Economic Development Authority

City of Petersburg Economic Development Authority Meeting Regular Meeting AGENDA March 4, 2021 5:00 p.m. Videoconference Meeting Join Zoom Meeting https://zoom.us/j/96507866720?pwd=VWhmSHdpMTJSVGUwZzE1TThaM0hOdz09 Meeting ID: 965 0786 6720 One tap mobile +13126266799,,96507866720#,,,,,,0#,,738053# US (Chicago) +19292056099,,96507866720#,,,,,,0#,,738053# US (New York) Dial by your location +1 312 626 6799 US (Chicago) +1 929 205 6099 US (New York) +1 301 715 8592 US (Washington D.C) +1 346 248 7799 US (Houston) +1 669 900 6833 US (San Jose) +1 253 215 8782 US (Tacoma) Meeting ID: 965 0786 6720 1. Call to order – Mr. Samuel Rhue, Chairman 2. Roll call of EDA members 3. Approval of the Minutes:  January 21, 2021 4. Financial Report- Mr. Richard Taylor Secretary /Treasurer 5. Report from the Chairman- Mr. Samuel Rhue 6. New Business a. Pocahontas ROW Request by South Central Wastewater Authority (SCWWA) – Robert Wilson, Executive Director ARWA/SCWWA. b. EDA 101 – Elizabeth Povar, Principal, The RiverLink Group David Denny, Managing Partner, Sanford Holshouser 7. Old Business a. Ramada Inn Update- Anthony Williams, City Attorney b. Hotel Petersburg Update- Dr. Nat Cuthbert c. Economic Development Report, Jeremy Tennant, Assistant to the City Manager 8. Public Comment Period 9. Announcements a. Next meeting date- March 18, 2021 at 5:00 pm 10. Adjournment  RiverLink Group Partners The RiverLink Group (TRG) is a woman-owned Virginia-based economic development consulting firm, serving public, private and non-profit clients at the local, regional and state level. Our focus - at the intersection of community development, workforce, higher education and business development – delivers innovative and high quality professional and technical services to solve short or long-term needs. The RiverLink Group teams with preferred partners to provide customized and practical solutions. Our capabilities focus on strategic action planning, business retention and growth, entrepreneurial system development, higher education partnerships, talent system development, economic and data analytics, group facilitation, and management services. • Elizabeth Povar, Principal, has 38 years of experience in economic development at the local, regional and state levels including 21 years in leadership with the Virginia Economic Development Partnership. Her focus areas include marketing, business development, business retention, strategic planning, rural development and higher education/workforce connectivity. She serves on the Board for the Virginia Rural Center and the Board for the Virginia College Fund, as well as the Advisory Board for the Commonwealth Graduate Engineering Program. She resides in Henrico and Middlesex Counties in Virginia. For over 20 years, Sanford Holshouser Economic Development Consulting, LLC (SHEDC) has been known as a highly respected economic development consulting firm. But our sterling reputation is based on much more than our firm’s years of operation. Our team of innovative, accomplished economic development professionals collectively possess over 250 years of practitioner-based experience providing services in many states, and in other countries, as well. Every partner has “frontline” experience in running successful economic development programs at local, regional and state levels. This experience has proven beneficial to our clients. • David Denny, Managing Partner, has practiced economic development and business development for over 30 years, mainly in Virginia. Prior to joining SHEDC, David served in senior marketing and business development management roles for two premier Architectural, Engineering and Environmental firms in SWVA. He and his family lived in Blacksburg for over 21 years. David has provided a variety of economic development services to a variety of clients across the Commonwealth and nation. He specializes in organizational review, program funding and finance and strategic economic development action plan development. Petersburg EDA February 2021 THE FOUR FUNDAMENTALS OF ECONOMIC DEVELOPMENT Who, What, When, Where, How? Who leads it? • Designated individuals or organizations at local, regional and state levels What is it? • A process that influences the growth and restructuring of local economies When does this happen? • Consistently and steadily Where does this happen? • In localities, in regions, in states How is it done? • Understanding the dynamics of business change • Proactively creating a healthy climate for business development • Partnering to support business growth • Measuring results and adapting strategies Why Economic Development? • $ for Companies – Profit and Sustainability • $ for Citizens – Quality of Life, Wealth Creation • $ for Government – Services for citizens Creating better, stronger communities Outcomes? • Largely to create jobs and draw new income into the regional economy that can then be spent within the community and support non-basic employment sectors • Basic Economic Industry - Economic entities that attract dollars to the local economy • Non-Basic Industry - Economic entities that serve the local market and recycle income generated from out-of-region. • Assure sustained economic prosperity that contributes to a better quality of life A Business Mindset • What are the costs of public services per household in your community? • What are the taxes paid in your community per household? • The gap between the cost of public services and the residential taxes collected is a primary reason we do economic development. Economic Development Over the Years Early 20th Century: Move from Farms to Metropolitan Areas and the Birth of the Corporate Real Estate Industry • Immigration and explosion of growth in cities • Mass-production manufacturing results in centering activity in resource rich and urban areas • Rise of central business districts, “modern” skyscrapers and large offices as symbols of corporate strength • Rise of Bell Telephone facilitating communications between centers Mid 20th Century: The Interstate Highway System Post War World II and the Dawn of the Economic Development Discipline • From Rust to Sun Belt, from Cities to Suburbs: sprawling residential, office, corporate and industrial parks result in decentralization of business activity spurred by public sector incentives • Hollowing out of CBDs and dense neighborhoods, onslaught of public financing programs to spur urban renewal • In 80s and 90s, overheated corporate real estate leads to savings and loan debacle, the rise of REITs and risk-adverse projects New Millennenium: Data Driven Globalization, Networked Communities & Maturing of the Economic Development Profession • Aging, shrinking workforces, technology, and social changes in a knowledge- based economy • Local to Global: Globalization permitting work anywhere across time zones, less office need, more integrated and collaborative space • Shorter business life cycles with profit focus produce more near term leases and greater flexibility with real estate plays, talent and energy advantages result in return of manufacturing (“on-shoring”) Economic Development Shift Traditional Economic Development Toward a New Model (Traditional +) Government Distributive Investor Perspective • “Open for Business” • Sustained Growth • Political • Data-driven • Incentive Toolbox • Advice and Advocacy • Jobs, jobs, jobs • Competitiveness and Productivity Project and Deal Centric Focus on Economic Growth • Tactical and Transactional • Strategic, Integrated and Prioritized • Prescriptive • Consultative and Collaborative • Bricks-and-Mortar • Human Capital • One-offs • In-the-center-of-it-all Leadership Swinging for the Bleachers Improving the Economic Base • Big-Game Hunting • Entrepreneurial Ecosystem • Next Big Thing (the Silver Bullet) • Focus on Diversifying Base/ Resiliency • “Build it and They will Come” • Benchmark to Focus Resources • Local Legacy • Regional & Global Growth Questions……….. How do you think the current pandemic has impacted the national, state, regional and local approach to economic development? What emerging trends will impact economic development? Economic Development Partnerships BUSINESS The Four Fundamentals of Economic Development BUSINESS ATTRACTION GROW YOUR OWN BUSINESS EXPANSION PLACEMAKING for TALENT Four Legs to the Economic Development Function • The foundation of a healthy economy starts with placemaking - often affiliated with tourism – significantly affects workforce and talent. • The second leg of the stool is Business Retention & Expansion—retaining and growing existing businesses already residing in the local trading area. • The third leg of the stool is Entrepreneurial Development—starting and nurturing new businesses within the local trading area. • The fourth leg of the stool is Investment/Attraction—recruiting businesses or business expansions from competing communities to the local trading area. Placemaking • What a change 15 -20 years can bring…An inverted model • New significance for “Quality of Life” as an evaluation factor • “Vibrancy and life” – as expressed in schools, health care, events, recreation, neighborhoods, community pride, general amenities, etc. • Social Justice Movement – creating the “big tent” Placemaking and Talent Attraction • Talent is the fuel of a community’s economic health • Live Here – Work There • Value All • Take Care • Showcasing Virginia’s talent • https://hqnova.com/talent.ht ml • https://www.youtube.com/wat ch?v=XpIxiTBZ5zM • https://get2knownoke.com/ Placemaking Business Retention & Expansion • Higher percentage of new jobs and capital investment come from existing businesses • Retention of capital base secures tax revenue for state and locality • Outreach is cost-efficient • Opportunities to identify problems before they become unsolvable • Opportunities to validate business climate and identify business climate improvements • Create business champions for your community • Create a professional service team that is creative and customer- focused Business Retention & Expansion Frederick County Economic Development Authority: “We continue to shine as one of Virginia’s finest economic development regions……leaning on numerous resources…..One such resource includes call-team visits to local businesses to communicate training resources and expansion assistance opportunities. The Frederick County EDA has an established track record of facilitating financial and workforce training assistance to expanding companies.” Recent Headlines • May 2018: UAV PRO builds new facility in Nottoway County (75 jobs, $2 million) • May 2020: Hershey announces $135 million Augusta County expansion (110 jobs) • June 2020: Governor Northam announces Drake Extrusion to expand Henry County operation (30 jobs, $6.85 million) • July 2020: Bausch + Lomb expanding Lynchburg operation, creating 79 jobs over next 5 years ($35.5 million) • August 2020: Musser Lumber Company to expand sawmill, create jobs in Wythe County (12 jobs, $2.4 million) Growing Your Own – Entrepreneurial Development Benefits: Challenges: Corporate downsizing – more opportunity Entrepreneurs are heavily influenced by quality Potential scalability of place Build on and create clusters Entrepreneurs typically require extensive support networks Small business people typically have a vested interest in the well being of the community and High percentage of failure in first two years are civic-minded Significant staff time necessary for sometimes limited visible rewards Growing Your Own – Entrepreneurial Development COwORK Gloucester Business Attraction • Benefits: – Increases the size of the local economy – Diversifies the tax and employment base – Most visible result of economic development efforts • Challenges: – The most competitive of economic development functions – Generally an expensive strategy – Successful recruitment requires elements in place to reduce the risks for the business client: • Critical mass • Population density and growth • Quality of place and world class amenities • Research universities and colleges • Multiple reliable and scalable transportation modes • Affordable, higher density housing • Shovel ready sites and spec buildings • Aggressive and scalable workforce development resources • Proven past success in analogous economic development efforts Business Attraction Timing – IKEA facility Morgan Olsen becomes available VEDP’s Talent $S Accelerator Program 57.8 M Financial solution that lowered upfront costs compared to Jobs competitor 700 The Four Fundamentals of Economic Development BUSINESS ATTRACTION GROW YOUR OWN BUSINESS EXPANSION PLACEMAKING for TALENT  https://www.vatc.org/ Resources www.vedp.org www.govirginia.org http://www.virginiasbdc.org/ http://edwardlowe.org/ http://www.bre.guru/BRE https://brei.org/ http://siteselectorsguild.com/ www.iedconline.org https://www.institutefortomorrow.com/  Questions? Thank You! Petersburg Economic Development Authority February 2021  Frequently Asked Questions – Economic Development • What is “economic development”? • There is no single definition of this phrase. • Economic development is a process of creating and utilizing physical, human, financial, and social assets to generate improved and broadly shared economic well-being and quality of life for a community or region. • It is a process of deliberate intervention in the normal economic growth by making it easier or more attractive for businesses to invest and create jobs. • The main goal of economic development is improving the economic well-being of a community through efforts that entail job creation, job retention, tax base enhancements and quality of life. • What is an Economic Development Authority (EDA) (Purposes, Powers and Functions of EDA)? (Note: the following are summarizing information in Act of the Commonwealth 15.2-4903 to 4920; “Creation of Industrial Development Authorities”) • Any locality in the Commonwealth is hereby authorized (see, Dillon Rule) to create by ordinance a political subdivision of the Commonwealth, with such public and corporate powers as are set forth in this chapter. • The authority shall be governed by a board of directors in which all powers of the authority shall be vested, and which board shall be composed of seven directors, appointed by the governing body of the locality. • No director shall be an officer or employee of the locality. When a director ceases to be a resident of such locality, the director's office shall be vacant, and anew director may be appointed for the remainder of the term. • The authority shall have the following powers: o To sue and be sued and to prosecute and defend, at law or in equity, in any court having jurisdiction of the subject matter and of the parties. o To adopt and use a corporate seal and to alter the same at pleasure. o To enter into contracts. o To acquire, whether by purchase, exchange, gift, lease or otherwise, and to improve, maintain, equip and furnish one or more authority facilities. o To lease to others any or all of its facilities and to charge and collect rent. o To sell, exchange, donate, and convey any or all of its facilities or properties. o To issue its bonds for the purpose of carrying out any of its powers. o To employ and pay compensation to such employees and agents as the board of directors shall deem necessary in carrying on the business of the authority. o To exercise all powers expressly given the authority by the governing body of the locality which established the authority and to establish bylaws and make all rules and regulations, not inconsistent with the 1  provisions of this chapter, deemed expedient for the management of the authority's affairs. o To appoint an industrial advisory committee or similar committee or committees to advise the authority. o To borrow money and to accept contributions, grants and other financial assistance from the United States of America and agencies or instrumentalities thereof, the Commonwealth, or any political subdivision, agency, or public instrumentality of the Commonwealth, for or in aid of the construction, acquisition, ownership, maintenance or repair of the authority facilities, for the payment of principal of any bond of the authority, interest thereon, or other cost incident thereto, or in order to make loans in furtherance of the purposes of this chapter of such money, contributions, grants, and other financial assistance, o To make loans or grants to any person, partnership, association, corporation, business, or governmental entity in furtherance of the purposes of the authority including for the purposes of promoting economic development. o The authority shall not have power to operate any facility as a business other than as lessor and shall not have the power to operate any single or multi-family housing facilities. • What is the Connection Between the Local Government’s Department of Economic Development and the EDA? • The EDA is enabled by the local governing body. • The EDA Board members are appointed by the members of the local governing body. • Staff for the EDA may or may not be operationally connected with the staff of the local governing body. • The EDA and the local governing body, ideally, should share a common vision of the economic development goal and outcomes for the locality. • The roles and responsibilities of the EDA will vary based on decisions made by the local governing body and the EDA itself. • Ideally, roles and responsibilities of the EDA should be clearly defined and well understood by community leaders and stakeholders. • A system of clear and transparent communication should exist between the EDA and the local governing body. • What are some of the Legal Constraints/Virginia Constitution (as relates to Industrial Development Authorities)? • The Virginia Code reference section for the powers of Industrial Development Authorities is § 15.2-4900 • Industrial Development Authorities have broad powers as defined in this section. 2  • Further interpretation of this section of the Code of Virginia should be discussed with the local government’s attorney. • What are some Common and Less Common Activities? • Common o Acquire, develop and sell or lease real property. o Serve as a landlord to secure rental/lease revenue. o Finance projects through issuing bonds or securing loans. o Apply for or manage grants received by the IDA or on behalf of other/affiliated organizations (e.g., Local government); serve as a fiscal agent to others holding grants. • Less Common o Act as the sole economic development entity of the locality o Conduct promotion, marketing, and traditional activities normally assigned to a locality economic development department or public/private not for profit economic development organization. • “Gray” Area Activities (may be conducted by and IDA, shared with the local government) o Development of incentive packages offered to companies. o Funding of IDAs: funded from its own resources and revenues or from grants from other entities or budgeted from local government allocation. • What is the Dillion Rule? • Derived from two court decisions issued by Judge John F. Dillon in Iowa in 1868, further upheld by the United States Supreme Court in 1907 and 1923. • Thirty-nine states employ the Dillon Rule, including Virginia. • The Dillon Rule is the principal that local government only exercises (1) powers expressly granted by the state, (2) powers necessarily and fairly implied from the grant of power, and (3) powers crucial to the existence of local government. • The Dillon Rule provides that local governing bodies have only those powers that are expressly granted, those that are necessarily or fairly implied from expressly granted powers and those that are essential and indispensable.” • What about Grants? (DAVID) • An IDA/EDA may apply for grants either on behalf of itself or others (e.g., in collaboration with other localities or authorities). • An IDA/EDA as applicant can administer and manage grants received. • What about Bond Financing • Bond financing is a tool that can be used by industrial development authorities (and other entities) to provide financing for various types of project investments. • The Commonwealth grants to an industrial development authority the power to issue bonds through its authority to finance; the authority may also refinance such bonds. 3  • Bond financing can be provided to a wide variety of endeavors such as property acquisition, industrial development (sites and buildings), environmental mitigation, health facilities and much more. • The definition of “bonds” under the statue is "Bonds" or "revenue bonds" and embraces notes, bonds and other obligations authorized to be issued by the authority. • An IDA can loan funds from the proceeds of a bond issue to support the statutory rights, privileges, goals, obligations and authorities granted to them by statute. • Any Recommended Model EDA’s within Virginia to view/study? • Over 100 IDAs and EDAs exist in Virginia’s localities. • Many are willing to serve as a resource for best practices. • In a recent survey, the following characteristics were self-identified as best practices for well-functioning EDAs: o Economic development goals and outcomes are well-defined and aligned with the views of the local governing body. o A clear action plan with objectives and measurable outcomes is used as the guiding strategy for implementation of activities to achieve the goal. o Through its board members, the EDA and the local governing body communicate regularly and transparently about both strategy and action. o The staff of the EDA is shared with the local governing body. While not a requirement, this particular linkage can provide consistent connectivity between the two primary partners. o Funding for the EDA is sustainable and may come from a variety of sources. 4  SCWWA Proposed Truck Reroute on Pocahontas Island Community Discussion  Original Concept 2  Neighborhood Meeting Concept Plan 3  FOLAR Concept Plan 4 5  Stewart Concept Plan 6 7 Gap Financing Revolving Loan Fund Petersburg EDA March 4, 2021 Dis-Investment Accumulates  ● Other Blighted Properties keep Values Down ● Unproven Market Cost of Rehab is ● Fewer Lenders Greater than Final ● Fewer Buyers Value ● Environmental Abatement ● Upgrade in Utilities ● Demolition + Construction  Gap Based on Sale Value Rehab Costs Building Value ● Cost of Building = $100,000 ● Land = $150,000 ● Abatement = $350,000 ● Rehabbed Building = $6,900,000 ● Demolition = $750,000 ● FF&E = 35% = $612,000 ● Construction = $9,500,000 ● TOTAL VALUE = $7,662,000 ● FF&E = $1,750,000 ● GAP = $7,278,000 ● Overages = $2,490,000 ● TOTAL = $14,940,000  Financing Gaps Sale Value Cash Flow ● Costs: $14,940,000 ● Costs: $14,940,000 ● 20% Equity: $3,000,000 ● 20% Equity: $3,000,000 ● Primary Lender: (85% of Value) ● 3 year avg net cashflows = = (85% of $7,662,000) = $350,000 $6,512,800 ● 80% of $29,000/month = $23,000 ● Historic Tax Credits: (28% of ● Loan Based on Cashflow = $11,500,000) = $3,434,400 $3,900,000 ● Funds = $12,946,000 ● HTC: = $3,434,400 ● Gap - $2,000,000 ● Funds = $10,334,000 ● Gap = $4,600,000  Gap Financing Revolving Loan Fund ● Bridges the financing gap for catalytic projects ● Targets High Impact Projects ● Replenishes through repayment ● Offers favorable terms ● Stabilizes the Tax Base ● Removes Blight ● Creates Jobs ● Invests in Petersburg