Loading...
HomeMy WebLinkAboutBudget Advisory Commission - 01/05/2012 APPROVED MINUTES BUDGET ADVISORY COMMISSION MEETING THURSDAY,JANUARY 5, 2012 6:00 P.M., CITY CENTER 8080 Mitchell Road Eden Prairie, MN COMMISSION MEMBERS: Chair Rick King; Vice-Chair Jon Muilenburg Commissioners: Annette Agner, Eapen Chacko, Dan Funk, Michael Morris, Chris Nylander STUDENT REPRESENTATIVE: Charles Adams CITY STAFF: Sue Kotchevar, Finance Manager; Tammy Wilson, Finance Supervisor; Lindsey Danhauser, Art Center Supervisor; Nicole White, Coordinator of Special Events; Jan Curielli, Recorder GUEST: Greg Olson, Conservation Commission Member I. ROLL CALL/CALL THE MEETING TO ORDER Vice-Chair Muilenburg called the meeting to order to 6:00 p.m. Chair King was absent. Agner, Morris and Adams arrived late. II. MINUTES A. BAC MEETING HELD THURSDAY, NOVEMBER 3, 2011 MOTION: Nylander moved, seconded by Chacko, to approve the minutes of the November 3 meeting as published. Motion carried 4-0. III. PARKS AND RECREATION SPONSORSHIP PROGRAM Kotchevar distributed copies of the handout for the Parks and Recreation Sponsorship Program. Agner arrived at 6:05 PM. Lindsay Danhauser, Art Center Supervisor, said there are a couple of ways to track donations for events, parks and facilities. There are individual donations for a specific Budget Advisory Commission Minutes January 5, 2012 Page 2 purpose such as the donation of the Art Center building. There are also grants that have a specific purpose such as a grant from the Eden Prairie Foundation for capital purposes. She reviewed the three-year history of donations and explained the correlation of benefits the sponsor receives to the value of the donation given. Nicole White, Coordinator of Special Events, said before they worked together to streamline the process, the recreation coordinators would solicit for individual events. To put together the process, they looked at the events that are sponsored and put them into two categories by the attendance at the event and the operating budget. She reviewed the letter they send out two times a year in line with their spring/summer and fall/winter events. The letter is sent out to about 325 different businesses and service organizations local to the Eden Prairie area. She said they also send a contribution form so donors can specify the event in which they are interested. Donations allow the City to offer programs at nominal or no cost. To put more of a value on things we are doing, Nicole said they identified the levels of contribution that determine how much the donor is allowed to publicize their contribution to the event. Nicole said they received about$10,000 in donations for 2011, which went to offset costs for the events. They also receive in-kind sponsorships, which give a direct cost saving for the events, and event enhancements that do not give direct cost savings but do help to enhance the event. Adams arrived at 6:10 PM. Nylander asked if they have a follow-up contact when they solicit donations from businesses. White said they are working on that, and they are currently using a database from the Community Development Department. Many times the point person changes within the organization. They narrowed down the number of solicitations to businesses that have 15 employees or more, which brought down the total to 300-325. Nylander noted direct follow-up is very important. He suggested they arrange a personal visit with someone in the company rather than just relying on the brochure. Agner noted it is harder to say "no" when someone visits the business in person. Morris arrived at 6:12 PM. Danhauser asked if the Commission had any suggestions regarding the contribution levels. Nylander thought they could build a contact base with those who are currently giving and then address those who gave previously but have stopped giving. They could work with City employees or others who have existing relationships with organizations to build a base of potential contacts. Funk suggested they work with the Chamber of Commerce because they already do a lot with businesses. That would be a quick and easy way to get to a lot of business people. He asked if donations are designed to cover staff overhead for the event. Danhauser said they put 20% overhead into each event budget. She said they are not currently covering all the Budget Advisory Commission Minutes January 5, 2012 Page 3 direct costs for the events. The cost recovery depends on how many people the event reaches and the size of the budget. Parks and Recreation programs cover all their costs because people pay a fee for those programs. Community events have somewhat of a sliding scale, and she was not sure how far we are from covering all costs. White said each event has its own cost recovery goal. Nylander asked what kind of response they got when they introduced the different levels of sponsorship. Danhauser said they received some push back from some of the sponsors, but staff is working with them. They realize it is important to be completely consistent. Chacko thought the sponsors would like to see the benefits from their sponsorship. Funk said they could judge that by the cost per attendee. Danhauser said some of the sponsors are perfect for certain events, and they know the audience will be one they want to reach. Chacko said the sponsor list is quite narrow. He thought we should be able to do better with better targeting. He asked about the Fourth of July event. Danhauser said that is the biggest single event. Chacko thought there should be a lot more companies sponsoring that event. Agner commented the response rate on 300 solicitations is remarkably small. Danhauser noted most non-profits get only a 1-2% return rate from their solicitations. Muilenburg asked if direct mail is the only contact with them. Danhauser said we have information on the website and also advertise in the Parks and Recreation brochures. We have reached out in person to some of the companies She asked for feedback as to where they should start. Nylander said face-to-face meetings are where they would get the most return. Muilenburg noted a lot of companies have programs where employees can request certain sponsorships and that may be a way to get higher sponsorship rates. He suggested an article in Life in the Prairie that would suggest people contact their employer about such a program. Morris said he deals with sponsorships at his company. Having a personal touch and reaching out is important. He suggested addressing the letter to each individual organization rather than using a generic salutation. His company developed a matrix to score the requests they receive, and cost per impression is one factor in the matrix. He asked if they collect data on who attends events in the City. Danhauser said it is hard for them to quantify who is coming to some of the larger events,but they can determine that for the programs that require registration. Morris said it is important to show how affordable it is in terms of promoting their company. White asked for the Commission's comments on the brochure. Morris said it is more generic than some he has seen. He also thought it was important to meet person-to-person to establish a relationship. He suggested reminding contributors of how the money was used and how successful the event was, with the hope that would result in greater donations the next year. Budget Advisory Commission Minutes January 5, 2012 Page 4 IV. PACE PROGRAM Kotchevar said Greg Olson, who is Vice Chair of the Conservation Commission, is here to talk about the Property Assessed Clean Energy (PACE)program. She said this is an interest of the Conservation Commission, and they would like to get feedback from the BAC. PACE is a program the City of Edina is looking into. Olson explained the PACE program. He said the premise of the program is, if the City uses special assessments to put in curb and gutter or to widen streets, why can't the City encourage property owners to invest in solar panels and geo-thermal systems with a similar payment system. Such systems are pricey on the front end and are somewhat difficult to finance, so it would be helpful if the property owner could use a special assessment to acquire and pay for the green technology. He said there are challenges to the program, but it seems to be operating well in different parts of the country. The City of Los Angeles identified 13,000,000 square feet of commercial office property where this would work. He said the Conservation Commission is still learning about the program and expects to get some insights into how it would work in the next few months. Kotchevar noted this program has been more common on the west coast. The Minnesota legislature approved it in 2010. She showed a clip of the story KSTP-TV did recently on the Edina program. Edina is still working on the financing of the program. She said she attended a presentation on the program at the Minnesota Government Financial Officers Association. She gave a PowerPoint presentation on the benefits of PACE and the history of the program in Minnesota. Agner asked what the benefit to the City would be by partnering on this program. Kotchevar said this technology has high startup costs. Edina is planning to fund the start up costs, and they received a$5000 grant to help set up the program. She said it is difficult for cities to obtain financing for this. The city can issue revenue bonds,but the city does not have to make the bond payment if the revenue doesn't come in. That means there is a higher level of risk involved. Olson noted Edina is trying to create a fund from which they could fund smaller projects. Funk said in that case the city would have a total amount available to divide up among the individual small businesses involved. Kotchevar said that would seem to have less risk. Nylander asked about the advantages of the program for the business or homeowner. Olson said the payback time for the improvements can't be longer than 20 years, and the up-front costs can't exceed 10% of the tax-assessed value of the property. The payback comes from the savings the technology generates. Nylander asked if it would show up as debt for the business. Olson said the special assessment is a lien and would go ahead of a mortgage on the property. Nylander asked why the property owner wouldn't just borrow the money to do it if it provides enough Budget Advisory Commission Minutes January 5, 2012 Page 5 benefit to them. Olson said he wasn't sure why a big project wouldn't use tax-exempt revenue financing. He was also not sure why the first mortgage lender wouldn't do it if it is paid back. Kotchevar said in the long term it might not be worth it because the owner may sell the property. Nylander said the seller may not receive full value of the improvement. Olson noted using this for residential property is a lot trickier than for commercial. Morris said it would be interesting to see the cash flow for this. Olson thought it is a win- win situation but we need more time to work it out. Funk said some businesses have tried to set internal goals for green technology but the upfront costs of those goals are quite high. He thought there must be some other benefit from a taxable income standpoint. Kotchevar said she reviewed some of the existing PACE models. Edina has found it difficult to get someone to buy the revenue bonds. In California the Clean Fund has helped to do revenue bonds; however, the interest costs are high. Olson said he, as a lender, wants to know the borrower and wants a set of financial statements. He thought 7% for a loan of that size is not unreasonable. Edina is running into the problem of who is doing the underwriting. It is expensive to do the underwriting and to get conformance to municipal and state law. Kotchevar asked if the Clean Fund is helping with the Edina fund. Olson said he thought the Clean Fund looked at the auto repair shop and said they were willing to make the loan because they had all the information they needed on the business and would be repaid. Kotchevar thought there is probably a difference of opinion as to what a reasonable interest rate would be. Kotchevar said her concern is that we would issue a City of Eden Prairie revenue bond yet we wouldn't have to come up with the money to pay for it if we don't get the revenue. She was concerned about what Moody's would say if the City does not pay for the bond. She thought we will see more changes or regulations on this. She noted a lot of cities have gotten into trouble when developers have gone bankrupt and the cities don't get repaid for the debt they incurred to put in infrastructure. Her interest is to protect the City in anything we do. Muilenburg asked about how this would benefit the City. Kotchevar thought it comes down to whether the City has an obligation regarding energy use. Olson said it would lead to an enhanced tax base and would be helpful in the long term if the program was structured correctly. Muilenburg said he would have to see the numbers. Nylander thought energy efficiency for the City has to make sense financially. Kotchevar was concerned about how you measure risk assessment. Nylander didn't think the City should be in the underwriting business and was concerned about the administrative costs to the City. Chacko said that is what the rating agencies would look at. Nylander thought it might be better if organizations were the direct lenders. Budget Advisory Commission Minutes January 5, 2012 Page 6 Morris thought it raises some questions about the responsibilities and priorities of city government. He would want to right the city's operational ship before helping a private business. Chacko said there is an analogy with the City's 20-40-15 program. In that program there is a company who makes projections about savings from the improvements and will make payments if those projections don't happen. He said he could see risks and costs to this. Morris thought it also depends on the future cost of energy. Olson thought it would be premature to write off the program since it is working in other parts of the country. There is a lot more that needs to be examined,but he thought it is worth pursuing to see how to make it work. Nylander thought it is worth monitoring what is happening in Edina. Morris said it also takes on a little different spirit when you look at who is responsible for generating the energy. There would be a direct correlation when city-owned utilities are involved but not if energy is supplied by private companies. Funk thought it could be a tool to attract or retain businesses. We could assign a value in terms of employees added or retained and similar metrics. Chacko said Liberty properties have put a lot of money into enhancing their buildings. He thought the payoff would occur in the bigger commercial projects. V. ADJOURNMENT Kotchevar said the next meeting will be the February 2, 2012. MOTION: Chacko moved, seconded by Nylander to adjourn the meeting. Motion carried 6-0. Vice-Chair Muilenburg adjourned the meeting at 7:20 PM.