CEDC - June 15th 2015

MINUTES OF THE
COMMUNITY ECONOMIC DEVELOPMENT
COMMITTEE MEETING

Monday, June 15, 2015 at 6:00 p.m. - Mayfield Village Main Conference Room

Present: Joe Saponaro, Bill Marquardt, Ron Wynne, Ted Esborn, Diane Wolgamuth, and Mary Betsa                                         

The Meeting of the Community Economic Development Committee was held on Monday, June 15, 2015 in the Main Conference Room at the Mayfield Village Civic Center. Mr. Saponaro called the meeting to order at 6:00 p.m.

  • Approval of Minutes of Meeting of December 15, 2014

Mr. Marquardt, seconded by Mr. Saponaro, moved to approve the Minutes of the Meeting of December 15, 2014.

ROLL CALL:

AYES: All
NAYS: None

Motion Carried. Minutes of December 15, 2014 Approved as Written.

  • Organization of CEDC
    • Minutes

Mr. Esborn stated, there will be items on the agenda during these meetings which will involve confidential economic development discussions and will require going into Executive Session. Due to the confidential nature of some of the discussions, a request for a legal opinion will be forwarded to the Law Department relative to content in the Minutes and going into Executive Session as long the reason falls under the economic development category. Mr. Esborn will talk to Joe Diemert about the proper way to follow. It should be easy enough to identify prior to a meeting whether there will be confidential information which would fall under economic development and require an Executive Session. Mr. Esborn will also check to see if confidential documents which are handed out fall under the public records law and whether or not they have to be distributed before the meeting or if they can be handed out during the meeting.

Mr. Saponaro stated, Ted, you may want to keep folders for Committee members with confidential handouts and the information will be recollected after the meeting. Ask Joe how that is supposed to work. Get a written opinion on how to deal with this.

Mr. Esborn will follow up and report back to the Committee.

Ms. Wolgamuth stated, there are times when there project items that we want the opportunity to get a read from Council without having to do it on the Council floor. Those items would be matters for discussion in Executive Session as they fall under the economic development category. The CEDC is a subcommittee formed to discuss matters concerning economic development in terms of project and whether or not the Committee thinks there will be Council support for that. In the past, we did not have a lot of meetings because unless there was an economic development matter which was pressing, we did not meet.

Mr. Saponaro stated, Joe will have to provide a written opinion.

Mr. Esborn sees the chief part of the scope being involvement with the incentive grant program. That will be a typical example of confidential information. We have some tonight.

Mr. Saponaro stated, we can amend the agenda and go into Executive Session this evening for economic development. When we go into Executive Session for matters that fall under economic development, there are no official minutes or notes taken. For anyone outside the committee attending these public meetings, they will be asked to leave during Executive Session. We are not a voting committee. That’s important to discuss with Joe as well.

Mr. Esborn stated, let me report on One Community/Everstream because that matter is fairly brief and would not fall under Economic Development.

  • OneCommunity/Everstream

Mr. Esborn reported, if it is okay with the Committee, I would like to ask a representative from OneCommunity to the July meeting to discuss our relationship with them. I can provide an overview of where we are at with fiber and the fiber network.

Mr. Saponaro stated, if it is best to have them here, it is okay to invite them. This is an opportunity for administration to bring in front of us people, ideas, projects, things of that nature that are confidential and non-confidential. Are you setting the agenda? Mary Beth, how does that work?

Mrs. Betsa replied, Ted gave me the items and I set the agenda for this evening’s meeting.

Mr. Saponaro stated, you guys work together, that’s fine. We will go through what’s on the agenda. If anyone else wants something on the agenda, we can let you know.

  • Economic Development Incentive Program

Mr. Esborn stated, I don’t think there’s any confidential information on this item. I am going to pass out the current evaluation forms we use. The top one is for attractions and the bottom one is for retention.  

Mr. Saponaro asked, is this a good evaluation? Is it a good process?

Mr. Esborn replied, that’s what I would like to discuss. Now knowing we are going to have these meetings monthly, how can we use this Committee to review applicants who provide the information to provide for a grant under this program?

Mr. Saponaro asked, how do applicants know there is a program? They don’t get this application. We score them. How do they find out about it?

Mr. Esborn replied, only when they ask. I have not posted it on the website.

Mr. Saponaro asked, posted what?

Mr. Esborn replied, any information about this program.

Mr. Saponaro stated, you would not post this because it’s an internal document, right?

Mr. Esborn replied, right.

Mr. Saponaro stated, what you are saying is, hey, you can come to us for economic development. There may be grants. Give Ted a call.

Mr. Esborn replied, right. To answer your question, the only way they would know about this is to ask.

Mr. Saponaro asked, so they call up and say, do you have any incentive programs in your community?

Mr. Esborn replied, right.

With regard to the attraction incentive application, Mr. Saponaro stated, you have five different categories. How did we come up with these five specific areas?

Mr. Esborn replied, we started by saying that the most important thing we wanted to look at was revenue. We made half of the available points available through revenue. This was a process CEDC went through in 2012.

Ms. Wolgamuth clarified, when he says “we”, this was the CEDC discussing what was most important and what these items should be.

Mr. Saponaro asked, so this was with the input of Council members?

Mr. Esborn replied, yes. With revenue being the most important thing, we asked ourselves what the other factors important to us are. That’s why we ended up with density and new business to the County, owner/occupied, filling a vacant space. They are only a small amount of points, but we viewed them favorably. That’s why we put them in there.

Mr. Saponaro asked, have you ever had any discussions or conversations with associations or organizations you belong to in your role in economic development and urban planning where others can weigh in on this and what they do in their own communities in terms of scoring?

Mr. Esborn replied, this model is very common. It’s very common to have an incentive based on income tax revenue. I don’t know how common the smaller factors are, but from interactions with my counterparts in other cities and with real estate brokers and businesses, a grant that is a percentage of income tax revenue is a very common model. We looked at other cities in the area and what they were doing. This seemed like a model that made sense because the idea is what the company brings in, you grant back in percentage.

Mr. Marquardt stated, that’s more of a value to the property owner. It’s not a value to the Village.

Mr. Esborn stated, I see density as a value. With high density, theoretically at least, we can keep other square footage open for potential growth.

Mr. Marquardt stated, I think they overlap so much that I don’t think it’s necessary.

Mr. Esborn stated, I only set that one apart. I think I more see what you are saying on the bottom three. We wanted there to be some points awarded for other factors important to us.

Ms. Wolgamuth stated, we talked about that we had a couple of vacant buildings. Everyone was asking what is going on with them. They have been vacant for so long. How can we provide some incentive to not have vacancies?

Mr. Marquardt asked, isn’t that the property owner’s problem?

Ms. Wolgamuth replied, except that we as the CEDC discussed being concerned about that and not wanting those properties to remain vacant.

Mr. Marquardt stated, that’s the property owner’s problem. If he can’t fix it up, sell it or tear it down. This is subsidizing the property owner as well as the person.

Mr. Esborn stated, I have heard a lot of concern about vacant buildings. That’s what led to that.

Mr. Saponaro asked, concerned in what way?

Mr. Esborn replied, that if they remain vacant, then they will fall into disrepair and fewer and fewer people will want to use them.

Ms. Wolgamuth added, and then Beta seems like it is not thriving.

Mr. Marquardt asked, we don’t have any ordinances that people have to maintain their properties that we can enforce?

Mr. Saponaro stated, there’s two different things going at play here. We want attraction incentives for companies to come in. We also want the property owners who own the properties to take care of and maintain their properties. I think they are two different items because the attraction incentive to bring them in, there may be vacant space, but that’s not a scorable thing. It’s more along the lines of what can they actually bring to the Village in terms of employment and revenue. Can they take over vacant space or a building that has been otherwise unoccupied for a period of time? They can. Obviously, they won’t come here if they can’t do that. That’s been the precursor. We are not brokering vacant space, right? They are not coming to us and saying, what’s your vacant space and we are saying, well we have these five pieces, because we can’t do that. Once they decide they want to come, then we look at that and say, okay, based on this, what is the incentive here? You guys want an incentive, but what do you bring to the table? The mere presence is although appreciated because we would like to have more businesses here. Show us how it benefits the Village. What you would ask is obviously payroll dollars, employment dollars, the things that actually would benefit us. These may be factors, but they are more in the front end for someone just coming here.

Mr. Marquardt stated, we have had property owners from Beta come in. They are about as uninterested in marketing their property as I have ever seen. They say, well, if it comes along, it comes along. I don’t think that’s the Village’s duty to service them. If they want to rent their property, do something about it, other than just throwing a sign up.

Mr. Saponaro stated, on the other side of that though, and this is something we have talked about in Council or wherever, we have to enforce our ordinances. If we have property owners and businesses on Beta concerned because their neighboring vacant property is in disrepair or there is an issue, we have to enforce our ordinances. It’s not fun. People don’t want to do it. But it is not just a matter of, it’s a $10 fine for every day you don’t do that. Fine, for $10, who cares? That’s what you are going to get. We have ordinances on the books. We don’t need more laws. We need to enforce the ones we have so that they are workable. That’s part of the issue. This isn’t telling me we want to be property managers. I am just saying that from the perspective of attraction incentive, these can be factors of information we may want to know. However, I don’t think they have anything in terms of scoring. The revenue may not be the only thing, maybe the number of employees, I don’t know.

Mr. Esborn stated, to both your points on this, I have had businesses looking to come in to a space on a property that happens not to be more than half vacant. I have told them that under our analysis, here’s the amount of points which converts into a percentage. They ask me, what could have gotten us more points? I have told them we look favorably on businesses moving into more substantially vacant buildings. They ask why that is their problem.

Mr. Saponaro stated, so we are scoring against ourselves.

Mr. Marquardt stated, I wouldn’t even mention the scoring. That’s our side of it.

Mr. Esborn stated, I kind of have to. I feel like it can’t be, this is your score, we are not going to tell you.

Mr. Saponaro stated, I don’t think it is about the scoring part of it as much as this is our internal process.

Mr. Marquardt stated, it’s these are the things we are interested in. You can tell us, but the scoring should not be part of it.

Mr. Saponaro stated, you can throw this away and still have meaningful discussions and come to the same conclusion, whether there’s any points awarded or not. This should be more of a checklist, but not a hard and fast checklist.

Mr. Marquardt stated, the scoring part always bothered me on this.

Mr. Saponaro stated, what we put ourselves up against is we are giving people an opportunity to scrutinize. When you guys come to us prior to something going on and say, here’s an opportunity, here’s what we think it is, we are going to ask appropriate questions and you will hopefully have answers and we go through a vetting process. I don’t really care about the score itself. That has not made a difference for me because it doesn’t have meaning for me. I don’t put it together. That makes sense for you. That can be your internal way of your process. When it comes to us, we want to know the pros and cons, who has weighed in on it, what their thoughts are, what the concerns are, does it fit our ordinances, do we have to get variances, is it a use we are thrilled or not thrilled about. We have to look at all those different things.

Mr. Esborn stated, when I initially put this together, the idea at the start was that I would fill out this evaluation form. There’s three forms. The first one just asks for the information. It’s the company’s information. The second one is the scoring sheet. The third one is a recommendation form. As originally conceived, I would bring those three to CEDC. I would say, here’s my recommendation, then allowing for discussion and more of an internal process. Since CEDC hasn’t been meeting regularly, I have not been able to do that. Now we can. There’s only one company with an open application. I sent them a letter saying here is how I evaluated your application. This is a non-committal, non-binding statement of how you fared under our system. I do that so they can go forward knowing a ballpark of what they would be able to get under our program. Now that we are meeting more regularly, I think it is possible to do it how we originally envisioned it where on a monthly basis anyone who has applied, I provide the information and the score and recommendation. We can discuss and go from there.

Ms. Wolgamuth stated, there’s not that many applications. Not many people even qualify under it.

Mr. Saponaro stated, you made an important distinction. What qualification do they have to hit in order for this grant to be applicable? We may say anyone that does not have an average revenue of $100,000 or greater does not qualify.

Ms. Wolgamuth replied, right. If the revenue to the Village is $10,000, what does that mean their payroll is?

Mr. Wynne replied, 2%.

Mr. Esborn stated, we have it on the retention form. We should have that on the attraction one as well.

Mr. Marquardt stated, if your average wage is $50,000, you are getting 2%, you are making $1,000 a head per year. $10,000 is 10 people.   That’s assuming that kind of a payroll. That’s probably high end. Threshold and then base the rest of it on what income tax you bring in. We will give you a kickback for a year for each new employee on an annual basis.

Mr. Esborn stated, having worked with these factors in practice, I would not mind making it a little simpler.

Mr. Marquardt stated, you can measure income by business, right?

Mr. Esborn replied, yes.

Mr. Marquardt stated, so you can say, if you are bringing in this much income tax, we will give you a kickback for a year and then if you pull in more people we will give you a kickback for the next one. It’s simple and straightforward.

Mr. Saponaro agreed. You don’t have to score on that. They either meet the requirement or they don’t. That makes it easier. Plus, you could publish that. You don’t have to say, you are guaranteed. No one is guaranteed. You could say there are programs you may qualify for with minimum threshold requirement of annual payroll of $5 million. Are you going to come to us and say, we have an annual revenue of $50,000, we should give them an incentive? Would you consider that?

Mr. Esborn replied, I would.

Mr. Saponaro asked, tell me the reasoning behind it.

Mr. Esborn replied, I think smaller businesses should be incentivized as well as larger businesses because there are spaces that they are filling

Mr. Saponaro stated, you are going back to a vacancy issue.   Tie it to revenue. There’s not one way of looking at it. I agree with you. Small companies become bigger companies. We have to look at those things. There can be incentive programs. But you have to come up with something that says, you have to meet these requirements in order to get there, right? It’s not necessarily the scoring part of it. They have to do the work. A lot of places have these qualifications. We don’t need to recreate the wheel. We need to determine what other communities are providing and requiring to provide for incentive programs. It needs to be an ongoing discussion.

Mr. Marquardt stated, let’s keep it in perspective too. We don’t have to compete with every other community.

Mr. Esborn stated, if we said we only want to incentivize companies that bring over $100,000, I have much less of a problem making that change because now it is clear to me that that is our goal.

Mr. Saponaro stated, right now, you are not sure of the scope. Let’s talk in terms of potential clients. A potential client comes in, sits down and talks to you. You write down all the information. It’s up to them to provide you with why you should take them on as a client and then you have to come back and say why you should hire them. It starts with them. It always has to. We are not trying to solicit business. What we are trying to do is meet the needs of our existing businesses in terms of economics or anything we can help with. That’s what we are trying to achieve. And then coming back with situations with companies. We need to understand what our parameters are but we don’t need to be pendant by those parameters. Let’s keep it in perspective that way. You are looking for the structure and framework, but what we end up with is maybe not what you expected but as long as you know what the parameters are, that’s what we have to figure out. This is going to be an ongoing conversation.

Ms. Wolgamuth stated, contrary to what we are saying now, Ted’s charge for these last few years has been diversify and fill those vacancies as best you can. That’s what he is trying to do with every small business that he can attract.

Mr. Saponaro stated, I am not saying that’s not a good thing to do. However, we are not brokers. What we are trying to do is keep the coffers filled with people, revenue, and income. We don’t want vacancies.   It’s not from the brokerage standpoint, it’s what the attraction to Mayfield Village is or what our brag sheet contains about Mayfield Village that would attract you. That’s a better approach of an attraction. An incentive program can be on the list, but what are the other things we offer that a business may want and why do they want to come here. For example, our fiber network. It’s huge.

Mr. Esborn stated, a lot of this is driven by specific questions. People wanting to know if we have a financial incentive program.

Mr. Saponaro stated, your response to that from my perspective is, what we normally do is this, I would like to have more of a dialogue with you. First of all, what is attracting you to Mayfield Village? Do you know about the Village? Part of this process is to educate and to see the reality of this. Are you currently in a Lease? When does it expire? Do you have a building you are trying to sell? What are you looking to come in to this? What is the viability? You don’t have to spend hours with someone who is just checking who has a long term lease which is not done until 2020, right? I am sure you do a lot of those things already.

Mr. Esborn replied, perhaps a requirement is to meet with a representative of the business in person before going forward.

Mr. Saponaro stated, we don’t want it to be a bureaucratic process, but maybe you can meet them at the place or come to the Village and sit down to discuss and move the process along a lot quicker. You would be able to make an informed decision.

Mr. Esborn stated, if this Committee is a group that I work in coordination with on these things –

Mr. Saponaro stated, you don’t need our permission, Ted. You are in your job to do what you think is best, right? Then you will bring to us the information after going through the process if it’s worth having a conversation over.

Mr. Marquardt stated, have a business plan for the investments you think you might want to make. That’s all you are doing is making an investment in this business. It’s a matter of, do we want to make an investment in this business or not? That’s what your business plan spells out.

Mr. Esborn stated, the challenge there is when the question comes, does your community have a program for incentivizing business attractions?

Mr. Marquardt stated, that’s when you say, yes, let’s talk about it. We will discuss it with you.

Mr. Esborn stated, that’s why we put this together in the first place.

Mr. Saponaro stated, you are looking for a formalized program, kind of like a grant application. A program does not have to be in existence. I am challenging you to look at it from a perspective. Don’t let that be the threshold question that I am not comfortable answering with a yes because we don’t have this hard in writing. We do have a program.

Mr. Marquardt stated, you can have an outline of what you want to discuss with someone, but be flexible enough to say, every one is a little bit different.

Mr. Saponaro stated, by the virtue that we have this committee and you can come to Council and the other departments and request approvals, there is a program in place.

Mr. Esborn asked, how does that happen in a theoretical situation like this where I have met with a business and discussed their situation and I then say, this is ready, put this on the CEDC agenda? How would we move from there?

Mr. Marquardt stated, that’s why I am saying to put together a business plan. If it makes sense from an economic and other points.

Mr. Esborn stated, if the business plan is compelling to everyone-

Mr. Saponaro stated, it comes here. Then it has to be discussed in Executive Session in Finance. It goes on that agenda. Then it gets discussed in Executive Session at Council. A business plan is not a 40 page document.

Mr. Marquardt stated, it’s the pros and cons.

Mr. Saponaro stated, more entrepreneurial versus a checklist.

Mr. Esborn asked, what should we do with our one holdover?

Mr. Saponaro stated, let’s have a discussion about it. If it is worth discussing, put it on the agenda. You set the agenda. If you don’t think it’s worth bringing to us, it doesn’t come to us. Internally you, the Mayor, Ron, whoever, is going to say, Ted, do more work on that, Ted, don’t waste your time on that, Ted, I agree, Ted, I don’t agree. It doesn’t come to us unless you feel it is worth discussing.

Mr. Esborn stated, if you go into Executive Session this evening, I can show you the information and we can discuss it.

Mr. Saponaro stated, we will do that. There’s a lot of information we just talked about. We talked about deconstructing what has been the process. Economic development is free-flowing. It doesn’t fit in a particular box. We have to be a committee free-flowing as well. There’s so many unknowns.

Mr. Esborn stated, I am glad there’s only the one company right now that has entered the game when we were working with this system. From here on, knowing it is broader than this, I can take the approach.

Mr. Saponaro stated, you have to think this through. We are not going to get it settled all right now. You have to throw that away and look at it from a different perspective. You have to stand back and look at a company and because you are being put in a position of expertise to say you recommend or don’t recommend. If you are not 100% on it, we can’t feel comfortable with it. You can have whatever checklist or whatever you need to make the decision.

Mr. Marquardt stated, if it was your money, would you invest in it? What kind of confidence do you have that it is worthwhile?

Mr. Esborn stated, this will change the process. I understand. It’s clear to me.

Updates

  • Greenway Trailhead Funding

Mr. Saponaro asked for an update on the Greenway Trailhead Funding.

Mr. Esborn replied, it is still in process. Those grants are not awarded until October. We should have a site visit this month by ODNR. This is one of the longer grant processes.

Mr. Saponaro asked, so ODNR will come out for a site visit, but final awards will not be announced until October?

Mr. Esborn replied, right.

Mr. Saponaro asked, the funding for that occurs immediately, or does it go to the next fiscal cycle?

Mr. Esborn will have to double check.

Mr. Saponaro asked, find out if that is something we can do immediately or wait because the funds are not available until a certain time.

  • East Commons

Mr. Saponaro asked, with regard to East Commons, I saw that the property is up for sale. It seems like that whole thing has died.

Mr. Esborn replied, I asked Sam about it probably two months ago. He said they were still trying to find someone but they have not.

Mr. Saponaro asked, trying to find someone to do what?

Mr. Esborn replied, interested parties in one of the buildings. They planned on building the first building. That has not happened. It’s been very very slow. John has heard very little from the developers on that.

  • Holiday Inn

Mr. Saponaro asked, have we had any updates regarding Holiday Inn at all? Have we talked to them or heard anything from them?

Mr. Esborn replied, not since December.

Mr. Wynne asked, what’s going on with that, just the renovation?

Ms. Wolgamuth replied, yes. It has come up several times and then it never really turned into anything.

Mr. Esborn stated, it has been going on for about 4 years now. They have been saying that they are going to start the process.

Mr. Saponaro stated, I had relatives who stayed there a couple months ago. They said it was wonderful. I was happy to hear that.

Mr. Esborn stated, it used to be the busiest Holiday Inn in Ohio.

Mr. Saponaro stated, okay, this will be one of those items that when it comes up we will discuss it and see what we can do.

  • Motion to amend the agenda to go into Executive Session.

Mr. Marquardt, seconded by Mr. Saponaro, moved to amend the agenda to go into Executive Session

ROLL CALL:

AYES: All
NAYS: None

Motion Carried. Agenda Amended.

  • Executive Session
    • Motion to go into Executive Session for the purpose of considering economic development deemed necessary to protect the interests of the applicant or the possible investment or expenditure of public funds to be made in connection with the economic development project.

Mr. Marquardt, seconded by Mr. Saponaro, moved to go into Executive Session for the purpose of considering economic development deemed necessary to protect the interests of the applicant or the possible investment or expenditure of public funds to be made in connection with the economic development project.

ROLL CALL:

AYES: All
NAYS: None

Motion Carried.

The Committee went into Executive Session at 6:42 p.m.

The Committee returned from Executive Session at 6:59 p.m.

Mr. Esborn stated, with regard to the involvement of the Mayfield Community Improvement Corporation as an entity, the law department has suggested that they administer the incentive grants. Because the funds for the grant are now in the Innovation Zone Fund, they are being renamed and combined. That will then be the Fund controlled by MCIC.

Mr. Marquardt asked, what are the conditions?

Mr. Esborn replied, if they fall below 80% of 2014’s withholding tax revenue, then the Village has the right to demand repayment.

Mr. Marquardt asked, and how do you know they are spending it on their capital infrastructure?

Mr. Saponaro stated, any company that we offer an incentive to we have to have a means to monitor it, right? If it’s for a specific purpose, they are going to have to provide us evidence that it is for a specific purpose.

Mr. Esborn stated, they should be able to document for us and show us the use of the funds on upgrades. They can show us that they spent the amount on certain items.

ADJOURNMENT:

Mr. Marquardt, seconded by Mr. Saponaro, made a motion to adjourn. The meeting adjourned at 7:05 p.m.

Next Meeting

The next meeting has been scheduled for Monday, July 20, 2015 at 6:00 p.m. in the Main Conference Room.