Local Option Review Team

LOCAL OPTION REVIEW TEAM Thursday, April 16, 2020 - 10:00 a.m. 400 East Military, Fremont, Nebraska (attendance is limited) and Zoom Topic: Local Option Review Team Time: Apr 16, 2020 10:00 AM Central Time (US and Canada) Join Zoom Meeting https://zoom.us/j/96553163080 Meeting ID: 965 5316 3080 One tap mobile +13462487799,,96553163080# US (Houston) +16699009128,,96553163080# US (San Jose) Dial by your location +1 346 248 7799 US (Houston) +1 669 900 9128 US (San Jose) +1 253 215 8782 US +1 301 715 8592 US +1 312 626 6799 US (Chicago) +1 646 558 8656 US (New York) Meeting ID: 965 5316 3080 Find your local number: https://zoom.us/u/aZ78luqI2 ZOOM Meeting Information View Video Tutorials: https://support.zoom.us/hc/en-us/articles/206618765-Zoom-Video- Tutorials?_ga=2.150510262.1497980210.1584968460-1067452037.1584536802 Telephone Audio Information Call: +1 301 715 8592 US Enter Meeting ID: 965 5316 3080 You will be connected to the meeting. If making a comment during a public hearing or comment period please press *9 to electronically raise your hand allowing the Chairman to call on you. Once called upon to speak please press * 6 to unmute your phone; press * 6 again to mute when finished speaking 1. Call to Order 2. Approval of minutes from January 30, 2020 meeting. 3. Review Quarterly Report. 4. Review Fund Balance. 5. Consider Objective Framework to assist in determining Local Option Economic Development Fund award amount and loan elements. 6. Adjourn. This agenda was posted at the Municipal Building and was distributed to the members of the Local Option Review Team on April 14, 2020. The official current copy is available at City Hall, 400 East Military Avenue. A copy of the Open Meeting Law is posted for review by the public.  CITY OF FREMONT LOCAL OPTION REVIEW TEAM JANUARY 30, 2020 – 12:00 p.m. A meeting of the Local Option Review Team was held on January 30, 2020 at 12:00 p.m. in the 2nd Floor Conference Room at 400 East Military Avenue, Fremont, Nebraska. The meeting was preceded by publicized notice in the Fremont Tribune and the agenda displayed in the Municipal Building. The meeting was open to the public. A continually current copy of the agenda was available for public inspection at the office of the City Administrator, 400 East Military Avenue. The agenda was distributed to the Local Option Review Team on January 24, 2020 and posted, along with the supporting documents on the City’s website. A copy of the open meeting law is posted continually for public inspection. ROLL CALL Roll call showed Members Benson, Vobejda, George, Oliva, and Jacobus present; McClain and Horeis absent. 5 present, 2 absent. Others in attendance included Lottie Mitchell, City of Fremont; Brian Newton, City Administrator; Chris Venteicher, WholeStone Farms; and Garry Clark, Greater Fremont Development Council. APPROVAL OF MINUTES FROM OCTOBER 30, 2019 MEETING. Moved by Member Oliva and seconded by Member Benson to approve the minutes of the October 30, 2019 meeting. Ayes: Benson, George, Vobejda. Abstentions: Jacobus and Oliva. Motion carried 3-0 with 2 abstentions. REVIEW FUND BALANCE. Mitchell reviewed fund balance. Moved by Member Benson and seconded by Member Jacobus to receive the fund balance report. Ayes: Jacobus, Benson, Oliva, George, and Vobejda. Motion carried 5-0. CONSIDER LOCAL OPTION ECONOMIC DEVELOPMENT FUND APPLICATION FOR WHOLESTONE FARMS, LLC. Mitchell introduced applicant. Chris Venteicher presented the WholeStone Farms, LLC application and answered questions about the project. Moved by Member Vobejda and seconded by Member Oliva to approve Local Option Economic Development Fund Application from WholeStone Farms, LLC. Ayes: Jacobus, Benson, Oliva, George, and Vobejda. Motion carried 5-0. ADJOURNMENT Moved by Member Jacobus and seconded by Member Benson to adjourn at 12:24 p.m. Ayes: Jacobus, Benson, Oliva, George, and Vobejda. Motion carried 5-0. 1  SUMMARY OF LB840 SALES TAX REVENUE ECONOMIC DEVELOPMENT PROJECTS LB 840 Minimum Investment-- Wage Amt. Land, LB 840 Loan Jobs per Jobs Infrastructure & Local Sales Tax Business Name / Project Date to Business Created Contract Retained Other Generated (1.5%) Notes Defaulted Christensen Business Park--purchase 112 acres & infrastructure 2000 $ 2,661,256 $570,000 Performance- BasedInfrastructure included with Christensen Business Natura, 2779 West Rademakers Way 2002 $ 570,000 25 $8.25 Park Spec Building at Christensen Business Park, 2639 West 23 Av. 2002 $ 283,000 Sold building to Charleston's Utility extensions on North Lincoln Street, 2400 North Lincoln Made access to Steenblock (Holiday Inn Express & Steenblock) 2002 45 $ 70,000 and Holiday Inn Express Sewer extension on North Yager Road to serve Burlington Northern Industrial tract 2003 $ 50,000 $50,000 Performance-Based. Infrastructure included with Southwark, 2073 West Rademakers Way 2004 $ 100,000 30 $8.50 Christensen Buisness Park Nelson Business Park: Fremont Contract Carriers, 865 South Bud Blvd (Eagle Dist. also located here) 2004 35 145 $ 776,161 $145,000 0% RP & $10,000 PB, create 10 jobs & retain for Ready Tech-Go, Inc. (RTG Medical) 2007 $ 155,000 10 $8.50 1 year (LM) 0% RP, create 20 jobs & Overland Products, 1577 & 1687 North Airport Road 2007 $ 600,000 20 $9.00 20 retain for 5 years (LM) $50,000 0% RP & $100,000 PB, create 20 jobs & retain for 4 years, maintain Fremont RK Aerials (Rosenbauer), 840 South Broad 2004 $ 150,000 20 $8.25 20 location for 15 years (LM) $200,000 0% RP & $300,000 *Defaulted May 6% RP, create 12 jobs & 2010, remaining retain for 4 years, maintain loan balances Fremont facility for 10 years. re-amortized $100,000 PB, clean up and repaid at Best Cobb, LLC, 731 South Platte 2007 $ 600,000 12 not defined property w/in 9 months. (LM) 8% interest Page 1 of 4  SUMMARY OF LB840 SALES TAX REVENUE ECONOMIC DEVELOPMENT PROJECTS LB 840 Minimum Investment-- Wage Amt. Land, LB 840 Loan Jobs per Jobs Infrastructure & Local Sales Tax Business Name / Project Date to Business Created Contract Retained Other Generated (1.5%) Notes Defaulted $50,000 0% RP & $125,000 PB, create 10 yobs & retain Christensen Lumber LTD, 714 N Main 2007 $ 175,000 10 $11.00 for 5 years (LM) PB, create 10 jobs & retain for International Spices, 1040 South Lucius 2007 $ 60,000 10 $10.00 5 years (LM) PB, create 10 jobs & retain for Merritt Equipment, 4650 North Broad 2008 $ 150,000 10 $14.00 5 years (LM) Single Payment Loan, term 8 Mid America Truck Wash 2008 $ 50,000 12 months (LM) Christensen Bus. Park--purch. 23 acres (Izaak Walton Range) 2009 $ 200,767 Morningside North Business Park--purchase of 42 acres 2009 $ 819,707 Sycamore Leaf Solutions, 321 East Military 2011 $ 40,000 2 $15.00 2 $40,000 Performance-Based Fremont Techology Park--purchase of 81 acres 2011 $ 654,392 Fremont Technology Park CDBG loan guarantee, 2011-047 2011 $ 975,392 Fremont Techology Park--infrastructure, 2011-047 2011 $ 420,000 Airport Infrastructure 2012 $ 132,631 Fremont Techology Park--infrastructure, 2013-095 2013 $ 1,635,040 Morningside North Business Park--infrastructure, 2013-095 2013 $ 444,000 PB, Maintain location for 3 McGinn Holdings, LLC 2014 $ 10,000 years PB, create 3 jobs & retain 8 Sycamore Leaf 2015 $ 100,000 3 $15.00 8 for 5 years $200k RP; $400k PB 20 jobs in yr 1, 10 jobs in yr 2, 5 jobs in yr 3; retain all jobs for 5 Structural Components 2015 $ 600,000 35 $15.00 years. Base = 209 jobs Page 2 of 4  SUMMARY OF LB840 SALES TAX REVENUE ECONOMIC DEVELOPMENT PROJECTS LB 840 Minimum Investment-- Wage Amt. Land, LB 840 Loan Jobs per Jobs Infrastructure & Local Sales Tax Business Name / Project Date to Business Created Contract Retained Other Generated (1.5%) Notes Defaulted $300,000 PB - 25 new jobs, retain for 5 yrs. Base = 315 jobs. Monitoring began Fremont Beef 2015 $ 300,000 25 $15.00 12/2015 PB, retain 10 jobs for 5 years Heartland Area Assessories 2016 $ 150,000 10 and voluntary annex PB, 800 by year 5 and at least $150M invested in property by Costco 2016 $ 1,000,000 800 $15 year 2. Rebate of 30%, not to exceed $25,000, on qualified 12 Days of Christmas - Film 2017 $ 19,719 $975** expenditures PB, 12 new jobs in Fremont, Legacy Post and Beam 2017 $ 60,000 12 $18 retain for 5 years Matching funds for Rural Workforce Housing Fund Greater Fremont Development Council 2018 $ 500,000 Grant 50% RP, 50% PB, 7 jobs, Pearl Academy 2018 $ 71,121 7 $10 retain for 5 years PB, Maintain team in Fremont for 5 years, first season = Expedition League 2018 $ 250,000 2019 Infinite 8 Institute 2018 $ 200,000 8 $19 RP over 5 years In default. PB, 50 new jobs, retain for 5 WLG Fremont, LLC (RTG Medical) 2019 $ 600,000 50 80 years Funds for Low-Moderate Greater Fremont Development Council 2019 $ 1,000,000 Income Housing Rebate of 30%, not to exceed $35,000, on qualified La Flamme Rouge, LLC - Film 2019 $ 14,134 $707** expenditures Morningside Business Park Morningside Business Park - Johnson Road Paving 2019 $ 1,000,000 Infrastructure Improvements PB, 5 new jobs, retain for 5 505 Brewing Company 2019 $ 165,000 5 $15 years Page 3 of 4  SUMMARY OF LB840 SALES TAX REVENUE ECONOMIC DEVELOPMENT PROJECTS LB 840 Minimum Investment-- Wage Amt. Land, LB 840 Loan Jobs per Jobs Infrastructure & Local Sales Tax Business Name / Project Date to Business Created Contract Retained Other Generated (1.5%) Notes Defaulted PB, 600 new jobs, retain for 5 WholeStone Farms, LLC 2020 $ 1,300,000 600 $17 1300 years Totals $ 7,239,974 1729 1642 $ 11,872,346 PB = Performance Base RP = Repayable **Sales tax generated is singular event Page 4 of 4 City of Fremont Nebraska Status of LB 840 Funds 3/31/2020 Premilinary Estimate Assets: Checking 276,523.35 Money Market 2,430,130.82 Investments 3,000,000.00 5,706,654.17 Liabilities: Capital Transfers 0.00 5,706,654.17 Known Committed Funds: Tech/Bus Park Res 2011-047 420,000.00 Tech/Bus Park Res 2013-095 1,061,661.81 Morningside Business Park Res 2013-095 172,675.14 Morningside Business Park - Johnson Rd South Res 2019-186 801,019.40 505 Brewing Co Res 2019-240 0.00 WLG Fremont Res 2019-038 600,000.00 Wholestone Farms Res 2020-052 1,300,000.00 Tech/Bus Park Resolution 2011-047 975,392.00 5,330,748.35 Uncommitted Funds 375,905.82  STAFF REPORT TO: Local Option Review Team FROM: Lottie Mitchell, Grant Coordinator DATE: April 16, 2020 SUBJECT: LB840 Application Review Tools Recommendation: Consider adding proposed objective framework to assist in determining Local Option Economic Development (LB840) Fund award amount and loan elements. Background: We have discussed introducing guidelines to assist with determining award amounts per job created and/or retained in the past. Recently, we have received inquiries to assist smaller, retail businesses. In considering these inquires, it became apparent that a tool to assist us in determining award amounts would be beneficial. We currently have two tools to assist staff and the committees in awarding LB840 loans and grants and determining what interest rates are appropriate. Those tools are the scoring matrix and the matrix included in the application. These tools are very useful in providing guidance as to forgiveness amounts and what interest rates should be charged on repayable amounts, but do not provide a framework to determine an appropriate level of assistance. We have created the attached table to be used as objective framework to help applicants know what level of funding they may be eligible for. The attached table will also help us to provide consistency among award amounts. Fiscal Impact: None.  Fremont LB 840 Scoring Matrix Guidelines Wages & Job Creation 1. Average hourly wage of new jobs (take retained jobs into consideration if there is no new job creation, average hourly wage, Dodge Co., 2019, 3rd qtr = $19.83) 0 points = <$17.49 6 points = $20.50-$21.99 2 points = $17.50-18.99 8 points = $22.00-$23.49 4 points = $19.00-$20.49 10 points = >$23.50 2. Non-wage benefits 1-5 points for how robust the non-benefits wage offerings are 3. Aggregate wages paid to employees in created or retained jobs within one year compared to LB 840 $ invested 0 points = 100% or less 2 points = 100% to <125% 5 points = 125% or more 4. Amount requested per job created/retained 2 points = > $30,000 8 points = $15,000 - $19,999 4 points = $25,000 - $29,000 10 points = < $15,000 6 points = $20,000 - $24,999 Community Impact & Investment 1. Does the company bring significant dollars in the community? 1-10 points (consider where the company’s customer base is, who buys their products/services – where are they located?) 2. Duration of commitment to maintain jobs in the community 2 points = < 1 year 8 points = 5-10 years 4 points = 1-3 years 10 points = > 10 years 6 points = 3-5 years 3. Amount requested compared to total project cost 2 points = > 40% 8 points = 10% - 19% 4 points = 30% - 39% 10 points = < 10% 6 points = 20% - 29% 4. Has a financing gap been identified? 0 points = no 5 points = yes 5. Impact on property valuation 1-5 points for how the project will positively impact property valuation Business Factors 1. Management experience and ability 1-10 points for the ability of the management team to successfully complete the project 2. Established business, or start up venture 2 points = start up venture 8 points = established business, 6-10 years 4 points = established business, 1-2 years 10 points = established business, 11+ years 6 points = established business, 3-5 years 3. Time required to reach job creation goals 2 points = 8+ years 8 points = 1-2 years 4 points = 6-8 years 10 points = less than one year 6 points = 3-5 years  Fremont LB 840 Scoring Matrix Applicant Name→ Name of Scorer Benefited Business→ Amount Requested→ Points possible↓ Points given↓ Wages & Job Creation↓ [30] (4 factors) [ ] subtotal Avg. hourly wage of new jobs (take retained jobs into consideration if there is no new job creation, average hourly wage, Dodge Co., 10 2019, 3rd qtr = $19.83) Non-wage benefits 5 Aggregate wages paid to employees in created or retained jobs 5 within one year compared to LB 840 $ invested Amount requested per job created/retained 10 Community Impact and Investment↓ [40] (5 factors) [ ] subtotal Does the company bring significant dollars in the community? 10 Duration of commitment to maintain jobs in the community 10 Amount requested compared to total project cost 10 Clear identification of a financing gap 5 Impact on property valuation 5 Business Factors↓ [30] (3 factors) [ ] subtotal Management experience and ability 10 Established business, or start-up venture 10 Time required to reach job creation goals 10 Totals→ [100] (12 factors) Total Local Option Economic Development Loan Fund and Economic Enhancement Fund Application The purpose of the Local Option Development Plan Loan and Economic Enhancement Fund is to encourage population growth, new industries, and investment in the community. Funds are offered to businesses in the form of low or 0% interest loans and performance-based forgivable loans (grants), based upon creation of new jobs and investment in Fremont. Businesses must provide matching funds for the project. Potential City uses include land improvements; public infrastructure; building acquisition and improvements; retail industry; service industry; other new industry; equipment, working capital, job training and buy-down leases for Primary Industry; equipment, job training, buy-down leases, land improvements, building acquisition and improvements and infrastructure for Non-primary Industry; and other economic development activities allowed by statue. Eligible activities under the Economic Development Plan may include the following to attract new and existing business and industry development in Fremont. • Land purchase/options • Infrastructure to new or existing business and industry • Site improvements • Construction for new or existing business or industry or on a speculative basis The matrix for the two programs include: Interest Rate Qualification Criteria: Jobs Investment Compensation Interest Rate City Participation Interest Rate > $18.00/hour and benefits 0% <10% 0% > $16.00/hour and benefits 2% 10% - 19.99% 2% < $14.00/hour and benefits 4% 20% - 29% 4% No benefits offered 6% 30% + 6% Benefits = 50% of the cost of health insurance paid by the employer Sales Tax - Based on initial years taxable sales Taxable Sales Interest Rate <$999,999 0% $500,000 - $999,999 2% $250,000 - $499,999 4% $50,000 - $249,999 6% Businesses will be given the benefit of the category under which they meet the requirements for the lowest interest rate. Based on staff discretion, up to a 2% reduction will be provided if multiple categories are met. The interest rate will never be less than 0%. Loans will be structured as at-risk or performance based forgiveness. To qualify for a performance based forgiveness loan, the applicant must: Pay employees at 125% of the Dodge County average wage; and Have taxable investment greater than $2.5 million dollars, or Have taxable sales greater than $2.5 million dollars. Note: Based on special circumstances, staff can make recommendations to the City council outside of these parame- ters. To be considered for financial assistance, applicants must provide a completed application, including all applicable attachments. Return competed application to City of Fremont Attn: Grant Coordinator 400 E. Military Fremont, NE 68025 City of Fremont LB840- Local Option Economic Development Fund Eligibility Guidelines Tier One Tier Two Tier Three Tier Four Tier Five Tier Six Wages* 100% to 125% (or greater) of Dodge County Average Hourly Wage (i.e. $18.95 to $23.69+) Job Creation 1 to 5 6 to 25 26 to 50 51 to 100 101 to 500 501 and up Capital Investment** $50,000 and up $1 million and up Over $10 million Sales Tax Gross sales of $50,000 to $499,999 Gross sales of $500,000 to $999,999 Gross sales over $1 million Project must meet at least two of the four criteria to be eligible for that tier. For each criteria met, 25% of the loan will be considered for forgiveness. Program Features Tier One Tier Two Tier Three Tier Four Tier Five Tier Six Interest Rate 0 to 6 % Up to 25% of annual Up to 25 % of annual Up to 20% of annual Up to 20% of annual Up to 15% of annual Up to 15% of annual payroll of new jobs or payroll of new jobs or payroll of new jobs or payroll of new jobs or payroll of new jobs or payroll of new jobs or Assistance Caps $50,000, whichever is $200,000, whichever is $350,000, whichever is $500,000, whichever is $750,000, whichever is $1,000,000, whichever least least least least least is least Additional portions of loan forgiveness may be considered in certain circumstances where the job creation requirement has been met and the Forgiveness applicant has demonstrated significant benefit to the community. Recommendations of contract terms will be made by City staff based on application information, credit analysis, and available funds. Additional Items *Positions must receive health insurance and other benefits. The Dodge County "annual average weekly wage"is found here: http://data.bls.gov/cew/apps/data_views/data_views.htm#tab=Tables (NAICS Industries by Geography, All Industry Levels, One Area, Dodge County, Nebraska, Prior Year/Quarter Annual Averages, All Establishment Sizes; Source: Quarterly Census of Employment and Wages – Bureau of Labor Statistics) and divided by 40 hours to determine hourly wage.) **Participation in other local programs like tax increment financing or Economic Enhancement Fund will be taken into consideration.