The Cook County – Grand Marais Economic Development Authority (EDA) reviewed its budget once again at the February 11, 2014 meeting, trying to figure out how housing and a small business consultant fits into the EDA mission.
EDA Treasurer Scott Harrison distributed a copy of the budget for 2014. Harrison explained that the EDA gets most of its revenue from the levy, which comes from real estate taxes. The EDA receives $210,000 with $150,000 going to operations and $60,000 for debt service on the Cedar Grove Business Park. After the board discussed several of the budget line items, Harrison said, “I just want people to be aware that there aren’t a lot of dollars laying around.”
Harrison pointed out a positive in the EDA budget, $35,000 from the Small Business Administration, which funds Small Business Development Centers around the state. The University of Minnesota coordinates the Small Business Development Center (SBDC) in Cook County and Pat Campanaro is the consultant. She has been working with Cook County Higher Education but as of April 1, she will be under the EDA umbrella and will provide assistance to business owners at the EDA office in Grand Marais City Hall.
That move will mean some modifications to the EDA office space. Harrison said with the recent siting of the Cook County Chamber in the front office, the small business development consultant needs private space to meet with clients, but also needs to be able to see when someone enters the office. He said the renovation would consist of constructing a wall, adding a door and a window at a cost of about $5,000. The board discussed who should pay for the renovations, the EDA or the city, or if it should be shared. Howard Hedstrom agreed to go to the next city council meeting to ask if it would pay for the renovation. At the city council meeting on February 12, the request for the renovation was approved and the city agreed to pay half of the cost of the modification.
Harrison also presented a job description for the SBDC consultant, which states that the consultant will provide leadership in the promotion of a countywide economic development vision and direction; present a strong, positive image to the community by establishing working relationships with community groups, business owners, organizations, public officials, the general public and in particular, the county chamber; and promote the EDA and SBDC resources to potential clients.
Board Member Heidi Doo-Kirk said the personnel committee is looking at what the EDA bylaws say about staffing. She said the EDA has help from Jim Boyd of the Cook County Chamber and Pat Campanaro with the Small Business Development Center, but it is not clear if that is appropriate. However, she said, looking at the budget presented by the treasurer there is no money to hire a director or an office administration person. “We would be hiring at zero pay,” said Doo- Kirk.
Board Member Howard Hedstrom also said Board President Mark Sandbo has taken on a lot more duties because there is no EDA director. Doo-Kirk said things might fall through the cracks without a director. She said for example, Mark Sandbo received a letter from someone interested in moving to the community and bringing a business. “Is that for you, Pat?” she asked Campanaro.
Campanaro said she wasn’t sure and agreed that is something that needs to be worked out. AEOA works with EDA on housing
Scott Zahorik and Leah Hall from the Arrowhead Economic Opportunity Agency (AEOA) were at the meeting to give an update on a proposed “work force” housing project on two lots in the Cedar Grove Business Park. Hall said AEOA is looking at developing a townhome complex with 2- 3- and 4-bedroom units. She said a market study will be completed to determine the appropriate unit combination and an architect will help determine what style of housing is most appropriate.
Board Member Hal Greenwood said he didn’t think there was a need for 3- or 4-bedroom units. He believed more one-bedroom or even studio apartments were needed. Hall said if the market study shows a need for more 1-bedroom units, the style of housing would be adjusted.
Hall said the proforma had been completed and distributed a status report which estimates a total income of $217,000 per year with sample rents of $683 for a two-bedroom; $789 for a three-bedroom and $881 for a four-bedroom. The proforma estimated the annual cash flow would be $34,506. Hall stressed that the numbers were preliminary. “This is in an ideal world, with no incidents outside what we’ve anticipated,” she said.
Hall said operating expenses were based on statewide standards, but some categories were estimated higher because expenses are higher in Cook County. The worksheet also included estimated development expenses, which Hall said also included a buffer, as it is believed costs will also be higher to build in Cook County. It is believed that the cost of development will be $6,113,821.
Hall shared information on potential sources of funding, which total $5,171.793. There is a gap of $942,028, which Hall said could be addressed in a variety of ways: adjustment of number of units, unit combinations, and other funding sources. Hall said she has ideas for funding that she does not want to disclose yet. She said that gap demonstrates the need for tax credits to help control rents to keep the units affordable.
Zahorik said, “We’re starting with the preferred model, the townhome. Part of the process is looking at this $942,028 gap. It’s a way to get everybody thinking about what it has to be; what it needs to be.
“Maybe this is it. Maybe we nailed it coming out of the gate. Maybe not. Maybe it’s exactly what we need, but the funding is not there. We need to look at that. The last thing we want to do is put up a building that no one wants to move into,” he said.
Hall said the next step is to take the completed proforma to Minnesota Housing Financing Agency and the Greater MN Housing Fund. Hedstrom asked what the EDA’s role was in this project. Hall said support and the transfer of land in the Cedar Grove Business Park as has been discussed. Greenwood asked what the timeline for the project is. Hall said it is hoped that the project would be completed in June 2015.
In other business:
. Harrison presented a draft resolution for the sale of revenue bonds for Superior National at Lutsen. A unanimous motion was passed authorizing Ehlers & Associates and bond counsel Fryberger, Buchanan, Smith & Frederick, P.A. to proceed with preliminary work necessary for the “authorization, issuance and sale of the bonds in an amount not to exceed $2,350,000 to provide funds for the cost of improvements and additions to Superior National at Lutsen.”
. The reimbursement to Golf Pro Greg Leland was approved for his attendance at the golf show in Orlando, Florida. Leland attended the show without being paid. The board noted he would also be attending the Minneapolis Golf Show without pay.
. The board reviewed the final proposed contract with Community Fundraising Solutions (CFS) for completing the administration of the 2012 Department of Employment and Economic Development (DEED) grant for housing and commercial rehab. The contract is for February 11 – June 15, 2014. CFS proposes to provide the services for $20,762, which will be $3,200 per month during the terms of the agreement and $7,962 of earned administrative fees from the grant. Part of the payment will be in the form of purchase of the computer server by CFS from the EDA. Any additional services required after June 12, 2014 will be billed at $75 per hour.
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