVELOPMENT OF 118 E. COLLEGE STREET Jeff Davidson addressed the Members first, stating that he believes Marc Moen will be attending this morning's meeting, in case Members have questions regarding this project. Davidson continued, stating that the project involves the building currently occupied by Vito's. He ran through the staff report, giving Members an idea of what this project will entail. The plan is to gut the building and convert the first floor to a retail space not including a bar or a restaurant, and fit out the upstairs for Class A office space. Davidson added that the building is in poor shape and that before this project begins, there are many improvements and upgrades that must be done including a new roof, and new heating, ventilation and air conditioning. He stated that in working with Moen, and reviewing the costs of acquisition and renovation, it made sense to assist in the expenses of building itself. Doing so would ensure that building would become viable for a new use and that assisting in the costs of a new roof, elevator and HVAC, approximately 12.5% of the costs of the project, the downtown would have a newly refurbished building that would serve Iowa City for a long time to come. Assisting in the building infrastructure costs can be done using tax increment financing. Given that the 2 project will be required to pay full property taxes every year and that the building would carry a minimum assessed value and generate new property taxes of $32,000 annually, it would take eight years for the $250,000 to be paid back to the City using TIF, according to Davidson. Marc Moen spoke next, adding that part of the plan is to return the face of the building to its original condition. He briefly shared what this will entail, including tearing off the green efis fagade that exists now and replacing the cornice work and other ornamental items. He also shared where the elevator will be installed, noting that they are required to install one by code, since the second floor is going to be office space. The discussion continued, with Moen sharing with Members what they have found at the 118 E. College Street building and what all will need to be done before it can be restored. Mims asked what "class A office space" refers to. Davidson said it is the standard that commercial realty uses in describing the quality of office space, class A being the best. Moen noted that it will be state-of-the-art space when completed. He also shared that they are working with the same realtor that they worked with to get Starbuck's downtown, in hopes of getting a nationally known retailer in the first floor space. Moen added, however, that this process can take time and will not happen immediately. Mims moved to recommend to the City Council to proceed with an agreement pursuant to the City Manager's Letter of Intent for redevelopment of 118 E. College Street. Hayek seconded the motion. Motion carried 3-0. CONSIDER APPROVAL OF CITY MANAGER'S ECONOMIC DEVELOPMENT POLICY STATEMENT Ford noted that Members have a draft of the Economic Development Policy that was presented to City Council in January during the budget process. She added that staff is looking for direction from the Committee as they move forward. Hayek asked for clarification on some wording and Ford noted the edit to incorporate into the final. There was some discussion about referring to place of origination for businesses being recruited to Iowa City with concurrence that the general idea is to NOT recruit business away from our neighbors. This was also discussed among the Members. Davidson and Ford will rework this final wording. Mims moved to approve the City Manager's Economic Development Policy statement as discussed. Hayek seconded the motion. Motion carried 3-0. STAFF TIME: Ford noted that they are working on amending the Scott Six Industrial Urban Renewal Area to include the new industrial park area. She added that they have a couple of good prospects for the new park. Davidson added that there has been increased interest by developers in various sites around town, and that they may need to establish an urban renewal district in the South Riverside Drive area. COMMITTEE TIME: Hayek noted the improvement in the streetscape and roadwork on Linn Street. He also thanked Davidson for taking himself and a few others up to the DOT Commission's public input meeting last week on rail service. Bailey noted that there is a discussion today about keeping the Post Office's substation downtown open. Everyone agreed that it provides a much -needed service to the businesses downtown. Staff will see what they can find out about this issue. Bailey also noted that she will be attending the Smart Conference in Des Moines. ADJOURNMENT: Hayek moved to adjourn the meeting at 9:10 A.M. Mims seconded the motion. Motion carried 3-0. Council Economic Development Committee ATTENDANCE RECORD 2011 TERM N p NAME EXP. Regenia 01/02/11 X X Bailey Matt 01/02/11 O X Hayek / E Susan 01/02/11 X X Mims Key: X = Present O = Absent O/E = Absent/Excused _,---r.® CITY OF IOWA CITY MEMORANDUM Date: June 15, 2011 To: Economic Development Committee From: Wendy Ford Re: Agenda Item #3 — Consider recommendation on Towncrest Financial Incentive Grant Program Authority At the June 71h Council meeting you approved a resolution authorizing the mayor to enter an agreement with Towncrest Internal Medicine for architectural design services. This project will be the first to use matching funds for a fagade improvement project, one of four incentives available for redevelopment projects in Towncrest. The project you approved authorized the City to pay half of the $3,000 fee for a facade improvement concept plan for Towncrest Internal Medicine. Staff is proposing recommendation that the City Manager be granted administrative authority to approve financial incentives for the two programs in the Towncrest Urban Renewal Area which are capped at $25,000 per application: • The Towncrest Fagade Improvement Program, and • The Pre -development assistance portion of Catalyst Project Grants With this authority, the following three stipulations would apply: • Projects would be rezoned to meet all eligibility criteria set forth in the project application; • Projects must enhance the Towncrest area and generally follow guidelines in the Towncrest Urban Renewal Area Design Guide; and • Reporting the granting of any of the funds would occur at the first Economic Development Committee meeting following such disbursement, and again in an annual report. We feel there are two compelling reasons to adopt this proposal: 1) Council has approved budget authority for these programs; and 2) the City Manager has authority for similar Economic Development disbursements from the Economic Development Assistance Fund. Because the budget authority and the Towncrest Design Plan guidelines are already in place, we feel that providing administrative authority to the City Manager will streamline the City's ability to assist with Towncrest improvements. If you agree, staff will proceed with a resolution to grant this authority at the next City Council meeting. Let me know if you have any questions. cc: Tom Markus Jeff Davidson Ppdadmin/memos/item3-towncrest incentive.doc �.® CITY OF IOWA CITY MEMORANDUM Date: June 17, 2011 To: City Council Economic Development Committee From: Wendy Ford Re: Agenda Item #4 -- Englert Theatre Annual Report and Request for renewal of funding In December of 2008, you approved a proposal from the Englert Theatre for a three year annual funding request of $50,000 beginning in July of 2009, to be reviewed annually before disbursements are made. This report, and ensuing July disbursement will mark the third year of support for the Englert. You requested that the Englert provide an initial benchmark of accountable measures and then report on these measures annually. The following report by Englert Executive Director, Andre Perry addresses these items and will show significant operational performance improvement in the Englert's mission to be a cultural and economic driver for our community. As the Englert approaches its 99th anniversary, it will finally have its own mortgage after years of paying a third party entity for the benefit of having enjoyed Historic Tax Credits to finance the initial restoration. A mortgage will be held by a combination of three local banks, and additional operating financing will be provided by a fourth local bank, all of which view the Englert as a key attraction in downtown Iowa City. While significant operational, fundraising and programming changes have enabled the Englert to continue gaining in profitability, financial assistance is still critical. Chief among them are the capital expenses of ongoing structural repairs (for example, roof repair and tuck -pointing). The Englert staff and Board of Directors are proposing another three year funding commitment that will assist in ongoing operations and allow for these critical capital expenses to be made. Recommendation: Staff recommends support of this proposal because: • It specifically addresses the building infrastructure, which is important to the mortgage financing provided by the banking community, • It continues to provide entertainment alternatives for the entire community, and especially for those under 21 who are no longer allowed in the bars after 10 pm, • Competition for the theater -going public is increasing this year with the Coralville Center for the Performing Arts and will continue into the future as the School of Music's four planned performance venues come to fruition, and • A strong theater generates downtown visitors who frequent restaurants, shops and other entertainment venues. Please be prepared to discuss the Englert's request for a renewed funding commitment. If you have any questions, feel free to call. June 17, 2011 To the Economic Development Committee: Thank you for your continued support of the Englert Theatre. This Annual Report outlines our organization's continued progress and growth in 2010 and in the first quarter of 2011. The report includes information such as our current financial statement, demonstration of increasing profitability, ticket sales reports, community partnerships, Englert event analysis, donor relations, and future plans for the theater. Over the last year the Englert Theatre has experienced positive growth. The organization's operations have charted a better course towards financial stability and the theater's offerings as a cultural landmark in Downtown Iowa City have been diverse, far- reaching in appeal, and artistically impressive. As we look to the future of our partnership with the City of Iowa City we have several goals. Our most immediate goal is to secure the third year of financial support from the city pending the Economic Development Committee's assessment of our progress. Furthermore we ask that the City of Iowa City renews its commitment of $50,000 each year for the next three years (2012 — 2014). The city's financial support has been essential in keeping the theater's operation in effect over the last two years. Continued financial support will supplement the Englert Theatre's day-to-day operations. It will also have another effect: as the theater grows older, we must be committed to thorough maintenance of the building. Each year brings new maintenance tasks to the forefront and additional funding will help us address these issues without compromising our operational budget. As always, we are very appreciative of the City of Iowa City's support and attention to Englert-related issues. We hope this support will continue into the future. We remain committed to growing the cultural cache of Iowa City for a wide range of residents and visitors. Sincerely, Andre Perry Executive Director, The Englert Theatre Table of Contents I. Current Financial Report II. Debt/Cash Flow Projection III. Three Year Financial Report IV. Attendance Report V. Ticket Purchase Demographics VI. Englert Theatre in the Greater Marketplace VII. Donor Relations VIII. Englert Theatre Future Plans I. Current Financial Report Below, please find the Englert Civic Theatre, Inc. consolidated profit and loss statement ending April 30, 2011 reflecting four months of financial performance. April YTD financial performance has exceeded budget by $46,057 and prior year by $14,308. April YTD financial performance has been driven by strong Englert Events programming margin contribution, better than anticipated Rentals, and advance timing of Fundraising/Grants which include show sponsorships. Programming margin has been led with Second City, Lucinda Williams, and Gaelic Storm. PROFIT/LOSS STATEMENT Income Apr Actual Apr Budget Last Apr Apr YTD Actual Apr YTD Budget Last Apr YTD Fundraising/Grants $6,149 $8,600 $550 $48,733 $33,100 $25,173 Englert Events 53,194 39,723 59,842 198,446 172,134 191,970 Rental Events 14,421 4,428 13,316 75,364 61,872 66,232 Other 4,142 1,393 1,484 11,488 11,696 9,930 Total income $77,906 $54,144 $75,192 $334,031 $278,802 $293,305 Expenses Administration $7,920 $8,684 $1,753 $36,796 $34,4U7 $26,421 Building 3,781 8,315 7,592 26,065 27,780 27,929 Fundraising Expenses 152 125 448 494 500 819 Personnel 25,835 25,139 24,965 104,486 100,556 94,434 Englert Events 35,706 29,480 55,015 136,303 127,747 130,939 Rental Events 461 116 0 2,181 1,620 3,491 Non -Operating 1,588 2,750 (523) 6,457 11,000 2,333 Total Expenses $75,442 $74,609 $89,250 $312,782 $303,610 $286,364 Profit/ Loss $2,464 ($20,465) ($14,057) $21,249 ($24,808) $6,941 Programming Margin $ $17,488 $10,243 $4,827 $62,143 $44,387 $61,031 Programming Margin % 33% 26% 8% 31% 26% 32% II. 2010 Debt/Cash Flow Projection Stronger than anticipated YTD financial performance has allowed the Englert to maintain its operating line debt below the current maximum $250,000 credit line capacity. Anticipated payments from the City of Iowa City and University of Iowa's Division of Performing Arts in early July will allow debt to not grow through softer summer programming months. Fall's improved programming seasonality will support cash flow the balance of the year. The Englert plans on purchasing the remaining equity position from its Limited Partner, Cityscape for $230,341 in July. Cityscape was an early partner involved with the purchase of historic preservation tax credits. This equity purchase is currently in the process of being finalized and will be financed with local lenders and a capital campaign effort currently underway by the Englert. Post purchase, the Englert building will be 100% owned by the non-profit, Englert Civic Theatre, Inc. Englert Civic Theatre, Inc. 2011 Operating Line Debt - 300,000 ......... Current Credit Line at $250 000 Maximum 250,000 %% %% 200,000 150,000 DPA pmt $9.5K Early Payment (Aug Budget) I I i 100,000 /CLP Grant SUAK City Payment $50.OK DPA pmt $20.OK (6 mo.Rent) 50,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec �Debt Forecast -"&•-Max. Debt III. Three Year Financial Report with 2011 Budget Key historic financial drivers have included substantially improved theater utilization, better programming margins, and reduced spending. Further, additional city and grant funding has allowed the Englert Board of Directors to approve a realistic small profit in 2011's Budget. Income Total Development Income Other Income Rentals Englert Series Total Income Expenses Administration Building Fundraising Non -Operating Personnel Rentals Englert Series Total Expenses ProfiV(Loss) 2008 ACTUAL 2009 ACTUAL 2010 ACTUAL 2011 BUDGET $ 158,956 $ 175,431 $ 151,990 $ 183,500 38,067 26,993 31,378 31,475 159,057 150,999 145,985 152,775 486,576 446,350 489,686 496,956 $ 842,657 $ 799,774 $ 819,039 $ 864,706 $ 60,949 $ 60,332 $ 83,303 $ 98,908 103,889 74,599 66,230 75,858 73,112 3,283 3,322 5,000 39,079 42,206 45,005 33,000 302,053 293,780 285,374 301,672 3,344 1,601 5,427 4,003 352,206 397,320 337,682 338,455 $ 934,631 $ 873,121 $ 826,343 $ 856,897 $ (91,975) $ (73,347) $ (7,304) $ 7,809 IV. Attendance Report — Current Statistics and Recent History Attendance records over the past two years show increasing attendance numbers to theater events, both in-house productions and rentals. 2011 Attendance (as of 5-30-11) Englert Presents/Co-Presents Tickets Sold: 9,099 Englert Presents/Co-Presents, Free/Non-Ticketed Events: 838 Rental Attendees (both ticketed and free events): 11,369 Total: 21,306 (as of 5-30-11) — end of the year projection: 51,134 2010 Attendance Englert Presents/Co-Presents Tickets Sold: 17,622 Englert Presents/Co-Presents, Free/Non-Ticketed Events: 1,478 Rental Attendees (both ticketed and free events): 26, 813 Total: 45,913 2009 Attendance Tickets Sold: 9877 Non -ticketed attendees (lectures and other rentals): 20,420 Total: 30,297 V. Ticket Purchase Demographics 2009 — 2011 To be clear, these figures are gathered from online credit card sales and only tell part of the story of customers who have come to the Englert. Other methods of purchasing tickets are not accounted for in this particular review. These figures show a strong base of support for Englert events from the immediate community and an increasing amount of support from other areas in Iowa as well as out-of-state locations. Englert Theatre Customers 2011 (through Spring 2011) Total Johnson County: 55% -10wa ("Ity: 43',;o -Coralvilte: 6%) -North Liberty: Y/, Total Non -Johnson County: 35% _Cedar Rapids/Marlow soy , -Other Iowa: 271)/o Out -of -State: 10% Enalert Theatre Customers 2010 Total Johnson County: 63% -IoNva City: 49%) -Coral v it l e: 9</t, -'forth I.Abcrty: 110 Total Non -Johnson County: 30% -Cedar Rapids/10arion: 9"0 -Other lotva: 2.1 11,4, Out -of -State: 7% Enalert Theatre Customers 2009 Total Johnson County: 68% -Iowa 0IV: 49" 4, -Coralville: 90, -North Liberty: 5° i, Total Non -Johnson County: 27% -Cedar Rapids Marion: 9`ia, -Ot17el' 10Lva: 1 /0 Out -of -State: 5% VI. Englert Theatre in the Greater Marketplace Englert programming and development over the last three years has positioned the theater on relatively equal ground to other theaters, performing art spaces, and concert venues in the Midwest. In some instances, the Englert's event schedule exceeds the quality of events of other theaters in competitor markets. It is important to note that the theaters, performing arts spaces, and other venues we compete with often have larger capacities (1000+) or exist in cities with populations (1 million or higher) larger than Iowa City (60,000 pop.) Despite these possible limitations the Englert has the potential to further rival the programming found in other markets, thus making Iowa City a more desirable location for current residents, potential new residents, and other Iowans seeking a venue for cultural events. Competitor Markets for Arts Programming in the Midwest City Population Chicago, IL 2,800,000 (Sample venues: The Metro, Goodman Theatre, Vic Theatre) Minneapolis / St. Paul (Twin Cities), MN 2,800,000 (Sample venues: The Orpheum, First Avenue / 7`h St. Entry) Omaha, NE 400,000 (Sample venues: Orpheum Theatre, the Slowdown) Champaign -Urbana, IL 200,000 (Sample venues: Krannert Center, Canopy Club) Des Moines, IA 200,000 (Sample venues: Hoyt -Sherman, People's) Madison, WI 200,000 (Sample venues: Majestic Theatre, Overture Center) Sioux Falls, SD 150,000 (Sample venues: Washington Pavillion) Lawrence, KS 100,000 (Sample venues: Granada, Bottleneck, Lawrence Arts) Columbia, MO 100,000 (Sample venues: Blue Note, Missouri Theatre) VII. Donor Relations Community Sponsors The Englert continues to receive significant support and contributions from several community partners amounting to $40K from sponsoring organizations in 2010. Major Sponsors Include: Mediacom New Pioneer Co -Op Community Foundation of Johnson County MC Ginsberg Friends of the Englert: Approximately 200 households Volunteers: Over 200 active Volunteers VIII. Future Plans Capital Campaign We are currently engaged in a capital campaign to eradicate the theater's out-of-state debt to Cityscape (a financial institution that leveraged the theater's tax credits several years ago). If successful, this initiative will bring ownership of the building back home to Iowa City. 99'h/IOe Anniversary Celebration & Expansion of Development Program The theater will celebrate its 99`}' year this fall. This weekend -long event will serve as a celebration of Iowan culture and will feature several local and regional artists and musicians in conversation and performance. Furthermore, this event will kick-off a new development plan aimed at increasing the number and consistency of individual and family donations to the theater. From Fall 2011 through Fall 2012 (when we celebrate the theater's 100`h year) we will continue our year -long drive to grow the theater's donor - base. This will be a primary initiative of the Executive Director and Development Director over the 2011 — 2012 year. Growing the donor base will further solidify the theater's financial stability in future years. Programming Vision Over the next year we will continue to sharpen our programming initiative. Diverse programming remains a key goal: we will ensure there are events aimed at attracting the various demographics in our community. In the past year we have offered a wide variety of programming including: children's shows, plays and musicals, readings, lectures, music performances, film series, and on-stage/intimate shows. We have showcased both local and national talent. We have continued to work closely with the University of Iowa, hosting shows from the Division of Performing Arts and Hancher as well as strengthening ties with the Office of Student Life (this fall we will launch the midnight movie series as an alternative to Iowa City's bar scene). Changing Cultural Landscape of the Corridor We are aware of and preparing for changes to the cultural landscape in the Corridor. The most immediate change will be the addition of the Coralville Performing Arts Center in Fall 2011. This —500 capacity venue will offer a new space for community theater and dance performances, other community events, and rentals. As a result, some of the rentals and partnerships we enjoy at the Englert will shift over to the Coralville venue. Furthermore, the University's performance outlets — Division of Performing Arts and Hancher — are making plans for new buildings (one downtown and the other on the west side of the river) to be completed by 2014 (Hancher) and 2015 (DoPA). In response to these changes, which will affect our incoming revenue, the Englert plans to: Expand our donor base (see Expansion of Development Program above); Strengthen our ties with University of Iowa organizations who will use the theater for events; and Consider new opportunities for revenue within the theater (examples: selling or leasing the third floor space, converting the second floor gallery into a lounge/cafe space). r �, .® CITY OF IOWA CITY MEMORANDUM Date: June 16, 2011 To: Economic Development Committee From: Jeff Davidson, Director of Planning and Community Development, Re: Agenda Item 5: Renewal of agreement with the National Development Council In July of 2010 you recommended to the City Council that we enter into a contract with the National Development Council. During the subsequent year NDC has been working with us to analyze housing, economic development and community development projects. Specifically, NDC has been assisting us by working with developers on financing proposals to enable projects to proceed. NDC has assisted us in meeting with owners, lenders, and development professionals in sorting through the components of project development. Our NDC contract expires on 6/30/11. The attached summary report identifies several ongoing and upcoming projects involving complex financial analysis. NDC is currently assisting us with three ongoing project evaluations in Towncrest, and four projects in Riverfront Crossings including the Hieronymus Square/Voxman/Clapp multiuse project, the Court/Linn multiuse parking facility public -private partnership, a new hotel development, and relocation of two bank properties. NDC assisted us in developing the financial deal for the Vito's building rehabilitation downtown. They assist us with all evaluations of Tax Increment Financing projects. NDC has experience working with and obtaining funding through the Economic Development Administration (EDA), SBA 7(A) loans, New Market Tax Credits, CDBG and HOME programs, Federal Home Loan Bank Community Investment program and several others. NDC will meet with owners, lenders, development professionals, and government agencies to ensure their continued support throughout each project. Key aspects of their services include: • propose, design and organize new programs (financial incentives), or review and update existing ones • evaluate sponsor/developer capacity • review finances and structuring, cost assumptions, capital budgets, and operating statements • advise on equity sources and structuring • identify and secure other funding sources as needed • assist with development issues during pre -development and developmental phases • negotiate with investors, lenders and developers • advise on regulatory and administrative issues We would like to continue our relationship with NDC for an additional six months. NDC has agreed to maintain their existing $6,000 per month agreement. For this amount, NDC staff is present in Iowa City three days per month and available for technical assistance as needed via email and phone during the remainder of the month. Funds are available for NDC's services through the Towncrest and Riverfront Crossings economic development accounts established by the City Council. Please bring any questions you have to the June 21 Economic Development Committee meeting. Because the proposed contract extension is less than $50,000 it can be signed by the City Manager without City Council action. p pd d i r/me m/E D C -N D C 062111. d oc NATIONAL DEVELOPMENT COUNCIL Powneis in G.�t�rnr7 unity L7t veh:Trnenr 5rr'lr:e 1909 April 15, 2011 Jeff Davidson, Director Department of Planning and :Community Development 410 E. Washington Street Iowa City, IA 52240 Re: Summary of Technical Assistance Services To -Date Dear Mr. Davidson: Per our agreement and your request, this report intends to summarize the technical assistance services provided by the National Development Council (NDC) since the beginning of our on -site engagement with the City of Iowa City (City) in August 2010. Accomplishments associated these efforts will also be noted where appropriate. During the nine (9) on -site visits that have been completed between August 2010 and April 2011, and through email and phone support between visits, NDC has assisted the City on a broad range of projects and programs as follows: 1. Towncrest Redevelopment Area The start of NDC's engagement coincided with the completion of the Towncrest Business Development Model report and with efforts to complete the Design Plan Manual for the Towncrest Urban Renewal Area. NDC was able to review and provide feedback on both of these documents prior to their finalization and to assist City staff in the implementation of action steps supporting their major recommendations, including: a. Facade Improvement Program: NDC drafted program guidelines, applications and examples of participant agreements for distribution to Towncrest property owners and business tenants. NDC continues to advise staff on program implementation through identification of appropriate projects and the structuring of program assistance. b. Catalytic Redevelopments: by accompanying staff to meetings with property owners, tenants, developers, and lenders, NDC assisted in educating potential participants in the goals of this gap financing program and in necessary predevelopment tasks. These efforts have already resulted in a serious property acquisition effort by a developer working with a large area tenant that is seeking upgraded facilities. Training Division 927 Dudley Road Edgewood, KY 41017 TEL (859) 578-4850 FAX (859) 578-4860 New York Office 708 3rd Avenue, Suite 710 New York, NY 10017 TEL (212) 682-1106 FAX (212) 682-5611 www.nationaldevelopmentcouncil.org NDC TA Activity Summary April 15, 2011 Page 2 c. Town and Campus Apartments: NDC has assisted City staff in extensive efforts over the past eight months to identify redevelopment opportunities for the Town and Campus apartments. Numerous meetings, phone conversations and emails with the site's owner, housing authority staff, lenders and affordable housing developers have established a strong foundation for future redevelopment efforts by identifying the project's underlying economics and the motivations/interests of each party. Meetings with the larger population of Towncrest stakeholders have confirmed that progress on addressing the Town and Campus apartments are critical to the success of the City's redevelopment efforts. Taken together, City staff efforts, with NDC technical assistance, in pursuit of Towncrest redevelopment goals have succeeded in convincing stakeholders that the City is serious about making substantive improvements in the area's long term economic viability and livability. This is a critical prerequisite to achieving substantial physical redevelopment objectives. 2. Downtown Projects A significant portion of NDC's on and off -site assistance to the City has been delivered on behalf of large Downtown projects including: a. St. Patrick's Square: NDC has provided extensive assistance to date in reviewing, advising and underwriting the preliminary deal structure for this proposed mixed -use project. Provisions of Iowa law governing the use of tax increment financing required a revised approach to the project, but NDC's work to date will advise future financing structures and will be updated as necessary to support the City's gap financing support. b. Hieronymus Square: the structuring of City assistance for this project continues as its budget and operating proforma evolve. NDC technical assistance and analysis is providing City staff with specific questions regarding the project's request for TIF assistance, but is also providing a framework for how future projects can be underwritten to maximum the impact of relatively scarce public resources. 3. Other Development Projects and Program NDC has assisted staff in analyzing and structuring City support to projects outside the Towncrest and Downtown focus areas as requested. Some of these requests have addressed: a. Wetherby Condominiums — NDC has assisted staff in extensive underwriting, loan structuring, CDBG compliance and developer negotiations for this proposed affordable rental housing project. NDC TA Activity Summary April 15, 2011 Page 3 b. TIF analysis — NDC has initiated, at the City's request, a review of how tax increment financing has been utilized by the City and other Iowa localities with an eye toward designing additional tools for addressing the City's development needs. c. New housing models — private dormitory and affordable artist live/work space projects have involved NDC in preliminary developer interviews and the identification of appropriate financing and development resources. In summary, the wide array of City development objectives and activities, and the high quality, measured by experience, training and motivation, of City development staff, have made the first eight (8) months of NDC's engagement very productive. Extensive detail on the technical assistance services outlined above are included in the many emails, meeting notes and spreadsheets that have been generated by NDC and City staff during the engagement. Additional detail and discussion is available as requested. I look forward to my next visit on May 2 and to addressing any needs you and your staff may have for assistance in the meantime. Respectfully, Thomas Jackson Director Cc: Steve Long, Iowa City John Down, NDC r ®r� CITY OF IOWA CITY .�,4 MEMORANDUM Date: May 12, 2011 To: City Council Economic Development Committee From: Tracy Hightshoe, Community Development Planner Re: CDBG Economic Development Fund — FY11 Summary (7/1/10 to present) The CDBG Economic Development Fund was created to stimulate private sector investment that results in the creation of permanent, private sector jobs with living wages for low -to - moderate income persons in Iowa City. The Economic Development Fund provides assistance through low interest loans with interest rates ranging from 0 to 4% and repayment terms set at 5 or 7 years. The loans approved are typically for permanent working capital and often in conjunction with a private lender who provides a majority of the funds needed for the business to open or expand. All CDBG economic development activities must meet the National Objective of benefiting low to moderate income persons. The program rule requires that 51 % of the jobs created or retained must be held or made available to low -to -moderate income persons based on family size or the business must qualify as a micro -enterprise. A micro -enterprise is a commercial enterprise that has five or fewer employees, one or more whom owns the enterprise. At least 51 % of the employees and owners of a micro -enterprise business must be low to moderate income. The CDBG Economic Fund had a balance of $193,329 at the start of FY11. The City received four applications in FY11 requesting $106,000 in CDBG funds to start or expand businesses in Iowa City. The Paper Nest, a retail custom print and design company, was awarded $11,000. This business meets the HUD definition of a micro -enterprise. Baroncini LLC, a new Italian restaurant, was awarded $35,000 and will create 6.0 FTE jobs. One application was deferred until the business can obtain partial financing through a SBA loan and the other was deferred until they can find a location for their business. The City had one business, opened in 2007; go out of business in FY11. Nile Valley Restaurant, a.k.a. Ali Baba, closed as the business was not able to generate enough in sales to cover ongoing operations. The owner entered a repayment agreement with the City to pay their remaining balance. There is $147,329 remaining in the Economic Development Fund. On July 1, 2011 an additional $35,428 will be placed in the fund for a total balance of $182,757 available for economic development eligible activities. In FY11, the City hired the National Development Council (NDC) to review economic development and housing proposals, assist in the creation of new financial incentives and assist in the marketing efforts to reach businesses and potential entrepreneurs to create or expand businesses. NDC will be working with the City on redevelopment efforts throughout the City, initially focusing on the Towncrest neighborhood, Riverfront Crossings and the St. Patrick's development site. NDC has experience working with cities and communities in all 50 states to help them create, design, finance and execute their housing, economic and community development projects.