Bemidji City Council discusses loan policies for Village at South Shore
The city does have financial resources available for developers needing some assistance to support proposals in the Village at South Shore, but the Bemidji City Council will have final say on whether those resources can be tapped.
The council met in a work session Monday with two representatives from the Headwaters Regional Development Commission, which has been contracted to market and promote the land in the south shore redevelopment area.
The presentation and discussion led by the HRDC's Dave Hengel, director of leadership and development, and Tiffany Fettig, business loan consultant, focused on the city's available redevelopment funds.
The city has roughly $1 million available in revolving loan dollars available to help bridge gap financing needs for developers.
The terms of the loans, including the amount available, are broadened for projects proposed for the south shore, which includes the former Minnesota Department of Transportation site, and the railroad corridor.
Traditionally, loans are available for $20,000-$150,000 and have interest rates set by market conditions and the desirability of the application. Applicants must pay closing costs and a 1 percent loan origination fee and create at least one living-wage job.
But for projects proposed in the south shore, those terms have been tweaked. Loans are available for up to $300,000 with the possibility of a 0 percent interest rate. Payments could be deferred for up to 24 months and no job creation requirement is included.
"This is a really good way to differentiate and show the importance of this area," Fettig said.
But, as council members noted, those are potential options available.
"I'm not real anxious to do 0 percent interest and defer payments for 24 months," said Councilor Rita Albrecht. "I think we should pick and choose from this list."
Fettig negotiates with potential developers on behalf of the city and also will try to utilize other available gap financing funds, such as those available through the HRDC, Joint Economic Development Commission and Northwest Minnesota Foundation.
She makes a recommendation to the council, which has final approval power.
"Everything ends up back on your plate," Hengel said to the council.
Fettig also said that, really, $300,000 is higher than what would originally be loaned. Applicants could apply for up to an initial $250,000, and, later, if they run into cash flow issues, could ask for an additional $50,000.
The size of the loan available - $250,000 - is not huge. But, as Hengel said, if a developer could leverage $250,000 from the city, and additional funds from the HRDC, JEDC and Northwest Minnesota Foundation, that could add up to more than $1 million, which is substantial.
Albrecht said those agencies able to assist with such gap financing needs have often, in the past, come together to support a project together.
"To be a three-legged stool," she said.
Hengel also asked the council to consider other potential incentives, such as Tax Increment Financing, tax abatement and waiving of city fees.
"I'm not suggesting that you make policies on these," he said.
Rather, he wants the council to have a work session to discuss the options now, before a developer would come to the council table asking for one of them.
"I would love to have the conversation proactively," Hengel said.
Just like the already adopted Planned Unit Development maps out planning and zoning standards for the Village at South Shore area, having that conversation now would tell developers up front about what would be available and what would not, Hengel said.
A date for that work session has not been set.
The council voted 7-0 to convey to VenuWorks that it would expect to not be charged for marketing in The Sanford Center.
The HRDC is working with The Sanford Center to market the Village at South Shore in various locations throughout the facility, including the scoreboard, the marquee sign along Paul Bunyan Drive and various signage locations in the vicinity of the club seating. There also are plans for a traveling display to move between the convention center and events center.
Because the city owns the facility, but VenuWorks manages it, the council was asked to weigh in on whether it would or would not expect to be charged for that marketing.
Hengel noted that VenuWorks staff was not being difficult or disagreeable, but wanted some clarification.
"I would assume that we would not have to pay for advertising in our own building," said Councilor Kevin Waldhausen.
"That would be my assumption," said City Manager John Chattin.