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HomeMy WebLinkAbout03/21/2016 Work Session City of Springfield Work Session Meeting MINUTES OF THE WORK SESSION MEETING OF THE SPRINGFIELD CITY COUNCIL HELD MONDAY MARCH 21,2016 The City of Springfield Council met in a work session in the Jesse Maine Meeting Room,225 Fifth Street, Springfield, Oregon, on Monday March 21, 2016 at 6:00 p.m.,with Mayor Lundberg presiding. ATTENDANCE Present were Mayor Lundberg and Councilors VanGordon,Moore,Ralston, Woodrow and Pishioneri. Also present were City Manager Gino Grimaldi,Assistant City Manager Jeff Towery, City Attorney Mary Bridget Smith,City Recorder Amy Sowa and members of the staff. Councilor Wylie was absent(excused). 1. NEDCO Update and Discover Downtown Springfield. Courtney Griesel,Management Analyst,presented the staff report on this item. Ms. Griesel said tonight's presentation would be regarding Discover Downtown and the work Neighborhood Economic Development Corporation(NEDCO)has been doing in downtown Springfield and Springfield in general. Ms. Griesel spoke regarding the Food Cart/Mobile Food Vending process and program.An overview was included in the agenda packet. It includes information on start-up costs,and ongoing operational costs of the carts.Economic Development staff at the City took a hard look at that business model as they tried to understand why we were not seeing them come into downtown. They also met with business owners and found that part of the issue was lack of employment base downtown creating enough demand. Originally,Community Development Block Grant(CDBG)funds were allocated to the Food Cart Program to outline policies,not necessarily to fund an ongoing program. Their hope was to have enough interest and foot traffic to fund continued operations. They hope to look further over the next month to find ways to provide better access to that path into downtown and hear from the vendors the kinds of things they look for that would help improve this program.Erin Fifield, Community Development Analyst,was present to answer questions about the CDBG program. Ms. Griesel said staff had worked with NEDCO over the last six months to understand where leadership in the Discover Downtown program should fall. There is currently not a funded Discover Downtown Manager which means the urban renewal district has not been putting out funds for that position. Emily Reiman,Executive Director of NEDCO, said she was appointed to this position about 10 months ago.At that time, she had been the manager of their personal asset building programs for about five years.Although she had been with NEDCO for a while,the community economic development work, and particularly the work partnering with the City of Springfield,was relatively new to her. She knew the first year would be about assessment and evaluation of NEDCO's programs. A couple of trends emerged quickly during that evaluation. The partnerships with the City of Springfield were a little tenuous.NEDCO had not always delivered where they could have,had not done a good job communicating where those partnership existed,and had not made sure both the City and NEDCO had clear and common expectations around the work they had undertaken. These factors caused a general level of frustration with some of the areas NEDCO had partnered with the City most closely. The other thing that became evident was that in the community economic development work City of Springfield Council Work Session Minutes March 21,2016 Page 2 s NEDCO was doing, including SPROUT,the Main Street Program,the Food Cart Program and the Micro-Enterprise Business Education Services.As a cluster,they are on a very unsustainable path. Financially,that set of programming was significantly in the red across the board. The combination of the tenuous partnership relationships and the fact the community economic development programs were on such an unsustainable path forward,became the work that she,the management team and NEDCO Board of Directors had been tackling for the last ten months. It became apparent they would need a state of NEDCO union and state of the NEDCO and City of Springfield partnership presentation to Council. That is what she and Ms. Griesel have been working on for tonight. She outlined her three objectives for tonight's discussion: • General overview of NEDCO services and what they do in the City of Springfield. • Discuss the changes NEDCO has gone through in the last year to address the problems faced when she started,and put NEDCO on a different footing. • Set the stage for ongoing conversations moving forward about how NEDCO and the City can be better and more effective partners and provide the most impact possible in a sustainable and thoughtful way. Mayor Lundberg said she would like to hear about those programs that are specific to Springfield. She also suggested that Council be able to ask their questions as Ms.Reiman goes through her presentation. Ms. Reiman referred to a chart in Attachment 1 of the agenda packet(NEDCO Update Report)which illustrates the rapid growth that NEDCO underwent. In 2009-2010 they were relatively small with a budget of about$700,000 and a staff of seven. Over the course of the next four or five years,they expanded dramatically mostly in the personal asset building program which includes financial literacy, first time homeownership,and foreclosure prevention. They do work with a lot of families in Springfield and the impacts of that work are shown on the final page of the report. That program scaled in a way that was sustainable and NEDCO continues to be a leader in the state for both foreclosure and home ownership counseling. Ms.Reiman said the other area NEDCO scaled rapidly was in community economic development. The cost for SPROUT was more than the majority of dollars invested in community economic development with relatively smaller amounts going to micro-enterprise services and the Main Street Program. Between 2009-2014,there was rapid expansion in all of those programs, including the entire conception of SPROUT!. Ms. Reiman noted that the report includes one-page summaries of each of the four departments in NEDCO. The Personal Asset Building page shows that most of the programs are break even or require minimal subsidy. The subsidies are modest and generally come from private grant sources or sponsorships sources that are very stable. The Community Economic Development page notes that all of the programs in this section require substantial subsidies. When she took over as Executive Director,they were nearly through half of the fiscal year and were on track to lose a significant amount of money in this department. They are in the fourth year of NEDCO investment into the SPROUT! Program. From its concept, it was meant to be on a five-year business plan to a break event point. It has taken more investment on NEDCO's part than originally planned and will likely take more than five years to get to the break-even point. They have about$2.5M in NEDCO investment in the SPROUT! building,not counting grants. Compared to that,the other programs were smaller subsidies but every dollar counts when facing a large deficit. The Springfield Farmer's Market was running at a$20,000 NEDCO investment(deficit)annually,the Main Street Program was running at about a$30,000435,000 investment(deficit)annually,and the non-profit Incubator Program at about a$60,000-$70,000 investment(deficit).NEDCO was not going to be able to sustain that level of investment over that number of programs and be able to deliver on any of them well,and could City of Springfield Council Work Session Minutes March 21,2016 Page 3 possibly be looking at the complete closure of some of them. Ms.Reiman said she started working with the management team, Board of Directors and City staff to try to evaluate which might have stable funding sources,whether or not business models or strategies to make them more viable,or did they need to shift NEDCO's focus to areas where they had more sustainable funding sources. Over the course of the last year,they decided that because of the level of investment in SPROUT! and the unique asset it proved to the community,that(along with the Farmer's Market)should be the core focus of their community economic investment in time and resources. They realized the Main Street Programs wasn't a model they could sustain over the long term and wasn't at a place that was going to be sustainable in a few years. They also realized that their Non-profit Business Incubator was not a sustainable concept and that although they could scale down the Micro Enterprise services and find a niche that served a community need and was viable in terms of funding, it didn't include a Non-profit Incubator. Ms. Reiman referred to the section on NEDCO's Property Development activities which include affordable housing,and commercial development acquisition and rehabilitation. The property development is one of the more stable program areas outside of SPROUT!.Many of these programs are actually income generating and have been for a number of years. She referred to the Community LendingWorks Program which was developed about five years ago to do community development lending work. That is another area where they have sustainable break even programs that can scale without significant grant funding. Those programs are funded primarily through fees and interest earned on the lending activity,with a few government grants. They have focused changes and adjustments on the Community Economic Development program to make it more sustainable and viable. Over the long-term, she feels they will be in a good position to do good community development work,but most will need to be done through building development,through micro and small business lending, some of the micro-enterprise services and their work at SPROUT!. They have a long going expertise in those areas, and can bring the most resources to the table so they are sustainable in the long term. Councilor Woodrow referred to the update report and the organizational summary where it lists expansion to Clackamas County and southern Oregon. She was curious how much that was taking away from the resources in our area. Ms.Reiman said NEDCO does have a three-County service area—Lane,Marion and Clackamas counties. Their community economic development work is exclusively focused in Lane County now and in Springfield. The programs they have in the other two counties are largely the Personal Asset Building programs which scale in a sustainable way and have State and Federal funding; and the Community LendingWorks Program which also scales in a sustainable way. Both of those programs have an independent funding stream from the Community Economic Development program, and are funding models that can cover its costs as it scales. They are remaining focused on Springfield only in the Community Economic Development program until they can get to a more stable position. The fact that theyhave to scale back on the Main Street Program and Incubator program does not mean NEDCO is any less invested in Springfield or are deprioritizing. The management team and Board talk frequently about their commitment to Springfield,and realize they have not fulfilled their commitment the way they envisioned. With the changes,they are not trying to draw back from Springfield, but to position themselves in a way to have a much bigger impact in a more sustainable way. Ms.Griesel said staff has talked with downtown businesses recently about an upcoming event revolving around Mother's Day that would be sponsored within the urban renewal district. This will be a minor investment for a do-it-now activity,with some business-to-business networking and consulting.NEDCO staff at SPROUT! has been key in sitting at the table with businesses as another downtown business to create momentum and leadership. They are looking at taking some of the funds City of Springfield Council Work Session Minutes March 21,2016 Page 4 that were budgeted for Discover Downtown work and applying them towards an actual event.At the same time,city staff has been meeting with the Springfield Chamber to discuss ways to generate momentum within the organizations to focus it downtown and bring businesses together, asking how they would like to be engaged differently in the future,and how the last five years with Discover Downtown has been.They are asking for ideas to carry forward. She has been happy to have NEDCO and SPROUT! staff as co-businesses at the table with our other downtown businesses. Mayor Lundberg said you have expanded very rapidly in areas where she feels they can make money to expand the services. She noted that the fundraising line under SPROUT! should include much more. Ms.Reiman said they were working on adding to that. Mayor Lundberg said SPROUT! is definitely one of the most important things in Springfield and they can't let it fail since it is cornerstone of our redevelopment efforts.Affordable housing is another area where NEDCO is an important player. They took part in the foreclosure and threshold programs for many years. It's an important piece in helping people get a leg up on being stable in the community. The City is not building affordable housing so depends on having people who can,and want that to be successful.We need to find a way that downtown businesses have a support mechanism and involving the Chamber of Commerce is one way. She separated food from the Non-profit Business Incubator program because that is the cornerstone of SPROUT!. Our other partners can worry about other kinds of micro businesses. The idea for food carts came from a need to provide better food options for students in downtown. Perhaps they could specialize in a program that brings in our high school students and let them do micro entrepreneurship. There is room for developing our food hub engaging the high school students, giving them a table at an event, or even a competition at the Farmer's Market. She already talked to School Superintendent Sue Rieke-Smith about the idea. Ms. Reiman said it is her two-year ambition to get micro enterprise services for youth at SPROUT! and in the food world. She loves the idea. Mayor Lundberg said the big issue is what to do with SPROUT!. One of the issues is that they need to rent out the building,and they first need to get the sprinkler system in place so they don't have to charge the extra amount. She requested Council move some of the funding from previous CDBG funds that were granted and not used by NEDCO,towards the sprinkler system. If NEDCO can raise the rest,they can get it completed. Ms. Reiman said they were still getting the final bids in for the sprinkler system. Mayor Lundberg said any money transferred for this project would lower the amount NEDCO needed to raise for that system. Ms.Reiman said the good news is that the events are bigger and more frequent than originally thought,which require the sprinkler system. Mayor Lundberg said if it fails it could sit empty for a number of years. We have the momentum in downtown to help it move forward. Ms.Griesel said staff could go back and look at what we could do regarding re-appropriation of the CDBG funds and how much. They will know more once they get the bid. The sprinkler system is intended to get SPROUT! ready to rent for events that help fund the facility. There are other opportunities to look at other programs,and staff could bring back some funding options. City of Springfield Council Work Session Minutes March 21,2016 Page 5 Councilor Woodrow said she felt with the funding back and Ms.Reiman's participation,NEDCO could reach out to fundraise and promote the facility for events. Ms. Reiman said NEDCO is already in talks with potential funders for SPROUT!. They can't submit full proposals until they get back the final bids and know what they need. Mayor Lundberg said if those sponsors give them the full funding,the City wouldn't need to transfer funds over. Councilor Moore referred to the Property Development and several foreclosed homes that were rehabbed and were now affordable rentals. She asked if NEDCO held the ownership of those homes. Ms.Reiman said they do for those five.Historically,NEDCO has mostly developed single family properties for first-time buyers. Due to the circumstances and a number of foreclosed properties,they re-tooled their single-family development for a few years and kept those for affordable rentals. She could confirm,but she believes they have 15 or 20 year affordability clauses. Councilor Moore applauded Ms. Reiman for the report she provided. It was very comprehensive. She noted the low amount listed that food carts make per day. Ms.Reiman said it is partly why the shift has been for a permanent location for food carts. Ms. Griesel said the hourly wage is low partly because they see the food vendors start up as a low-paid owner-operator system. Councilor VanGordon said he was fine reallocating the CDBG funds if they don't receive additional funds through other grants.He would like to see it as a match program to help promote fundraising. Even though the City would be taking back the food cart program, it would still be allowed. Ms. Griesel said City staff will take a six-month look at the food cart program, and look at who should be the first point of contact(City or NEDCO).For now it will remain with NEDCO. Councilor VanGordon asked if there were plans to spend the Discover Downtown funds if they take it back from NEDCO. Ms. Griesel said once the Downtown Manager was no longer on salary at NEDCO,they were no longer invoicing the City. The funds are still part of the downtown urban renewal district and will go through the normal prioritization process for those funds. They are looking at doing a business-to- business concept and utilizing the SPROUT! venue as a great Mother's Day event to come, shop and eat downtown,with fun activities and music. There will be some advertising for the event. The funds will remain in a line item to allow the City to be responsive to opportunities. If we hadn't had that budget,we could have moved funds for this type of activity. Councilor VanGordon said he would be interested in knowing the game plan for the rest of the fiscal year. Ms. Griesel said she could do an update to the Council regarding the downtown urban renewal agency. Councilor VanGordon said he would like to move forward with NEDCO, and figure out how to continue to grow the partnership and get things in line. City of Springfield Council Work Session Minutes March 21,2016 Page 6 Councilor Pishioneri thanked Ms.Reiman for her report and the details about NEDCO and their programs. He would like to see something subsequent to this about how these issues can be solved.He would also like to see if other cities that have these programs in place are also in the red.If not,what are they doing that makes them successful that could be used as models. It is a work in progress.He appreciates the amount of effort and the communication provided. Ms. Reiman said she hired Lisa Hardwig with the sole mission of helping NEDCO and the Board figure out SPROUT!. They have cut the deficit by about two-thirds. She will make that the focus of her next report. Councilor Woodrow said she would like to see that happen downtown. The short-range action items that can bring back unification of the businesses are going to be crucial. Once they have the short- range items,they can focus on long-range goals and expectations. She previously served on one of the downtown committees and it was easy to get bogged down with details rather than making progress. Ms. Reiman said NEDCO is a member business in those efforts. She also pointed out that their lending program has already helped four or six downtown businesses be able to expand and locate in downtown.Plank Town is a great example of NEDCO assisting with their location downtown. That is a huge resource to assist those invested in making downtown successful. Ms. Griesel said the City will continue to move some of the funds from the budget for the lighting project,crosswalks,beautification and art. They will continue to look for activities to partner with downtown businesses and for the basics of business. Mayor Lundberg said she would like to see the next report before they go on Summer Break, even if it's in a Communication Packet. Some things to include are: focusing on SPROUT! and food based businesses; lending programs; and affordable housing. Those are the things most critical to the Council.The City will try to find other partners for some of the events. ADJOURNMENT The meeting was adjourned at 6:51 p.m. Minutes Recorder—Amy Sowa Christine L. Lundberg Mayor Attest: Amy Sowa City Recorder