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COMMITTEE OF THE WHOLE - MINUTES - 3/7/2002 COMMITTEE OF THE WHOLE – CITY OF MUSKEGO Approved JOINT MEETING WITH MAYOR’S TASK FORCE ON ECONOMIC DEVELOPMENT MINUTES OF MEETING HELD MARCH 7, 2002 Mayor De Angelis called the meeting to order at 7:08 PM. Also present were Aldermen Slocomb, Le Doux, Patterson, Petfalski, Wichgers and Salentine (arrived from LML Mtg. At 7:50 PM), and Clerk-Treasurer Marenda. Ald. Sanders was absent. Mayor’s Task Force members present were Jeanne Zangerle, Don Reidy and Harry Brodel, in addition to Ald. Le Doux and Wichgers. The Pledge of Allegiance was recited by all in attendance. The Clerk-Treasurer noted the meeting was noticed in accordance with the Open Meeting Law. PERSONAL APPEARANCE Dave Anderson of Ehlers and Associates was present to discuss the creation of a Community Development Authority (CDA), along with Finance Director Gunderson and Planning Director Turk. Mayor explained that the Mayor’s Task Force has reviewed numerous redevelopment activities in various areas of the City and recently bonding for the community center. A Community Development Authority would be a good vehicle to do that. Mr. Anderson distributed a packet of material on CDA’s, which included copies of his power point presentation, a sample resolution creating a CDA, draft by-laws, sample timeline and the State Statutes governing Community Development Authorities. He presented an overview of what a CDA is, what it can and can’t do, CDA lease revenue bonds and how those work in general, and some of the benefits and problems with Muskego creating a CDA. A CDA is an agency created by the City Council and can have a lot of power if that’s the way it’s created. It can act as a private development arm of the City down to just a shell to do financing. It can be used as a complement with a TIF District, and use of CDA lease revenue bonds does not count towards the City’s 5% debt limit. The purpose and powers were reviewed. Mr. Anderson said to create a CDA, a resolution must be adopted by a 2/3 vote of the City Council. Their power and authority will be determined by the Council through creation of the by-laws. The methods of issuing bonds by the CDA were reviewed. The flow of money for a TIF project or project like the Community Center starts with the bondholders providing money to the CDA; the money then goes to the City for undertaking the project; when the project is done, the title of the improvements goes back to the CDA; the CDA then leases that property to the City; and the City makes lease payments to the CDA; and, the CDA pays the bondholders. If there is a private developer with a private building, the flow of money would change and go from the bondholders through the CDA to the industry, and not to the municipality at all. That would be a conduit financing and most likely secured by a letter of credit. The CDA can be created before the boundaries of the districts are determined, and the CDA can then provide input to the Council on the location of the districts. The boundaries do not need to be contiguous. Ald. Patterson questioned why a CDA wasn’t discussed when creating the last TIF district. Mayor indicated it was discussed along with a redevelopment district as an option to the developer, although discussions were centered on TIF. Mayor reported the City has been approached by the church and school in the Tess Corners area about the possibility of a CDA due to its ability to issue Committee of the Whole/Mayor’s Task Force Page 2 Minutes of Meeting Held 3/7/02 tax exempt bonds, along with potential revenue bonds for the community center. A map with some areas recommended by the Plan Department for possible CDA districts was reviewed. Mayor indicated another area might be the Durham Hill area. Ald. Wichgers asked if creating a CDA would change anything with an existing TIF District, and Mr. Anderson responded it basically doesn’t change anything other than give it a few more options. The TIF process is independent of this process and all the same rules apply. Mr. Anderson reviewed the draft of the resolution to create the CDA and by-laws. By- laws are not required by law but are recommended. The Council should consider having a staff member be on the board. He indicated the only thing a CDA can’t due is replace the Plan Commission in creating a master plan. A public hearing must be held when the boundary is created and area determined to be blighted. In response to a question about liability, Mr. Anderson stated the City would carry the CDA as an additional insured on its liability insurance policy. Mr. Brodel asked if the CDA could be more proactive in getting private development to an area of the City rather than wait for a proposal to be submitted, and Mr. Anderson said that would be the purpose of the CDA, in addition to soliciting businesses. Mr. Turk commented that another purpose for the CDA in the Tess Corners area could be to offer a low-interest loan to pay for the cost of burying electric service. Mr. Anderson reviewed a sample timeline once a CDA is created to go through the bonding process, and the statutes that pertain to CDA’s. Ald. Slocomb asked if a property is located in a CDA, does it create any liability to the business. Mr. Anderson responded, no, unless debt is created for that particular business. Ald. Wichgers asked if any CDA’s in the State of Wisconsin had failed, and Mr. Anderson responded he had not heard of any failures or financial problems with any CDA. Ald. Salentine asked about the timeline for the creation of the CDA. Mr. Anderson said adoption of the resolution creating the CDA takes a 2/3 vote of the Council. Determining the area in which the CDA will work requires an area to be determined blighted under a really broad standard of what blight is, the broadest part of which says anything preventing the sound growth and development of the community. That process does require a notice to the people involved, a public hearing and approval by the Council and the CDA before they can operate in that area. A CDA can include just one parcel at a time if desired. Ald. Slocomb asked for the estimated difference in interest rates in bonding done by the CDA compared to general revenue bonds of the City. Mr. Anderson said they would be relatively close, probably about one-tenth higher than the City. The limit on the debt issued by a CDA is basically what the market will bear. Probably couldn’t finance the entire Community Center because there are no revenues coming in now, relying strictly on a study at this time. A rule of thumb is you would have $1.25 net revenues for every $1.00 debt. The debt issued by a CDA has no term limit, other than what the market will bear. Committee of the Whole/Mayor’s Task Force Page 3 Minutes of Meeting Held 3/7/02 Ald. Slocomb asked Mr. Anderson to put together what the community center debt would look like based on the feasibility report. Dawn noted there was a report from Ehlers handed out with the community center study. Mr. Anderson said the report could change based on the actual design costs; if another facility is being built down the road that would compete, other business types of events, etc. Mr. Turk stated that the next step would be for the Committee of the Whole to review the by-laws, and then Common Council approves by-laws and the resolution, and then staff prepares a redevelopment plan for at least the one parcel for the community center to get this moving. Mr. Turk felt the plan could be completed by the time the appointments to the CDA were made so they would have something to react to. Mr. Brodel felt the Tess Corners area could benefit from a CDA because it could be more pro-active in attracting development to meet the design standards of the City. Ald. Slocomb asked how the CDA would operate in the purchase of land. Mr. Anderson said the CDA would have to use the same eminent domain procedures as the City, but would have the benefit of doing it for economic development projects. Ald. Wichgers asked what about the community center site would fit the broad definition of blight. Mr. Anderson answered by asking are there any wetlands on the property, are there services to the property yet? It is a legislative determination to state it’s blighted. Ald. Petfalski asked that this move forward to get a CDA established. Mayor said the by-laws could be on the COW agenda next Thursday. The draft of the 3/14 COW agenda was reviewed. No additions were made other than the by-laws for the CDA. Adjournment Ald. Slocomb moved to adjourn at 8:18 PM. Ald. Le Doux seconded; motion carried. Respectfully submitted, Jean K. Marenda Clerk-Treasurer jm