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HomeMy WebLinkAboutCCEDC c Agenda 5-10-16 (2).pdfAgenda City Council Economic Development Committee Tuesday, May 10, 2016 12:00 noon City Manager’s Conference Room City Hall 1.Call to Order 2. Consider approval of minutes from the April 12, 2016 Economic Development Committee meeting 3. Consider Recommendation for financial assistance of $40,000 for façadeimprovements to Big Grove Brewery, 1225 S. Gilbert Street 4. Consider Recommendation for Next Steps in Reviewing Economic Development and TIF policies 5.Staff report 6.Committee time 7.Other business 8. Adjournment EDC 5.10.16 packet page 1 MINUTES CITY COUNCIL ECONOMIC DEVELOPMENT COMMITTEE APRIL 12, 2016 CITY MANAGER’S CONFERENCE ROOM, CITY HALL, 12:00 P.M. Members Present: Rockne Cole, Susan Mims, Jim Throgmorton Staff Present: Wendy Ford, Tracy Hightshoe, Geoff Fruin, Doug Boothroy, Eleanor Dilkes, John Yapp Others Present: Curt Nelson, Julie Zielinski, Nancy Quellhorst, Nancy Bird, Nate Kaeding, Kate Moreland, Charlie Eastham RECOMMENDATIONS TO COUNCIL: Throgmorton moved to recommend approval of the request from EDC, Inc. for $25,000 in funding for FY18. Cole seconded the motion. The motion carried 3-0. Cole moved to recommend approval of the request use $50,000 CDBG Economic Development funds for small business assistance for FY17. Throgmorton seconded the motion. The motion carried 3-0. Throgmorton moved that they direct staff to incorporate the affordable housing provisions contained in the memo from Boothroy and Yapp into a draft ordinance for the full Council to consider. Cole seconded the motion. The motion carried 3-0. CALL MEETING TO ORDER: The meeting was called to order by Chairperson Susan Mims at 12:00 P.M. CONSIDER APPROVAL OF MINUTES: Minutes of the February 2, 2016 meeting were reviewed by Members. Cole moved to approve the minutes as presented. Throgmorton seconded the motion. The motion carried 3-0. UPDATE FROM EDC, INC.; CONSIDER REQUEST FOR $25,000 IN FUNDING FOR FY18: Ford noted that Members have a memo in their packet concerning this item. She outlined a staff recommendation for funding of $25,000 for EDC, Inc. (Entrepreneurial Development Center) in Cedar Rapids. She noted that both Curt Nelson and Julie Zielinski from EDC, Inc. are present and she gave a brief outline of EDC’s services. Their work includes working with businesses on both ends of the corridor to build job opportunities and business success in the corridor. Ford noted that EDC, Inc. has developed what they call “a recipe for success” for business assistance. This includes ensuring the 'ingredients' of marketing, development, sales, operations, information EDC 5.10.16 packet page 2 technology, and finance are all part of the business plan and that there is the right amount of support from each area. Ford noted that EDC, Inc. has also been funded by neighboring communities: Cedar Rapids at a $100,000; Coralville just began at the $20,000 level; North Liberty continues at $5,000; and Hiawatha has been contributing $11,500 annually. Ford stated that staff believes it is important to consider supporting the Entrepreneurial Development Center because cities that help to grow entrepreneurial pursuits in their communities are stronger cities. Entrepreneurs build businesses, create jobs and draw employees to the area. Iowa City has been supportive of the entrepreneurial community, Ford continued, noting that the City has also helped sponsor EntreFEST in the past, as well as provide significant support for ICAD and the CoLab, all of which help foster support for small business entrepreneurs. The staff recommendation, therefore, is to budget $25,000 for FY18, and an intent to budget for FY19, with the expectation of receiving annual reports from EDC, Inc. Ford asked Nelson to give an update on EDC’s work. Nelson added that the State has also contributed around $100,000 annually to EDC, Inc., and that Senator Harkin has been a big supporter of what they do, with over a million dollars of support received from the federal government for their projects. Nelson noted that although they have a Cedar Rapids address, EDC works throughout Iowa. When he founded EDC, Inc. in 2003, it was focused primarily on the Iowa City to Cedar Rapids' corridor, but they have worked in 40 counties over the years. Looking at last year alone, Nelson noted that approximately a third of their hours were spent in Iowa City itself, with around half of their time in Johnson County. He also spoke to how they have helped raise capital for businesses and also helped to bring in needed talent for continued operations. Throgmorton asked Nelson if he would further clarify what some of these businesses do, as he is not familiar with them. Nelson then gave further details to Members and responded to questions regarding some of the businesses they have worked with. Cole asked Nelson if there are other organizations like EDC, Inc. in the area. Nelson stated that there are no other organizations like EDC, that they were very careful when they set it up to not duplicate what others are doing. Cole then asked what type of outreach efforts EDC has made to under-served communities in the area. Nelson noted that they take referrals from anywhere in the state of Iowa, that anyone who contacts them can be eligible for support. Throgmorton moved to recommend approval of the request from EDC, Inc. for $25,000 in funding for FY18. Cole seconded the motion. The motion carried 3-0. DISCUSSION OF THE $50,000 CDBG FY17 ECONOMIC DEVELOPMENT SET-ASIDE (Tracy Hightshoe): Hightshoe addressed Members regarding the set-aside of $50,000 for the FY17 CDBG Economic Development funds. She stated that the decision on the use of these funds goes through the Economic Development Committee, not the Housing and Community Development Commission. The Housing Commission determines the amount. The funds may be used for small business loans for businesses that hire low- to moderate-income employees. Over the years, these funds have helped approximately 23 businesses in Iowa City. Hightshoe noted that for FY16, they funded curb ramps in the Riverfront Crossings area, and in FY15 and earlier, they did facade grants through the Building Change program. They were able to help approximately nine businesses in the downtown area with renovations. Continuing, Hightshoe shared some of the more recent projects they have assisted, noting that the fund is currently depleted. Staff is recommending the $50,000 be used for small business loans. Fruin then asked if Hightshoe EDC 5.10.16 packet page 3 could give Members some examples of small businesses they have helped in the past. She noted several local small businesses that these funds have been able to help. She stated that the majority of businesses make their payments, and that in 2016, for example, the City expects to receive approximately $40,000 in repayments. Hightshoe then responded to Member questions regarding the use of these funds. Fruin noted the flexibility of these funds and how they have been able to help fund other projects. Cole moved to recommend approval of the request use $50,000 CDBG Economic Development funds for small business assistance for FY17. Throgmorton seconded the motion. The motion carried 3-0. CONSIDER PROCESS FOR AMENDING CITY'S TAX INCREMENT FINANCE (TIF) POLICY (Wendy Ford, Geoff Fruin): Ford noted that this item on the agenda is in regards to one of City Council's strategic planning items – to review and revise Iowa City's TIF policies. She reviewed current policies, noting that these have been used as a guide for staff as they evaluate TIF requests. She noted the goals of economic development – to increase the tax base, to foster a good environment for entrepreneurial activities, and to attract high quality jobs. She noted that staff tries to meet these goals while aligning with the Council's strategic planning, Urban Renewal Plans, and the Comprehensive Plans. Continuing, Ford described some of the business and activity the City has assisted financially and she described the various Economic Development Division’s budgeted financial sources. Fruin talked about the TIF policy in general, noting that the evaluation process is one of the most rigorous and time-consuming in the state. The policy was put together with a clear understanding that public dollars are to be the last dollars in on projects in which the City participates, and is designed to ensure that there is public benefit in any type of public/private partnership. Fruin stated that Councilors undoubtedly hear from developers about how the process for TIF funds in Iowa City is much more rigorous than in other communities. He noted that TIF is not an entitlement to alternative financing for developers. Fruin suggested that Members look at the current TIF policy and determine how it is serving the community right now. Fruin stated that as Members review policy, they may wish to add clarity to items they’d like to see tightened and more restrictive and conversely, add clarity to items that will be allowed greater flexibility. An example of flexibility would be the range of sustainability features required in a project requesting TIF. Fruin noted that there is a memo in the meeting packet from Doug Boothroy and John Yapp about affordable housing, which are tightly defined, leaving less flexibility when comes to development and use of TIF funds. Throgmorton stated that he believes there should be greater consistency between the economic development policy and the strategic plan, especially with regards to sustainability, social justice, and racial equity. He questioned if there might be some metrics in the Mayor's compact or in the STAR communities rating process that could provide them with some particulars that would be useful. Throgmorton pointed out that he believes most of the policies are too vague. Throgmorton noted, for example, “achieve high quality architectural and site design” and that he has no idea what this means. He suggested 'enhancing long-term sustainability through neighborhood and building design' instead, by 'encouraging developments that enhance walkability and access to jobs and schools via public transit.' EDC 5.10.16 packet page 4 With regards to the energy efficiency component, he suggested being more specific by calling for 'energy efficiency that exceeds the State energy code by 40%,' or that 'draws from the architectural 2030 challenge.' Overall, he believes they need greater specificity in these components. Throgmorton stated that he does like what is being recommended in the affordable housing memo. With regards to the creation of high quality jobs, he stated that he values this and finds it to be very important, but he thinks that they need to find a way to reward economic developments that directly improve jobs and opportunities for lower income residents. As for underutilized and blighted properties, Throgmorton stated that there have been a couple of instances where the parcels were so small that he did not understand how they could be eligible for assistance. He noted the Camp Cardinal urban renewal area as an example. He stated that it is very small and he questioned the 'urban renewal' portion of this. Mims stated that she would encourage Committee Members to put their suggestions and thoughts in writing so that they can then share with the full Council, with the added benefit of giving staff an idea of what Members are hoping to achieve. This would also allow the business community to see what types of changes are being proposed to these policies, giving them a chance to provide feedback to Council. Throgmorton asked if having a transcript of this meeting would be possible, in order to provide them with exactly what is being proposed. Mims asked staff about taking this portion of the meeting and having it transcribed into a memo from Ford to Council, to memorialize the discussion on changes to the TIF policies. Fruin asked if Members want staff to provide feedback on their suggestions. Mims stated that she believes they need to get the ideas out there so the community can react, and also to give staff more time to react to the suggestions. Cole noted the issue of consistency and expectations of the business community. He stated that it seems that they should administer the policy as it is currently written, until it is changed. Once policies are changed, of course, the expectations would change as well. Cole stated that he believes they should not be rushed in terms of recommendations and that he wants to have outreach and feedback throughout the community first. One exception for Cole is the affordable housing recommendations. He believes these have been well vetted by a large number of stakeholders and might only need a few tweaks before becoming part of the policies. Cole noted he thinks City Council members find out about requests for TIF funds too late and are not given time for input. The first public mention of a TIF request is when it comes before the EDC, which is frequently only a few weeks before it comes before council. He noted he would like more time for input. Along the same lines, Throgmorton stated that one of his concerns has been that the policies are quite vague and that the synthesis of vague policies has been left to the discretion of the City Manager's office. As a result, he believes that the Council has not played much of a role in indicating what it really wants. He believes the City Council should provide better specificity so everyone knows what City Council requires and what they find to be important. Mims stated that she agrees they need to get their ideas out as soon as possible so that they can move forward obtaining community and developer feedback. Cole, referring to the recommendations for affordable housing, stated that he believes modifications to the policy could be made in this area fairly quickly. Boothroy noted that when they reviewed the affordable housing policies, they determined a requirement of a minimum of 15%, recognizing that financial gaps go up as the affordable housing requirements increase. This EDC 5.10.16 packet page 5 is because of the revenue and value differences to the developer between offering a market rate versus and affordable housing product. Throgmorton asked if staff believes more work should be done on the proposal in the memo from Boothroy and Yapp. Boothroy stated that they met last Thursday with their committee to look at the language of the ordinance, and that everyone agreed to what was proposed. It will next go before the Planning and Zoning Commission for their review, before going to the full Council. Cole noted that in the past, the EDC has met only a few times per year. He asked if they could make this a regular monthly meeting instead. Mims noted that they have always met as needed, based on timeliness and what had to be considered by the committee. Throgmorton agreed that they should most likely meet a minimum of once per month, especially while revising these policies. Throgmorton moved that they direct staff to incorporate the affordable housing provisions contained in the memo from Boothroy and Yapp into a draft ordinance for the full Council to consider. Cole seconded the motion. Discussion then ensued, with Cole restating his concern that they give the community time to weigh in on recommended policies. After a brief discussion, he agreed with the other Members on moving forward with these recommendations. The motion carried 3-0. Fruin noted that staff will get this on a meeting agenda and will schedule a follow-up meeting, as well. He asked if they could revisit one item – the City Manager's spending authority for economic opportunity funds. Fruin stated that the practice was originally put in place as such so that the City could be more responsive to smaller requests. He asked what the Members' expectations are for these funds as they move forward. These would be the Economic Development Opportunity funds, up to $50,000 per ‘opportunity,’ which the City Manager could approve. Cole asked if these projects weren't previously on the Consent Calendar, and Fruin noted that they would first be on the EDC agenda for review and approval before going to the full Council. After some discussion, Members agreed that the current practice should continue. STRATEGIC PLAN ITEM DISCUSSION: SIGNIFICANTLY IMPROVE THE COUNCIL AND STAFF'S ABILITY TO ENGAGE WITH DIVERSE POPULATIONS: Throgmorton stated that his intent with this topic is to put it on the table so that at the next meeting they could follow up on the discussion. He noted that a month or so ago he sent the Committee an email explaining the need for a 'community gap analysis.' He stated this could be done by meeting with a diverse set of small focus groups, sharing the City's story about its use of TIF, listening to reactions to that story, and asking for advice from the focus group members about how to narrow the community gap. Throgmorton noted that 'gap analysis' is a ‘term of art’ in economic development. He added that there is a big gap between what the community thinks the TIF policy and programs are and how the staff and Council think about them. He believes they need a 'community gap analysis' in order to alleviate misinformation. Cole agreed, stating that they do need to get out into the community more, and that he would like to see them better explain to the community how these programs are administered. Mims agreed there is an understanding gap, stating that other things have played into this misinformation, such as comments made during political campaigns, for example. The EDC 5.10.16 packet page 6 community does not always get correct information. She agreed that the community needs to be better educated on the use of such programs as TIF. Throgmorton then further clarified his idea of focus groups and how they might approach this topic in the community. Ford noted that presenting a streamlined TIF story would be a challenge given the technical detail required for a full understanding of the concept. She could do this and she also said she believes elected officials should be a part of this outreach so that the community is better able to digest the political considerations Council must address when presented with a TIF request. Cole stated that he believes they will need to do public forums and listening posts in order to get stakeholder feedback on this topic. Throgmorton stated that the key is to engage in dialogue with focus groups so that the learning can go both ways, not just trying to educate the public in general. Cole suggested they do a series of public forums called 'bridging the gap,' where they would have dialogue concerning the TIF. Members continued to discuss this issue, noting what they believe are the best ways to educate the public on TIF. Fruin stated that staff will consider these ideas and will come back to Members with a recommendation. STAFF REPORT: Hightshoe talked about the micro loan program briefly, noting that staff plans to market it to persons of color, women, and immigrants for use of these funds. She also talked about a series of five new workshops called 'So You Want to Start a Business.' This series, the month of May (National Small Business month), came out of a collaboration with Kirkwood Community College, Community CPA, three local banks, and a community outreach group, Sankofa. COMMITTEE TIME: None. OTHER BUSINESS: None. ADJOURNMENT: Throgmorton moved to adjourn the meeting at 1:35 pm. Cole seconded the motion. Motion carried 3-0. EDC 5.10.16 packet page 7 Council Economic Development Committee ATTENDANCE RECORD 2016 NAME TERM EXP. 0 2 / 0 4 / 1 6 0 4 / 1 2 / 1 6 Rockne Cole 01/02/18 X X Susan Mims 01/02/18 X X Jim Throgmorton 01/02/18 X X Key: X = Present O = Absent O/E = Absent/Excused EDC 5.10.16 packet page 8 Date: May 9, 2016 To: City Council Economic Development Committee From: Geoff Fruin, Interim City Manager Re: Recommendation for Big Grove Brewery Façade Grant The City Council adopted the Downtown and Riverfront Crossings Master Plan in 2013. Since that time, the City has budgeted funds in the Capital Improvement Program to facilitate both public and private improvements that help achieve the vision articulated in the plan. The City has taken a similar approach to help spur activity in the Towncrest neighborhood. Over the last few years, the Riverfront Crossing and Towncrest capital improvement funds have been used to fund public planning studies, as well as support private development primarily though facade improvement grants. Since the adoption of the Downtown and Riverfront Crossings Master Plan, the City has experienced strong development interest in Riverfront Crossings. Much of this interest has been located in the core of the district (e.g. MidwestOne, Sabin Townhomes, CA Ventures) and on the western edge (e.g. Emrico Riverside Apartments, Kum and Go, Brueggers, Hampton Inn). The eastern edge of the district along Gilbert Street has been slower to attract strong development interest. This corridor is critically important to the overall plan, particularly with respect to how redevelopment can strengthen the pedestrian and bicycle connections to downtown, as well as the visual appeal of both the Gilbert Street and Ralston Creek frontages. Several months ago, Big Grove Brewery approached the City about locating a brewery / taproom at 1225 S Gilbert (former Iowa Hawk Shop Outlet Building). City staff worked with Big Grove representatives on zoning and building code considerations. Through those discussions Big Grove elected to move forward under the existing commercial zoning classification. However, Big Grove has repeatedly indicated their excitement for the Riverfront Crossings Plan and is anxious to partner with the City to ensure that the vision for Gilbert Street, the Ralston Creek corridor and the Riverfront Crossings Park are all carried out. The vision in the City’s master plan played heavily in Big Grove's relocation decision. The Riverfront Crossings Plan did not anticipate the re-purposing of the building at 1225 S. Gilbert. However, staff believes the creative reuse of the building is a perfect fit in the context of the overall plan. It will add a distinctive and memorable urban/industrial character to the street, creek and park frontages while still providing the flexibility to achieve the plan goals of improving pedestrian, bicycle and vehicular circulation. Big Grove is making a significant investment in the property and is planning to flip the active frontage of the building from the Gilbert Street side to the Ralston Creek side, which will be directly across from the future Riverfront Crossings Park. The new west facing active front speaks directly to the City's desire to activate and engage with Ralston Creek and the Iowa River. The building layout will also create tremendous synergy with the future park and Ralston Creek trail. With a west facing frontage, the facade treatment on the east side of the building becomes critically important. Being the first redevelopment project in this part of Riverfront Crossings, the City is interested in ensuring that the facade treatment helps set the tone for future projects. Big Grove has indicated it is prepared to make minor repairs and paint the building prior to opening. EDC 5.10.16 packet page 9 However, a preferred option would be to work with the City on an enhanced façade that includes corrugated aluminum siding, custom art and enhanced signage. This treatment would greatly enhance the attractiveness of the building and create an industrial character that fits the business, plan and creek frontage very well. A draft rendering of the façade is included with the Big Grove request letter. It should be noted that façade design is still being refined and final colors and other treatments are likely to be modified. The Big Grove Brewery project is a perfect fit for the Gilbert Street corridor and the overall Riverfront Crossings Plan. The project involves the creative reuse of an existing building by a locally owned and operated business. The business plan to open up to the creek and future park will help set the desired tone of engagement with our waterways. Big Grove Brewery is committed to the vision of the City’s plan and is taking a risk being the first business to make significant investment in the Gilbert Street corridor since the plan was adopted. The City has an opportunity to work with Big Grove on an enhanced façade treatment that will add to the overall project, but more importantly help establish a higher level of design along this corridor. Big Grove has requested $40,000 in façade assistance for this project. The request is in line with previous façade grants that have been provided through our Building Change program downtown. I am recommending approval of a 40% façade grant with a maximum cap of $40,000, to be paid from existing fund balance in the Riverfront Crossings capital improvement budget line. If the City Council Economic Development Committee concurs, staff will work with the City Attorney’s Office on a corresponding agreement and seek final approval from the full Council. EDC 5.10.16 packet page 10 Façade Grant Request Big Grove Brewery & Taproom Iowa City Expansion 1225 South Gilbert Street Iowa City, IA 52240 To Whom It May Concern: My name is Matthew Swift and I am one of the owners of Big Grove Brewery in Solon, IA. We are planning an expansion into the River Front Crossings district at 1225 South Gilbert Street. We are requesting $40,000 in assistance to put a new façade on the building. A little background on our company and our plans to move into Iowa City. We are currently brewing on a very small system, a 3.5 barrel system (one barrel = 31 gallons) and we produce just over a 1000 barrels a year. Most of the beer is consumed at the brewery itself but we do have 20 retail customers that carry our beer when stock is available. In addition, we have a waiting list of accounts that would like to carry our products. In the end we came to this simple conclusion, we need to make more beer! To be clear, we have no plans on changing any part of our business in Solon. That facility will continue to brew experimental brews and focus on delivering a great brew pub experience. We view BGB Solon as our Brew Pub and BGB Iowa City as our Production Brewery & Taproom. It is our intention to grow into two locations, not move our business. The new brewery system we would like to put in place has the ability to make twenty times the beer we make currently. The system utilizes a technology called mash filtering and is extremely efficient. It uses less water, grain and hops on the hot side of the beer brewing process. This would be the ninth craft brewery in America to utilize this type of system and technology. Next step, find a space large enough to house a brewery of this scale. Thus we began our search for a 2nd location. We had several factors that we were looking for in the future property: lots of space, proximity to a downtown, walking & biking access, green space, good access for loading and logistics. We didn’t think that Iowa City would end up being our home because of all of obstacles that you could run into when looking for a property like this in a community that has a low inventory of older warehouse-style buildings. That all changed when Geoff Fruin and the city staff walked us through the River Front Crossings plan. This new district is exciting and it met all of our needs. River Front Crossings Park that sits behind the building is major bonus and once bridge connections are made the walkability from downtown to the site is easy and safe. The way that the space interacts with all of the new amenities is important to us and we look forward to continuing to work with the city as different parts of the project come online. We believe that the Crossings District has the ability to reshape the south side of Iowa City and possibly become an extension of downtown much like the North Side Marketplace. EDC 5.10.16 packet page 11 The building is the former storage facility of the Hawk Shop and was originally a lumber yard. The exterior of the building is in pretty bad shape. It is missing boards, paint is chipping off, old dented fences, stairs that are in need of repair, etc. Our request for the assistance is to change all of that. We would like to put a pre finished corrugated aluminum siding with concealed fasteners from Pac-Clad. The budget number we have in place of these improvements is $108,100. $24,900 for the soffit (the building has several large overhangs) and $83,200 to clad the building. There will also be considerable expense for the signage and mural art that will be placed on the exterior. We are still bidding out costs on replacing the stairs on the south east corner of the building as well. We are requesting $40,000 in assistance to make this project financially viable. I’m attaching our current renderings that reflect our vision for 1225 S. Gilbert St. The design team is working on what colors and the art piece will look like. I’m also attaching photographs of the building in its current state. Without the assistance of the city we will move forward with a less expensive and less attractive option, probably paint. We truly do appreciate the consideration and are excited to be a part of bringing production beer brewing back to Iowa City. Respecfully, Matthew Swift Big Grove Brewery EDC 5.10.16 packet page 12 EDC 5.10.16 packet page 13 EDC 5.10.16 packet page 14 EDC 5.10.16 packet page 15 EDC 5.10.16 packet page 16 EDC 5.10.16 packet page 17 Date: May 4, 2016 To: City Council Economic Development Committee From: Wendy Ford, Economic Development Coordinator Geoff Fruin, Interim City Manager Re: Next Steps in Economic Development Policy Review One of the City Council’s action items in their Strategic Planning Priorities for 2016 is to review and consider amending the city’s Tax Increment Finance (TIF) policies. At their meeting on April 12, 2016, the committee recommended changes regarding the provision of affordable housing for residential projects requesting TIF. Those recommendations stemmed from the work of an ad-hoc Inclusionary Housing Committee that was charged with making recommendations regarding affordable housing creation in the Riverfront Crossings area. City Council adopted those policy changes at their meeting on May 3, 2016. Before getting into the details of further policy changes, the committee indicated a desire for a robust public input process. Staff has developed an initial framework for what the process could look like. 1. Conduct Focus Group meetings (May – July) These would be small groups (of up to ten people per session) of community stakeholders. The focus group members would be joined by a staff person and one EDC committee member. The goal would be to share existing policies and data, gather input about what is important to each stakeholder group, seek ideas for standards to be used to measure success, declare what is working, what could be improved, etc. Regular EDC meetings could continue to occur during these months and staff and the Member who attends each would report on the meetings. Staff would compile all feedback and meeting discussions for background in preparing draft policy. The stakeholder groups could consist of the following: • Past TIF recipients • Developers, architects and engineers • Taxing entities (Johnson County, ICCSD) • Chamber of Commerce, Iowa City Area Development Group, Iowa City Downtown District • Housing non-profits • Neighborhood association representatives EDC 5.10.16 packet page 18 2. EDC Discussion and Draft Policy (August - September) Staff will be looking at policies and best practices from other communities to use for further background and discussion with the EDC. The EDC will continue to meet regularly to discuss and consider draft policy changes and refine until the policies are ready for public review and City Council recommendation. 3. Present Draft Policy along with TIF 101 (September) Staff and the EDC committee would present a modified version of the TIF 101 presentation (given Feb. 4, 2016, to the EDC), recent examples of TIF projects and the new draft policies to the stakeholder focus groups and any interested members of the public. The purpose of this meeting would be to provide TIF information to a broader audience and seek feedback on the draft policy prior to City Council consideration. 4. Final EDC Consideration (October) 5. Council Adoption (October – November) Let’s discuss this process at your meeting on May 10, 2016. EDC 5.10.16 packet page 19 To: Economic Development Committee From: Jim Throgmorton Subject: Economic development and TIF policies Date: May 7, 2016 During our meeting on April 12, I briefly suggested some possible changes to our Economic Development and TIF policies. I also briefly introduced a proposal to conduct what I called a “community gap analysis” pertaining to our use of TIF. I did so simply to begin the discussion and to indicate some of the principles and priorities that guide my own thinking. This memo restates and elaborates slightly on both of these suggestions. Possible changes to our Economic Development and TIF policies The first sentence of our existing economic development policy states, “It shall be the policy of the City of Iowa City to use the City Council Strategic Plan as the basis for its economic development activities.” With that in mind, I think the staff should revise the text of the existing ED Policy to establish a stronger connection between that Policy and the Strategic Plan the Council adopted in March 2016, especially with regard to sustainability, social justice / racial equity, and producing a more walkable city. The existing ED Policy also states that developers will be expected to meet “all or some” of seven minimum standards in return for public financial assistance. My sense is that most of these standards are too vague, and, given the cumulative vagueness, the existing policy delegates too much discretion to the City Manager. If we intend to use TIF as an incentive for private developers to produce projects that will be in Iowa City’s best interest, we need to articulate those standards more definitively. The seven existing standards, and my preliminary ideas about how they might be amended, are: • Achieve high quality architectural and site design. The Form Based Code provides admirable clarity for projects located in the Riverfront Crossings District; however, for most other parts of the city, this standard is so vague as to be virtually meaningless. I’d like to see this part of the policy revised to encourage projects that produce or enhance the walkability of neighborhoods (that is, enable people to undertake useful, safe, comfortable, and interesting walks) and facilitate access to jobs and schools via public transit and bicycles. Such projects would contribute to improved public health, reduce transportation costs, enable more unplanned social encounters, provide more time for people to spend with friends and families, and help build a stronger sense of community. • Offer energy efficiency and sustainability features beyond what is required through adopted building codes. I’d like to see the policy be made more specific and give developers a strong incentive to produce more carbon-efficient projects. The revised policy could, for example, explicitly state that no project will be eligible for TIF assistance from Iowa City unless it is designed to achieve the emission efficiencies identified in Architecture 2030’s “2030 Challenge” (see EDC 5.10.16 packet page 20 appendix). Alternatively, the policy could be revised to state that any new project would be eligible for TIF incentives to help it achieve the carbon (greenhouse gas) emission efficiencies identified in the 2030 Challenge. Details about this standard might also indicate that estimates of carbon emissions from a proposed project must include emissions produced by the transport of employees, customers, and residents to and from the project, as well as emissions generated off-site as a result of on-site demand for electricity. There might also be a way to incorporate the social cost of carbon emissions into the financial calculations. • If a residential project, the contribution to an affordable housing fund or the provision of a certain percent of affordable housing units within the project. City staff made an admirable set of recommendations about this standard in Doug Boothroy’s and John Yapp’s March 10 memo. • Creation and retention of high quality jobs. I would like to see our policy define more clearly what we mean by a “high quality job.” I also think that the staff should draft an additional standard, which might be titled, “Provide inclusive economic opportunities.” This would provide substantial financial incentives for projects that directly produce good jobs and improve economic opportunities for lower income residents.1 • Developer equity (not including debt) to be equal to or greater than the public financing requested. • The redevelopment of underutilized and/or blighted properties. This standard is too vague spatially. My sense is that it should not apply to small parcels of land; e.g., a quarter block, but should instead apply to larger areas such as Towncrest and S. Riverside Dr. • Projects achieving public purposes as detailed in the comprehensive plan, Urban Renewal Area planning documents, and/or the City Council adopted Strategic Plan. One last point: My sense is that the Form-Based Development Standards, which the 1 IP #5 in our March 10 Info Packet contains an article titled: “A Blueprint to More Inclusive Economic Growth.” Amy Liu (March 3, 2016), Harvard Business Review. Liu lays out a framework for remaking economic development and argues that sustainable regional growth needs to improve living standards for all. In her view, “Economic inclusion must be a priority both for economic policy makers and for business. If the next generation of workers is not prepared to meet the needs of major employers, that will stifle industry productivity, expansion, and retention. If people are unemployed or underemployed, they cannot purchase many of the goods and services the economy produces, hurting small businesses and entrepreneurs. Inefficient use of land and infrastructure - including the congestion it can create - hampers job access, limits productivity, and hurts property values.” According to her, three concepts for producing more inclusive growth have emerged over the past few years: (1) make inclusion a stated goal, and measure it; (2) focus on supporting industries that actually deliver good jobs; and (3) invest in people, including through apprenticeships. In her view, “The alternative, continued focus on short-term profits at the expense of the community, isn't sustainable- politically or economically.” EDC 5.10.16 packet page 21 Council adopted for the Riverfront Crossings District in 2014, should also be modified to be consistent with and reinforce the Strategic Plan and modified ED policy. The existing version of those Development Standards greatly increases the allowable density of development throughout the RFC District, and provides substantial density bonuses for projects which contain specific features, including: Class A office space, affordable or workforce housing, and design that could achieve LEED certification. Strategic Plan item discussion: Significantly improve the Council and staff’s ability to engage with diverse populations. “Gap analysis” is a key tool the staff uses to assess TIF requests. I have nothing but admiration for the technical quality of the staff’s analyses of financial gaps. I strongly believe, however, that we need to attend to a second gap, namely, the gap between the staff’s and past Councils’ assessments of the merits of particular TIF proposals, and the general public’s responses to those proposals. Just as our staff conducts rigorous “gap analysis,” so too I think we need to conduct a rigorous “community gap analysis.” How might this be accomplished? No doubt there are many possible ways, but I don’t think it can be achieved by presenting detailed technical analyses to the public. My sense is that the general public is much more adept at hearing and responding to stories.2 As one possibility, I suggest that we invite a skilled writer to help Wendy Ford craft “the City’s story” about why and when the City began using TIF, how it has used TIF, how nearby municipalities use TIF, how the Iowa City public has responded to specific requests for TIF, and the puzzlement City officials feel when hearing the public’s reaction. Wendy and others could meet with a set of small focus groups representing diverse interests within the city, share the City’s story with each of those groups, hear focus groups’ members react to that story, and ask them for advice about how to narrow “the community gap.” Conducting such a “community gap analysis” could improve the City officials’ and the public’s mutual understanding of TIF, reduce political conflict over its use in Iowa City, and possibly generate innovative ideas about how it can be used in the future. Appendix: The 2030 Challenge 2 Stories can be defined as “verbal expressions that narrate the unfolding of events over some passage of time and in some particular location.” Key features of stories and storytelling include the importance of story crafting (or composition by an author), emplotment, point of view, and characters; the sense of community formed (at least temporarily) between storytellers and their audiences; and the fact that many stories emerge from action and then circulate within webs of relationships. EDC 5.10.16 packet page 22 The 2030 Challenge was issued by Architecture 2030 and adopted by the American Institute of Architects in 2006: “All new buildings, developments, and major renovations shall be carbon-neutral by 2030.” The key elements of the challenge are: • All new buildings, developments and major renovations shall be designed to meet a fossil fuel, GHG-emitting, energy consumption performance standard of 70% below the regional (or country) average/median for that building type. • At a minimum, an equal amount of existing building area shall be renovated annually to meet a fossil fuel, GHG-emitting, energy consumption performance standard of 70% of the regional (or country) average/median for that building type. • The fossil fuel reduction standard for all new buildings and major renovations shall be increased to: o 80% in 2020 o 90% in 2025 o Carbon-neutral in 2030 (using no fossil fuel GHG emitting energy to operate). These targets may be accomplished by implementing innovative sustainable design strategies, generating on-site renewable power and/or purchasing (20% maximum) renewable energy.” EDC 5.10.16 packet page 23