EDA Meeting Date: August 26, 2024
To: Members of the Economic Development Authority
From: Nate Carlson, Economic Development Coordinator
Title
2025 EDA Budget
Body
Action Requested:
The EDA Board shall review the final draft of the 2025 EDA budget and make a motion.
BACKGROUND:
Staff has prepared a draft of the 2025 EDA budget for consideration by the EDA Board. The primary concern for the EDA is the yearly review of the EDA Funds (i.e. Fund 290, Fund 292, and Fund 293).
Revenues
The EDA has traditionally requested the maximum levy allowed by Minnesota Statute of 0.01813 percent of the previous year’s taxable market value, which is based on the County-determined 2024 Estimated Market Value.
Based on this information, the maximum EDA levy could be $395,848. In addition to the levy, the EDA receives additional revenue of approximately $20,000 from other sources. These include approximately $12,000 from interest on investments and $8,000 from interest accrued to loans in repayment. A total of $415,848 in estimated revenues are included in the draft 2025 EDA budget. This represents a 9% increase from the 2024 approved levy. The levy increase amount is due to an overall increase in estimated market value of all taxable property in the City. As the community builds out and increases in density, the estimated market value is likely to increase, which in turn can increase our maximum levy opportunity.
Expenditures
The draft expenditure budget is balanced with projected revenues equal to expenditures at $415,848.
Personal Services: The 2025 EDA personnel budget provides funding for 1.2 full-time equivalent (FTE) staff, which represents the actual salary and overhead, including benefits, for the Economic Development Coordinator and 10% of the salary and overhead for the department’s Administrative Assistant and Community Development Director positions.
Community Development is preparing to request from City Council the creation of a shared EDA/HRA associate position to assist in program administration. The EDA budget may shift if this request is approved by the City Council. Staff will present an updated budget to the EDA following those Council budget discussions.
Professional Services: This line item is for professional consulting services related to economic development including market studies, land surveys, retail trade analysis, and marketing activities.
Legal Services: This line item has increased over the past few years due to the increasing complexity of projects initiated by the EDA.
Advertising: This line item has increased significantly compared to previous years due to the City’s strategic initiatives, including pursuing community branding. The EDA has a significant role in marketing the community for economic development success.
Dues and Memberships: The City of Northfield is making a financial commitment to the Southern Minnesota Initiative Foundation (SMIF). The EDA will provide $5,000 in sponsorship to SMIF. The Northfield EDA and SMIF have partnered on a number of business development projects in the past. However, Northfield and SMIF have never had a partnership relationship through the sponsor program. This new opportunity will continue to strengthen the resources available to current and future business in Northfield. This investment is another outcome of the Socio-Economic Work Plan, designed to provide greater access to resources for businesses in Northfield.
Other Projects: This line item is for EDA work plan initiatives and other new projects that may be included in the strategic plan.
The EDA renewed the Façade Improvement Program in June 2023 for another three years starting in 2024 and ending in 2026. The EDA allocated $20,000 to this successful program. The EDA established the Façade Improvement Program in 2019 to incent property owners to invest in their buildings, specifically in the downtown district. Over the course of the three-year pilot program, the EDA granted $137,279 in façade improvement funds to 13 different recipients. Including the match amounts and total investments made by applicants, the program spurred a $300,000 total investment in the aesthetics and vitality of the Downtown.
The EDA Board also gave direction to staff during the June 2022 EDA retreat to explore possible property acquisition. Staff has estimated $20,000 to fund this exploration. Staff is also working on participating in the U of M Extension Business, Retention, and Expansion program <https://extension.umn.edu/research-communities/connecting-businesses-and-community>. This project is a multi-year effort, and staff continues to work toward completion of this initiative.
Staff is preparing to present a “Micro-Lending” program for the EDA to consider in 2025. Communities throughout the state have started to consider offering low-interest loans of $5,000 - $10,000 to assist businesses access funding. With interest rates remaining high and banks having little interest in small loan offerings, the EDA can fill a need for small business owners. Staff has dedicated $50,000 for 2025, and the program criteria will need to be approved by the EDA before the program can be established.
Partnership Programs: This item includes EDA funding for the Riverwalk Market Fair and the Metropolitan Consortium of Community Developers (MCCD).
The EDA approved a three-year contract starting in 2022 for the MCCD entrepreneurial development services. EDA staff will be in conversations with MCCD this fall regarding a possible extension of the contract for services. Currently, staff is preparing a $20,000 budget expense for a contract extension in 2025.
The consultant service contract with the Riverwalk Market Fair (RWMF) also comes from this line item. In 2022, the EDA renewed the contract with the Riverwalk Market Fair for three years. The EDA adjusted the 2025 contract fees resulting in $25,000 for a base fee with the potential for an additional $5,000 if the Market Fair matches revenues.
Micro Grant Program: Staff recommends allocating $15,000 for the Micro-Grant program for 2025. Staff is committed to improve marketing of the program. Staff will also explore partnership opportunities to leverage additional funding.
EDA Reserves: Following the adoption of the City’s Comprehensive Plan by the end of the year, Community Development staff is preparing to initiate an overhaul to the Land Development Code. The update is intended to streamline development processes and provide clear direction to developers. This effort is costly for community development to begin, and the EDA is being asked to contribute one-third of the cost, which is $67,000. The HRA will contribute similarly. The EDA reserves can accommodate this request.