HomeMy WebLinkAbout04-04-13 Economic Development Council minutes, approved/
City of Bozeman
Economic Development Council (EDC)
Meeting Minutes
April 4, 2013
10:30 – 12 pm
City Commission room, City Hall, 121 N. Rouse
Members Attending: Anders Lewendal (Contractor)
Cheryl Ridgely (Bozeman Deaconess Hospital), Stuart Leidner (Prospera Business Network) Daryl Schliem (Bozeman Chamber of Commerce), Erik Garberg (Civil Engineer), Teresa McKnight, (Montana
State University Innovation Campus), Tracy Menuez (Human Resource Development Council)
Members Absent: Deputy Mayor Jeff Krauss (liaison)
Staff Present: Brit Fontenot (City Director
of Economic Development and Community Relations), Chris Kukulski (City Manager), Aimee Brunckhorst (Deputy City Clerk)
Guests / Public Present: Jason Bacaj (Bozeman Daily Chronicle),
Chris Mehl, City Commissioner, Earl Matthers (County Administrator)
NOTE: These minutes are not word for word and should be considered in addition to the audio recording of the meeting.
Call
to Order
Chairperson Daryl Schliem called the meeting to order at 10:34 a.m.
Public Comment
Mr. Schliem opened public comment. Seeing no public comment, he closed public comment.
Minutes
– March 7, 2013
Motion and Vote to approve the minutes of March 7, 2013 as revised.
It was moved by Anders Lewendal, seconded by Stuart Leidner to approve the minutes of March 7, 2013
as revised by Teresa McKnight.
Motion passed unanimously.
D. Action Items
1. Discussion and preparation for the April 15, 2013 City Commission policy meeting: Economic Development Incentives (Garberg, McKnight and Menuez).
Brit
Fontenot began the presentation on this item providing a quick background explaining that the upcoming City Commission policy meeting regarding economic development incentives was set
up to gauge whether the Commission would like the EDC to fully engage in actively pursuing new incentives or are satisfied with the ten incentives the Council has already put in place
or were already in existence. He provided a handout listing these existing incentives (see attachment).
Erik Garberg, Subcommittee chair for this item continued the presentation explaining
the subcommittee has been focusing their efforts looking at specific incentives that other communities have offered. There is a much broader toolbox to be used as well. The subcommittee’s
plan for the April 15th meeting is to offer education about what tools and opportunities are available and then focus the Commission on a plan so we will know where we should go with
the least amount of unintended consequences. Erik provided information regarding Missoula’s targeted marketing strategy that includes six key sectors. Many of their incentives are standard.
Erik asked the Council members if they agree with the approach the subcommittee is planning for the April 15th Commission meeting and what does the group feel is the best approach. He
asked Daryl Schliem about a radio program where he was promoting the manufacturing sector.
Daryl Schliem said the manufacturing sector is one segment that may be in need of actively
pursuing within the city of Bozeman. There are a large variety of manufacturing sectors.
Erik Garberg asked where there are logical places for incentives from a budget standpoint and
whether there are incentives that should or should not be considered such as property tax abatement, expedited review, someone else paying building permit fees, etc.
Chris Kukulski
said there has been a willingness regarding economic development at the commission level to possibly allocate mills or a portion of a particular mill for a particular purpose. They would
like to know what the return would be if they did invest mills.
Brit Fontenot said he has discussed this with Commissioners and they seem willing to ramp up their efforts in economic
development if staff were able to show them how to get the most return for the amount invested. $50,000 was plugged into his budget for the incentive portion. Research regarding other
cities shows incentives is often a large part of their economic development efforts and $50,000 is not very much. Questions that he would raise are whether $50,000 is token, is perception
important, and where do we get the most value for investments.
Stuart Leidner referred to the state incentive package provided to EDC for review.
Stuart Leidner said he has been working with an optics group. There are 30 optics companies in the Bozeman area who are doing some form of manufacturing or R&D work. As we define manufacturing,
we may want to look at what clusters we want to be working towards. What can we be doing to help create an atmosphere that allows them to continue to grow? Encouraging existing businesses
likely has a better return on investment considering the resources at our disposal now. He spoke regarding an MMEC Study currently being conducted. They are conducting roundtables with
groups around the state and have a large targeted mail, telephone survey following Dillman’s method of valid research. That data will be provided to everyone upon completion.
Cheryl
Ridgely spoke regarding the goals and strategies of the ED Plan.
1) a. clusters that were identified as priorities. If we only have $50,000 in the budget to work with, it might make
sense to prioritize these clusters that we have already identified. What would be the criteria for qualification and how can we ensure that those clusters we have identified as priorities
would qualify for any incentive program created.
Brit Fontenot said we did prioritize those to some extent and are actively supporting five clusters several with the highest growth
potential. These include biosciences, outdoor, manufacturing, photonics and high tech with health care emerging based on the BBR Outlook Seminars. He previously proposed working on outdoor
and photonics during this fiscal year. We feel with the partnerships created we could add a lot of value to work with these two clusters intensely instead of spreading efforts out over
all of them.
Erik Garberg summarized the conversation saying it sounds like requesting 1 to 5 mills may be a possibility and that two clusters would be focused on more intensely right
now.
Stuart Leidner asked how to prioritize where the best return on investment is regardless of the sector. He spoke regarding recruitment and retention as a good return on investment
no matter the cluster. How can the pool of money we may be able to use, best be used. For an existing business, offsetting impact fees most often would not help.
Erik Garberg said when
he looks at incentives he is looking at buying down entry into the market.
Tracy Menuez spoke regarding the incentive program of Ashville, North Carolina. The state fund has a lot
of incentives, though many are handled locally. Most of their incentives are done with tax abatement. She likes their high level of accountability for what they do and it is not considered
a barrier. Most incentives are provided after performance. That is her concern regarding using impact fees. Impact fee abatement is not tied to performance.
Chris Kukulski said his
interpretation of what the Commission has indicated when talking about increasing investments relates to the entire gamut of what gets invested in economic development. The cities role
is to be partners with others, not replicate or duplicate services.
Stuart Leidner spoke regarding Prospera’s ability to help new businesses with grant dollars. Some of those dollars could help with a match for grant dollars. Part of those mills could
also be used as part of a match for grant dollars.
Erik Garberg spoke regarding how the state is a huge piece of this.
Tracy Menuez spoke regarding creating partnerships. The investments
can be quite small. Asheville’s financial investments are often small. They are providing a lot of the manpower, and services like training through a community college. Many investments
were 1% or less of the total project. We don’t necessarily need to be a 20% funder for a project.
Teresa McKnight spoke regarding being in full partnership with businesses that want
to come in. She argued that trying to use $50,000 as some form of enticement may not work well. She feels we should look at what all the fees are that a business will be responsible
for to come into the city and what fees can we pull down or subsidize to reduce the impact to the company. In addition, a lot of corporations coming in look for some type of job training.
In some states they have custom fit programs with specialized training for employees at a reduced price.
Brit Fontenot spoke in agreement with Teresa and mentioned that with a limited
amount of funds, finding ways of using them to maximize return. He has been hearing that having someone to help a business through the process is an incentive as is streamlining the
internal process, and saving time. We should look at everything from the state, partners and the municipality bundled together that can be offered as incentives.
Anders Lewendal asked
about research related to metrics that fiscal investments have a return on investment.
Erik Garberg said research pointed to being careful, targeted and using quantitative tools for
incentives. Performance based incentives are best for the community because you see that return and do not have to worry as much about being taken advantage of.
Cheryl Ridgely spoke
summarizing the discussion saying we have two priorities (outdoor and photonics), a finite set of dollars and we have spoke regarding recruiting and retention of new companies and economic
gardening of current companies. She spoke regarding packaging up what incentives are already available from all partners into a portfolio that can be offered. She spoke regarding a workforce
program in North Dakota where they provided reimbursement per new job created. That encourages workforce development and a new job created is very measurable. This would target both
new and existing companies.
Stuart Leidner said the state has a $5,000 credit for each net new job created in the primary work force sectors. The state also based the credit that the
job must be paid above a median county wage.
Brit Fontenot said this would be linked to the Commission’s high priority regarding job creation.
Stuart Leidner asked whether paying back or down impact fees can be targeted.
Chris Kukulski said there is no restriction from a technical perspective. Everyone has to pay impact fees.
Who gets reimbursed later after performance is not a concern to the legality of the impact fee performance.
Tracy Menuez spoke regarding a group tracks subsidies provided to businesses
from every state and a ranking of over 300 incentive programs around the country. They were looking at performance requirements of job creation or a minimum investment standard, market
based wage requirements and rules for shifting jobs from other existing facilities. Where are the jobs coming from. It offered best practices for targeting our incentives.
Anders Lewendal
asked what businesses are asking for to come here.
Stuart Leidner said the recent businesses they have worked with were focused on cost of living for employees, the tax bases both corporate
and personal, the tax abatement program and the new equipment tax credits and work force housing. Going forward, he will think about what questions to ask related to that query. Space
constraints were an issue for one company but North Park could probably cure that in the future.
Teresa McKnight said we should not shy away from placing $50,000 in an account and
saving it for five years to build a reserve so we can offer a better cash incentive down the road.
Chris Kukulski asked what the city is doing picking winners or losers regarding targeting
sectors. The city does not know who will succeed and who will not. We could set the outcomes we are looking for without picking specific industries or sectors.
Brit Fontenot said anecdotally
he is hearing that manufacturers need trained, qualified employees. Workforce training has merit and the outcomes the commission is interested in - high paying jobs that allow reinvestment
into the community, expanding the tax base. There may be a way to leverage city tax dollars with programs that might already be in place such as the Bear (Business Expansion and Retention)
incumbent workforce training program where they offer some funds for training. This may be a way to begin the incentive program without the perception that we are giving away money.
Commissioner
Chris Mehl asked that the EDC look into what programs are priorities within the entire economic development budget that has been presented as the Commission will be approving the final
budget towards the end of June, beginning of July. If the Council did have to reduce the budget or would want to expand it, what would be the highest and lowest priorities? He also spoke
regarding providing information about cluster development and incentives as there may be overlap.
Daryl Schliem said there may be a list of 15 programs right now that we could list as available on the city website, Chamber, Prospera, etc. That is what a site selector or growing company
is looking for. Incentives are usually tied into the number of jobs, the wage, the maximum investment made into the buildings that come into the tax role and possibility of some unique
things.
Tracy Menuez handed out what Ashville uses to show incentive programs.
Daryl Schliem said the Tax Increment Finance District is a benefit. If a private developer wants to invest
9 million into private land, he would be willing to have a program that takes 75% of the TIF district to pay the developer until he is fully paid back. It is a way to get infrastructure
into place with a TIF district that has been already approved, involves no new taxes. We have the tools here and should watch that we do not put a highly regulated program in place that
would disqualify most. An ala carte situation would work better.
Anders Lewendal would agree and spoke regarding scarce, limited resources. We should consider creating an environment
where everyone would have a desire to come to Bozeman and not targeting just a few groups.
Teresa McKnight spoke regarding a program provided on the state of South Dakota website that
offers an analysis of the cost of doing business there compared to another specific state. Site selectors look online and if they do not find what they are looking for within seconds,
they move on to look into another location. The information needs to be readily available on all our websites.
Cheryl Ridgely spoke regarding the importance of having staff resources
to develop these tools and then follow up on them.
Daryl Schliem spoke regarding the staff component as a budgetary priority. He then spoke regarding an online tool he created in Texas
that shows area specific unique incentives. http://www.texaswideopenforbusiness.com/
Chris Mehl said the Commission is looking on the 15th for suggestions from the EDC. They know that
due to resource constraints they may not be able to implement all suggestions.
What are the incentive methods and what is the efficacy of those?
Tracy Menuez spoke regarding a broad
incentive list and beginning to put together a 15 to 20 year road map. We can start broad and then narrow down to where we want to start now.
Teresa McKnight spoke regarding commonality
of programs across states and communities and suggesting creative programs as well.
Daryl Schliem said the state will continue to be more open. He provided an example of work he has been involved with on the airlines. They have seen a return for the capital risk put
out through the public/private partnership.
Brit Fontenot said he feels a strong recommendation includes the following elements:
Rooted in the adopted economic development plan.
Saving
a piece of money to build up upon itself over time.
Rooting the discussion in a priority the commission has identified - creating jobs & diversifying the economy
Programs that have
been shown to be successful to mitigate risk
Leverage existing funds.
Connect to what we know is happening at Gallatin College.
Erik Garberg spoke regarding the importance of making
recommendations at the meeting on the 15th.
Daryl Schliem spoke regarding looking at the budget recommendations as well.
Brit Fontenot said we should stay focused on the 15th on the
incentive discussion.
Tracy Menuez said the EDC members will have another opportunity to weigh in at a later date regarding budget priorities.
Brit Fontenot asked that EDC members
provide materials that should be incorporated into the memorandum and attachments for the April 15th meeting by the end of the week.
ED members spoke regarding which members would be
available for the April 15th Commission meeting. Daryl Schliem will not be available, but the majority said they will be attending.
E. FYI/Discussion
1. Report from the EDC marketing
subcommittee (Schliem and Ridgely)
Cheryl Ridgely said they have identified several individuals who have been working on marketing for the city of Bozeman already. They determined there
are already dollars allocated, and marketing plans under way. The subcommittee will send out some dates in April for an initial work session with the people that are already working
on this to determine if there are things that can be done for collective impact and to determine if there is a consensus on a consortium or a coordinated campaign. They are looking at
targeting primarily external businesses. They are also including members from a local communications firm in the first work session as they have already been working with all the other
groups working on marketing. They would also like to look at what dollars might be available to coordinate and put together an overall marketing plan and budget.
2. Report from the EDC North Park development RFP subcommittee (Schliem and Leidner)
Stuart Leidner reported the preliminary engineering request for proposals (RFP) is already out.
Those RFP’s are due by April 25th. The committee that will look at them is Brit Fontenot, Stuart Leidner, Dustin Johnson in City Engineering, and Craig Campbell from the Department of
Natural Resources and Conservation. The next step will be putting out a request for proposals for development of the park itself. They began discussing this April 3rd and are looking
at a range of ideas from hiring a real estate broker to get the property sold to a broader RFP that would look at alternatives for how someone coming in might develop the property. They
will continue to have conversations with the Commission about the direction they would like this to go. They are waiting on feedback that Brit Fontenot and Chris Kukulski are working
on before a final proposal to present to the EDC and then on to the City Commission.
3. Commission approval of the Impact Fee Deferral Program
Brit Fontenot mentioned that the Commission
did approve the impact fee deferral program and thanked the Council members for their piece in that proposal. He spoke regarding educating businesses and service providers regarding
the changes in the impact fee program. Chris Saunders and Brit Fontenot would be interested in providing educational presentations to any interested organization. They already met with
Prospera staff and they found the information very valuable.
4. Broadband Steering Committee
The broadband steering committee has been ongoing for several months with the notion that
supporting high tech businesses requires knowing what broadband services are available and treating broadband availability as an infrastructure issue. When Senator Baucus’ had a meeting
in Bozeman recently, this concern was raised and there is a lot of interest locally and statewide.
Stuart Leidner said the presentation regarding the impact fee changes was very valuable
to staff at Prospera. One of the things that Chris Saunders from the Planning Department was talking about was an online program that when you plug in data, you can find out approximately
what your fees will be. He would like to see the resources made available for this type of tool. The state does not have this type of tool, but these types of conversations are happening
at the state level as well. Stuart spoke regarding state level meetings about improving the Innovate Montana site selector that the state has invested in.
Anders Lewendal agreed that
a software tool like the one suggested would be very helpful.
Teresa McKnight spoke regarding a software program she created with the State of Utah called Sure Sights where site selectors
can look at shovel ready projects, rail systems, etc.
Cheryl Ridgely spoke regarding purchasing a $15 web domain.
Commissioner Mehl reported that Chris Saunders had suggested the software program to the Commission and all five commissioners nodded their heads affirmatively.
Daryl Schliem said
the city of Bozeman could set a good role model and example for the state and the state will likely follow as talk at the state level has indicated that the state will match what local
municipalicities are doing.
Stuart Leidner said the state has been investing in the site selector Innovate Montana and have been investing in economic development and are continuing
to look into how to build upon those.
F. Adjournment
Daryl Schliem adjourned the meeting at 12:02 p.m.
* NOTE – Full audio of this EDC meeting is available at www.bozeman.net.
_________
___________________________
Daryl Schliem, Chairperson
PREPARED BY:
____________________________________
Aimee Brunckhorst, Deputy City Clerk
Approved on: May 2, 2013