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HomeMy WebLinkAbout2012-01-26 BEDC Packet AGENDA CITY OF MAPLEWOOD BUSINESS AND ECONOMIC DEVELOPMENT COMMISSION Thursday, January 26, 2012 6:00 P.M. Council Chambers - Maplewood City Hall 1830 County Road BEast 1. Call to Order 2. Roll Call 3. Approval of Agenda 4. Approval of Minutes: a. April 28, 2011 b. June 23, 2011 c. September 22, 2011 5. New Business: a. Property Assesses Clean Energy (PACE) Program b. 2012 BEDC Work Plan c. Marketing Plan of Available City Parcels 6. Unfinished Business: a. Overview of Available Assistance Programs 7. Visitor Presentations: 8. Commission Presentations: a. Living Streets Taskforce (No Report) 9. Staff Presentations: a. Development Summary (No Report) b. Election of Chair and Vice-Chair 10. Adjourn MINUTES CITY OF MAPLEWOOD BUSINESS AND ECONOMIC DEVELOPMENT COMMISSION 5:15 p.m., Thursdav, April 28, 2011 Council Chambers, Maplewood City Hall 1830 County Road BEast 1. CALL TO ORDER A meeting of the Commission was held in the City Hall Council Chambers and was called to order at 5:16 p.m. by Chairperson Jenkins. 2. ROLL CALL Commissioners David Hesley, Commissioner Mark Jenkins, Chairperson Christine Novak, Commissioner Shelly Strauss, Commissioner Beth Ulrich, Commissioner Warren Wessel, Commissioner Present Present Present 'Absent Absent Present 'Commissioner Shelly Strauss resigned prior to the meeting due to family commitments. Staff Michael Martin, Planner 3. APPROVAL OF AGENDA Commissioner Hesley moved to approve the aQenda as submitted. Seconded by Commissioner Novak. Ayes - All The motion passed. 4. APPROVAL OF MINUTES Staff recommended tabling the March 24, 2011, BEDC minutes. Commissioner Hesley moved to table the approval of the minutes for March 24. 2011. Seconded by Commissioner Wessel. Ayes - Chairperson Jenkins, Commissioner's Hesley, & Wessel Abstention - Commissioner Novak The motion to table passed. April 28, 2011 Business and Economic Development Commission Meeting Minutes 1 5. NEW BUSINESS a. Capital Improvement Plan 1. Assistant City Manager, Public Works Director, Chuck Ahl gave the presentation on the Capital Improvement Plan and answered questions of the commission. 2. Planner, Michael Martin answered questions of the commission. Commissioner Hesley moved to approve the Capital Improvement Plan. Seconded by Commissioner Novak. Ayes - Chairperson Jenkins, Commissioner's Hesley, & Novak Nav - Commissioner Wessel The motion passed. b. Tanner's Lake Update 1.. Planner, Michael Martin gave the Tanner's Lake Update. 6. UNFINISHED BUSINESS a. Business Retention Tour (No Report) 1. Planner, Michael Martin gave the report. 7. VISITOR PRESENTATIONS a. Diana Longrie, 1771 Burr Street, Maplewood. Ms. Longrie spoke about the National League of Cities meeting in Washington, D.C. This year a great portion of the meeting was about municipal governments and what they can do in these economic times to help spur economic development. Ms. Longrie encouraged commissioners to watch the meeting that was held. You can go to www.tvworldwide.com/events/nlc/1103121 to view the meeting. 8. COMMISSION PRESENTATIONS a. Commissioner report at the city council meeting of April 25, 2011. Commissioner Hesley was scheduled to attend. The item scheduled for review by the business and economic development commission at this meeting was the Maplewood Mall Public Improvements Tax Increment Financing Public Hearing. b. Commissioner Wessel will represent the BEDC at the May 17, 2011, Planning Commission meeting at 7:00 p.m. 9. STAFF PRESENTATIONS The next BEDC meeting is scheduled for Thursday, May 26, 2011, at 5:15 p.m. 10. ADJOURNMENT Chairperson Jenkins adjourned the meeting at 7:42 p.m. April 28, 2011 Business and Economic Development Commission Meeting Minutes 2 MINUTES CITY OF MAPLEWOOD BUSINESS AND ECONOMIC DEVELOPMENT COMMISSION 5:15 p.m., Thursday, June 23, 2011 Council Chambers, Maplewood City Hall 1830 County Road BEast 1. CALL TO ORDER A meeting of the Commission was held in the City Hall Council Chambers and was called to order at 5:17p.m. by Acting Chairperson Ulrich. 2. ROLL CALL Commissioners Karen Anderson, Commissioner David Hesley, Commissioner Mark Jenkins, Chairperson Jennifer Lewis, Commissioner Christine Novak, Commissioner Beth Ulrich, Commissioner Warren Wessel, Commissioner Present Absent Absent Present Present Present Present Staff Michael Martin, Planner 3. APPROVAL OF AGENDA Commissioner Novak moved to approve the aqenda as submitted. Seconded by Commissioner Wessel. Ayes - All The motion passed. 4. APPROVAL OF MINUTES Commissioner Novak moved to table the April 28. 2011. BEDC minutes. Seconded by Commissioner Wessel. Ayes - All The motion to table passed. 5. NEW BUSINESS a. New Member Introduction i. Planner, Michael Martin introduced the new members, Karen Anderson and Jennifer Lewis to the BEDC Commission. ii. Members Karen Anderson and Jennifer Lewis introduced themselves. The current BEDC members introduced themselves to the new members and shared their background. June 23, 2011 Business and Economic Development Commission Meeting Minutes 1 b. Sl. John's Hospital Trillion BTU Program i. Planner, Michael Martin gave the report on St. John's Hospital Trillion BTU Program. ii. Peter Klein, St. John's Hospital addressed and answered questions of the commission. Commissioner Wessel moved to approve the loan of UP to $400.000 from the Citv of Maplewood. in partnership with the St. Paul Port Authoritv. to HealthEast's St. John's Hospital for enerqv efficiency improvements. Seconded by Commissioner Lewis. Ayes - All The motion passed. c. Maplewood Living Streets Task Force i. Planner, Michael Martin gave a brief report on Maplewood Living Streets Task Force and requested representation from the BEDC. Commissioner Lewis volunteered to be the representative on the Maplewood Living Streets Task Force from the BEDC. d. Business Baseline Survey Results i. Planner, Michael Martin gave the report on the Business Baseline Survey Results 6. UNFINISHED BUSINESS None. 7. VISITOR PRESENTATIONS None. 8. COMMISSION PRESENTATIONS a. Commissioner report at the planning commission meeting of May 17, 2011. Commissioner Wessel was scheduled to attend. The item scheduled for review by the Business and Economic Development Commission at this meeting was the Maplewood Capital Improvement Plan Public Hearing. 9. STAFF PRESENTATIONS a. BEDC Meeting Time i. Planner, Michael Martin stated the BEDC meeting time was at 5:15 p.m. but will now change to 6:00 p.m. held on the fourth Thursday of the month. Commissioner Wessel moved to approve the meetinq start time be chanqed to 6:00 p.m. the fourth Thursdav of the month. Seconded by Commissioner Novak. Ayes - All The motion passed. June 23, 2011 Business and Economic Development Commission Meeting Minutes 2 b. Election of Vice Chairperson i. Planner, Michael Martin gave a brief report on electing a Vice Chairperson to replace Shelly Strauss who resigned. Commissioner Wessel moved to table this item until all commission members are present. Seconded by Commissioner Novak. Ayes - All The motion passed. c. Resolution of Appreciation for Shelly Strauss i. Planner, Michael Martin gave a brief report for the resolution of appreciation for Shelly Strauss. Commissioner Novak moved to approve the resolution of appreciation for Shelly Strauss. Seconded by Commissioner Wessel. Ayes - All The motion passed. d. 3M Wins Freedom Award from US Military Chairperson, Jenkins was absent. Staff said the report was informational for the commission. 10. ADJOURNMENT Commissioner Novak moved to adjourn the meeting at 5:59 p.m. June 23, 2011 Business and Economic Development Commission Meeting Minutes 3 MINUTES CITY OF MAPLEWOOD BUSINESS AND ECONOMIC DEVELOPMENT COMMISSION 6:00 p.m., Thursday, September 22,2011 Council Chambers, Maplewood City Hall 1830 County Road BEast 1. CALL TO ORDER A meeting of the Commission was held in the City Hall Council Chambers and was called to order at 6:00 p.m. by Chairperson Jenkins. 2. ROLL CALL Commissioners Karen Anderson, Commissioner David Hesley, Commissioner Mark Jenkins, Chairperson Jennifer Lewis, Commissioner Christine Novak, Commissioner Beth Ulrich, Commissioner Warren Wessel, Commissioner Absent Present Staff Michael Martin, Planner 3. APPROVAL OF AGENDA Staff requested the Commissioner Ulrich Seconded by Commissioner Ayes - All The motion passed. 4. APPROVAL OF MINUTES Commissioner Ulrich moved to approve the minutes for March 24, 2011. Seconded by Commissioner Hesley. Ayes - Chairperson Jenkins, Commissioner's Hesley & Ulrich Abstention - Commissioner Lewis The motion passed. The BEDC minutes for April 28, 2011 and June 23, 2011, are tabled due to a lack of members who attended the meetings to vote on those two sets of minutes. No action is required to approve the August 25, 2011, BEDC Minutes. September 22, 2011 Business and Economic Development Commission Meeting Minutes 1 5. NEW BUSINESS a. 3M Presentation, Thomas J. Heim - Director of Administrative Services i. Planner, Michael Martin introduced the item and the speaker Thomas Heim. ii. Director of Administrative Services at 3M, Thomas J. Heim gave the 3M presentation. b. Overview of Revolving Loan Programs i. Planner, Michael Martin gave the overview of the revolving loan program report and answered questions of the commission. ii. Chairperson Jenkins addressed the commission regarding the loan program discussion. 6. UNFINISHED BUSINESS a. Election of Vice Chairperson i. Planner, Michael Martin gave the brief report. Chairperson Jenkins moved to nominate Commissioner Hesley as Vice Chairperson. Seconded by Commissioner Ulrich. Ayes - All The motion passed. 7. VISITOR PRESENTATIONS None. 8. COMMISSION a. Living Streets i. Planner, ii. Commissioner on the Living the item. update the commission at the next BEDC meeting 9. STAFF PRESENTATIONS a. Solar Works in Maplewood - Planner Martin stated a Solar Works workshop will be held at the Maplewood Nature Center on October 11, 2011, from 6:30 to 8 p.m. b. Maplewood Business Expo - Staff invited the BEDC commission and the public to attend the Maplewood Business Expo which will be held November 3, 2011, from 10 am to 2 p.m. at the Maplewood Community Center. c. Development Summary - Planner Martin reviewed developments that are being reviewed by the boards and commissions in the City of Maplewood. d. Business Retention Tour - Planner Martin and Chairperson Jenkins discussed the business retention tour process in Maplewood. September 22, 2011 Business and Economic Development Commission Meeting Minutes 2 e. BEDC Questions - Planner Martin said Commissioner Novak is moving out of the City of Maplewood and will no longer be serving on the commission. There are questions for the BEDC to review that staff is looking for input regarding for when the interviews are held to replace Christine Novak. 10. ADJOURNMENT Chairperson Jenkins adjourned the meeting at 7:22 p.m. September 22, 2011 Business and Economic Development Commission Meeting Minutes 3 MEMORANDUM TO: FROM: SUBJECT: DATE: Business and Economic Development Commission Shann Finwall, AICP, Environmental Planner Property Assesses Clean Energy (PACE) Program January 18, 2012 for the January 26 BEDC Meeting INTRODUCTION The Minnesota Legislature included SF 2720 in the 2010 Jobs bill enabling the establishment of Property Assessed Clean Energy (PACE) programs. PACE programs allow local governments, individually or through a joint powers agreement, to establish voluntary contractual assessment programs to fund conservation and renewable energy projects. Property owners repay the city through an assessment levied against their property and payable in installments on property tax bills. DISCUSSION The City of Edina adopted a PACE program last year. The Edina Emerald Energy Program allows commercial and industrial properties to get a loan from the city for conservation and renewable energy projects. The city serves as an intermediary using special assessments on the business owner's tax bill as a conduit to attract private financing. The City of Maplewood adopted an energy efficiency and conservation strategy in December 2009. The strategy was required as part of the city's energy efficiency conservation block grant. The overarching goal of the plan is to promote energy efficiency and stimulate increased energy conservation. One of the implementation strategies outlined in the document is to work with local chambers of commerce, business associations, and large commercial and industrial firms in Maplewood and adjacent cities to cooperate more fully in energy conservation goals. The creation of a commercial PACE Program in Maplewood would assist the City in meeting that goal. SUMMARY John Doll, former State Senator and Lynn Hinkle, Policy Director with Minnesota Solar Energy Industry assisted the City of Edina in the establishment of their PACE Program. Messrs. Doll and Hinkle have offered to speak to the Business and Economic Development Commission on a similar program for Maplewood. Both gentlemen's biographies are attached for your information. Also attached is a PACE power point presentation given by Mr. Doll at a recent Regional Chamber of Commerce event hosted by Senator Franken and a guide for policymakers titled Unlocking the Building Retrofit Market: Commercial PACE Financing. Attachments: 1. John Doll Biography 2. Lynn Hinkle Biography 3. Property Assessed Clean Energy Financing Presentation 4. Unlocking the Building Retrofit Market: Commercial PACE Financing Attachment 1 John Doll Biography Former State Senator John Doll currently serves as an officer of the Minnesota Chapter of the Energy Services Coalition and on the Dakota/Scott County Workforce Investment Board Business Services committee. From 2007-2010, John represented Senate District 40 (Burnsville, Savage, Bloomington and Dakota, Hennepin and Scott counties) in the MN State Senate. During his senate tenure, he was Vice Chair of the Energy, Utilities, Technology and Communications committee; Health; Housing and Family Security committee; and the Transportation committee. He also served on the Legislative Commission on State and Local Government and the Legislative Energy Commission. He focused on streamlining government operations, effective public/private partnerships, and economic development through clean energy initiatives. He made substantial contributions to the Renewable Energy Standard, the Urban Partnership Agreement, the Green Jobs Task Force, and Guaranteed Energy Savings Contracts. In 2010, he was the chief senate author of the legislation enabling cities and counties to enact local PACE programs. Over the past year and a half, John and Lynn Hinkle have worked across the state of Minnesota to advance PACE culminating establishment of a commercial PACE program in the City of Edina in November, 2011. Attachment 2 Lynn Hinkle Biography Lynn Hinkle is Policy Director for the Minnesota Solar Energy Industries Association (MnSEIA). Lynn helped lead the 2011 effort to secure Executive Order 11-12 to scale-up use of guaranteed energy savings retrofits for public buildings and remains an Executive Coordinator of the Energy Jobs Association to ensure its implementation. Lynn continues to lead efforts to implement the 2010 Minnesota Property Assessed Clean Energy (PACE) legislation including the Minnesota PACE Steering Team (Minnesota Commerce). In 2009, Lynn was responsible for passage of the Minnesota Renewable Energy Equipment Manufacturing Fund legislation. Lynn has developed and managed several commercial retrofit projects, such as Spruce Tree Center on University Avenue (St Paul,) that integrated LEED EB with a 37 kW solar array. Lynn co- chaired Minnesota's Plug-In Hybrid Electric Vehicle Task Force In 2007 and helped launch the Mayors' Green Manufacturing Initiative at the same time. Lynn led several negotiations between Ford Motor Company and UAW Local 879 at Ford's Twin Cities Assembly Plant from 1986 to 2006 and graduated with honors from Dartmouth College in 1971. Awards: Capitol Report's 2011 Public Policy Achievement Award (Work with the Energy Jobs I nitiative to secure Executive Order 11-12) Attachment 3 1/18/2012 roperty Assessed lean Energy Financing Senator Franken, City of Eagan, Dakota County Regional Chamber of Commerce Event January 5, 2011 John Doll Former State Senator, District 40 nearly 35% of U.S. energy use and carbon emissions come from our buildings 1 Why PACE? PACE provides a pathway to overcome inherent barriers to investing into critical deep energy retrofits in the private sector: short term investment horizons, split incentives, capital competition, high upfront costs, tight credit or low levels of liquidity. It provides a perpetual funding mechanism for EE and RE projects that can overcome the above concerns. And because energy savings make the projects cash-flow positive, and because total asset value is increased, companies improve their financial position without having to tie up any of their equity or debt capacity. What is PACE? Property Assessed Clean Energy financing is a local government program that uses a 100+ year old provision of the property tax code to create a land secured financing district that allows property owners to pay for improvements that are in the public interest. In this case, improving building energy efficiency and installing renewable energy upgrades. 1/18/2012 2 Minnesota PACE The Minnesota Legislature included in the 2010 Jobs Bill, SF 2720, which enables PACE programs to be enacted throughout the state. The "opt-in" program allows local governments, individually or through joint powers agreement, to authorize and create a PACE program. "Best practices" guidelines were included to assure a reliable and sustainable, high quality financing mechanism for deep energy retrofits commercial, industrial and residential buildings. Key Provisions of PACE . MN Statute 216C.436 authorizes local governments to issue and sell revenue bonds under the program through special assessment on property tax "Authorizes multi-jurisdictional PACE programs . Senior Lien Status (Tax Lien) of Financing . Transferability of lien . "Opt_in" program "Adheres to Best Practices guidelines to reduce reduce the risk of default . Requires an energy audit or renewable energy system feasibility study . Program sustainabilityensured through quality assurance and controls "Bonds issued under this subdivision are not a debt or obligation ofthe issuer or any local government that issued them, nor is the payment of the bonds enforceable out of any money other than the revenue pledged to the payment of the bonds. 1/18/2012 3 Benefits of PACE To Property Owners To lenders . Lower Default Risk . No upfront costs . Better Loan-to-Value Ratio . Improved Cash Flow . Less investment risk -Off-balance sheet, SIR>l . Improved property value . Improved property values . Guaranteed revenue stream for repayment of financing -Minimizes the split incentive barrier -Property tax liens pass th rough . Removes Holding Period Bias -Special assessments can transfer Benefits of Deep Energy Retrofits in Commercial Buildings . Significant Energy Consumption Savings -Net Increase in Cash Flow -Healthier Environments for Tenants and Employees -Improved Productivity Levels 'Higher Occupancy Rates/Higher Rents 'Improved Marketability of the Property -Increased Property Values . Energy Efficiency Credits 1/18/2012 4 1/18/2012 Commercial PACE PACE Financing for Commercial Buildings to Reach $2.5 Billion Annually by 2015 - Pike Research, June 2010 Accordingto a new report from Pike Research, PACE programs will continue to proliferate in the United States, and by 2015 investment in PACE financing for commercial buildings will total $2.5 billion annually, under a baseline forecast scenario. This level of investment would result in the creation of 50,000 new jobs, and would mitigate almost 8 million metric tons of carbon dioxide (C02) emissions, equivalent to taking 1.7 million cars off the road fora year. "PACE programs are gaining momentum around the country, and they represent a very promising mechanism for overcoming many of the barriers to energy efficiency retrofits for commercial buildings," says Pike Research managing director Clint Wheelock "The majority of buildings would benefit from energy retrofits, with neutral to positive cash flow in addition to the other environmental and social benefits." 5 1/18/2012 6 Attachment 4 II i UNLOCKING THE BUILDING RETROFIT MARKET: COMMERCIAL PACE FINANCING A GUIDE FOR POLlCYMAKERS 'U,S, Department of Energy (2009),"BuildingsEnergy DataBook;"U,S,Energy Information Administration (2010) "Annual Energy Review 2009," Table12.3 'Nadel,S"Shipley,A etal.(2004),"Technical, Economic, and Achievable Energy Efficiency Potential for US -A Meta-Analysis of Recent Studies," Washington, D,C.American Council for Energy Efficiency Econorrry (ACEEE) Frost and Sullivan (200S) 'North American Energy Management Services" Report1lN337-F1 Deep energy efficiency retrofits in buildings are a cost-effective way to achieve significant greenhouse gas emissions reductions and energy savings. Despite the enormous opportunity in the commercial building sector, activity and investment in comprehensive energy retrofits has been largely focused in public and institutional buildings over the last 20 years. Several well-documented barriers have stalled the retrofit market in the private sector. Market research indicates that lack of internal capital funds and access to external financing are the most challenging barriers. New energy efficiency financing models have enormous potential to catalyze demand from both owners and lenders for clean-energy investment in buildings. Property assessed clean energy (PACE) financing is a model administered by local governments to allow property owners to undertake energy efficiency, renewable energy, and water efficiency projects without large up-front payments. Just as other land-secured financing districts are used to fund public purpose projects, PACE districts allow local governments to deploy capital for energy and water improvements in buildings. The outlay for projects is secured by a property lien and is repaid by the owner as a voluntary special assessment on the property tax bill over a 5- to 20-year term. With authority from 23 states in the US, cities and counties may now launch PACE programs to advance environmental and economic development goals. While the residential market was the initial focus of many PACE programs, recent rulings from the Federal Housing Finance Agency (FHFA) have stalled programs in that sector. Therefore, commercial PACE has emerged as the most viable near-term opportunity to spur retrofit activity. Despite the promise of PACE to mobilize commercial retrofit projects, the model is still in its early stages and is unproven at scale. This paper highlights the experience of leading commercial PACE programs under development and focuses on best practices that reduce risk to building owners and to commercial mortgage holders. Policymakers will also find advice on how they can launch PACE programs and similar financing initiatives to achieve significant economic and environmental benefits in their localities. D Significant cost-effective energy savings remain untapped in the commercial building sector, which in the U.S. accounts for 18 percent of primary energy use, 36 percent of electricity use, and 19 percent of energy- related greenhouse gas emissions.1 Comprehensive and deep energy efficiency retrofit activity and investment has been largely concentrated in the public and institutional sectors over the last decade, despite the significant opportunity for energy savings and greenhouse gas (GHG) emissions reductions in private-sector buildings. The current market for comprehensive building retrofits in the U.s. is about $5 billion per year, dominated by public and institutional facilities. Based on a number of sources, 2 Johnson Controls estimates that 22 percent energy savings could be cost-effectively achieved across the entire stock of existing private- sector commercial buildings, resulting in an additional $12 billion market annually over the next decade.3 At a rate of five direct jobs, five indirect jobs, and ten induced jobs for every million dollars invested, this incremental growth translates to 240,000 new jobs over that decade. Based on national-average commercial building fuel mixes and electricity emissions factors, some 128 million metric tons of carbon dioxide (C02) emissions would be avoided annually by the end of a decade - equivalent to the annual emissions from 28 coal-fired power plants. Enhancing the energy efficiency and overall sustainability of existing commercial buildings creates budget relief in utility expenses, reduces C02 emissions and air pollution, alleviates strain on the electric power system, improves the health and productivity of occupants, and creates local high-quality job opportunities. For commercial building owners considering retrofit projects, the benefits can be substantial and immediate. Energy efficiency improvements can increase the owner's net cash fiow and improve the property's appeal to existing and prospective tenants. Energy efficiency both pays for itself and positions the property to outperform its peers and generate higher returns. Recognizing the benefits of energy-efficient buildings, some cities have adopted mandates for building labeling and disclosure, which require commercial buildings of a certain size to make ENERGY STAR ratings or a similar performance metric available to the public. These requirements, along with the growing trend of tenants seeking green office space, create a market risk for owners of less efficient properties. Even without regulation, portfolio managers and appraisers are already identifying wasteful buildings as high- risk and assigning lower values to them. RI Despite the measurable benefits and an impressive return on investment, several well-documented barriers deter building owners from making energy efficiency improvements or installing renewable energy tech- nology. These include: The up-front cost of efficiency measures and renewable energy systems. Real estate holding periods biased to favor short-term investments. Split incentives between owners and tenants. Lack of new real property to serve as collateral for investor security. Up-front cost and the widespread difficulty of securing capital through a lender have been the main forces stalling the market. In a 2010 global survey conducted by Johnson Controls and the International Facility Management Association (IFMA), involving more than 2,880 executives with budget responsibility for their companies, 47% of respondents identified limited internal capital or insufficient ROI as the top barrier to implementing energy-savings measures.~ As a result, the market for private-sector building retrofits is considerably smaller than its potential. By addressing this widely recognized capital barrier, new financial models can have a huge impact on catalyzing demand from both owners and lenders for clean-energy investments in commercial buildings. Johnson Controls and IFMA(2010) "Global Energy Efficiencylndicator2010" N Several financial models address the concerns of key stakeholders to a varying degree, but one of the more promising models is tax-lien financing, commonly known as property assessed clean energy (PACE) financing. The PACE idea mimics a widely used funding model in which municipalities and counties set up land-secured financing districts to fund projects that serve a public purpose. In such models, the local government collects an additional assessment from properties within the district to amortize project costs over time. As more localities adopt carbon-reduction and energy-savings goals, PACE financing can be a critical tool for policymakers looking to promote efficiency in existing building stock. PACE is a scalable financing program that addresses many of the widely known barriers to clean-energy retrofits. It provides municipalities with a stool for achieving their energy and climate goals while creating jobs and stimulating commercial lending. 1, PACE Model PACE programs are authorized by state legislation that gives local governments the authority to create special land-secured financing districts and levy voluntary assessments for clean-energy measures. Property owners may voluntarily join these districts to fund energy efficiency and renewable energy improvements. The funding for the projects is secured by a tax lien (which may be senior to all other obligations on the property) and is repaid by the owner as a special line item on the annual property tax bill over a 5- to 20-year term. While some local PACE programs sell revenue bonds to fund a pool of projects, others allow building owners to arrange their own financing directly with a commercial bank and leverage the enforceability of the tax lien on the property as security for financiers. The security of the tax lien provides a solution to the inability of commercial building owners, who often lack investment-grade credit ratings, to secure any type of third-party financing for energy retrofits. Additionally, the lien is attached to the property, not the property owner, and therefore transfers with ownership. This allows owners to undertake deeper retrofits with greater energy and carbon savings and greater net present value, yet longer payback periods, even if the owner only plans to hold the building for a few years. In addition, the PACE model helps to overcome efficiency investment barriers in triple-net-lease tenant-occupied properties, because property assessments normally qualify as eligible pass-through expenses. Tenants ultimately benefit from the utility bill savings and bear the cost of the PACE financing payments. Because the savings are usually larger than the PACE payment costs, the tenants see net positive cash fiow. The tax lien model has quickly generated substantial excitement in the U.S.: 23 states have passed PACE- enabling legislation, and two others allow PACE through existing authority. As more districts implement PACE programs, best practices and different styles of the original model are emerging. Both the White House and the U.s. Department of Energy have released guidance and best practices for municipalities establishing programs and express strong support for the tax lien model for the residential and commercial sectors. However, as of October 2010, despite the overwhelming support from the Administration, residential PACE programs were stalled due to concerns from the Federal Housing Financing Agency (FHFA), which views the senior lien provision as an unwarranted risk to federal home loan banks and questions levels of consumer protection. Fannie Mae and Freddie Mac reinforced the FHFA opposition with letters stating that PACE financing constitutes a default on residential mortgages they own. Stakeholders in residential PACE programs continue to work optimistically toward a resolution to allow PACE programs to resume, but the road ahead remains unclear and the early model may need to be modified. Meanwhile, commercial PACE programs continue to develop and grow. To ble 1, Barners and PACE Madel SolutiOns Scarce internal capital budget Spread cost over 5-20+ years No access to or aversion to financing . No investment-grade credit rating . Lack of collateral assets that don't already fall under first mortgage . Inability to get mortgagee consent or lien waiver from securitized mortgage . Limited number of lenders experienced in financing energy efficiency/renewable energy retrofits . External third-party financing rates exceed internal cost of capital . Balance sheet debt ratio concerns Repayment security through senior lien position rather than borrower's credit Backed by property, not by owner or equipment collateral . Local governments provide scale . Low rates due to senior lien position and/or publicly funded loan loss reserves . Accounting treatment may not consider PACE assessments a long term debt/liability Uncertain holding period Transfers upon property sale or tenant tu mover Owner/tenant split incentives Qualifies as triple-net-lease pass-through cost without lease modification or renegotiation Skepticism regarding whether promised energy savings/ROI will be realized Contractor may guarantee savings via a performance contract Many communities developing PACE programs, including Boulder County in Colorado and Sonoma County in California, are using different approaches to reach different sectors. Johnson Controls recommend a two-pronged approach that entails separate PACE programs, one to meet the needs of residential and small commercial properties, and another intended for mid-size to large commercial and industrial properties. Residential and light commercial programs tend to use the pooled bond financing model because projects are too small to attract project financing. Additionally, the size of individual residences does not allow cost-effective measurement and verification on a project basis, so residential PACE programs are validated using statistically representative audits similar to those used in utility rebate programs. Even though residential programs have not been able to go forward due to the FHFA concerns, commercial tax-lien financing remains a viable option because some existing commercial mortgage holders have consented to PACE program participation. These lenders recognize that clean-energy retrofits improve the value of their underlying property assets and also see a business opportunity as investors in PACE financing capital. As a result, a handful of commercial PACE programs remain active, and others are in development to launch. As tax-lien financing programs continue to develop in the commercial sector, some key features stand out as best practices and create robust protections for all parties involved. These include: the PACE model To make PACE programs truly scalable for the commercial building sector, programs should allow building owners to arrange their own financing directly with a commercial bank and leverage the enforceability of the tax lien on the property as security for financiers. This enables building owners to negotiate rates, terms, conditions, and schedules that best suit their specific project needs, rather than waiting to lock in a rate through a bond. It also opens a wider channel of capital infiow compared to pooled bond models. Figure 2 maps out the process of owner-arranged PACE financing. The process begins when the building owner engages an Energy Service Company (ESCO) to audit the property and develop a retrofit plan. The owner then submits the plan to the municipality for approval, in some cases along with a lien consent letter from the mortgagee. Once the municipality notifies the client of approval and records the assessment against the property, the client can negotiate financing from lenders on advantageous terms due to the security of the lien. The owner then enters into a performance contract with an ESCO, and the lender pays the contractor to perform the installation. The municipality assigns the assessment collection rights to the lender, and the building owner pays the assessments semi-annually or at an agreed-upon schedule. 2, PACE Process Commercial Submission and Record Assessment Collection Construction 1. Owner engages ESCO to develop plan 2. Owner submits plan/application to municipality for approval, including mortgagee lien consent 3. Municipality notifies owner of approval, records assessment against property 4. With lien approval, owner shops and negotiates financing from lenders on advantageous terms 5. Owner enters performance contract and planned service agreement with ESCO 6. Lender pays ESCO upon completion 7. Municipality enters 3-party agreement with lender and owner; assigns lender right to collect assessments 8. ESCO provides operations and maintenance and measurement and verification for a service fee 9. Owner pays semi-annual assessments 10. ESCO pays owner if verified savings fall short of energy-savings guarantee and contractor certification Performance contracting is an internationally proven procurement method for reducing risk and enabling third-party financing for retrofit projects. ESCOs provide turnkey responsibility for the retrofits, including site audits, detailed design and engineering, business case analysis, installation, commissioning, and measurement and verification (M&V) in accordance with international standards. Most important, the ESCO assumes performance risk for the project in the form a long-term performance guarantee to ensure that volumetric energy savings materialize and are preserved over time. Performance guarantees have traditionally allowed owners to secure financing at attractive rates and terms from third-party financial institutions. The risk of energy savings not materializing is minimized because the ESCO guarantees that the units of energy are saved. In the event that energy savings do not materialize, the ESCO is required to pay the owner in cash or through additional improvements to make up the shortfall. This reconciliation process is used widely by the federal government, local and state governments, schools and industry and has been proven for over 25 years. In the case of PACE programs, local governments might encourage or even require long-term performance guarantees. This protects property owners and existing mortgage holders by ensuring that the owners gain and maintain positive cash fiow as a result of the project. Guarantees also help local governments ensure quality control and program satisfaction among constituents. An additional best practice is to require the transferability of the guarantee so that future building owners enjoy the benefit of the savings guarantee for the life of the PACE assessment. To minimize risk for local governments, contractors working on PACE projects should have certification based on financial stability, technical expertise, and ability to provide energy guarantees for commercial projects. Communities can leverage National Association of Energy Services Companies (NAESCO) accreditation, federal- or state-approved ESCOs, or contractors with investment-grade credit to provide this assurance. Such contractor certification will improve the quality of PACE programs and support local workforce development goals. criteria to ensure success Local programs should evaluate applications using a set of minimum property qualifications to create confidence among lenders that the program minimizes owner default risk. The following minimum require- ments are recommended: Borrower must be the legal owner of the property. Property must not be subject to any involuntary liens. Property owner must be current on property taxes and must not have been delinquent within the past five years. Property owner must not have declared bankruptcy within the past five years and must not be in bankruptcy, and the property may not be an asset in a bankruptcy proceeding. Property owner must be current on existing mortgages and have secured consent from the mortgage lenders before applying for financing through the program, if such consent is possible (e.g. nonsecuritized mortgage). Existing loan-to-value ratio should not exceed 85% before improvements. forth to holders Several requirements should be included to ensure that the PACE program does not put the existing mortgagee of the property at unnecessary risk, but rather puts the building owner in a better position to service the existing debt payments and increases the value of the mortgagee's underlying asset. The suggested PACE program requirements include: A maximum lien-to-property value ratio of 15% to ensure that any delinquent, uncured PACE assessment that is payable senior to the mortgage upon default is nominal in value compared to the outstanding mortgage. An expected savings-to-investment ratio (SIR) greater than one over the term of the PACE loan, so that only cost-effective and property-value-enhancing measures are included, and that these measures, as a comprehensive package, pay for themselves over the life of the assessment. All costs including financing costs should be included in this ratio calculation. This will improve the participant's ability to repay PACE assessments and other debt, such as mortgage payments. An assessment term that does not exceed the average useful life of all measures included in the project. Performance guarantees. a proper sequence Programs should set a minimum project energy savings requirement (e.g. 20% savings) and should require a loading order where a minimum level of energy efficiency must be achieved before the installation of renewable energy systems will be financed. For example, the proposed commercial PACE program in Los Angeles, which is expected to launch by mid-2011, requires applicants to undertake projects that will achieve the greater of an Energy Star score of 70 or a 10% improvement from baseline consumption before renewable energy installations will be eligible for financing. of Taking a portfolio approach, rather than selecting projects on a case-by-case basis, allows the program to achieve maximum scale, while balancing risk as the program gains traction. In most circumstances, com- mercial office buildings belong to a real estate investment portfolio. Engaging the leadership of a portfolio of buildings creates a larger market than targeting property or facility managers for each site. a loan loss reserve fund Federal, state or local governments can provide modest public funding to leverage significant private investment by seeding loan loss reserve funds - credit-enhancing mechanisms that make lenders more likely to participate in providing PACE financing. The loss reserve fund covers bridge payments to lenders in default situations. Because only delinquent payments (typically 1-2 years) must be cured upon default, the bulk of the assessment survives bankruptcy, and the remaining balance and future payments are assumed by the new property purchaser. This results in roughly 10 times more leverage of government funding compared to a guarantee program for unsecured energy efficiency loans. While initially seeded with government funding through a state energy program or local energy efficiency community block grants, the reserve fund could be replenished on an ongoing basis through a small surcharge included in each PACE assessment. Sources of reserve funding are most commonly being developed at the state level. For example, in April 2010, California passed legislation establishing a statewide PACE Reserve Program that lowers financing costs for businesses and residences making energy improvements through retrofits. The state-financed loss reserve, administered through the California Alternative Energy and Advanced Transportation Financing Authority, was created with $30 million from the Renewable Resources Trust Fund. measurement and verification for validation Quality assurance through ongoing measurement and verification ensures that the program achieves its energy savings and GHG reduction goals, and that the expectations of building owners and financial lenders are being met. Local programs should require that the energy savings be measured and verified according to the Efficiency Valuation Organization's International Performance Measurement and Verification Protocol (IPMVP), and that savings be guaranteed by a licensed, experienced, reputable and creditworthy contractor. Data on the effectiveness of commercial building efficiency retrofits will drive future retrofit decisions and help bring the PACE model to scale. It will also continue to improve the financing process by providing more security for potential retrofit lenders. The City of Melbourne, Australia, has created a new Environmental Upgrade Charge (EUC) program tor financing energy retrofits in commercial buildings using a variation of the PACE model. Melbourne's program has some important features that may be replicable and scalable in other parts of the world. Best Practices: Commercial Sector Private Retrofits As part of its Zero Net Emissions by 2020 Strategy, Melbourne has launched a 1200 Buildings Program that aims to retrofit 1,200 existing office buildings to reduce energy use, save water, and lower carbon emissions. Deloitte estimates that a successful 1200 Buildings Program will create up to 8,000 green jobs and generate up to $2 billion of private sector investment in Melbourne over ten years. To kick-start this initiative, the Victorian Parliament passed an amendment to the City of Melbourne Act on Sept. 14, 2010, allowing the Melbourne City Council to administer a commercial building retrofit financing model. The council may now enter into environmental upgrade agreements (EUAs) with commercial property owners seeking up-front financing for projects that improve energy, water and environmental efficiency, and with the financial institutions willing to fund these retrofits. Following approval of the EUA, the private lending body advances funds to the building owner to undertake the project. The owner or occupier pays an ongoing environmental upgrade charge (EUC), levied by the council, that practically matches the principal and interest. Payments are then passed on to the lender. Melbourne's building retrofit program will target non-residential properties and uses an owner- arranged financing model. This allows property owners to seek out a commercial lender independently to secure attractive rates and terms specific to the project, with assurance of the EUC from the city council. In addition, the program's approach is unique in targeting portfolios of properties instead of single-building retrofits alone. In its first phase, the Melbourne program will target top-tier nonresidential property owners that have an investment grade credit rating, that have 10 or more sites totaling more than 5,000 square meters of 1I00r area in their portfolio, and that spend $500,000 or more on energy each year. While these conditions limit participation to 35 percent of the city's building stock, they will enable a rapid launch with lower administrative costs and better likelihood for long-term success. Early projects will provide case studies and technical resources that will widen the market later. Applicants must also demonstrate that plans for retrofits will achieve at least 20 percent energy use savings. That criterion promotes comprehensive retrofits rather than simple, piecemeal improvements that may eliminate the potential for cost-effectively reaching deeper levels of savings later down the line. s Some alternate approaches to the basic commercial PACE model may be more appropriate in certain customer or regulatory environments. While these mechanisms do not address the full scope of barriers as comprehensively as the basic PACE model, they are promising solutions, particularly when they incorporate some of the best practices discussed above. Subordinate-lien PACE Some state and local governments are examining or implementing subordinate-lien PACE programs. Making the assessment for retrofit project payback secondary to mortgage obligations addresses the most visible concern of the FHFA and federal home loan backers. Interest rates will be 2 to 4 percent higher with a subordinate lien, which limits the appeal of the offering and significantly increases the costs of the energy project. However, under these terms, some financial providers may find PACE investment opportunities with a greater risk/return profile to be more attractive. In addition, if the primary mortgage holder provides the financing, as many have expressed interest in doing, the lien seniority issue disappears. Overall, fewer investors might participate, but the subordinate-lien option still addresses several key challenges in the commercial retrofit market, including bankruptcy concerns. Credit Risk Loan Guarantee Regardless whether PACE financing is available, establishing a federal or local loan guarantee program to cover credit risk on ESCO projects would leverage public funding to ramp up private investment in building retrofits on a large scale in the commercial real estate sector.5 The credit guarantee fund provides first-loss protection against credit losses incurred by the investment vehicle and enables capital infiows into the sector, while lowering the cost of capital. A credit program that defines the components of an energy savings performance contract (ESPC) separates performance risk from owner default risk and creates a fund guaranteeing lenders against owner default risk under commercial ESPCs. 'SeeChristmas,J. (2010) 'The Business Case for Expanding Title XVII to Provide Federal Guarantees behind Owner Default Risk under Commercial Energy Savings Performance Contracts" The legislative proposals for a federal credit-risk loan guarantee program under consideration would lower interest rates, would give risk-averse institutional lenders security in their investment, and could work without the ESPC component. For example, a federal commercial retrofit loan guarantee program might issue a guarantee not to exceed 90% of the project cost. Assuming a $12 billion/year commercial retrofit market with an average owner default risk of 5% and technology risk of approximately 5%, the total federal exposure to capture the full opportunity would be $1.08 billion. If loan guarantees are combined with energy savings performance contracts, where a qualified ESCO takes on the technical and performance risk in the form of a contractual savings guarantee, the loan guarantee would cover only the 5% owner default risk, reducing federal exposure to $540 million. A loan guarantee that targets a specific component of project risk - owner default verse contractor default - is the most efficient and cost-effective way to provide assistance to the commercial retrofit market. The purpose of a credit program is to reduce the cost of capital and address owner default risk. Lenders want to provide financing, owners want to retrofit their projects, and ESCOs want to provide retrofit services, but capital is needed to facilitate these relationships and activities. This fundamental market failure to finance commercial building retrofits is directly addressed with commercial retrofit loan guarantees. Due to the lack of new collateral inherent in energy retrofits, governments may need to modify seniority rules. Current loan guarantees available for renewable and nuclear energy under the Section 1705 program give the federal government full seniority over major assets. In an efficiency guarantee structure, the rules could be written such that the government would have no claim on an original mortgage, but would be senior or pari passu to secondary or "mezzanine" loans. H The following steps outline a basic process for local governments to follow in implementing a tax-lien financing program. Because PACE programs are run on the local level, there are different styles of imple- mentation for the various elements, including program administration, underwriting criteria, source of funds, eligible measures, and quality control. 1. Find out if your state has and pursue if needed Local governments need authorization from the state legislature to collect special assessments for energy efficiency or renewable energy improvements on private property. Legislation often defines the process for launching local programs, so this may be the first critical resource for setting up a PACE district. See the Institute website for an up-to-date U.S. map of PACE legislation by state that includes live links to the enacted legislation. 2. lead staff and advisors Local communities can manage PACE programs in-house or seek additional capacity through third- party program administrator partners. Partners can have turnkey responsibility for all processing and management tasks or may be pulled in for specific expertise. Providers of PACE services include: Renewable Funding Abundant Power Powerhouse Service Inc. Strategic Development Solutions Wisconsin Energy Conservation Corporation FSL Financial HK Climate Solutions LLC Urban Atlantic 3. Conduct a and the program to meet with from stakeholders It is important to define the public purpose goals of the program, including GHG reduction targets or economic and workforce development goals. Market research and analysis is required to estimate the potential program size and the level of capital required. Additionally, stakeholders and potential partners should be engaged when determining these goals and designing key program elements, such as eligible efficiency and renewable improvements and means for quality control. Working with the community and inviting input from stakeholders during the early stages of development allows staff to gauge buy-in and begin educating potential partners and applicants. 4. a network of Programs directed at mid-size to large commercial and industrial sites should apply the owner- arranged PACE financing model, which enables property owners to negotiate their own terms using the seniority of the tax lien as security for financiers. Under this model, conveyance of the note is between the private lender and the property owner only, and the municipality is involved only to arrange for the levy of the assessments. Program staff must first conduct outreach to providers of capital to raise awareness and gauge interest in the program. The local government must then solicit commitments to participate in the program (e.g. letters of support). Staff might also issue an RFP to create a pool of pre-qualified commercial PACE lenders. In addition, states may have existing financial incentives for efficiency and renewable energy, such as public benefit charges or rebates, which enhance PACE financing by offsetting some of the project costs. The Guide to and !?enewofJfe Districts Loed prepared by the Renewable and Appropriate Energy Laboratory (RAEL) at the University of California, Berkeley, discusses financing elements in greater depth. It is expected that with a robust program, interest rates will range from 5 to 8%. Over time, rates will come down as the program gains market acceptance, more data becomes available, and a securitization market develops. 5. Create tax assessment districts state The city councilor local governing body most likely needs to approve various elements of the program proposal. The process for creating the financial district will vary from state to state and cou nty to cou nty. 6. launch and market the program Once the program is ready to be launched, marketing and outreach should include as much detail as possible about the energy and additional benefits from energy efficiency and renewable energy improvements, as well as information on the cost of financing and available incentives. 7. Perform assurance and program measurement and validation. To ensure that projects funded by the program meet and sustain energy savings and GHG emissions reductions, administrators should require that savings be measured and verified according to the IPMVP protocol. It is recommended that the program evaluate licensed and credible contractors who perform M&V services ahead of time and maintain a list of approved providers as a resource for building owners and lenders. Some 250 billion square feet of today's U.S. building stock will still exist in 2035. To reach energy savings and GHG reductions goals, inefficiencies and energy usage in existing private-sector commercial buildings must be addressed. The PACE financing model overcomes many of the barriers that now prevent deep energy retrofits in this sector and can be a key facilitator in unlocking this market. According to a baseline forecast scenario in a report by Pike Research, $2.5 billion will be invested annually in financing for retrofits in commercial properties through PACE by 2015. This investment would create 50,000 new jobs and prevent 8 million metric tons of carbon dioxide emissions. Under an aggressive market forecast scenario, which accounts for federal and state legislative backing of PACE, those amounts would at least triple. For local governments, the additional benefits of increased tax revenue and job creation can be substantial and do not require excessive spending. The Institute for Building Efficiency is an initiative of Johnson Controls providing information and analysis of technologies, policies, and practices for efficient, high performance buildings and smart energy systems around the world. The Institute leverages the company's 125 years of global experience providing energy efficient solutions for buildings to support and complement the efforts of nonprofit organizations and industry associations. The Institute focuses on practical solutions that are innovative, cost-effective and scalable. II . I @2010Johnson Controls, Inc. 444 North Capitol St., NW Suite 729, Washington DC 20001 www.Johnsoncontrols.com MEMORANDUM TO: FROM: SUBJECT: DATE: James Antonen, City Manager Michael Martin, AICP, Planner 2012 BEDC Work Plan October 19, 2011 INTRODUCTION Staff would like to have a discussion with the business and economic development commission (BEDC) on the development of its work plan for 2012. The city council has been working on the 2012 budget for several months and has preliminarily placed funds in the BEDC budget. The council's intent with this budget move is to have the city hire a consultant to work with the BEDC and economic development authority (EDA) on completing its work on an action plan. This work will provide the city with a better basis of what its intent is in terms of economic development. If ultimately approved, the BEDC budget will serve as a significant first step in the city committing to developing an economic development program. DISCUSSION Staff and the BEDC have worked on several individual components that will ultimately work together to form an action plan. However with several changes in commission membership, momentum on this effort has often been dampened. A consultant will be able to take an independent viewpoint and assemble all these pieces in order to give the city a strong basis for what it is trying to achieve by focusing on economic development. Staff would like the BEDC to consider what guidance it would like an economic development consultant to provide to the commission and city. The final goal or deliverable will be to have an action plan to formally adopt but staff wants to hear feedback from the BEDC on what it feels a consultant should prioritize. The city will not be starting from square one on this venture but there is still a considerable amount of work to be done to formulate a plan. In addition to formally adopting an action plan, staff would like to hear additional feedback from the BEDC on what other goals the commission would like to set for 2012. Staff believes a joint meeting between the BEDC and EDA would be beneficial in order to have an open discussion on shared goals. The business outreach program will continue in 2012. Please consider any other initiatives that should be considered for the BEDC in 2012. RECOMMENDATION Review this memo prior to the October 27 BEDC meeting and come prepared for a discussion. MEMORANDUM TO: FROM: SUBJECT: DATE: James Antonen, City Manager Michael Martin, AICP, Planner Marketing Plan of Available City Parcels October 17, 2011 INTRODUCTION Throughout 2011 , staff has been preparing key city-owned parcels for potential sale for private development. Some of these parcels have been before the business and economic development commission (BEDC) prior but staff wants a final opportunity for the commission to provide input on how these properties for should be marketed. Aerial maps of key city-owned parcels are attached to this report. DISCUSSION City staff has been analyzing all city-owned properties, other than parks and open spaces, to determine if any are expendable. Some of these parcels have required a great amount of background work, such as cleaning up old easements, to prepare them for sale. In 2012, staff intends to market these properties for sale. Staff would like the BEDC to provide feedback on what the city should be considering when marketing these parcels. For example, should the city act as the selling agent or should a professional agent be brought in to represent the city? Should the city be targeting potential buyers with projects in hand or should it take any potential buyer? Please come to the commission meeting with any ideas you may have for the city to consider. Any feedback received during this meeting will be forwarded to the city council when more formal plans are developed for the sale of these parcels. RECOMMENDATION Review this report prior to the October 27, 2011 BEDC meeting. Attachments: 1. County Road 0 and HazellMlod 2. Van Dyke and Castle Hazelwood Street Vacation of Excess Right-of-Way Attachment 1 DISCLAHvfER: This map is neither a legally recorded map nor a smvey and is not intended to be l1sed as one. This map is a compilation of records, information and data located in variol1s city, cOl1nty, state and federal offices and other somces regarding the area shmvn, and is to be l1sed for reference pmposes only. SOURCES: Ramsey COl1nty (September 30, 2011), The La\vrence Grol1p:September 30, 2011 for COl1nty parcel and property records data: September 2011 for MEMORANDUM TO: FROM: SUBJECT: DATE: James Antonen, City Manager Michael Martin, AICP, Planner Overview of Available Assistance Programs October 17, 2011 INTRODUCTION At the September 22, 2011 business and economic development commission (BEDC) meeting, it was requested that staff provide a brief overview of available assistance programs currently offered to business owners. Other than tax-increment financing and tax abatement applications, none of these programs are administered by the city of Maplewood though there is some potential where the city would need to be a partner or sponsor. Also, this list is not meant to be exhaustive but rather a synopsis of the programs most likely to have an effect for businesses in Maplewood. DISCUSSION Below is a brief outline of various economic development programs available for Maplewood businesses. Minnesota Job Skills Partnershi/J Proqram - This program works to act as a catalyst between business and education in developing cooperative training projects that provide training for new jobs or retrain existing employees. Grants are awarded to public or private educational institutions with businesses as partners. This program is administered by the Minnesota Job Skills Partnership Board and grants are awarded quarterly. Minnesota Investment Fund - This program works to create and retain the highest quality jobs possible on a state wide basis with a focus on industrial manufacturing and technology related industries; to increase the local and state tax base and improve the economic vitality for all Minnesota citizens. Grants are awarded to local units of government who make loans to assist new and expanding businesses. Maplewood would not qualify for this program. This program is administered by the Minnesota Department of Employment and Economic Development. Small Business Administration 504 Loans - This program is a long-term financing tool, designed to encourage economic development within a community. The 504 Program accomplishes this by providing small businesses with long-term, fixed-rate financing to acquire major fixed assets for expansion or modernization. Proceeds from 504 loans must be used for fixed asset projects, such as: . The purchase of land, including existing buildings . The purchase of improvements, including grading, street improvements, utilities, parking lots and landscaping . The construction of new facilities or modernizing, renovating or converting existing facilities . The purchase of long-term machinery and equipment To be eligible for a 504 loan, a business must be operated for profit and fall within the size standards set by the SBA. Under the 504 Program, a business qualifies as small if it does not have a tangible net worth in excess of $7.5 million and does not have an average net income in excess of $2.5 million after taxes for the preceding two years. 'NOTE - The Small Business Administration offers several specialized loan programs. The one described above is the most general. To read about the more specialized programs visit ww.sba.gov. Small Business Deve/opment Loan Proqram - This program provides loans for business expansions that result in the creation of new jobs. Small business loans up to $5 million are made by the Minnesota Agricultural and Economic Development Board (MAEDB) through the issuance of industrial development bonds. Manufacturing and industrial companies located or intending to locate in Minnesota and meet the federal definition of a small business (generally those with 500 or fewer employees) are eligible. Generally, 20 percent of the project costs must be privately financed through equity or other sources. Minnesota Community Capital Fund - This program provides local communities and economic development agencies throughout Minnesota with the opportunity to participate in an development financing organization as a means of helping small businesses and nonprofits secure the capital they need to grow. MCCF is a bank participation loan fund that leverages millions of dollars in underutilized local economic development funds through the pooling of resources. MCCF provides its members with greater lending flexibility and the capability of offering much larger loans to their local small businesses than would be possible with their own limited and restricted resources. Maplewood was a participant in the Twin Cities Community Capital Fund which folded last year and merged with the statewide program. Maplewood decided to not join the statewide program. RECOMMENDATION Review this memo prior to the October 27 BEDC meeting; feel free to bring information on additional programs for discussion purposes. MEMORANDUM TO: FROM: SUBJECT: DATE: Business and Economic Development Commission Members Michael Martin, AICP, Planner Charles Ahl, Assistant City Manager Election of Officers January 17, 2012 INTRODUCTION The City of Maplewood's Commission Handbook requires the business and economic development (BEDC) commission elect a chairperson and vice-chairperson. Mark Jenkins currently serves as chairperson and David Hesley as vice chairperson. DISCUSSION The Commission Handbook states officers should be elected at the first regular meeting in December. However, the BEDC did not meeting in December, so the commission will need to nominate and elect officers at its first meeting in January. Staff is recommending the BEDC elect a chairperson and vice-chairperson to serve in 2012. On January 26, 2012, nominations will again be taken for officers to serve through 2012. The handbook has a section which deals with the role of the chairperson and vice chairperson. Below is the excerpt from the handbook: Role of the Chairperson and Vice Chairperson Commissions generally appoint the chair and vice chair at set times of the year. Although the appointment is usually for a year, the chair and vice chair serve at the pleasure of the commission The willingness and ability of an individual to serve as the chair or vice chair should be taken into consideration Commissions should try to give all commissioners an opportunity to serve as chair. The responsibility of service as chair or vice chair does take extra time. Responsibilities of the Chair . Preside at all official meetings of the board, commission, or committee. . Consult with the staff liaison in drafting the meeting agenda. . Attend City Council meetings, in person or through another commissioner as designee, as needed to represent the commission, board, or committee with the approval of the commission, board, or committee. . Sign correspondence from the commission with the approval of the City Council. The effective chairperson also, during meetings: . Solicits opinions and positions from reticent commission members. . Protects new thoughts from being rejected prior to fair evaluation . Discourages blame-orientated statements. . Keeps the discussion focused on the issue. . Builds trust by even handedness and fairness to all the participants. Responsibilities of the Vice Chair . Substitute for the Chair as needed. The section is silent on the procedure for election of the chairperson and vice chairperson. BEDC members should voice nominations for chair and vice chair, and the body will then vote for the positions. If only one nomination emerges for each position, a motion can be made to formally appoint that person to the post. If there is more than one nomination, the BEDC should vote publicly to decide which candidate will be appointed. RECOMMENDATION Consider nominations and elect a chairperson and vice chairperson for 2012.