HomeMy WebLinkAbout06-21-2007 Council Economic Development Committee
AGENDA
City of Iowa City
City Council Economic Development Committee
Thursday, June 21, 2007
8:30 a.m.
Lobby Conference Room
City Hall
1. Call to Order
2. Approval of Economic Development Committee Minutes, May 29, 2007
3. Extend the Dream Lease - CDBG application, deferred from May 29,2007
4. Update on Discerning Eye - CDBG application
5. Update on La Reyna - CDBG application
6. Downtown Market Niche Analysis - Staff update
7. Committee time
8. Adjournment
MINUTES
CITY COUNCIL ECONOMIC DEVELOPMENT COMMITTEE
MAY 29,2007
COMMERCE BUILDING, LARGE CONFERENCE ROOM
Preliminary
Members Present:
Regenia Bailey, Connie Champion, Bob Elliott
Members Absent:
None
Staff Present:
Wendy Ford, Tracy Hightshoe, Steve Long, Jeff Davidson
Others Present:
Brenda, Tom Walz, Jeff Edburg, Allan Young (Extend the Dream
Foundation); Connie and Alex Legaspi (La Reyna, Inc); Joni and Sam
Schrup (Discerning Eye); Melissa Mailloux, Eleanor Matthews, Mary
Bosch (Marketek); Nancy Quellhorst, Lorin Ditzler (Area Chamber of
Commerce); Gigi Wood (Corridor Business Journal)
RECOMMENDATIONS TO CITY COUNCIL:
Extend the Dream Lease
Elliott moved that the issue be deferred to the June meeting; Champion seconded. Motion
carried.
La Revna Workina Capital
Champion moved to support La Reyna at an amount that can be fully secured by equity
they have in their building, up to a cap of $100,000; Elliott seconded. Motion carried.
Hightshoe will report to Council.
Discernina Eve Workina Capital
Champion moved, and Elliott seconded to fund at $35,000 and a 3.2% loan. Motion passed.
Hightshoe will present at the next Council meeting.
CALL MEETING TO ORDER
Chairperson Regenia Bailey called the meeting to order at 10:32 AM.
APPROVAL OF MINUTES FROM APRIL 6 AND APRIL 12
Minutes of April 6 and April 12 were approved as distributed.
CDBG ECONOMIC DEVELOPMENT FUND APPLICATIONS
Extend the Dream Lease
Hightshoe provided funding history for the Extend the Dream Foundation lease for the south
Gilbert street location. 100% funding was provided for the first three years and 50% for the
following three years. The current request is for $10,000 for one year. Extend the Dream
Foundation is working with a consultant (Marlene Perrin) on financial management issues, and
provides business training for disabled persons. Hightshoe recommends that if sufficient
sustained efforts are made to address the financial management issues, and the Foundation
could secure additional sources of funding, a lease option would be preferred.
Elliott inquired as to the federal government's intent in providing the funds. Hightshoe said that
HUD provided funding to communities by formula, but did not dictate how the funding was used.
We choose to use a portion of the funds on business development.
The committee expressed support and acknowledged the importance of the project to Iowa City.
However, concerns were expressed about on-going support with economic development funds
since the organization is a non-profit and primarily serves a social need within the community,
given that the project will always require a subsidy. Bailey said that she wanted Hightshoe to see
the fundraising plans before the committee moves forward.
Elliott moved that the issue be deferred to the June meeting; Champion seconded. The motion
passed.
Extend the Dream Prooertv Acquisition
Hightshoe reported that Extend the Dream leases the property at 2218 F Street. It is zoned
commercial but contains a rental unit. Hightshoe provided a brief update of the two micro-
enterprises currently at the property, Mick's Workshop and RAMP UP. Hightshoe stated that
there is a concern that if the property is to be used solely for commercial purposes, the property
would have to be upgraded to current commercial building codes. Hightshoe stated that as this
project deals with a rental unit that may trigger lead based paint and uniform relocation
assistance, Davis Bacon requirements to update the property to commercial standards, and
increased reporting/financial management requirements that the project be deferred until
occupancy and other related issues are resolved. The organization is an all volunteer
organization and compliance with all the applicable regulations will be difficult.
Walz provided further background on the current and projected uses of the building, the positive
effect on the neighborhood, and the positive reception by the community. Currently rented by the
Foundation, the building is located across the street from the building purchased two years ago
with CDBG funds (2203 F Street); Walz stressed their great opportunity to acquire the sister
building. It is a no-risk situation; 2203 F Street has jumped $100,000 in value in the two years
they have owned it. Purchase of 2218 F Street would allow them to occupy the building at $300 a
month rather than the current rent of $1,200, and would therefore allow them some operating
capital. Hightshoe asked if the rental income from this unit appears in the submitted profit and
loss statements. Walz replied that no rent is received from the tenant. The tenant is the owner of
Mick's Workshop. Walz stated if this request is granted, Mick would move to the property across
the street they own. The Foundation is applying for grants from other venues in addition to this
one.
The committee concurs with the importance of the project to the community, but is concerned at
providing a $100,000 grant, and also does not see the project as economic development; rather,
it fits better with public service. This grant will not move forward; no follow-up is needed.
La Revna Workinq Caoital
Hightshoe explained the background work she does before making a recommendation. Hightshoe
stated that when evaluating these proposals, like lenders, she looks at the 4Cs: character,
capacity, capital, and collateral. La Reyna is a family-owned specialty grocery store (Latin
American cuisine) established in Iowa City in 2004. They request one-time assistance for
working capital. These applicants have a good history, having been in business since 1985 in
Chicago and then Columbus Junction. They have had great recent growth, their forecasts were
completed with the assistance of the Small Business Development Center and seem realistic
given the assumptions used, and the owners qualify as mid to lower income. They do have high
debt but have a history of being current in their payments. Hightshoe recommends that they be
funded to the amount of equity they have in the building or to the extent collateral is available. In
order to help them get to the point where they can accurately report financial information and
obtain private lender financing at a lower interest rate, she recommends that one of the owners
be required to take a class on accounting/financial management reporting (Quick Books) and
retain an accounting firm to provide ongoing support, such as 8 hours every month for a certain
period of time. Applicant has been denied funding in the past due to reasons such as incomplete
financial information.
Discussion ensued around the cash flow problems, the result of outstanding loans and two years
of lag time between purchase of the building and start of the business. Paul Heath at the Small
Business Development Center provided considerable assistance in writing a business plan and
preparing to apply for regular lower interest financing.
Champion moved to support the La Reyna at an amount that can be fully secured by equity up to
a cap of $100,000; Elliott seconded. Motion carried. Hightshoe will report to Council.
Discerninq Eve Workinq Capital
Hightshoe reported that these applicants provided thorough information. Hightshoe met with their
commercial lender, who strongly supports this applicant and states they have the capacity to run
the business. Applicant's son and business manager has a BS degree from Iowa and completed
the Technical Entrepreneurial Certificate Applicant received a SBA loan, but can't obtain further
financing. The commercial lender has a mortgage on the owner's personal residence. They have
high debt, but are current on payments and have a history of paying the obligations entered.
They are experience a cash flow problem as the build out was significantly more expensive than
anticipated and depleted their funds for working capital. The applicant leases the space and has
little to no collateral available. The project will retain one position that is paid above the CEBA
threshold and does not require more than a high school diploma. Hightshoe recommends full
funding of $35,000 with a seven-year loan at 1 % (interest paid monthly or quarterly), with annual
principal payments due every December, their highest revenue month.
Discussion centered on competition with established businesses. Champion considers
competition to be good. J. Schrup pointed out how they differentiate themselves in the
eyeglasses market; that they have a more stylized, higher end product, for people looking for
something different.
Champion moved, and Elliott seconded to fund at $35,000 and a 3.2% loan. Motion passed.
Hightshoe will present at the next Council meeting.
At 11 :50 a.m., there was a 15 minute recess to allow the consultants time to arrive.
DOWNTOWN MARKET NICHE ANALYSIS - CONSULTANT REPORT
Meeting reconvened at 12:05.
The Downtown Market Niche Analysis is a joint effort of the City of Iowa City, the Iowa City Area
Chamber of Commerce, the Downtown Association of Iowa City. Mary Bosch and Eleanor
Matthews provided an update on their activities, distributing a schedule of their site visit which
detailed the plans for focus groups and the public meeting, for which flyers have been distributed.
Ford will make introductions and opening remarks for the city at tonight's public meeting. It was
noted that the creative sector is quite different from the other focus group.
In first four hours today Marketek did driving and walking tours of the area. They were surprised
to discover Coralville, not knowing it existed as such a thriving community. Coralville has a
widely dispersed business area, but does not really have a downtown. Iowa City, on the other
hand, has a traditional town center, with parking facilities. Unlike others, the Iowa City pedestrian
mall works, primarily due to the connection to the university. Marketek will comment on the best
and worst of downtown at the Thursday meeting with the council. On first impression they like the
downtown, and found it pretty and clean. They also like the square grid layout. Elliott mentioned
that perceptively Iowa City has three downtowns: the day time, evening, and late night versions.
Bosch asked for someone who knows the properties to walk the town with them. After some
discussion, it was determined that Davidson and Ford would go, along with a banker. There isn't
much vacant space, but some of the other buildings on the fringes of downtown have steps
leading to the entrance-way; which is not viable in the long-term, but can be good for start-up
retail business since rent is cheaper. Other vacant spaces tend to be too big for most
establishments, and rents are high. The intention is to extend downtown southward,
incorporating that area into the downtown area
Bosch inquired about signage, such as the blue sign on Dubuque Street because there is not a
clear indication where downtown starts or that you have arrived. Davidson indicated that current
signage is a University initiative which the Economic Development Committee is coordinating.
Quellhorst responded to an inquiry about banners, flower baskets, etc., saying that students
leaving bars at 2:00 AM. create too much destruction. Matthews stated that this is a typical
college town, and that it is not necessary to spend a fortune.
Marketek then distributed an extensive handout of area population characteristics. We do want to
include high school students in the survey, which is ready to launch. Ford will work to get to the
survey posted on school and university net works. Six weeks are allowed for completion of the
survey because that is approximately the time it will take for some people to receive the survey
announcement via their utility bills.
In other discussion, the committee noted the city's good relationship with the university, but also
mentioned that Johnson County is not a favorite with state legislators; because it is considered
too liberal. Johnson County is, however, one of 5 growing counties in the state (out of 99
counties), and growing without casinos. Drinking age and bar population is a local issue that will
soon be a referendum requiring people to be at least 21 toe in a bar after 10:00 PM. As an
employment area, Iowa City is an Island of growth and financial stability. People come from 60
plus mile radius for employment and shopping. Someone will talk to Nancy Quellhorst to enlist
employers in having their employees complete the survey.
Adiournment
Bailey moved to adjourn and Elliott seconded. The meeting adjourned at 1 :02 PM. .Next
meeting is scheduled for Thursday, May 31, 12:00 noon, in the Commerce Building, large
conference room.
Submitted by Carolyn Kohler
Council Economic Development Committee
Attendance Record
2007
Term 1/23 2/09 2/20 2/27 3/06 3/12 4/06 4/12 5/29
Expires
01/02/08 X X X X X X X X X
01/02/08 X X X X X X X X X
01/02/08 X X X X X X X X X
Key:
X Present
o Absent
OlE = AbsentlExcused
AbsentlExcused
s/pcd/mins/ecodev/2007/5.29-07 ed pt1.doc