Loading...
Business Assistance – Blake Road Station Development Project; Bishop CITY OF HOPKINS Memorandum To: Honorable Mayor and Council Members Mike Mornson, City Manager From: Nick Bishop, Finance Director Date: August 10, 2021 Subject: Business Assistance – Blake Road Station Development Project _____________________________________________________________________ City Council has expressed an interest in providing some type of financial assistance to businesses affected by the Blake Road Station Development Project. Staff is currently in the process of researching what options are available to consider. Staff will present their findings at the work session. Finance Department CITY OF HOPKINS Memorandum To: Honorable Mayor and Council Members Mike Mornson, City Manager From: Nick Bishop, Finance Director Date: August 10, 2021 Subject: Business Assistance – Blake Road Station Development Project _____________________________________________________________________ PURPOSE To discuss the viability of providing financial assistance to businesses affected by the Blake Road Station Development Project. INFORMATION City staff and consultants reviewed funding sources available to the City. The representatives included: • City Manager, Mike Mornson • Assistant City Manager, Ari Lenz • Director of Planning & Economic Development, Kersten Elverum • Community Development Coordinator, Jan Youngquist • Finance Director, Nick Bishop • City Attorney, Scott Riggs from Kennedy & Graven • Senior Municipal Advisor, Stacie Kvilvang from Ehlers & Associates Four different funding sources were identified and reviewed: American Rescue Plan Act (ARPA), Economic Development Fund, Tax Increment Financing (TIF)/Tax Abatement and other grants. The City may only use public funds for lawful expenditures, which includes the following criteria: • A public purpose for the expenditure must exist. • Specific or implied authority for the expenditure must be in State statute or the City’s charter. Providing payments to a closed business or business that is no longer in Hopkins would not benefit the community and would not pass the public purpose test. Any financial assistance provided would need to be for a Hopkins business. Finance Department American Rescue Plan Act The City will receive $1.954 million of funding to be used from 2021-2024. One eligible use is assistance to small businesses and non-profits. Under ARPA guidance a loan or grant can be provided to mitigate financial hardship caused by the pandemic or to reimburse costs to implement COVID-19 prevention or mitigation tactics. The non- renewal of leases related to the development project is not caused by COVID-19. The City could create a forgivable loan program with ARPA funds for pandemic related financial hardships. The program could be City wide or targeted at small businesses. ARPA also allows programs targeted at businesses that serve disadvantaged communities. The City would need to develop criteria for the program that complies with ARPA and includes provisions that financial hardship has been caused by the pandemic. Each individual business would need to qualify before any assistance was given. Economic Development Fund The City periodically offers a grant program to downtown businesses for façade improvements from the Economic Development Fund. The City could design a similar program for affected businesses to reimburse all or a portion of costs associated with tenant build-out for a new site in Hopkins. Each individual business is different and could have extensive or minimal costs that qualify under such a program. It may also be challenging to find suitable space in Hopkins as commercial vacancy rates are fairly low, and there are limited opportunities. Tax Increment Financing/Tax Abatement Any use of TIF or tax abatements must comply with Minnesota Statutes (in Chapter 469). City Council has also adopted Policy 7-C that identifies eligible uses for TIF and tax abatements for private developments. This memo is not intended to describe all the criteria for the use of TIF or tax abatements. Staff does not have any development proposals from the affected businesses and believes is highly unlikely a proposal will come forward that qualifies for this type of support. Other Grants The City is not aware of any available grants to provide financial assistance for this purpose. Other Considerations This is not the first time that businesses have been displaced due to redevelopment in Hopkins. The City also expects that redevelopment will continue to occur within the City, especially in the Southwest LRT Station Areas. Offering financial assistance for one project could create the set a precedent that future projects will also receive assistance. Director of Planning & Economic Development, Kersten Elverum is currently in the process of meeting with the affected businesses and Trilogy Real Estate Group. The meetings will be to discuss business needs and other potential solutions, such as delaying the project. She will give a report at the work session. FUTURE ACTION Staff will proceed based on the direction of City Council. Business Assistance Blake Road Station Development Project Business Assistance Reviewed options with staff & consultants City Manager, Mike Mornson Assistance City Manager, Ari Lenz Director of Planning & Economic Development, Kersten Elverum Community Development Coordinator, Jan Youngquist Finance Director, Nick Bishop Business Assistance Reviewed options with staff & consultants (continued) City Attorney, Scott Riggs from Kennedy & Graven Municipal Advisor, Stacie Kvilvang from Ehlers & Associates Business Assistance A “public purpose” meets all of the following: The activity will benefit the community as a whole. The activity directly related to functions of government. The activity does not have, as its primary objective, the benefit of a private interest. American Rescue Plan Act City will receive $1.954 million Funds must be used between March 3, 2021 and December 31, 2024 American Rescue Plan Act One eligible use is assistance to small businesses Forgivable loans to mitigate financial hardship caused by the pandemic Forgivable loans to reimburse costs to implement COVID-19 prevention or mitigation tactics Technical assistance or other services to assist with business planning needs American Rescue Plan Act Possible to create a forgivable loan program with ARPA funds City wide or targeted Need to develop criteria for the program that includes financial hardship caused by pandemic Businesses would need to apply and qualify for assistance Economic Development Fund City periodically offers a façade improvement program to assist downtown businesses Possible to create a similar program for tenant build-out for new sites in Hopkins May benefit some business more than others Economic Development Fund Commercial vacancy rates are low May be challenging to find a suitable space Tax Increment Financing Use of Tax Increment Financing (TIF) must comply with State Statutes Affected business would need to have a qualifying development project Other Grants Staff is unaware of available grants to assist Other Considerations Redevelopment will continue to occur in Hopkins Offering financial assistance now could create precedent in future