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2021 01 12CHANHASSEN ECONOMIC DEVELOPMENT COMMISSION REGULAR MEETING JANUARY 12, 2021 Jim Sanford called the meeting to order at 7:00 p.m. MEMBERS PRESENT: James Ebeling, Jim Sanford, and Kathleen Donovan. MEMBERS ABSENT: Stephen Stamy and Adam Schafer STAFF PRESENT: Kate Aanenson, Community Development Director; Bob Generous, Senior Planner; and Jake Foster, Assistant City Manager PUBLIC PRESENT: Vernelle Clayton, Buy Chanhassen. APPROVAL OF MINUTES: There was no meeting in December Minutes from the November 10, 2020 Economic Development Commission meeting are awaiting transcription and are not available for approval at this time. They will be presented for approval at the February 9, 2021 EDC Meeting. OLD BUSINESS: LODGING TAX DISCUSSION Vernelle Clayton of the Buy Chanhassen group stated her appreciation to the EDC as she had reviewed the EDC’s goals to the City Council from last year to create a lodging tax. She proceeded to tell the EDC what the Buy Chanhassen group was doing in that regard. Statute 469.190 states that the purpose of the lodging tax is to “fund a local convention or tourism bureau for the purpose of marketing and promoting the city or town as a tourist or convention center.” Vernelle explained what a Convention and Visitors Bureau (CVB) was but that in Chanhassen it would be a visitors bureau only, such as “Visit Chanhassen,” or similar to ‘Discover’ St. Louis Park or ‘Explore’ Edina since we don’t have convention facilities. A lodging tax is paid by visitors staying at the City’s hotels. It is collected from the hotels by the City and passed on to the visitors bureau to be used in accordance with its budget, less a 5% handling fee. The need for a visitors bureau in Chanhassen is necessary as other communities are trading on our popularity. St. Louis Park and Plymouth have CVBs, both promoting hotel stays in their cities for Paisley Park, the Dinner Theatre and the Arboretum. Our hotels, restaurants and businesses will gain benefits, including many more businesses than just the hotels, Paisley Park, the Dinner Theatre and the Arboretum, of which are essentially used as a carrot. Buy Chanhassen would be the sponsor of Visit Chanhassen, coordinating creating the Articles of Incorporation and Bylaws and appointing the initial Board of Directors, which would include key Economic Development Commission – January 12, 2021 2 stakeholders. It is understood that there won’t be sufficient funds collected from hotel occupancy in 2021 to support offices, equipment and staff so it may be necessary to find other funding sources initially and have a limited marketing budget Buy Chanhassen attended two work sessions with the City Council in 2020 before COVID-19 hit. They are looking forward to scheduling a follow-up work session with the new City Council in 2021. In their initial presentations to the City Council, Buy Chanhassen reported that they planned to retain Meet Minneapolis as a source of marketing materials and marketing opportunities to the huge number of visitors they have in the past brought to the Twin Cities Metro Area. Commissioner Sanford asked about the history of Buy Chanhassen. Clayton stated that Buy Chanhassen is a membership organization that was formed after the Chanhassen Chamber of commerce merged with other cities to become the Southwest Chamber of Commerce. Before COVID-19 they met regularly at the Chanhassen American Legion, sponsored Night on the Town every summer, held a senators forum in the Council Chambers, but mostly held meetings to discuss legislation, and what’s happening in the community. Once a year they receive a State of the City address from the Mayor. Vernelle stated that Buy Chanhassen was like the Chamber but with a lower cost to join and is run by volunteers only. Commissioner Ebeling asked if any neighboring cities had visitor bureaus. Vernelle noted that Waconia, Shakopee, and Edina do. There are about 30 bureaus throughout the metro with the largest being Meet Minneapolis, an independent convention and visitors bureau. Ebeling asked if visitors would choose to stay in a hotel that doesn’t have a lodging tax. Vernelle said most visitors just pay the tax as part of their bill without question. City Council will need to approve the lodging tax. OLD BUSINESS: COMMUNICATION PLATFORM UPDATE Assistant City Manager Jake Foster provided an update to previous communications conversations. The City’s communications team looked into some of the following platforms: Bang the Table, Mail Chimp, and Constant Contact to move forward with a larger resident engagement strategy. The Mayor and Council are interested in implementing technology for citizen engagement. IT Manager Rick Rice would like to evaluate some of our current in-house platforms first before adding another one. Bang the Table could be a password-protected closed community which would be good for business owners in Chanhassen. We are still continuing to evaluate those systems and considering email technology outside of the communications platform. Commissioner Sanford ask if they would be opt-in services so businesses can choose to be a part of it. Jake said yes, depending on the route they decide to go with and that it would be more enticing for Chanhassen businesses if it was a closed platform. Economic Development Commission – January 12, 2021 3 Commissioner Sanford reviewed the commission’s communication goal of looking for a more efficient way for the City to communicate with businesses and people and wanted to know if it would be more of an informational platform. Jake said it would depend on the platform, whether it be a one-way communication of the City pushing messages out to the business community, or we work to implement one of the community engagement tools which is a two-way communication. Jake explained that that tool is very preliminary in their explorations, still requiring department heads to buy into the technology as something that all departments could utilize to make it worthwhile. Commissioner Sanford asked if there was a timeline for implementing the tool. Jake stated the website is the priority in the first quarter of the year at this time but is estimating the early second quarter project would start addressing the communications platform. Commissioner Ebeling restated that it could be multi-purpose with community engagement of citizens and business. Jake stated that if we were to implement the platform, closed groups could be created within the tool to separate businesses communication from resident surveys, etc. Commissioner Donovan thought it sounded like the city was proceeding with evaluating different vendors to see how impactful and open they are as well as security issues. She said it sounds like the City i s off to a good start and is looking forward to next steps. ADMINISTRATIVE PRESENTATIONS: BUSINESS INQUIRIES Community Development Director Kate Aanenson provided an overview of business inquiries and how the City processes those, such as do they come to us or are we soliciting projects? A lot of inquiries come through our website which is a great point of beginning. Our website is very transparent providing various demographics such as household income, which is a big part of why business like to come here because they know there is disposable income. They also look at available land and they can be picky as to what side of the street they want to be on, whether they want to be downtown or along Highway 5. We have a lot of information on available land such as if there is sewer and water, etc. All of our fees are online. Bob Generous puts together a pro forma every year which is updated with the new fees attached to development to assist in anticipating development costs. Our application also includes a development timeline. After potential developers gather information from our website, they will contact staff to start a dialog. Sometimes development will come through the State of Minnesota Department of Employment and Economic Development (DEED). Typically those projects are looking at multiple communities to pit cities against each other to find out what can be done for them. If a small operator may be going into an industrial park and they can’t afford the assessments, the City can assess them over the time. The City can also apply for grants for assistance with new development from the Carver County Community Development Agency (CDA). The City has a downtown business plan and people like the fact that we have a downtown which is a big draw. Commissioner Ebeling clarified that generally developers are usually reaching out to the City more so than the City reaches out to developers. Kate responded that developers are going to call Economic Development Commission – January 12, 2021 4 Planning staff to start the process. People know where they want to locate and have already made their site selection prior to talking to staff. An example is Panera Bread was looking for several years and ended up buying the motel on Highway 5, and Chick-fil-A wanted to locate there as well. Businesses already know where they want to be. We applied for a CDA grant for Chick-fil- A because they had excessive stormwater costs of over $400,000. At that point we became an assistant and had to figure out what we could do to keep the project moving once they decided to develop here. It’s pretty rare that we find developers; they find us. Why are they looking for us? Because we’ve got a great community. We keep those standards with zoning requirements and that they are going to be a value added and that being here they will be successful. There’s energy and synergy. Daytime employment is really important to provide for some of the other businesses: grab something for lunch, make a Target run, go to the Post Office, pick up dry cleaning, etc. We know some people that are looking for a site but they ask us to keep it confidential. We usually don’t disclose the information until a development application is received and becomes public. Our contact information is readily available on our website and we are always responsive to inquiries. We get email inquiries as well such as a national companies or someone else that has someone looking for a specific use. An example was a demand for auto repair. There weren’t a lot of sites that could accommodate it. Christian Brothers Automotive was just approved to be located on the Kraus-Anderson site located on the northwest corner of Highway 101 and Lyman Boulevard. That’s where they wanted to be located and we found a way to accommodate them. They wanted to be near bus transit so a person could leave their car for the day and take the bus. They were very sophisticated in what they needed to make their project work. We have a zoning ordinance and a land use plan and we are willing to make changes to these if the project is a good fit in the desired location. We annually update city code. We know drive-thrus are very important. We pay attention to their needs and try to stay within our current zoning standards and also to have a value added. If you look at Holasek Business Park on Lyman and Galpin Boulevards, it was a tough site with poor soils, but developer Mark Undestad was able to put it together and now it’s full. They also needed some assistance on that site because of stormwater issues. Businesses in Chanhassen are always reinventing themselves, expanding, or being more efficient. One example is Emerson did a major interior development expansion. All of their rooftop equipment was also replaced. This increased their production and value to the community. We accommodate businesses schedules with unique inspections. We are on the list through Carver County CDA and through DEED, which shows users looking for a certain square footage, building, or land. If a business expansion is less than 10% we can process that administratively without having to go back before the Planning Commission. This reduces 90- 120 days of the process. We meet with existing businesses to see if they have any specific needs. Commissioner Sanford asked if the City has much contact with any businesses other than for zoning changes or construction. Economic Development Commission – January 12, 2021 5 Commissioner Ebeling asked if the overall amount of inquiries declined since COVID started last March. Kate answered no. People find different opportunities. Industrial is still pretty strong as far as inquiries and building permits are still up. Ebeling asked what are the reasons developers choose not to move forward with a project (we’re too slow, fees too high, etc.)? Kate referred to the City’s transparency and how we are always up front with our timing, fees, and grants, etc. The City does not want to get into a deal and have a developer pull out. Chick-fil-A was a good example with their stormwater expenses and the CDA grant we were able to secure for them. Ebeling asked if we ever get feedback of why a business chooses not to develop in Chanhassen? Kate referred to why Trader Joe’s didn’t develop in Chanhassen. The city suggested the Kwik Trip site but there wasn’t enough household income in that area to support it. Then they were ready to go at the Total Wine location but found out there was a non-compete clause with Lakewinds Food Co-op, of which the City was not aware of. They did not want to be located downtown. They were very specific about the location they wanted. Aldi’s ended up taking the downtown location. Commissioner Sanford asked if there was a listing of professional activity codes of businesses in the area. Kate said we have standard industrial classification codes. She gave an example of the Federal Packaging industrial facility on Powers Boulevard next to the railroad tracks. It was a DEED deal. It was a tough site with a lot of grading but that’s where the business wanted to be and they worked with the State of Minnesota to obtain some grants. They found the site and made the call to us. They did their own due diligence just by looking through all of our data. We have heard there is some strong interest in the office part of the Avienda project, a medical office is still a strong market. Sanford asked for an update on the Avienda project. Kate said the housing is ready to go but it will cost around $15 million to extend the road west to the housing development. The Cityt is looking at grants to help build that road (Bluff Creek Boulevard) which is the thread that they need to have. The Council revisited the project last year and increased the housing allowance to up to about 900 units. There will probably be a small grocery store with that as well along with some retail and some office, and a hotel. Commissioner Ebeling asked if they were still waiting to break ground and Kate said yes. The first thing they want to do is the housing portion of the project. Kate asked for any suggestions from the Commission. NEW BUSINESS Commissioner Sanford brought up the Commission’s goals for the year and wanted to know at what point should they be looking at making a proposal on the lodging tax of if it is already launched and we are just waiting for that to happen? Will the City provide some sort of a lending or a grant program such as micro lending? At what point do we get ready to implement something? Commissioner Ebeling agreed and suggested that the Commission set up the platform and the framework. Commissioner Sanford asked how to build an incentive system to bring businesses into the City. What kind of businesses do we want to attract and how do we want to bring them in? Sanford asked Kate if that would be an appropriate use of their time. Kate replied that the City Council was appointing a City Council liaison to each commission for Economic Development Commission – January 12, 2021 6 communication purposes, which would provide a great opportunity for the commissioners to have that contact. Sanford suggested they review their goals on the next EDC agenda and prioritize them. He confirmed with Kate that no program would be able to be set up until a levy was approved to fund it. It would be the same process as the County uses. Kate Aanenson mentioned that Carver County got another $4 million in COVID money and that the program information could be found on Carver County’s website. Chanhassen allowed outdoor dining and tents to create some flexibility. That is the kind of feedback that the City can provide to the Commission. The City has been lenient on directional signage trying to support the businesses that are here. Commissioner Donovan was interested to see how things progress on communications. She shared concerns as to directions as the Commission looks to accomplish their goals and that they needed to start planning for the future. She liked the idea of having a City Council liaison. The meeting was adjourned by acclamation at 8:35 p.m. Submitted by Bob Generous Senior Planner Prepared by Kim Meuwissen