No preview available
 /
     
09/22/2015 - City Council Finance CommitteeFINANCE COMMITTEE MEETING TUESDAY, SEPTEMBER 22, 2015 10:00 A.M. CITY HALL SECOND FLOOR CONFERENCE AGENDA AGENDA ADOPTION II. ACCESS EAGAN UPDATE III. UPDATE PUBLIC FINANCING ASSISTANCE POLICY DISCUSSION IV. MINNESOTA INVESTMENT FUND APPLICATION - PRIME THERAPEUTICS EXPANSION V. FIRE ADMINISTRATION BUILDING UPDATE VI. OTHER BUSINESS VII. ADJOURNMENT Agenda Information Memo Finance Committee Meeting September 22, 2015 II. AccessEagan Update Direction to be considered: Following brief updates on AccessEagan and related Dakota County Broadband discussions, provide direction on several public policy questions which will enable staff to complete a 2016 AccessEagan budget submittal and guide future operations. Background: • In July, 2014, the Finance Committee authorized a total commitment of up to $3.0 million in funding for AccessEagan from retained antenna lease revenues to cover anticipated operating expenses through 2019. It further directed staff to check back in with the Finance Committee approximately one year later. • AccessEagan is one of the City's strategies to assist in its priority of ensuring the provision of "state of the art broadband service in the City of Eagan." The City Council was briefed at its June 9 work session on the Dakota County Broadband Study, an initiative and potential partnership that could represent an additional strategy in support of the Council's goals and have a bearing on future operations • AccessEagan on its own has had some market success in the last year and staff believes it is important to receive the Committee's guidance and direction as it implements additional strategies in 2015/16. • Communications Director Garrison, IT Manager Dan Cook and Finance Director Tom Pepper will review the accomplishments to date, and provide a brief overview of the key decision points and public policy questions. Attachments: (1) 2014/15 Accomplishments 2014/2015 Accomplishments to Date • DataBank commitment secured, meeting one of three Council broadband outcomes • Grand Opening held for DataBank in May (10 carriers in/committed to be in DataBank with another 6 in advanced discussions) • Cutover of AccessEagan connections to DataBank facility operational • According to DataBank's CEO and senior managers the presence of AccessEagan fiber was a major reason the company decided to locate here along with its understanding of key technology issues. "The City of Eagan actually brought the issue into focus about the 511 vulnerability and by supporting carriers coming into Eagan and building the [fiber] infrastructure, they really set themselves apart in the whole initiative of getting another carrier hotel in to place," said DataBank's Minnesota General Manager, Kris Edinger. • DataBank and AccessEagan about their selling packages to customers with blended pricing of AccessEagan/Data Bank services • 12 businesses in Eagan are currently served by AccessEagan lit fiber and 3 by dark fiber connections • Six total carriers are on the network (Frontier, Arvig, Velocity, Granite Communications , Enventis/Consolidated and OneNet) • Staff have secured more competitive pricing for lateral builds • There is evidence of increased carrier competition in Eagan at price points slightly lower than in surrounding communities • AccessEagan hired IT Network Supervisor • Work has begun on the Dakota County Traffic Signal upgrade project, which is utilizing the AccessEagan infrastructure along Yankee Doodle Road Agenda Information Memo Finance Committee Meeting September 22, 2015 III. Update Public Financing Assistance Policy Discussion Direction To Be Considered: To discuss further the priorities for public financing assistance and possible additional options for such assistance. Facts: When the EDA updated the City's Business Assistance Policy in 2014, it indicated a willingness to use additional business financing tools, particularly tax abatement, to support certain economic development priorities. A number of potential priorities were discussed at that time, but the two that were added to the policy were co - location data centers and carrier hotels. As a consequence, the City was able to apply a package of State financing assistance and tax abatement to secure the DataBank facility on Lexington Avenue. At the time of the policy update, it was noted the EDA would return to the discussion of additional priorities in the future. The topic has remained open since that time. Earlier this year, the City chose to add a firm to its economic development financing consultant team, Northland Securities. In the course of orienting them to Eagan's development philosophy and activities, staff discussed with them the City's historically conservative approach to business and development financing assistance and the initial discussions about future priorities. It seems appropriate to share some of their feedback, observations and questions with the Committee and, ultimately, the full EDA. • This business item will permit an overview of possible elements of that discussion. Attachments: None — Information to be provided at meeting. Agenda Information Memo Finance Committee Meeting September 22, 2015 IV. Minnesota Investment Fund Application — Prime Therapeutics Expansion Direction To Be Considered: To make a recommendation regarding the consideration of an application to DEED for a Minnesota Investment Fund allocation to support the addition of employees at Prime Therapeutics' Eagan locations and to make a recommendation as to whether to require or waive the application fee and escrow deposit in this regard. Facts: • City staff has been approached by the Minnesota Department of Employment and Economic Development and Prime Therapeutics regarding discussions between the company and the agency to make up to $250,000 available in a MIF forgivable loan in consideration of the creation of 100 new jobs at the company's Eagan locations. • The City has been asked by DEED and Prime to submit a MIF application on this basis. As a part of the City's process, Prime has submitted a Business Financing Pre -application for describing the project and the requested support. A copy is attached for review. • If the Committee recommends that the City proceed in this regard, a schedule would be prepared for completion of the State application form, EDA public hearing and related actions to implement the state assistance and the City agreements in its regard. • At this time, no other request is being made of the City other than to serve as a conduit for the forgivable loan. This will require the preparation of loan agreements and related costs and grant administration until the job goals are met. • The Committee is also being asked whether to require Prime to pay the ordinary application fee and escrow deposit ($1,000 plus $10,000) for a business financing application. • The City chose to waive the application fee and absorb the out of pocket costs associated with the DEED MIF forgivable loan awarded to Data Bank because of the priority the City had placed on attracting a carrier hotel and coloation data center to the community. In this case, Prime is a longtime member of the City's business community that is considering continued growth in the community. Because they have worked with DEED already to get a preliminary commitment of the funds, the benefit to the community is relatively certain and the out of pocket costs will be relatively low. Attachments: (1) Business Financing Pre -application CITY OF EAGAN PRE -APPLICATION BUSINESS ASSISTANCE FINANCING Legal name of applicant: Prime Therapeutics, LLC Address: 1305 Corporate Center Drive, Eagan, MN 55121 Telephone number: (612) 777-5976 Name of contact person: Brian Holmes / Sr. Director, Real Estate & Facilities REQUESTED INFORMATION Addendum shall be attached hereto addressing in detail the following: 1. A map showing the exact boundaries of proposed development. 2. Give a general description of the project including size and location of building(s); business type or use; traffic information including parking, projected vehicle counts and traffic flow; timing of the project; estimated market value following completion. 3. The existing Comprehensive Guide Plan Land. Use designation and zoning of the property. Include a statement as to how the proposed development will conform to the land use designation ad how the property will be zoned. 9. A statement identifying how the assistance will be used and why it is necessary to undertake the project. 5. A statement identifying the public benefits of the proposal including estimated increase in property valuation, new jobs to be created, hourly wages, and other community assets. 6. A written description of the developer's business, principals, history and past projects. I understand the Pre -Application is a tool through which the City will make an initial determination as to whether public financing assistance might be considered for the project. If so, I would intend to prepare and submit a formal application for business financing assistance. SIGNATURE Applicant's Signature; Date: August 20, 2015 ATTACHMENTS Question No.1 • Eagan West, 1460 Buffet Way Eagan, MN 55121 • Eagandale Corporate Center 1305 Corporate Center Drive Eagan, MN 55121 Question No. 2 The project will be to increase net new employment in Minnesota. Prime Therapeutics recently committed to expand into a Mendota Heights facility, which will result in a number of employees being shifted among Minnesota locations. The existing Eagan facilities do not currently have capacity for Prime Therapeutics's rapid growth. In order to facilitate Prime Therapeutic's statewide growth, the existing Eagan locations will require at least $500,000 in tenant improvements, In the next three years, 100 new full-time jobs will likely be created, Question No. 3 The property locations in Eagan are currently guided for Major Office and zoned for office uses through I-1 zoning and a Planned Development, Questions No. 4 Prime Therapeutics seeks local support for facilitation of the Minnesota Investment Fund. The Minnesota Department of Employment and Economic Development has indicated a willingness to finance the project with $250,000 in Minnesota Investment Fund proceeds. This program requires local support to pass the fiinds through to the business. The proceeds will be used for tenant improvements to facilitate the growth of approximately 100 employees in the Eagan locations. Question No. 5 The community will benefit from the increase in net new employment to the State and the creation of new jobs in the community. The positions will include; software engineers, system analysts, security engineers, IT architects, field operations technicians, clinical pharmacists, claims specialists, pharmacy benefit database specialists, product operations specialists, pricing analysts, network analysts, and contract specialists. Average hourly wage rates will be approximately $27/hr. and $34.25/hr. The community will benefit from solidifying Prime Therapeutics as a major employer and industry -leader in the community and region. Question No. 6 Not applicable, as the primary purpose of the project will be job creation, with a relatively small amount of capital investment / improvements. Agenda Information Memo September 22, 2015 Finance Committee Meeting V. Fire Administration Building Update Direction To Be Considered: To receive an update regarding the valuation of the former Fire Administration Building and provide direction or recommendations as appropriate. Facts: The Fire Department vacated the former Fire Administration Building at the time the new Fire Safety Center was occupied in 2011. The City's intention at that time was to sell the property, but in consideration of the recession, alternatives were pursued, including leasing it to JBL Companies for a period of time. After JBL vacated the property and the economy began to improve, the City entered into a listing agreement with Cassidy Turley to attempt to sell or lease it. Over the one year term of the listing, the property was shown a number of times, but the City received only one offer to purchase for an amount less than the asking price. When the City made a counteroffer, the prospective buyer chose not to pursue the property further. The listing was allowed to lapse at the end of one year in consideration of the absence of further offers. • Over the last year, as part of the space needs analysis for the City Hall, consideration was given to the possible use of the property for City Department office space. While feasible, that use was not seen as a first choice because it would begin to disperse City staff away from City Hall itself. In addition, there were offsetting cost savings to the City Hall project and expenditures to retain and operate the Fire Administration Building that would result in a net savings of approximately $635,000 for deferred maintenance and to configure it for City office uses. • There was also brief discussion of the possibility of identifying public service partners that might want to co -locate with certain City functions in the building. That has not been pursued substantially to date. • Following that discussion, direction was given to explore again the potential for selling the property. It was concluded that two steps should be taken at this time — to plat the property to resolve boundary issues prior to sale and to get a market range valuation from the City's appraiser. Both are being coordinated through the City Attorney's office. The City Attorney will be present at Tuesday's meeting to provide an update in that regard. Attachments: None — Information to be provided at meeting. Results and Situational Analysis When the Finance Committee met last year, it committed to up to $3 million in funding through 2019. Pro formas projected that $2.7 million, net of revenues, would be needed before operating revenues were sufficient to cover operating expenses. That was anticipated to occur by the end of 2019. To date, about $2.1 million, net of revenues, has been invested in the system. Revenues are lagging behind last year's pro forma projections. It is possible that the City's investment in AccessEagan will exceed $3.0 million before revenues begin to cover expenses. While sales activity is picking up and the data center opened later than the pro forma originally estimated, it must be acknowledged that it is probable that operationswill not be at break-even by 2019. Can the City take a longer view? Should there be other indicators of success if high speed broadband is enabled in more places in the city, and if private sector service offerings are increased/prices lowered as a result of the competitive environment stimulated by AccessEagan? The situational analysis reveals other factors at play: 1. Dakota County Traffic Signal Upgrade: The County plans to connect all traffic signals in the next five years, and they would like to use AccessEagan fiber to do that. This would represent an ongoing revenue source for Eagan. The County is preparing to budget the necessary funding to connect all traffic signals to fiber. City and County staff have identified 21 potential connections that the County could interconnect_to.AccessEagan..over.the..next five.yea.rs and, provide.a.revenu.e source to. AccessEagan.for-, excess fiber strands. 2. Likely Dakota County Fiber Expansion: In addition, the County has approached City staff about the possibility of using the City's existing conduit to populate additional fiber capacity in multiple pathways. In return, the City would be receiving a percentage of ownership of the increased fiber strands that would be extended at the County's expense from Eagan City Hall to the Western Service Center. By extending this fiber into Eagan City Hall, our municipal center becomes a hub for the fiber ring, as well as asecondary core location for AccessEagan fiber network. The City would not be investing any additional funding, only providing resources already built. 3. Potential Dakota County Broadband Initiative: As discussed in the June briefing to Council by Craig Ebeling, the County and the Cities are discussing a potential JPA to operate and maintain mutual fiber assets in a jointmanner similar to the DCC or LOGIS. 4. Regional Competition: Scott County and Shakopee have been successful luring new companies, in part by giving away fiber connections to the 511 Building. Eagan is now in position, if it chooses, to match that with AccessEagan circuits to Data Bank. Covering Build Costs to Get Business: Every market action has a reaction. Following a major cable provider's failure to secure the Flats at Cedar Grove (which chose AccessEagan), a Comcast representative stated at a recent conference that they have now been authorized to do "free" builds in certain multi -tenant locations in the Twin Cities. Other providers, who always used to have to have a first customer before justifying a build, are doing the same, right here in Eagan. Yet, having just one provider in an Eagan business defeats the purpose of open access competition. 4 F -I L-A " T'a A C� 0 CD CD 0 3 O 3 CD CD " T'a A . T 0 a — D m �c tq y D r a 3 a z 0 0 CD CD 0 0 c (n (n - 3 (n 0 00 M -0 oc� cn — Fn � — C > 3 CD CD CD FD' _. cn w 90 . T 0 a — 0 tq y r a a z C/) n 0) >0 N n CD �. �- p W CD CD C oo moo—ot<rn�CD. N Dcn (� cn CD CD � Cn C � . �. CD (n (n CD -"%, CD O CD Q° n, CD'• Cy- CD O cn m O O CD • • • • • �� O O mA rI� c o c cn^ cCD Ai Ai x rn =}: M m MMrn (D O m CD � rno. +3 rnv < co ����0 m� n.�� v rn a < CD a) CD c n C7 cncn CD z � O O • C v m • Is • .3•o' CD0o Drn n CD °.m0U) 0 3 O (� ,-+- m o cn 3 SCD o�rnU) (n. �o n cn � -��LT �CDDO � � rno_ -0 zT Q 3 :�4 �G 3. m �, 3 N CCD m -13 CD cn o' n D O V M • n � to V 0 O CD :3 OCD. �/n O CD CDCD CD CD P+ - CD O CD w i C CD CD --I/ n o CD \./ � < 0- w CD W 0--f- � O3 3 CDC:O �3m ' Cn CD .01Z O .� O Q) M CD cn cn cn cn 0- CD cn CA CD5n �O CD O Irn b G� a z Is • .3•o' >O n CD 0 3 O (� ,-+- m o cn 3 SCD �--� (n. �o n cn (D �CDDO CD -0 zT 0 3 :�4 M 3. m �, 3 cn O -13 cn o' 3 CD M = CD CD V 0 00 n - . OCD. �/n O CD CD P+ - CD O w i C CD CD --I/ n o CD \./ � < 0- CD O � O3 CDC:O ' Cn CD .01Z O CO Q) M cn cn cn cn 0- CD cn CD5n CD O • CD O m :33 (D cCDn cn (D �CDDO CD -0 O IIL :�4 CD 00 (Do,� CD -13 cn 0 00 n 0 OCD. �/n CD rnCD O N �n CD O � O3 O n 0 m O m Q o 3 m N -0 '+ ° o O v � z z < Q o m r+ LnLn D D z o Ul Ln w v (In L/I v v c• r � N O N Ln < m 0 < m N x D c (In (n C7 W I-1 C. N N m N r+ O rn v N V) aq _o m r+ n� fi m Ln s m N D n N p (ri m m un M Ln %< n' m m < O Ln W m m p D rt nj 0 m O 0 o CL fD s O d d LU y (D o n ' 0 m 3 3 o m C v '^ �• -% o .° C m 3 Q. o fD r« (D w N D v co A 'CO A rD m p p p �" rho N O o o a Q — N .p > `� N (D m00 X, O w !. i � O v� 0=0 (D A F,, O N co w -Pb A V v n cr a)O C)r► O `w O O O -co O O � N OCD O O O O O O O O(n 0 w In In w D O Iwn o o O Ln • It (� a) O Cl) cA M+ `D VV m O O 8 8 o S 8 p: O 0 Q C/) N b Vi a Ln o N Z O • c r n A c m cnO z cn cn c 0 z D r ItE rn � o 0 000 0 �(n�zT ooQ-o o Cn rn> M m0cn 0 � 0 0 �- v� C/)° 0 0- CD CD o n � n C: -1 0 rn (D x 0(p C) o O 0 CD _ o (n -I ( �, C) —, ca 0 O cn QL 3 (D v CTo �(n (D r+ O CD 0 O �3 --h3 z0 0 O r Cn Z3� O 0 CD o m o DO z Q-0 Lt O(n -.1- 0 � r ifs O �T r CD CD O � rf O C7 C O (n CD 3 CD '3 3 CD Cp O X cn� CD � CD CM O C7 ^ O zz� MM CD C: • i (D O (D _0 c '--f O 0 --s v p r-+ /Z3 \ D (n ■ rn 3rn \ D (D 3 3 p v (D CT c C ^� m� \ V 0- D 0 N m n 0 z 4b w O O ■ O:'■.�_ C ^� m� \ V C) O/ -q■ O n (D C: 3 CD 3 3 (D m CD x CD O n�� o zz� M I 1 0 (D > X0 0 0 0 CD 0 (D (D (D (n cn m 0 (D M =+ cr CD 3 0 0 3 CD CD 0 0 c (D < — CL C: (n 0 (D 0 3 10 (D r-+' ""I 3 m M cn CD (n CDS =3 0 cn C) CC) 0 (c) cn :3 (1) 0 3(1) M 0 0 (D cn '0 0 90 0 Cl u's 0 Ift • C) O 0 Z O C) CD 0 cr C/) CD C: ,-+. C Cf) CD M MCC)< v ,m �' CD CC O v 0 M -0 Q o CC CD < 0 0 :3EC/)E3 CD CD (%) QO CD CD cQ CD O CQ Cf) Z3 -� CD Cj CQ COD 3 m o � rn 0 0 =7 M �O U'. M C� --1 Z _ O X cn 1< COD CMD ZY Q w O j � O Q Z3 C) CMD O C) �. O Q � r+ CD 0 m O m D r �M i o Ift • C) O 0 Z O C) CD 0 cr C/) CD C: ,-+. C Cf) CD M MCC)< v ,m �' CD CC O v 0 M -0 Q o CC CD < 0 0 :3EC/)E3 CD CD (%) QO CD CD cQ CD O CQ Cf) Z3 -� CD Cj CQ COD 3 m o � rn 0 0 =7 M �O U'. M C� --1 Z _ O X cn 1< COD CMD ZY Q w O j � O Q Z3 C) CMD O C) �. O Q � r+ CD 0 m O m D r �M o v v � �(D D Q (D c cn 3 m rnrn ° (D O (n �(n (D3 o cn Z v Q o n �r u O CD O Ift • C) O 0 Z O C) CD 0 cr C/) CD C: ,-+. C Cf) CD M MCC)< v ,m �' CD CC O v 0 M -0 Q o CC CD < 0 0 :3EC/)E3 CD CD (%) QO CD CD cQ CD O CQ Cf) Z3 -� CD Cj CQ COD 3 m o � rn 0 0 =7 M �O U'. M C� --1 Z _ O X cn 1< COD CMD ZY Q w O j � O Q Z3 C) CMD O C) �. O Q � r+ CD 0 v O m �M _r v v 0 �(D Q (D O cn (Dv M ° (D 0 (n � o cn Z v Q n m 3 u o CD O Ift • C) O 0 Z O C) CD 0 cr C/) CD C: ,-+. C Cf) CD M MCC)< v ,m �' CD CC O v 0 M -0 Q o CC CD < 0 0 :3EC/)E3 CD CD (%) QO CD CD cQ CD O CQ Cf) Z3 -� CD Cj CQ COD 3 m o � rn 0 0 =7 M �O U'. M C� --1 Z _ O X cn 1< COD CMD ZY Q w O j � O Q Z3 C) CMD O C) �. O Q � r+ CD 0 0 _r :3 cn OCD Q (D cn O O (Dv ° (D Z v (D 0 z 3 u o Ift • C) O 0 Z O C) CD 0 cr C/) CD C: ,-+. C Cf) CD M MCC)< v ,m �' CD CC O v 0 M -0 Q o CC CD < 0 0 :3EC/)E3 CD CD (%) QO CD CD cQ CD O CQ Cf) Z3 -� CD Cj CQ COD 3 m o � rn 0 0 =7 M �O U'. M C� --1 Z _ O X cn 1< COD CMD ZY Q w O j � O Q Z3 C) CMD O C) �. O Q � r+ CD 0 CDQ- O n (CMIDDD) 1 � O O DO3 C n v CD CD >Q < 0 0 0 � O � '10 (n 3 M CD CD � O � M "MI CD CD 0 MMI m • i C) CDO ND COLD Cl) 0 OO C) (n3 3 �n3 v o o-0 O DO CT D. cv U� (n --N (nDO v 0 U) n � r -lo--N. 0 CD CD rn o OL)� o C� � � o3 C� O 0- < Cn CD Z < --, m cn �� o v o 0 o U) (D Z3 CT o � Q 0 —� < C: CD :3 --.h 00 0 U) n � C7 0 CD CD rn o OL)� o Z3 o3 C� 0- 0 Cn CD CD < --, m cn o o 0 o o � � o � 0 —� < C: CD :3 --.h 00 f --t- n 0- M r � O O CD C7U)r--f (n U) 0 0-0 O CD 0-O CD 3 e- cn r—.,- cn zT C: 0 l CD r M C7 \ V O 0 n m `S CD � O O O O CD O S \ Fn' cn O O C:�< CD �■ O CD — < O Cn 0 ,� cn cn • 0 Cl ft .1 b O O �O C!) X ■ 3 V -� O tD 3 zT CD O 07 - CD CD ■ O (n (nf � CD 3 cn CD CD 3_ . CD r+ O ■ � CD M CD .1 b . m m a a z 0 m 2 c) m vo m 3CD cn c� T -A o :3 3 — OCD o r4 CD Q CD(n3 o _ M 0' O n o o o D C: 0 C: �, oo CDcn —. - :3 �-�- cn W o �� C� CD O c� CD cD (n _. o (n w CD cn CD 0 O — . ca. on (n 0 CD o O � CD Cn CD �r C CD m 3CD cn c� T -A