City Council Worksession

South St. Paul WORKSESSION AGENDA SSP City Hall 125 3rd Avenue North Training room Monday, December 13, 2021 7:00 pm AGENDA: 1. Madeleine Lerner, Community Liaison for Representative Angie Craig 2. Hardman Triangle Update 3. Third Quarter Financial Report 4. Performance Recognition Awards – No Attachment 5. Council Comments & Questions A COUNCIL WORKSESSION REPORT DATE: DECEMBER 13, 2021 1 DEPARTMENT: ADMINISTRATION Prepared by: Joel Hanson, City Administrator ADMINISTRATOR: JRH AGENDA ITEM: Discussion with Madeleine Lerner, Community Liaison for Representative Angie Craig DESIRED MEETING OUTCOMES: • Meet Ms. Lerner • Talk about SSP Priorities • Discuss Items of Interest at the Federal Level of Government OVERVIEW: Ms. Lerner has replaced Morris Allen as Representative Craig’s Community Liaison. She will be present to introduce herself and learn about South St. Paul priorities. SOURCE OF FUNDS: N/A  EDA/Council Worksession Report Date: December 13, 2021 EDA Executive Director: _________ 2 Agenda Item: Hardman Triangle Update Desired Outcomes: • Confirm Council’s understanding of the status and potential implications of 2021 Special Appropriation relating to meat processing facility(ies) relocation • Discuss development potential and preferred redevelopment strategy/approach for Hardman Triangle • Discuss developer interest in EDA-owned site at 110 Bridgepoint Court Overview: Summary As discussed at previous Worksessions, the City’s Economic Development Strategy identified an approximately 20-acre area lying between Concord Street, Hardman Avenue, and Grand Avenue as a key focus area for redevelopment. In early 2020, the City Council approved the Hardman Triangle Redevelopment Plan, which established a framework for development of a vital mixed-use district at this key location in the community. Following the Redevelopment Plan’s approval, Community Development Staff and the EDA have made progress towards positioning the City for successful revitalization of the Hardman Triangle. As we look ahead to 2022, several interrelated opportunities warrant consideration in the context of the City’s vision for the Hardman Triangle. 2021 Special Appropriation – Meat Processing Uses As discussed in September, the Omnibus Tax Bill authorized by Governor Walz in July included language that authorizes the Minnesota Department of Employment and Economic Development (DEED) to provide $6,000,000 in grant funding for facility planning and construction to South St. Paul- based businesses engaged in the meat processing industry and operating out of facilities that are at least 75 years old. It has been determined that three South St. Paul businesses (Concord Fresh Meat, Concord Poultry, and Long Cheng), all located within the Hardman Triangle, meet the criteria outlined in the legislation. Since the Bill’s passage, Staff has continued to work closely with DEED staff on designing this unconventional (the state has not historically directly granted money to private businesses, thus there is no “playbook”) program. This program is still in its very early stages, with DEED and the Minnesota Office of Management and Budget (MMB) continuing to iron out the technical details of launching (let alone administering) the grant. As we understand it, DEED will release an RFP in the 1st Quarter of 2022, and at that time eligible businesses will be encouraged to coordinate with DEED on preparing and submitting their applications. It remains unclear whether all of the businesses identified as eligible will ultimately choose to apply, and if so how (or if) DEED will “score” or “rank” applications and ultimately award funds. At a minimum, for their application to be considered, the applicants will need to show that they: a) Have design due diligence and project budgeting completed for the new facility. b) Have a site identified for the new facility. c) Have the project fully funded. The DEED grant will be a reimbursement program, so the businesses will have to secure funding through a bank or equity/investor sources in order to be eligible to apply. One final and important point of clarification that we’ve received from DEED since we last updated the EDA is that the DEED funds may only be spent on sites and facilities within South St. Paul. Previous discussions with the businesses indicated that they each would have likely preferred to establish their facilities in the City of St. Paul if the opportunity presented itself, but that would now seem unlikely since doing so would essentially forfeit a business’ ability to leverage the DEED grant. Even though we aren’t the grantor or the grantee, the City will have to play an important role in this program specifically related to site identification and the development approval process. Development Potential/Redevelopment Strategy The Hardman Triangle Redevelopment Plan (click for link to the Plan document), through an intensive market study and evaluation of the site, suggests that the Hardman Triangle could potentially accommodate up to 20,000 square feet of commercial development and between 650 – 800 residential units over the next 10 – 12 years. The EDA controls about 9.5 acres of land in the district (generally, sites “C”, “D” and “E” in the graphic to the left). Site “D” (which is basically the 125 – 135 Grand Avenue properties) is viewed by staff as the key site within the district to establish the tone of development for the rest of the Hardman Triangle. Situated at the “100% corner” of Grand Avenue and Concord Street, in the ideal this site would attract a significant commercial presence at street level. In the time since the Plan’s approval, Staff has continued in attempts to keep this site “on the radar” of our contacts in the development community. Generally speaking, the messages we’re hearing are that the City is “doing the right things” to get this site ready, however there continues to be skepticism in the market about the viability of any commercial/retail component to the site in the short term at least. As we’ve discussed, at the very least it appears that the market wants to see how successfully the approved and proposed residential developments on Concord Exchange fare before making any meaningful overtures about mixed-use and/or commercial development within the Hardman Triangle. However, there has been preliminary developer interest in standalone residential development, potentially on site “E”, in the relatively near term. While this is certainly encouraging, Staff feels it is appropriate to discuss the EDA’s vision more strategically and broadly before engaging in any meaningful development discussions for sites within the Hardman Triangle. At the basic level, Staff would like to learn whether the EDA favors pursuing a “master-developed” approach or a more “site specific” approach to future development within the Hardman Triangle. The EDA’s preference as to approach will go a long way in determining how (and potentially when) Staff approaches redevelopment discussions in the Hardman Triangle, and will also inform specific action steps the EDA/City will take in implementing the vision of the Plan. Staff shares the following thoughts about the distinctions between the “master-developed” and “site specific” approaches on the next page. • “Master-Developed” Approach o By “master-developed”, Staff is referring to an approach that would essentially pursue implementation of the entire Hardman Triangle Plan (or some variation of it) through a development partnership with a single development entity, even if that likely occurs in multiple phases. o Most likely, this would entail the EDA issuing a Request for Proposals (RFP), with interested/qualified development teams presenting a comprehensive proposal for the development of the entire 20-acre site. This approach would involve relatively significant administrative work on the front end, but would provide the highest likelihood of clarity and cohesion as the site is brought to market and ultimately developed. o At this scale, the master-developed approach probably appeals only to relatively large regional/national developers and institutional capital. Given its position as an Opportunity Zone site (and assuming that federal program is sustained), it seems at least possible that going through an RFP process would attract some qualified and capable developers. o Obviously, the EDA could forego an RFP process and simply try to identify a development partner through our existing networks (in a sense, that’s what Staff has been doing for the past year and a half). This might be a bit more expedient, for better (eliminating red tape/delay) or for worse (potentially missing out on the “best deal”, best partner, or best outcome for the EDA/City). o At first blush, Staff’s most significant concern with pursuing the “master-developed” approach would be that the site’s challenges – most predominately market-related but also soil conditions – may prove to be too much risk for any one developer to want to take on. Put bluntly, the development community has not proven to be clamoring to undertake mixed-use development in South St. Paul due to several factors – many of which we can’t control. We are taking (in Staff’s opinion) every reasonable step we can to change that narrative, but ultimately a “master development” scenario will require that a developer is able to justify (to investors, lenders) the significant level of risk that is inherent in any implementation of our ambitious plan. • “Site Specific” Approach o By “site specific”, Staff is referring to an approach that would pursue implementation of the Hardman Triangle Plan (or some variation of it) one project/site at a time, quite possibly with different development partners per project. o It is probable that a “site specific” approach would be more flexible and feasible and yield more results in the short term, and provide an opportunity for a wider variety of regional/local developers to be involved in the redevelopment process. o A “site specific” approach also relies less heavily, at least in theory, on acquiring additional property within the Hardman Triangle in the short-term. Conceivably, a successful development could be accomplished on any of the sites in the district that are already under the EDA’s control. o The challenge with the “site specific” approach is that while the 2020 plan is a solid foundation, it is a relatively general and loose concept of the site’s development capacity. Important elements like street design and connectivity, parking, utilities, and stormwater management are considered only at a very high level in the 2020 plan. Prior to committing to any “site specific” development within the district, the City would be well-advised to confirm that any site developed would retain the ability to extend infrastructure to the broader district and that such a development would not unintentionally hinder the developability of other sites in the Triangle. 110 Bridgepoint Court The EDA may recall that the Hardman Triangle Redevelopment Plan also identified the block at the southeast corner of Concord Street and Grand Avenue for future redevelopment (“Site F” in the map at left, proposed 30,000 SF of commercial and up to 100 units of housing). The southwest portion of this site (110 Bridgepoint Court) is owned by the EDA and is currently undeveloped/vacant land. The 110 Bridgepoint Court site is in the “General Business” zoning district, which would permit a relatively broad range of retail/commercial uses by right and an even more broad range of service/light industrial/commercial uses through a CUP. The Comp Plan guides the site for “Commercial” development, which is more narrowly aimed at retail sales/services, restaurants, hotels/motels, and entertainment/recreation as well as office uses. Staff has been in general dialogue with Lariat Companies (link to company’s website), a west metro commercial developer that is interested in the 110 Bridgepoint Court site for the development of a small business incubator. They envision the development being about 20,000 square feet and being divided into multiple smaller suites (up to 1,500 sf each) for lease to small businesses, although they don’t suspect that many of these businesses will be traditional retail. Generally, what Lariat is seeing is similar to what we’re seeing in terms of demand: the most likely tenants in this facility would be general business services, contractors operations, e-tailers, small/cottage/craft manufacturing, small light assembly, office/showroom, and technology. Clearly, these are uses that are right at home in the Bridgepoint Business Park, but considering the fact that this site is guided and zoned differently from the sites to the south and east, Staff felt that before conveying that to the developer we should discuss the EDA’s vision for this property. Takeaways/Key Questions: • Since it’s been made clear by DEED that grant funds can only be spent within South St. Paul, the odds of the businesses moving to another community are greatly reduced. Given that, Staff reminds the EDA of our September discussion about potential sites within SSP. At that time, the consensus was that only sites that are currently zoned “I – Industrial” should be considered for potential development with modern custom meat processing facilities; we eliminated quite a few other options from consideration at the September meeting. Should staff proceed with due diligence on the current Public Works site for potential relocation? Obviously, if this path is pursued that has a domino effect on Public Works, which we’ll be prepared to discuss Monday. • Does the EDA have a preference as to how we should proceed with “marketing” the Hardman Triangle for development (“master-developed” vs. “site specific”)? In essence, the question is “In the near-term, should we gracefully turn away any interested developer whose intention is to pursue only a ‘one-off’ development project (unless that project is retail/mixed use at the 100% corner)?” • 110 Bridgepoint Court is a unique site, with Concord frontage (but not access), and neighbored by three distinctly different land uses (fast food to the north, office to the east, light industrial to the south). It’s easy to see the possibility that this site eventually gets developed in any number of ways and blending into the neighborhood relatively well. The current interest is for development as what would most closely resemble light industrial/office use – is the EDA compelled to facilitate that development, or would the EDA prefer continuing to hold this site for a different development type in the future? A COUNCIL WORKSESSION REPORT DATE: DECEMBER 13, 2021 3 DEPARTMENT: FINANCE Prepared by: Clara Hilger ADMINISTRATOR: JRH AGENDA ITEM: 2021 Third Quarter Financial Report DESIRED MEETING OUTCOMES: Discussion on the 2021 Third Quarter Financial Report OVERVIEW: The third quarter of 2021 is complete and financial results are available. The Finance Director prepared the attached third quarter financial report for Council review. The following items are important to note when reviewing the report: • The Benchmark is roughly 75% and is based on a fluid calendar year of operations. • Many of the variances result from seasonality and not all financial transactions occur evenly throughout the year. Some are one time or periodic activities that do not occur in each quarter. • Investment income is recorded and allocated to the funds on a semi-annual basis. • Large revenue sources (i.e. tax settlements and LGA) are received in May, July and December, which underscores the importance of a strong fund balance as a tool to avoid General Fund borrowing for operations. Finance has not noted any worrisome variances in the operating funds for the third quarter. The variances that have occurred are noted in the attached report. There are no proposed budget adjustments for the third quarter. The third quarter financial report will be placed on consent for formal council action at the December 20, 2021 meeting. SOURCE OF FUNDS: N/A  Benchmark 2021 2021 Actual thru 75% Description Original Amended September Percent Budget Budget 2021 of Budget GENERAL OPERATING FUND GENERAL FUND - REVENUES Taxes 10,933,514.00 10,918,648.00 6,275,015.65 57.47% A Fees 1,753,760.00 1,753,760.00 1,413,119.38 80.58% B Intergovernmental 2,292,248.00 2,292,248.00 1,778,676.97 77.60% C Charges for Services 1,807,080.00 1,807,080.00 1,286,801.26 71.21% D Other Revenues 82,710.00 82,710.00 75,615.56 91.42% E Transfers In/Fund Balance 190,000.00 190,000.00 142,515.00 75.01% Total Revenues 17,059,312.00 17,044,446.00 10,971,743.82 64.37% GENERAL FUND - EXPENDITURES General Government Mayor & Council 155,063.00 155,063.00 127,424.31 82.18% F Administration 448,404.00 454,106.00 301,693.66 66.44% Human Resources 145,010.00 147,397.00 105,907.55 71.85% City Attorney 70,000.00 70,000.00 42,329.47 60.47% G City Attorney - Criminal 170,000.00 170,000.00 163,907.63 96.42% H City Clerk 143,527.00 146,077.00 98,435.96 67.39% Information Technology 630,562.00 637,555.00 462,434.09 72.53% Recycling 52,988.00 52,988.00 9,056.82 17.09% I Finance 509,276.00 497,029.00 332,897.26 66.98% Total General Government 2,324,830.00 2,330,215.00 1,644,086.75 70.56% Public Safety Police 6,475,672.00 6,560,384.00 4,281,337.43 65.26% Fire 2,598,462.00 2,598,462.00 1,951,917.78 75.12% Total Public Safety 9,074,134.00 9,158,846.00 6,233,255.21 68.06% Public Works Engineering 507,458.00 516,879.00 355,966.55 68.87% Streets, Alley's and Blvd's 1,860,758.00 1,873,918.00 1,326,024.02 70.76% Buildings 259,618.00 258,215.00 168,809.13 65.38% Parks Facilities and Maintenance 1,112,273.00 1,120,384.00 946,618.62 84.49% J Total Public Works 3,740,107.00 3,769,396.00 2,797,418.32 74.21% Community Development City Planner 478,294.00 484,502.00 325,751.46 67.23% Code Enforcement 288,271.00 292,195.00 218,187.14 74.67% Total Community Development 766,565.00 776,697.00 543,938.60 70.03% Leisure Services Parks Administration 463,854.00 488,297.00 231,416.95 47.39% K Splash Pool 76,869.00 75,363.00 70,773.16 93.91% L Northview Pool 99,669.00 98,163.00 6,509.90 6.63% L Recreation Programs 174,391.00 169,818.00 68,468.94 40.32% K,M Community Affairs 118,893.00 120,592.00 84,110.08 69.75% Total Leisure Services 933,676.00 952,233.00 461,279.03 48.44% Nondepartmental Contingencies 220,000.00 57,059.00 0.00 0.00% Transfers out 0.00 0.00 1,365,215.00 0.00% N Total Nondepartmental 220,000.00 57,059.00 1,365,215.00 22.93% Total Expenditures 17,059,312.00 17,044,446.00 13,045,192.91 76.54% Revenues Over (Under) Expenditures 0.00 0.00 (2,073,449.09)  Benchmark 2021 2021 Actual thru 75% Description Original Amended September Percent Budget Budget 2021 of Budget OTHER OPERATING FUNDS LIBRARY FUND Revenues 826,598.00 841,464.00 420,003.75 49.91% A Expenditures 826,598.00 841,464.00 582,691.21 69.25% Revenues Over (Under) Expenditures 0.00 0.00 (162,687.46) DOUG WOOG ARENA Revenues 1,051,954.00 1,051,954.00 689,003.67 65.50% O Expenditures 893,659.00 943,935.00 609,858.14 64.61% O Revenues Over (Under) Expenditures 158,295.00 108,019.00 79,145.53 AIRPORT OPERATING FUND Revenues 1,203,242.00 1,203,242.00 1,077,358.90 89.54% P Expenditures 1,359,321.00 1,366,916.00 914,773.55 66.92% Revenues Over (Under) Expenditures (156,079.00) (163,674.00) 162,585.35 CENTRAL SQUARE FUND Revenues 119,509.00 119,509.00 120,453.28 100.79% Q Expenditures 132,833.00 140,423.00 115,153.95 82.01% Q Revenues Over (Under) Expenditures (13,324.00) (20,914.00) 5,299.33 STORM WATER UTILITY FUND Operating Revenues and Grants 625,950.00 625,950.00 350,974.43 56.07% R Expenditures - Operating 361,913.00 361,913.00 431,578.08 119.25% S Transfers - Capital 1,215,000.00 1,215,000.00 58,506.00 4.82% Revenues Over (Under) Expenditures (950,963.00) (950,963.00) (139,109.65) STREET LIGHT UTILITY FUND Revenues 305,570.00 305,570.00 175,042.83 57.28% R Expenditures 251,340.00 251,340.00 196,749.11 78.28% Revenues Over (Under) Expenditures 54,230.00 54,230.00 (21,706.28) WATER AND SEWER UTILITY FUND Revenues Administration 56,000.00 56,000.00 13,526.44 24.15% Water Utility 2,564,700.00 2,564,700.00 1,653,733.99 64.48% R Sewer Utility 3,975,600.00 3,975,600.00 2,603,970.96 65.50% R Total Revenues 6,596,300.00 6,596,300.00 4,271,231.39 Expenditures Adminsitration 500,662.00 490,648.00 336,346.94 68.55% Water Utility 1,133,148.00 1,135,630.00 741,105.41 65.26% Sewer Utility 3,510,780.00 3,512,830.00 2,822,449.14 80.35% T Total Expenditures 5,144,590.00 5,139,108.00 3,899,901.49 Transfers Water Utility 2,100,000.00 2,100,000.00 95,503.00 4.55% U Sewer Utility 500,000.00 500,000.00 162,303.00 32.46% U Total Transfers 2,600,000.00 2,600,000.00 257,806.00 9.92% Net Income (Loss) (1,148,290.00) (1,142,808.00) 113,523.90  Benchmark 2021 2021 Actual thru 75% Description Original Amended September Percent Budget Budget 2021 of Budget OTHER OPERATING FUNDS CENTRAL GARAGE - INTERNAL SERVICE FUND Revenues 1,452,917.00 1,452,917.00 1,165,690.05 80.23% V Expenditures 1,327,087.00 1,329,749.00 745,617.59 56.07% Net Income (Loss) 125,830.00 123,168.00 420,072.46 ECONOMIC DEVELOPMENT AUTHORITY Revenues 327,725.00 327,725.00 187,136.26 57.10% A Expenditures 327,725.00 333,251.00 220,415.24 66.14% Revenues Over (Under) Expenditures 0.00 (5,526.00) (33,278.98) EDA - HOUSING (HRA LEVY) Revenues 446,891.00 446,891.00 262,377.95 58.71% A Expenditures 446,891.00 451,756.00 202,635.70 44.86% Revenues Over (Under) Expenditures 0.00 (4,865.00) 59,742.25 HRA - PUBLIC HOUSING Revenues 2,049,100.00 2,049,100.00 638,847.32 31.18% W Operating Expenses 1,933,408.00 1,933,408.00 1,238,671.44 64.07% Capital Expenses 0.00 0.00 89,755.83 0.00% X Net Income (Loss) 115,692.00 115,692.00 (689,579.95) Tickmark Explanations for Budget VS Actual Variances A. Taxes will be received in June/July and December/January B. 3rd quarter Franchise fees come in October; Building permits revenue over budget for 2021 C. LGA is received in July and December D. Limited winter/spring recreation activities E. Interest earnings are posted semi-annually, other minor revenues are unpredictable F. City memberships paid annually G. Legal service invoices for eight months only H. Billings for Criminal attorney services will cease when the contract amount has been reached I. WSP is now fiscal agent, costs no longer paid by SSP; composite site costs occur May-October J. Purchase of trackless sidewalk machine not budgeted, approved 4/19/21 Council meeting K. Budget includes two recreation supervisors, only one hired L. Splash pool only open June through August; Northview pool closed in 2021 M. Recreation programs have been limited in the first half of the year N. Transfer of 2020 unassigned fund balance to Capital Programs Fund O. Winter ice season starts in October P. Certain revenues come in at the start of the year at the Airport (land leases) Q. Budget amounts for 6 months – benchmark is 100% for CSCC R. Utility revenues are based on service delivery, bills issued in Jan, Feb, Mar of 2021 are accrued back to the 2020 books as they are for services delivered in 2020. This is a regular & routine occurrence. S. Seidl’s Lake project costs T. Sanitary Sewer has 10 months of MCES charges U. Transfers to capital projects and utility administration to cover deficit will not be posted until the end of the year V. Sale of assets not budgeted W. Revenue activity from management company has not been updated for 2021 X. Housing project costs are paid from HUD capital grant