The URL can be used to link to this page

Home My WebLink About2011/11/28 - ADMIN - Agenda Packets - City Council - Study SessionAGENDA NOVEMBER 28, 2011 6:00 p.m. SPECIAL CITY COUNCIL MEETING -- Westwood Room 1. Call to Order 1a. Roll Call 2. Closed Executive Session Closed meeting with the City Attorney to discuss pending litigation relating to the City's appeal of MnDOT's negative declaration regarding the need for an Environmental Impact Statement for the MN&S Freight Rail Relocation Project. 3. Adjournment 7:00 p.m. or Immediately Following Special City Council / Closed Executive Session CITY COUNCIL STUDY SESSION – Council Chambers Discussion Items 1. 6:30 p.m. Future Study Session Agenda Planning – December 12, 2011 2. 6:35 p.m. Eliot School Redevelopment - Update 3. 6:55 p.m. Community Recreation Facility Tour Recap 4. 7:25 p.m. Tax Increment District Management Review 5. 8:10 p.m. Future of Cable TV Task Force Findings 6. 8:55 p.m. City Council Workshop – January 20-21, 2012 7. 9:10 p.m. Communications/Meeting Check-In (Verbal) 9:15 p.m. Adjourn Written Reports 8. October 2011 Monthly Financial Report 9. Charter Amendment for Civil Penalties 10. Cavalia Summary Report Auxiliary aids for individuals with disabilities are available upon request. To make arrangements, please call the Administration Department at 952/924-2525 (TDD 952/924-2518) at least 96 hours in advance of meeting. Meeting Date: November 28, 2011 Agenda Item #: 1 Regular Meeting Public Hearing Action Item Consent Item Resolution Ordinance Presentation Other: EDA Meeting Action Item Resolution Other: Study Session Discussion Item Written Report Other: TITLE: Future Study Session Agenda Planning – December 12, 2011. RECOMMENDED ACTION: The City Council and the City Manager to set the agenda for the regularly scheduled Study Session on December 12, 2011. POLICY CONSIDERATION: Does the Council agree with the agenda as proposed? BACKGROUND: At each study session, approximately five minutes are set aside to discuss the next study session agenda. For this purpose, attached please find the tentative agenda and proposed discussion items for the regularly scheduled Study Session on December 12, 2011. FINANCIAL OR BUDGET CONSIDERATION: None. VISION CONSIDERATION: None. Attachment: Future Study Session Agenda Planning – December 12, 2011 Prepared by: Debbie Fischer, Office Assistant Approved by: Nancy Deno, Deputy City Manager Study Session Meeting of November 28, 2011 (Item No. 1) Page 2 Subject: Future Study Session Agenda Planning – December 12, 2011 Closed Executive Session, December 12, 2011 – 6:30 p.m. City Manager’s Performance Evaluation Study Session, December 12, 2011 – 7:30 p.m. Tentative Discussion Items 1. Future Study Session Agenda Planning – Administrative Services (5 minutes) 2. Ellipse 2 Proposed Redevelopment Contract – Community Development (30 minutes) Staff would like to discuss and receive feedback on the proposed business terms that would serve as the basis for a Redevelopment Contract with Bader Development related to its e2 project. 3. Hwy 7 / Wooddale Interchange Traffic Improvement Options (Bike Trail) – Public Works (45 minutes) Discuss options regarding safety concerns related to the Cedar Lake Regional Trail crossings at Wooddale Avenue and Belt Line Boulevard. A report will be provided and overviewed with Council by staff that provides an analysis by SRF Consultants and includes different treatment options for consideration. 4. Hwy 100 Project Update – Public Works (30 minutes) Update for Council on the progress Mn/DOT has made on development of the Geometric Layout, Traffic Modeling, and Noise Analysis activities associated with this project; next steps will also be provided. April Crockett, Mn/DOT West Area Engineer, will attend the meeting to answer questions. 5. Communications/Meeting Check-In – Administrative Services (5 minutes) Time for communications between staff and Council will be set aside on every study session agenda for the purposes of information sharing. Reports 6. Project Update Hwy 7 & Louisiana 7. Recreational Fire Permits End of Meeting: 9:25 p.m. Regular M EDA Meet Study Sess TITLE: Eliot Sch RECOM No action POLICY The purp the status to provid BACKG In Febru with the conduct redevelop compatib desires. Design G The Desi incorpora Neighbor http://ww At the Ju financing discussed assistanc was also dependen of the fin Initial D Since the agreemen stages of discussio plan and for any d timely to proposal Meeting P P ting A sion D hool Redevel MMENDED n required at Y CONSIDE pose of this s of Eliot Sc de input on th GROUND: uary 2010, th intent of sel a neighborh ping the sit ble with the Guidelines ign Guidelin ated into th rhood Cha ww.stlouispa une 13, 201 g assistance d. The City e for a qual o acknowled nt on the spe nancial need Development e June 13th nt with a po f preparing on is to prov provide an detail evalua o at least pro they can exp Public Hearing Presentation Action Item Discussion Item lopment - Up ACTION: t this time. ERATION: Study Sessio chool Redev he direction he St. Louis lling the pro hood proces te. The in City’s goals nes were com he City’s C apter. The ark.org/webf 11 City Cou (TIF assista y Council c lity project t dged, that a ecific charac for assistanc t Idea meeting, th tential redev plans for h vide the City opportunity ation or prese ovide the Ci pect to see in g Action Other: Resolu m Written pdate. on agenda is velopment; a for future de Park Schoo operty for red ss to create ntent was th s, School Di mpleted duri Comprehens Guideline files/file/Com uncil Study ance) for a r concluded th that was con any decision cteristics of t ce he St. Louis veloper, Elio how to rede y Council w for City Co entation to th ity Council n the coming Item tion n Report s to provide and, to provi evelopment ol Board dec developmen e a set of D hat Eliot’s f istrict’s goal ing the summ sive Plan t s are ava mm_Dev/des Session, the redevelopme hat it would nsistent with n to provide the project b s Park Scho ot Park Partn evelop the ith a brief p ouncil to pro he City Cou with a gene g weeks and Meeting Consent Item Other: Other: the City Co ide the City of the Eliot cided to clo nt. The City Design Guid future use ls, and the n mer and fail through the ailable on sign_guideli e possibility ent project o d be willing h the Eliot S e TIF assis being propos ool District ners, LLC. school site. preview of th ovide input. uncil or the n eral sense of d months. g Date: Nov A m Resolu ouncil with Council wit School Site. ose Eliot Co y and School delines to s and develop neighborhoo l of 2010 an adoption the city ines_report_ y of providin on the Eliot g to conside School Desi stance would ed and a tho has entered The develop The purp he character The plans ar neighborhoo f the charact vember 28, Agenda Item ution Ord a brief upda th an opport . mmunity Ce l Board agre set the stag pment woul d’s concern d now have of the Plan y’s website _final.pdf ng tax incre t School site er providing gn Guidelin d very muc orough evalu d into a purc per is in the pose of toni r of the eme re far from r od. Howeve ter of the pr 2011 m #: 2 dinance ate on tunity enter, eed to ge for ld be s and been n by e at: ement e was g TIF nes. It ch be uation chase early ight’s erging ready r it is roject Study Session Meeting of November 28, 2011 (Item No. 2) Page 2 Subject: Eliot School Redevelopment - Update The emerging project plan is largely consistent with the Eliot School Site Design Guidelines. The developer’s thoughts are that it will be a market rate, multi-family housing development. Structures are anticipated to be three stories in height with underground parking. The buildings would have setbacks from Idaho and Hampshire Avenues consistent with the setbacks for the single-family homes along these same streets. Access to the underground parking would be from Idaho and Hampshire. The potential to allow mid-block pedestrian movement through the site would be provided. The two areas which the initial concept for the Eliot School site varies from the design guidelines are density and home-ownership. The development is anticipated to be market rate rental housing with rents about 20% less than recent upper-end apartments like the Ellipse. The design guidelines state a preference for owner-occupied housing. The density anticipated is approximately 12% higher than the density envisioned in the design guidelines. The guidelines say the site should be guided for medium density residential and a maximum of 129 housing units (30 units per acre). The developer’s initial thinking is a 144 unit (33.5 units per acre) project. The focus on rental housing and the density of the project are driven largely by economics and market conditions. For-sale, owner-occupied multi-family housing (condos, townhomes, co-ops) developments are very difficult to do under current market conditions. A for-sale project for the Eliot School site is probably not a marketable project for the for-seeable future. The number of units built on the site affects the ability of the developer to cover the basic costs of the project as well as the ability to fund amenities, under building parking and upgrades in the quality of the project in general. The market conditions and economics of the site are leading the developer toward proposing a rental housing project with densities higher than stated in our design guidelines. It would be premature to make any hard and fast decisions on a project that is still evolving into a design that is workable from a market, financing and physical development perspective. However it is timely for the City Council to provide any input or comments it cares to make on the early direction this project is taking. Your comments will be useful as we work with the developer and the neighborhoods on the plans for the Eliot School site. FINANCIAL OR BUDGET CONSIDERATION: None at this time. VISION CONSIDERATION: St. Louis Park is committed to providing a well-maintained and diverse housing stock. St. Louis Park is committed to being a connected and engaged community. Attachments: None Prepared by: Meg McMonigal, Planning and Zoning Supervisor Reviewed by: Kevin Locke, Community Development Director Approved by: Nancy Deno, Deputy City Manager Meeting Date: November 28, 2011 Agenda Item #: 3 Regular Meeting Public Hearing Action Item Consent Item Resolution Ordinance Presentation Other: EDA Meeting Action Item Resolution Other: Study Session Discussion Item Written Report Other: TITLE: Community Recreation Facility Tour Recap. RECOMMENDED ACTION: Staff requests Council input on the process, timelines and development of a task force. POLICY CONSIDERATION: Did the tours provide specific insights or ideas that the Council would like staff to pursue further? Is the Council ready to move ahead with the formation of a task force and is Council comfortable with the suggested make-up of the proposed task force? BACKGROUND: At the City Council Study Session on August 23, 2010 staff presented a proposal for moving forward on the exploration of the need for additional civic and/or recreational facilities in the community. Undertaking such an effort originates from the 2005/2006 Vision St. Louis Park process and the resulting Strategic Directions adopted by the City Council. Since that time, staff has conducted both an online and Decision Resources survey to solicit feedback from the residents on what programs and facilities they think are missing in the community. The City Council last discussed future Community Recreation Facilities at their September 12 and November 14, 2011 meetings. The Council concurred that a tour of other city programs and facilities would be appropriate. That tour took place on Wednesday, November 16. Council also gave approval to have an expert in the field update them on trends in the Parks and Recreation field. As facility planning moves forward, we need to be thinking towards the future with an understanding of our changing demographics. Tour of other City Facilities On Wednesday, November 16, the City Council, members from the Parks and Recreation Advisory Commission and staff toured three different types of facilities. Staff is interested in learning what the Council liked about each facility. Are there program elements or facilities that the Council would like to see in St. Louis Park? Are there items that Council did not like or wouldn’t fit in St. Louis Park? Are there other City facilities that the City Council would like to tour? Selection of a Task Force The timelines below suggest if the Council chooses to go forward with future planning for additional recreational facilities, they may want to consider appointing a task force. Does the Council wish to select a task force prior to bringing in the trends expert, Ellen O’ Sullivan? The task force then would have the benefit of hearing her presentation. Staff suggests the task force include: a member from the Parks and Recreation Advisory Commission, a member from Planning Commission, a member from the Community Education Advisory Committee, a resident from each ward, a member from one or two youth associations, a member from Lenox advisory board and a member from the business community and/or CVB. Are there other organizations that should be represented? Study Session Meeting of November 28, 2011 (Item No. 3) Page 2 Subject: Community Recreation Facility Tour Recap COMMUNITY RECREATION PLANNING TIMELINES: Staff suggests the following updated timelines: November 2011 November 16 - Toured city facilities in Chaska, Eden Prairie, and Plymouth. November 28 - Council Study Session (check with council for areas to discuss or follow-up). December 2011 December - Review with new council members to get them up to speed on history and next steps. - Define mission and purpose of Task Force. - Solicit members for a Task Force (10-13 members). January 2012 January - Appoint task force members. - Convene task force. January 23 - Date for Ellen O’Sullivan to speak to Council members and other stakeholders (City and School) regarding trends in Parks and Recreation. February 2012 February 13 - Council check-in regarding trends and upcoming public process. March 2012 Public Process. March - A series of focus groups lead by the task force and staff. - A variety of community members (including members of Lenox, youth associations, city and school commission members, people who gave us their e-mail during the survey) will be invited as well as advertisements on the website, Cable TV, and where appropriate. - Staff to research locations, potential partners and financing options. April 2012 April 9 - Council Study Session to discuss what type of facility (s) could support the programs our community wants and location (s). Hear report from Task Force. Next steps might be to create an RFQ (Request for Qualifications) or a RFP (Request for Proposal) or to ask the Task Force to further study options. SPEAKER ON TRENDS IN PARKS RECREATION AND FACILITY PLANNING: As we have previously discussed, it is important that we plan for future trends as we move forward. Staff has been in discussion with Ellen O’Sullivan, a well-known expert in the area of Parks and Recreation trends. She is available to talk to the Council (and other community leaders such as the School Board, CEAC, and PRAC if Council chooses to invite them) on January 23. One of the elements we need to keep in mind as we move forward with future planning is that as baby boomers age, they will want very different facilities than the old “senior center” models. Because the school district runs the Lenox Center and the City gives them money for senior programming, the Council may want to invite them to hear the speaker. Study Session Meeting of November 28, 2011 (Item No. 3) Page 3 Subject: Community Recreation Facility Tour Recap Lisa Greene, Community Education Director, did attend the tour on November 16 and wants to be involved in future planning. FINANCIAL OR BUDGET CONSIDERATION: Staff is working out the details for Ellen O’Sullivan to speak. Staff is coordinating with the state Minnesota Recreation and Parks Association (MRPA) to have Ellen speak to other professions in the area in an additional session while she is here. The cost will be shared with MRPA. Council gave direction to staff during the budget session to set aside some money to further study this issue. VISION CONSIDERATION: This topic is directly related to the results of Vision St. Louis Park and one of the adopted Strategic Directions that “St. Louis Park is committed to being a connected and engaged community” and the related Focus Area of “Exploring creation of a multi-use civic center, including indoor/winter use”. Attachments: None Prepared by: Cindy Walsh, Director of Parks and Recreation Approved by: Tom Harmening, City Manager Meeting Date: November 28, 2011 Agenda Item #: 4 Regular Meeting Public Hearing Action Item Consent Item Resolution Ordinance Presentation Other: EDA Meeting Action Item Resolution Other: Study Session Discussion Item Written Report Other: TITLE: Tax Increment District Management Review. RECOMMENDED ACTION: None required this evening. It is an information sharing session. POLICY CONSIDERATION: • Does the EDA/City Council have any questions or concerns regarding the status and financial health of the City’s TIF Districts? • What other information would the EDA/City Council like to see regarding the City’s Tax Increment Districts? BACKGROUND: Beginning in 2000, staff and Ehlers & Associates have periodically presented the EDA/Council with a report on issues associated with managing the City’s TIF districts and paying outstanding debt. This study session discussion is a continuation of this practice. Stacie Kvilvang from Ehlers & Associates, (the City and EDA’s financial consultant), and City staff will be discussing the TIF District Management Review & Analysis report with the EDA/City Council at a high level. The purpose of the report is to review the status, financial condition, debt management, and future value of the City’s tax increment districts. The report also describes the revenues generated from each TIF district, identifies findings, and presents recommendations that should be discussed regarding the management of City TIF districts and related debt. Information contained in this report is obtained from various sources, including, but not limited to: The City of St. Louis Park, Hennepin County, The State of Minnesota, The Office of the State Auditor and Ehlers staff. Portions of the information in the report are used by City staff throughout the year to provide a quick reference guide when performing analyses and making recommendations to the City Council or EDA. The full report is very lengthy and available upon request. FINANCIAL OR BUDGET CONSIDERATION: By updating the information contained the report; staff is able to have an excellent resource when analyzing data or preparing financial information to ensure a comprehensive picture for the City Council/EDA or end users of information. VISION CONSIDERATION: By partnering with others in the community, The City of St. Louis Park is demonstrating its commitment to being a connected and engaged community. Attachments: TIF District Status Report – Power Point (Full report is very lengthy and is available upon request.) Prepared by: Brian A. Swanson, Controller Greg Hunt, Community Development Coordinator Approved by: Nancy Deno, EDA Deputy Executive Director & Deputy City Manager TIF Status ReportCity of St. Louis ParkNovember 28, 2011Stacie Kvilvang – EhlersStudy Session Meeting of November 28, 2011 (Item No. 4) Subject: Tax Increment District Management ReviewPage 2 OverviewNumber of TIF DistrictsTax Capacity Captured by TIFIncrease in Tax BaseObligationsCAP programForecast of IssuesRecommendationsStudy Session Meeting of November 28, 2011 (Item No. 4) Subject: Tax Increment District Management ReviewPage 3 Number of TIF Districts16 TIF Districts9Redevelopment (26 years)Trunk Hwy 7, Victoria Ponds, Zarthan, Mill City, Park Commons, Wolfe Lake, Highway 7 Business Center, West End, Ellipse on Excelsior2Housing (26 years)Park Center, Aquila Commons1Soils (20 years)Edgewood1Renewal and Renovation (16 years)Elmwood1Economic Development (9 years)Hardcoat2Hazardous Substance Subdistrict (term varies)Park Nicollet and Highway 7 Business CenterStudy Session Meeting of November 28, 2011 (Item No. 4) Subject: Tax Increment District Management ReviewPage 4 Tax Capacity Captured by TIFComparable Cities 2011Captured TIF as a % of Tax BasePayable 2011 City Tax RateCity Bond RatingNew Brighton16.9%37.871%AARichfield11.7%56.797%Aa2Brooklyn Park12.1%52.074%AA+Hopkins7.8%56.463%AASt. Louis Park9.7%43.276%AAAGolden Valley 16.1% 53.060% AaaMinneapolis10.0%69.502%Aaa/AAABloomington5.9%43.088%Aaa/AAAEdina3.5%24.660%Aaa/AAAMinnetonka1.7%33.705%AaaStudy Session Meeting of November 28, 2011 (Item No. 4) Subject: Tax Increment District Management ReviewPage 5 Tax Capacity Captured by TIFNote:2010 decrease is due to two TIF district decertifying (Oak Park Village & Excelsior Boulevard)YearCaptured TIF as a % of Tax Base20049.10%20059.07%20069.11%20079.99%200811.16%200911.87%20108.84%20119.65%Study Session Meeting of November 28, 2011 (Item No. 4) Subject: Tax Increment District Management ReviewPage 6 Tax Capacity Captured by TIFTrunk Highway 7 District will decertify at the end of this yearApproximately 981,000 of tax capacity will no longer be captured for TIF for 2012Approximately 1.5%of total tax capacity of CityExcelsior Boulevard HSTI District will decertify after August 1, 2012 paymentPortion of 1sthalf and 100% of 2ndhalf 2012 increment will be returned to the County for redistribution (approximately $838,000)City’s redistributed portion for the General Fund is approximately $326,500In 2013, approximately 950,066 of tax capacity will no longer be captured for TIFApproximately 1.45%of total tax capacity of CityStudy Session Meeting of November 28, 2011 (Item No. 4) Subject: Tax Increment District Management ReviewPage 7 Increase in Tax BaseBased upon pay 2011 valuesOnly partial values for West End and EllipseDistrictOriginal Market ValuePay 2011 Market ValuePercent Increase in ValuePark Nicollet$4,806,460$47,503,300988.32%Highway 7$17,298,100 $76,288,100441.02%Victoria Ponds$500,000$35,252,8007050.56%Park Center$493,000$7,553,0001532.05%Zarthan$4,053,600$31,072,700766.55%Mill City$608,700$17,200,0002825.69%Park Commons$4,619,700 $132,405,5002866.11%Edgewood$1,000,000$5,376,800537.68%Wolfe Lake$1,717,300$9,500,000553.19%Aquila$1,900,000$17,613,500927.03%Elmwood$10,864,500 $90,671,200834.56%Highway 7 Business Center $2,772,700$9,603,800346.37%West End (partial completion) $43,051,000 $100,428,500233.28%Ellipse (partial completion) $3,400,800$3,470,800102.06%TOTAL$97,085,860 $583,940,000601.47%Study Session Meeting of November 28, 2011 (Item No. 4) Subject: Tax Increment District Management ReviewPage 8 ObligationsDistrictNoteOutstanding at 2/1/2012HSTIPark Nicollet1,269,308$ Note A1,619,914$ Note B277,699$ Note C74,571$ Note D23,821$ AquilaStonebridge793,834$ EdgewoodEdgewood370,296$ Wolfe LakeBeltline693,596$ Excelsior & Grand 4,746,907$ Phase NE4,669,273$ Phase E3,613,911$ Phase NW4,689,781$ Victoria PondsSVK202,930$ Mill CitySLP Apts5,515,572$ CSM Note 11,520,882$ CSM Note 22,020,703$ CSM Note 31,262,085$ West EndDuke20,884,030$ Ellipse IBader1,444,976$ TOTAL55,694,089$ Pay As You Go ObligationsHwy 7Park CommonsZarthanIssueAmount Paying District Term2008B GO Tax Increment Bonds5,185,000$ West End 2/1/20242004 Tax Increment Refunding3,890,000$ Trunk Hwy 7 2/1/20182010A Tax Increment Revenue Bonds - Hoigaards 3,495,000$ Elmwood 2/1/20232010B Tax Increment Revenue Bonds - Hoigaards 935,000$ Elmwood 2/1/2023TOTAL13,505,000$ N/A N/ABonds as of 2/1/2012Study Session Meeting of November 28, 2011 (Item No. 4) Subject: Tax Increment District Management ReviewPage 9 Construction Assistance ProgramBikemastersUtilized $70,000 from Mill City TIF district that had more restrictive use of the fundsFunds will not be repaidHardcoatUtilized $500,000 from Victoria Ponds TIF district that has more restrictive use of the fundsCreated a new 9-year TIF district to repay a portion of these fundsStudy Session Meeting of November 28, 2011 (Item No. 4) Subject: Tax Increment District Management ReviewPage 10 Forecast of IssuesMarket Value Homestead ExclusionWill have impact on the following districts:Victoria Ponds (74 town homes)$760,000 PAYGO Note to SVK• Will extend repayment term of note but WILLbe paid in fullZarthan (86 town homes)$1,395,547 PAYGO Note #3 to CSMNote WILL NOT be repaid in full (was never anticipated to be after 2001 legislative tax reform)Park CommonsCity interfund loan has priority on TIF Only impact is it will take LONGERto repay$4,668,663 NE PAYGO Note to TOLD$4,079,105 NW PAYGO Note to TOLD$3,300,715 E PAYGO Note to TOLDNotes WILL NOT be paid in full (were never anticipated to be after 2001 legislative tax reform)Study Session Meeting of November 28, 2011 (Item No. 4) Subject: Tax Increment District Management ReviewPage 11 Forecast of IssuesMarket Value Homestead ExclusionWill have impact on the following districts:Aquila Commons (106 Cooperative Units)$1,050,000 PAYGO Note to Aquila Senior LLC.Will extend repayment term but WILLbe repaidElmwood villageThe amount of funds available for the City to use for the intersection improvements at Woodale and Hwy 100 and for other eligible projects will be decreased (source is increment from the Rottlund town homes and condos)Study Session Meeting of November 28, 2011 (Item No. 4) Subject: Tax Increment District Management ReviewPage 12 Recommendations1.Market Value Homestead Exclusion. Provide updated analysis on impacts to existing obligations and amounts available for pooling for other projects. Study Session Meeting of November 28, 2011 (Item No. 4) Subject: Tax Increment District Management ReviewPage 13 Recommendations2.Pooling. Complete a pooling analysis for all existing districts to determine how much will be available for use and what strategies can be implemented to secure the use of these funds if deemed appropriate by the City. DistrictEnd Date of ObligationCash BalanceType of Project EligibleTrunk Highway 7 2011 1,390,029$ Any RedevelopmentVictoria Ponds 2014 783,146$ LimitedPark Center Housing 2023 1,743,143$ Affordable HousingZarthan 2023 1,734,942$ LimitedMill City 2019 155,425$ LimitedPark Commons 2028 1,030,081$ RedevelopmentWolfe Lake 2020 83,754$ RedevelopmentAquila Commons 2018 94,756$ Affordable HousingElmwood 2029 3,635,173$ RedevelopmentHwy 7 Corporate Center 2027 89,443$ RedevelopmentNote:Highlighted districts will likely have lower cash balances due to market value homestead exclusion and will be updated when pay 2012 information is availableStudy Session Meeting of November 28, 2011 (Item No. 4) Subject: Tax Increment District Management ReviewPage 14 Recommendations3.Use of Districts With On-Going Cash Balances. Newer districts which may have significant current and future cash balances for eligible TIF activities include:Park Center TIF District: $100,000 per year. The increments from this District can only be used for rental or owner-occupied housing which meet the income restrictions outlined in the TIF law. Elmwood TIF District: Amount per year beginning in 2012 TBD after calculations for market value exclusion are completed. The increments can only be used to improve areas with buildings in need of renovation or clearance or for public improvements in the Elmwood Village area and must be obligated before 2015 (currently anticipated that funds will be used for public improvements to Hwy 100 and Wooddale Avenue intersection within the TIF district). Study Session Meeting of November 28, 2011 (Item No. 4) Subject: Tax Increment District Management ReviewPage 15 Recommendations4.Five Year Rule. The five year rule for the following TIF districts should be tracked to avoid a lost opportunity for new projects District 5 Year DeadlineWolfe Lake4/26/2014 Aquila4/4/2015Elmwood Village - Original Area5/31/2015Elmwood Village - Modified Area2/21/2016Highway 77/17/2016West End7/9/2018Ellipse7/9/2014Study Session Meeting of November 28, 2011 (Item No. 4) Subject: Tax Increment District Management ReviewPage 16 Recommendations5.Decertification. Minnesota Statute 469.1763 subd. 4 places restrictions on the use of increment after the applicable five-year period is completed. Revenues may only be used to pay debt or contracts that were entered into before the five year rule deadline. Once outstanding obligations are paid, the district must be decertified. Therefore, it is important to monitor when obligations are going to be paid off to make sure that increment available for pooling is utilized to the fullest extent.Study Session Meeting of November 28, 2011 (Item No. 4) Subject: Tax Increment District Management ReviewPage 17 Final Thoughts1.St. Louis Park’s TIF districts are in overall good financial health2.The City has opportunities to utilize funds from several districts to augment its housing and redevelopment efforts 3.Redevelopment efforts have increased property valuations significantly and justify the short term investmentStudy Session Meeting of November 28, 2011 (Item No. 4) Subject: Tax Increment District Management ReviewPage 18 QuestionsStudy Session Meeting of November 28, 2011 (Item No. 4) Subject: Tax Increment District Management ReviewPage 19 Meeting Date: November 28, 2011 Agenda Item #: 5 Regular Meeting Public Hearing Action Item Consent Item Resolution Ordinance Presentation Other: EDA Meeting Action Item Resolution Other: Study Session Discussion Item Written Report Other: TITLE: Future of Cable TV Task Force Findings. RECOMMENDED ACTION: No action required. City Council asked city staff, with the help of the Telecommunications Advisory Commission, to examine the future of Cable TV in light of probable declining revenue, increasing competition, and related new technologies in the marketplace. POLICY CONSIDERATION: • Does the City Council wish to consider video services (delivered via Cable TV or other methods), provided to the public and internal staff, as a key communications tool in the future, especially after January 2021 when the current franchise expires? • Would the City Council like to consider any proactive approaches to its Cable TV Fund and operations? REPORT OVERVIEW: This report highlights the history of Cable TV in St. Louis Park, current trends in video service delivery, statistics and projections, analysis, current and future franchise composition, an analysis of the city’s Cable TV Fund, and future communications strategies related to video services. Below are important assumptions used by the Future of Cable TV Task Force in this report, assumptions with which we hope the Council continues to agree. Assumptions about the future of video services: • There will be no franchise agreement(s) or a very different type of structure to franchise agreements after January 2021, with changes to revenue streams as well. • Video will continue to play an integral and increasing role internally (for staff support) and externally (for various publics) in the city’s communications plan with or without the existence of a franchise agreement. • More options for delivery of video services will be available (both wired and wireless). • Residents and businesses will demand both increasing bandwidth and increasing wired and wireless delivery options. • The city must identify alternative revenue sources and delivery methods to continue video services in a financially feasible way. Study Session Meeting of November 28, 2011 (Item No. 5) Page 2 Subject: Future of Cable TV Task Force Findings BACKGROUND: Cable TV in St. Louis Park dates back over 30 years now. Below, staff has included a brief snapshot of what Cable TV looked like at three points during that period, plus a timeline of significant events along the way. 1983 Snapshot Northern Cablevision offers 25 channels in St. Louis Park. Government programming is seen on channel 8, with City Council and School Board meetings covered every Monday. Residents can use a three-camera studio to produce programming at the cable company office on Belt Line Boulevard after joining Park Cable Works, a nonprofit public access facility with office space in the cable company building. Park Cable Works raises funds via memberships, classes and tel-a- thons. Cable company staff covers the public meetings and high school sports. The City has one employee involved in video production and newsletter communications. October 2001 Snapshot Time Warner upgrades the St. Louis Park cable system in mid-2000 to a state-of-the-art hybrid fiber coax (HFC) system of 750 MHz bandwidth with high speed internet and digital cable channels. Time Warner has 13,079 total customers, 2,173 with internet access and 2,903 with digital cable service. Time Warner offers 30 Basic Cable channels for $9.75 and 73 Standard Cable channels for $35.70 per month. Digital cable allows 105 video channels and 40 music channels for $43.20 per month. Internet access costs $45.95 per month, including the required cable modem rental fee of $6 per month for a service that delivers 1 to 2 megabits per second download speeds. The City collects $379,000 in 5 percent franchise fees from Time Warner in 2001, including $37,000 from the internet access customers. The city has three employees involved in video production and one other to provide newsletter and other communications. Cable and satellite companies are competing actively for customers. U.S. West offers telephone service to St. Louis Park and is testing delivering video service in Omaha, NE. January 2007 Snapshot The current franchise enters its second year, and one of the provisions, Comcast ending its Local Origination programming (concerts, events and sports) occurs. The city, at Council direction, hires one full-time and two part-time employees so that the city can continue Local Origination programming on its own. The franchise agreement also pays the city $1.1 million in equipment grants ($300,000 of which was set aside for a new mobile production van/equipment for the On Location crew). At the same time, the city reorganizes its communication, Cable TV and Technology Services functions into the Information Resources Department. The department was organized with a focus on the emerging and future relationship between communication and technology. October 2011 Snapshot Comcast converted the system to all-digital in the fall of 2010 to reallocate bandwidth to offer more high definition (HD) cable channels. Comcast now provides 24 analog Basic channels for $10.97, and Basic customers with a digital box receive nine additional channels. Standard Cable is no longer offered to new customers, but “grandfathered” to customers that receive 88 channels on a digital adapter (DTA) for $62.99 per month. Most Cable TV customers are on the Digital Study Session Meeting of November 28, 2011 (Item No. 5) Page 3 Subject: Future of Cable TV Task Force Findings Preferred tier and receive at least 158 video channels plus 47 music channels for $80.99 per month. Channel 1 offers hundreds of free TV programs or movies on demand, including City- produced programs, and customers can pay extra for the Sports tier or Latino tier. Comcast offers discounts for bundling TV, internet and telephone service. Comcast offers a greater variety of price levels, including the Economy and Family tiers in video service and Economy, Performance, Blast, Extreme 50 and Extreme 100 tiers for internet service. Most internet customers pay $51.95 per month for internet service that delivers speeds from 7-12 megabits per second download speeds. The City expects to collect about $590,000 in franchise fees in 2011 to support video production services for five cable channels and online host sites. The City has 6 employees (4 FTE, 2 part- time – one at 20 hours and the other at 28 hours per week) involved in video and online productions and some graphic design, one Communications Coordinator and one Website Coordinator/Applications Developer. Through a cooperative City – School District agreement, a three-camera studio is available at the Senior High School for students or residents to use free of charge after training to produce programming. Timeline of Significant Events August, 1986: Nortel Cable TV buys the cable system in St. Louis Park from the much larger company, Storer Cable. 1987: The City assumes control of Park Cable Works and hires John McHugh to run public access from City Hall, since independent fund raising had dropped dramatically. The studio is used by public access and government access producers. 1992: A newly enacted federal Consumer Protection and Competition Act regulates cable TV service and creates a Basic service tier of local broadcast channels and locally produced channels. August 1994: Paragon Cable buys the St. Louis Park system from Nortel Cable TV. June 1995: Time Warner buys the St. Louis Park cable system from Paragon Cable. 1996: The federal Telecommunications Act deregulates cable TV service, except for Basic cable TV, and allows cable companies to offer internet and telephone service and telephone companies to offer video service. 1999: St. Louis Park Council Chambers is remodeled and robotic cameras are installed, instead of setting up cameras with tripods for every Council meeting. May 2000: Time Warner upgrades the St. Louis Park cable system to a state-of-the-art hybrid fiber coax (HFC) system of greater bandwidth, 750 MHz, which allows them to offer high-speed internet and digital cable channels. 2000 and 2001: City staff meets with two companies, Everest and Wide Open West, about granting additional franchises to allow those companies to build new HFC cable systems in St. Louis Park. Neither company has enough funding to build the new systems they were pursuing. Study Session Meeting of November 28, 2011 (Item No. 5) Page 4 Subject: Future of Cable TV Task Force Findings 2002: The Federal Communications Commission (FCC) reclassifies internet service as an information service, which means that cities can no longer receive franchise fees of 5 percent on this revenue stream. 2004: Time Warner introduces telephone service in St. Louis Park and the rest of the communities they serve in the metropolitan area. January 2006: The new franchise with Time Warner takes effect. Time Warner agrees to pay the City $1.1 million over the 15-year franchise for local production equipment and donate the old production van to the City in January 2007. The City hires three staff (2 FTE) to cover high school sports, concerts, and other local events. Maintaining this level of Local Origination service, which required the hiring of staff, was done at the City Council’s specific request and direction. The Cable company wished to end its own provision of Local Origination programming. The negotiated franchise agreement expires in 2021. August 2007: Comcast takes control of cable system, swapping other cities to Time Warner. One change is that Comcast no longer provides detailed customer reports. Below are Time Warner reports from 2000 through 2006. In the first few years Digital Cable, offering many more TV channels, was the “killer application”; but by 2003, High Speed Internet customers had surpassed Digital Cable customers. Time Warner Customers Table Total Customers Basic Cable Customers High Speed Internet Customers Digital Cable Customers 06/00 12,972 1,688 284 79 10/01 13,079 1,777 2,173 2,903 10/02 13,041 1,758 3,160 3,492 10/03 13,066 1,719 3,925 About 3,300 10/04 13,180 1,893 5,002 3,694 10/05 13,241 1,898 6,383 3,933 10/06 NA NA NA NA 2010: The City assumes control of School District channel operations, after the District cut technical support staff. Over the years, the City granted thousands of dollars in franchise fees to the school district to assist with cable TV coverage. Using Cable TV equipment earmarked franchise agreement funds, The City invests approximately $300,000 to replace the 30-year old production van and equipment inherited from the Cable company. Study Session Meeting of November 28, 2011 (Item No. 5) Page 5 Subject: Future of Cable TV Task Force Findings Comparison of Cable System Changes, 1983-2011 Date Cable TV Company # of Basic Channels Basic TV Cost # of Standard Channels Standard Cable Cost # of Premium & PPV Channels Digital Cable Channels Digital Cable Cost 1983 Northern 25 3 4/1/89 Nortel 33 $13.50 1/1/96 Paragon 22 $9.18 49 $25.07 9 9/18/01 Time Warner 30 $9.75 73 $35.70 51 105 video +40 music $43.20 10/1/11 Comcast 24 analog, 33 with digital box $10.97 91 (Need a Digital Adapter (DTA) for an analog TV) $62.99 (includes up to 3 DTA’s) 77 + Channel 1 and hundreds of movies and TV shows On Demand free or for a fee Digital Starter 91 video + 47 music Digital Preferred 158 video+ 47 music Other options: 17 Sports tier 29 Latino tier 45 HD channels, etc. $62.99 $ 80.99 Current and Planned Cable TV Operations: The city’s cable TV operations, branded as ParkTV, currently utilize five channels covering news, sports, performances, presentations, meetings and events in St. Louis Park. Channel 14: Chanel 14 is our Education Channel and features programming provided by School District #283 students and staff, school board meetings, school activity announcements and some St. Louis Park sports. Through a cooperative agreement, the city assumed control of the District’s channel in 2010. This agreement also gave the city full access and use free of charge to the television production studio at St. Louis Park High School. ParkTV uses the studio for its weekly news show “Park Update,” community TV programs, and special programming. Through this agreement, ParkTV provides one staff member to cover each School Board meeting. Channels 15/96: Channels 15 & 96 are the city’s two Community TV Public Access channels. They feature programming and announcements from adults living, working or volunteering in St. Louis Park. Some of these programs are produced in our studios using our equipment and others are simply submitted. Study Session Meeting of November 28, 2011 (Item No. 5) Page 6 Subject: Future of Cable TV Task Force Findings Channel 16: Channel 16 is our On Location channel which features concerts in the Park, high school sports, graduations and other special events. Most of the Channel 16 content is produced from our mobile production van and features multiple cameras for each production. In 2011, staff began cablecasting live concerts in the park, home football games at St. Louis Park High School, and high school hockey games from the Rec Center. Channel 17: Channel 17 is our Civic TV channel and features programs about city topics such as police, fire, development, recreation, our weekly news show “Park Update”, monthly news magazine show “Inside the Park!”, City Council, Planning Commission, and Telecommunications Advisory Commission meetings. ANALYSIS: Given this background, it is now important to consider what is going on both from an industry- wide perspective, and the perspective of the City of St. Louis Park operationally and financially. The Future of Cable TV Task Force utilized the services of two industry experts, Brian Grogan of Moss & Barnett and Joel Jamnik of Campbell Knutson. Both individuals have been involved with our franchise agreements and are utilized as telecommunications counsel on a regular basis. First, some observations from Grogan: Study Session Meeting of November 28, 2011 (Item No. 5) Page 7 Subject: Future of Cable TV Task Force Findings Companies in blue are not “traditional” cable operators. Direct TV and Dish Network are satellite providers (DBS), and Verizon and AT&T began as telephone companies and started offering video services in the last 10 years. The Cable industry’s revenue from residential video more than doubled from 1996 to 2009, from $24 billion to $53 billion. Other revenue, mostly internet but also telephone service, has increased more rapidly since 2002. St. Louis Park is served by the world’s largest cable TV Study Session Meeting of November 28, 2011 (Item No. 5) Page 8 Subject: Future of Cable TV Task Force Findings provider, Comcast. The largest providers are striving to maximize revenue from traditional video while investing in other delivery systems. For example, Comcast is a part owner of Clear, Sprint’s Wi-MAX (aka “4G”) wireless service and part owner of Hulu, an online over-the-top video provider. (Over-the-top is a video service delivered via broadband internet access). Recent Studies and Statistics Recent studies and statistics aren’t able to predict a clear path for the future of Cable TV, but the research is clear on one fact: people are receiving their video services in more formats, on more devices and in more ways than ever before. And this trend, a one-size-will-not-fit-all idea, is one of the most important trends that the city should pay attention to as it plans video services for the future. Some Highlights of Recent Research: • About 77 percent of consumers now watch over-the-top video on PC or TV, according to a 2011 survey of 6,550 consumers in seven countries completed by Accenture. • The behavior still skews young: 85 percent of respondents between 18 and 24 access and interact with video on desktops, laptops, Internet-connected TV and mobile devices, compared to 82 percent of those between 35 to 44. • About 64% of consumers 65 and older watch Internet video. • Traditional TV remains the most prevalent means of video consumption, with 92 percent of respondents saying they watch video this way. • In March 2011, 144.2 million Americans watched 14.5 billion online video streams, according to Nielsen. That’s an increase from 131.7 million U.S. Internet viewers who watched 9.3 billion streams one year ago. • Revenue from online television in the U.S. jumped 34 percent last year, totaling $1.6 billion for 2010. • But in terms of time spent viewing, traditional TV still outstrips online. U.S. online viewers spent an average of 14.8 hours watching Internet video for the month of March 2011, according to comScore — but Americans currently spend an average of 35.6 hours per week watching television, Nielsen figures show. • Still, Accenture’s survey found that in the past year, viewing video on nontraditional devices is trending upward. Viewing increased on laptops (35%), desktop PCs (28%) and Internet-enabled TVs (26%) across all age groups. • 46 million Americans rely on broadcasters for their TV service, according to market research at Knowledge networks, which conducted a survey of more than 3,300 U.S. Households in 2011 and compared them to Census figures – up four million people from a year earlier. • The same survey showed that a small, but notable number of homes, 5 million or 4 percent, had dropped pay TV service (this includes both cable TV and Satellite). • The survey also found some minority groups are more dependent on broadcast reception over cable reception; in fact, minorities made up 40 percent of all broadcast-only homes. • Lower-income households also trend towards broadcast-only television, according to the survey. Study Session Meeting of November 28, 2011 (Item No. 5) Page 9 Subject: Future of Cable TV Task Force Findings FUTURE FRANCHISES Our current franchise went into effect in January 2006. To better understand what the future may bring, staff researched more contemporary franchise agreements. Staff consulted with the legal counsel it uses to assist with telecommunications matters, including our franchise negotiations, for a clearer understanding of what’s happening with franchises being negotiated today. Important highlights: • Nearly 20 states now have state franchising laws (one franchise agreement is negotiated with service providers and applied to all communities). • In those states, cities are still receiving 5 percent franchise fees and in some cases cities are receiving an additional PEG fee of up to 1 percent. • Some local governments have actually come out ahead financially due to these laws; however, in virtually all cases, the cities have very limited regulatory authority of the cable operators. • Telecommunications attorneys and consultants do not believe it’s wise for local governments to plan on future revenues from new franchise agreements; however, today franchises are still being negotiated, usually for 10-year time periods. • The trends are quite clear as noted above -- that people are turning away from cable TV subscriptions, and the city is likely to see continued declining revenues from those subscriptions. • It is likely, however, that cities may continue to receive compensation from cable operators for the use of public rights-of-way for many years to come. • Cable operators are the only unregulated entities that are permitted to use all of the city’s rights-of-way and generate any level of profit they choose. • Some people may argue, and may argue more loudly in the future, that voice, video and broadband services are essential. But the fact remains that today these are still considered discretionary services and there is no guaranteed right allowing Comcast or any other operator to use the public right-of-way without authorization. If they do, fair consideration should be paid by the operator in the form of a franchise fee and most states and cities still uphold that principal. • Current franchise agreements are not resulting in additional PEG Channels from Cable operators, but there are new technologies such as high definition capability, on demand capability, and over-the-top applications that can be negotiated with cable operators. Improving connectivity to locations in St. Louis Park (i.e. City Hall, Rec Center, St. Louis Park High) and the level of capital funding are also important factors in current negotiations. The truth is, no one knows precisely what things will look like 10 years hence in 2021, either technically or financially. We only have to look back at what life was like 10 years ago in 2001 to understand that. However, it remains important to anticipate multiple scenarios and influence factors we can control. We turn to those now. Channel Consolidation City Staff is currently finalizing its 2012-2013 Communications Plan. This plan is designed to guide the city’s communications efforts over the next two years and addresses print publications, website and mobile applications, social media, public relations and marketing campaigns, and Cable TV. While accessing additional Cable TV Channels has long been seen as something Study Session Meeting of November 28, 2011 (Item No. 5) Page 10 Subject: Future of Cable TV Task Force Findings communities strive to negotiate during franchising, the 2012-2013 Communications Plan actually calls for the consolidation of the city’s current Cable TV Channels. The plan proposes consolidating ParkTV channels from five channels to three channels. It would merge channels 15 and 96 into one Public Access (Community TV Channel); convert Channel 17 (Civic) into a channel that would only show city council, school board, board and commission and special meetings; and Channel 16 (On Location) would become a one-stop channel for city news, live and recorded sports, live and taped concerts, school and featured programming. While eliminating channels does not save the City any direct funds, it will help brand the channels and make city information more accessible. Additionally, by returning channels to Comcast, the city may be able to leverage additional hours of on demand programming on the cable system or other benefits, as mentioned above like improving connectivity, over-the-top applications, etc. As part of this process, the city will also undertake a programming study to evaluate the type of programming currently offered and an analysis of trends in government programming. This process will include some type of user survey/focus groups to determine the type of programming desired in the community. ParkTV on the Web While the future of Cable TV is somewhat of an unknown, current trends indicate that video on websites, mobile devices, and social media platforms will continue to expand. Today, St. Louis Park offers its programming created for Cable TV in various formats embedded in our website; we offer On Demand programming on our website (people simply view a website page and can select from dozens of programs at any given time); and we live stream our Cable TV channels directly on our website (so people who don’t have Cable TV can watch our channels on their computers just as if they were watching on a TV). In addition, St. Louis Park has been a leader in social media among cities, and with more than 4,000 people (and growing) participating in our social media sites, we’re able to share video content directly with each of them daily. We intend to stay current with emerging delivery methods, and our current focus on delivering content to mobile devices is an example. Revenues and Expenditures: The current pattern of revenues and expenditures in the Cable TV Fund is unsustainable. As Scenario A of the attached long range financial worksheet shows, we currently estimate the fund balance to go negative in 2016. We have known this for some time, and it is something staff needs to address beyond the broader question of the future of Cable TV. The expenditures side needs to be addressed on a few different fronts. The first is to wean the dependence the General Fund has on the Cable TV Fund. That dependence has increased over time, especially with reductions in Local Government Aid received by the City. The second is to modify the longer term staffing structure, including incorporating additional volunteers and consolidating channels. Finally, we will need to take a different approach to other expenditures, especially capital expenditures without continuing Cable company support. Staff is currently working with a variety of scenarios to identify viable options / service levels on the expenditure side. We can influence this side of the equation most. Here are a few scenarios, none of which is a perfect mirror of what will happen: Study Session Meeting of November 28, 2011 (Item No. 5) Page 11 Subject: Future of Cable TV Task Force Findings Scenario A: Current Business Model – If we change nothing, and expenditures continue to increase while revenues remain flat, we go into a deficit state in 2016. It could happen sooner if revenues are less than flat. That is not sustainable, so operations and related expenses would need to be severely reduced if there was a desire to fund other significant items such as transfers to the General Fund. (See “Attachment A – Current CATV Financial Management Plan” for details). Expenditures for current video services (staff, equipment, etc. – not including transfers to the general fund) are currently estimated at approximately $500,000 annually. Should the city wish to continue its video services at these current levels if no future franchise fees are available this is the approximate amount of new revenues that would be needed annually, plus additional funding for major capital purchases of approximately $100,000 annually. Scenario B: Balance Fund and Cease All Video Services after January 2021 – This says we will make expenditures and revenues balance each other by the time the current franchise ends. We are assuming no future franchise revenues after January 2021, even if there is a franchise. The assumption is, no revenues – no video services after January 2021. To make this expenditure – revenue balance work, we would need to (1) reduce transfers to the General Fund by $30,000 each year beginning in 2013; (2) engage in no significant studies from this fund (such as the current Fiber Optic Study) after 2012; (3) assume we get no less than the projected $530,000 per year in franchise fee revenue through 2020; and (4) wind down equipment purchases. Staff has developed a spreadsheet that reflects this scenario. It can be shared with Council if there is a change in policy direction towards this scenario. Scenario C: Continue Only Pre-2006 Video Services - The assumption here is that we want to continue only the civic and community video services, and internal video support, which we had in place before January 2006. The biggest difference here is that we would no longer support local origination programming, which we assumed in January 2006 per Council direction and which included hiring of 2 FTEs. Scenario D: Continue Pre-2006 Video Services and Some Local Origination – This assumes Scenario C plus a reduced level of local origination programming. While all scenarios rely on increasing use of volunteers, this scenario probably emphasizes volunteers the most. Both Scenarios C and D also require far more assumptions on the revenue side than the expenditure side than Scenarios A and B. In Scenarios C and D, we would also need to take many of the steps in Scenario B and more. Staff has some financial models drafted, and want to spend the time refining those only if Council ultimately endorses the direction of Scenario C or D. Less manageable is the revenue side. Based on changing technologies and increasing video alternatives, there is concern that Cable TV revenues and associated franchise fees will decline in the future. Here is a picture of the St. Louis Park franchise revenue pattern in recent years (note that 2011 is obviously a partial year). What will the pattern be in future years? It is likely to be driven by market forces including the economy, alternatives, and technologies. It will also likely be largely driven by the extent to which players such as Comcast are able to innovate to maintain and grow their revenue streams in a competitive marketplace. Study Session Meeting of November 28, 2011 (Item No. 5) Page 12 Subject: Future of Cable TV Task Force Findings Note: The total for the first 3 quarters of 2011 is $444,167, which is $11,000 higher than after 3 quarters of 2010. The 2011 budget estimates $530,000 in franchise revenues. Longer term, there is another concern: Cable TV franchises may cease to exist in the future. It is difficult to know the future of associated franchise fees, for Cable TV or any other utility. While governments will undoubtedly fight to continue franchise fees, current fees and franchising have been and will continue to be under assault. Our current franchise took effect in January 2006. Other Revenue Sources: Given the potential for declining franchise revenues over the short term, and vanishing franchise revenues in the longer term, it is important to consider alternative revenue sources. Here are some possibilities: • Advertising/Sponsorships: In 2008, St. Louis Park adopted an Advertising & Sponsorship Policy that governs its use of advertising to augment the cost of printed and video productions. Current laws allow us to sell sponsorships or advertising on Channel 16. It’s anticipated that the city will experiment with sponsorship of programming once the channel consolidation is completed. Revenues would be modest, but would likely bring in several thousand dollars annually. • DVDs: The city currently sells DVDs of productions (particularly sports, graduations, etc.) in which revenue of more than $1,000 is earned annually. The future of DVD technology may drive this modest revenue source. • Potential for Fiber Optic Leasing Fees: Much like telecommunications companies lease space on our water towers, there is a potential that the city could lease parts of its fiber optic network in the future. Fees from these leases could be directed for the use of video production services. • Potential for Franchise Fees: The city could explore the possibility of charging other telecommunications companies, like CenturyLink, franchise fees similar to those paid by Comcast. Should a company, like CenturyLink, decide to offer video services, current state statute would require the company to enter into a franchise with the City under the same franchise fee, PEG and Area Served requirements as the City currently requires of Comcast. This is one reason the League of Minnesota Cities and MACTA monitor the Legislature so closely. If industry-sponsored legislation to limit local franchising authority were to pass, cities would also likely lose the franchise fee rights as well. $0 $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 $700,000 Total franchise fees 2006 2007 2008 2009 2010 2011 Study Session Meeting of November 28, 2011 (Item No. 5) Page 13 Subject: Future of Cable TV Task Force Findings LEGISLATIVE ISSUES: There are a variety of legislative issues at the state and federal levels that could affect Cable TV funding negatively in the future. Among the most common over time has been state-level franchising, with franchise fees going to states instead of local communities. Staff will continue to track legislative changes. Of course, this is a wild card; sort of the LGA of the cable tv world. NEXT STEPS: Broad market changes in video delivery technology will occur outside the City’s influence or control. That said, there are some steps the City can take to anticipate and address these difficult- to-predict-and-define changes in the future. • Begin reducing the Cable TV Fund expenditures and contribution to the General Fund (in progress) • Continue consolidation of channels • Undertake a programming study related to the type of programming created/submitted • Develop a long-term staffing plan for later in this decade and beyond 2021 • Continue to anticipate, innovate, and adapt – as we have done with social media, and now are with content for increasingly used mobile devices • Explore alternative revenue sources in detail • Become more agile. Position St. Louis Park to be as ready as possible to adapt to the quick changing video technologies by playing a role to enhance its broadband infrastructure. This would encourage more residents and businesses to locate and remain in St. Louis Park. In addition to economic and community development benefits, this may result in revenue streams to support video production in the long term. This is more the subject of the fiber optic study, which is starting now. We expect to have results and recommendations from that study by or before June 2012. FINANCIAL OR BUDGET CONSIDERATION: This report suggests the City of St. Louis Park can expect flat or declining revenues in the Cable TV Fund through January of 2021 and is guaranteed no franchise fees beyond that point. Thus, it is important now to prepare for that time, both financially and in terms of continuing to deliver video services. This includes video services to the public and internal staff. A few operating / financial scenarios have been drafted. VISION CONSIDERATION: St. Louis Park is committed to remaining a connected and engaged community. Providing timely, relevant and entertaining information via video services either online or on the Comcast cable system has become a central part of the city’s communication strategy. Attachments: Current CATV Financial Management Plan Prepared by: Jamie Zwilling, Communications Coordinator Reg Dunlap, Civic TV Coordinator Through: Clint Pires, Chief Information Officer Approved by: Nancy Deno, Deputy City Manager City of St. Louis Park Scenario A: Continue Existing Business Model Financial Management Plan Action: Continue Unsustainable Path / Go Into Deficit in 2016 4 Updated August 3, 2011 Cable TV Fund - Produces and broadcasts all cable tv programming for cable channels 14, 15, 16, 17 & 96 Based on Actual CIP as of 8/3/11 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Actual Actual Budgeted Proposed Projected Projected Projected Projected Projected Projected Projected Projected Projected Revenues Franchise Fees 581,928 586,353 530,000 530,000 530,000 530,000 530,000 530,000 530,000 530,000 530,000 530,000 530,000 Interest Income 33,172 11,489 25,000 11,692 11,283 9,787 7,789 3,308 (3,531) (11,260) (19,927) (29,581) (40,273) Miscellaneous 1,759 7,260 - - - - - - - - - - - Total Revenues 616,859$ 605,102$ 555,000$ 541,692$ 541,283$ 539,787$ 537,789$ 533,308$ 526,469$ 518,740$ 510,073$ 500,419$ 489,727$ Expenditures Personal Services 336,380 342,463 350,935 406,932 419,140 431,714 444,666 458,006 471,746 485,898 500,475 515,489 530,954 Supplies 23,133 15,217 4,600 4,600 4,738 4,880 5,027 5,177 5,333 5,493 5,657 5,827 6,002 Services & Other Charges 85,633 29,779 54,300 55,344 57,004 58,714 60,476 62,290 64,159 66,084 68,066 70,108 72,211 Capital Outlay (see below)- 92,085 - 23,350 - - - - - - - - - Transfers Out 155,000 159,715 209,506 209,506 215,791 222,265 228,933 235,801 242,875 250,161 257,666 265,396 273,358 Other Expenses - - - - - - - - - - - - - Total Expenditures 600,146 639,259 619,341 699,732 696,673 717,574 739,101 761,274 784,112 807,635 831,865 856,820 882,525 Incr/(Decr) in Fund Balance 16,713 (34,157) (64,341) (158,040) (155,390) (177,786) (201,311) (227,966) (257,643) (288,896) (321,792) (356,401) (392,798) Fund Balance - Beginning 769,146 785,859 843,787 779,446 644,756 489,366 311,579 110,268 (117,698) (375,341) (664,237) (986,028) (1,342,430) Fund Balance - Ending 785,859 843,787 779,446 644,756 489,366 311,579 110,268 (117,698) (375,341) (664,237) (986,028) (1,342,430) (1,735,228) Fund Balance Percentage 122.93%136.24%111.39%92.55%68.20%42.16%14.48%-15.01%-46.47%-79.85%-115.08%-152.11% Time Warner Cable TV Grant (not included above) Revenue received 200,000 100,000 Equipment purchased (295,924) (92,085) (115,800) (23,350) (38,900) (49,800) (265,300) (36,550) (9,250) (14,100) (79,600) (285,400) - Grant Balance 567,147 475,062 559,262 535,912 497,012 447,212 181,912 245,362 236,112 222,012 142,412 (142,988) (142,988) Fund Balance per CAFR 1,353,006 1,318,848 1,338,708 1,180,667 986,377 758,791 292,179 127,664 (139,229) (442,225) (843,617) (1,485,418) (1,878,216) Study Session Meeting of November 28, 2011 (Item No. 5) Subject: Future of Cable TV Task Force Findings Page 14 Meeting Date: November 28, 2011 Agenda Item #: 6 Regular Meeting Public Hearing Action Item Consent Item Resolution Ordinance Presentation Other: EDA Meeting Action Item Resolution Other: Study Session Discussion Item Written Report Other: TITLE: City Council Workshop – January 20-21, 2012. RECOMMENDED ACTION: Advise staff on the approach to be used for the upcoming workshop. POLICY CONSIDERATION: None. BACKGROUND: Since 2006 City Council has had a 1½ day workshop for the purpose of strengthening relationships to ensure a High Performing Council and to have reflective time on big issues/projects/directions and to set priorities. Since we have two new members, it will be important to spend part of our time on relational learning. And, as we move forward toward planning the 2012 workshop, we would like council’s feedback on the big issues/projects/directions that could be topics for discussion at the workshop. FINANCIAL OR BUDGET CONSIDERATION: None. VISION CONSIDERATION: Including the Four Strategic Directions as a key part of the workshop. Attachment: None Prepared by: Bridget Gothberg, Approved by: Tom Harmening, City Manager Meeting Date: November 28, 2011 Agenda Item #: 7 Regular Meeting Public Hearing Action Item Consent Item Resolution Ordinance Presentation Other: EDA Meeting Action Item Resolution Other: Study Session Discussion Item Written Report Other: TITLE: Communications/Meeting Check-In (Verbal). RECOMMENDED ACTION: Not Applicable. POLICY CONSIDERATION: Not Applicable. BACKGROUND: At every Study Session, verbal communications will take place between staff and Council for the purpose of information sharing. FINANCIAL OR BUDGET CONSIDERATION: Not Applicable. VISION CONSIDERATION: Not Applicable. Attachments: None Prepared and Approved by: Tom Harmening, City Manager Meeting Date: November 28, 2011 Agenda Item #: 8 Regular Meeting Public Hearing Action Item Consent Item Resolution Ordinance Presentation Other: EDA Meeting Action Item Resolution Other: Study Session Discussion Item Written Report Other: TITLE: October 2011 Monthly Financial Report. RECOMMENDED ACTION: No action required at this time. This report is being provided for information sharing purposes. POLICY CONSIDERATION: None at this time. BACKGROUND: This report is designed to provide summary information regarding the overall level of revenues and expenditures in both the General Fund and the Park and Recreation Fund. These funds should be a primary concern in analyzing the City’s financial health because they represent the discretionary use of tax levy dollars. As noted last month, a few changes have been made to this report and the attachments to provide a more concise summary of General Fund and Park & Recreation revenues and expenditures compared to budget. It is important to note the following items when reviewing this report: • Due to a change in accounting practice, payroll and accounts payable expenses are no longer accrued during the year. What this means is that wages or invoices paid in November will be expensed in November, even though the expenses may have pertained to the prior month. Because this may at times cause a small expenditure variance throughout the year, Accounting has reflected the applicable amount of October payroll expense in the attached department summary. This practice will continue in order to provide consistency to all reports. At year end, all 2011 accruals will be recorded prior to the audit. • Property tax revenues are received three times per year. Settlements in July and December make up the majority of the revenue. A small subsequent settlement is received in January for the final tax collections which are accrued back to December as they pertain to the prior fiscal year. • A large portion of the budgeted intergovernmental revenues are received at specific times during the year. Because these are significant sources of General Fund revenue, it usually causes a budget to actual revenue variance until received. These include Police & Fire Aid typically received in September or October, DOT Aid/Highway User Tax received in February and July, and PERA Aid received in July and December. Actual expenditures should generally run at about 83% of the annual budget through October. Currently, the General Fund has expenditures totaling 78.5% of the adopted budget and the Park and Recreation Fund expenditures are at 86.5% of budget. As noted later in the report, the Park & Recreation Fund variance is due in part to larger seasonal expenditures incurred over the summer months. Study Session Meeting of November 28, 2011 (Item No. 8) Page 2 Subject: October 2011 Monthly Financial Report Significant variances for both revenues and expenditures are highlighted below accompanied with a general discussion of reasons for the variance. General Fund Revenues: • Through October, license and permit revenues are at 107% of budget in the General Fund. The liquor and business license revenues have exceeded budget by nearly 5% or $36,000, and total permit revenues for the year have surpassed budget by $128,000 or 8%. • Intergovernmental revenue has exceeded budget by 3.3% or $37,000 because we have received more DOT Municipal State Aid than was anticipated this year. The State typically withholds 10% of the maintenance allotment until the following year, however, the full 2011 allotment was sent in advance of the anticipated State shutdown in June. In addition, we also received the 10% hold back of our 2010 allotment. Expenditures: • The Facilities Maintenance Department is well below budget overall at 65%. This is due to the retirement of the Facilities Superintendent and the subsequent staffing reorganization. This has been taken into consideration for the 2012 budget. Parks and Recreation Expenditures: • Expenditures in the Organized Recreation and Rec Center Divisions are currently exceeding budget at 89.6% and 86.2% respectively. Many of the expenditures incurred in these divisions are seasonal, with larger expenses occurring for pool and recreational activities over the summer months. A budget overage at end of year is not anticipated in either of these divisions. Program revenues under Charges for Services are also exceeding budget due to the seasonal nature of the activities • Total expenses in the Vehicle Maintenance Division are at 91.6% through October. Motor fuel expense is at 100% of budget, due mainly to snow removal costs in the first quarter of the year. Repair and maintenance services are also higher than budget, as there have been many unanticipated equipment repairs requiring external service and labor work. Certain repairs related to accidents will be reimbursed through a transfer from the Uninsured Loss Fund at the end of the year. Staff will continue to review expenses in this division closely throughout the remainder of the year. FINANCIAL OR BUDGET CONSIDERATION: None at this time. VISION CONSIDERATION: Regular and timely reporting of financial information is part of the City’s mission of being stewards of financial resources. Attachments: Summary of Revenues – General Fund and Park & Recreation Summary of Expenditures – General Fund and Park & Recreation Prepared by: Darla Monson, Senior Accountant Reviewed by: Brian Swanson, Controller Approved by: Tom Harmening, City Manager !"#$ %&%’ ()*"#$ +,)’-* . /0*/#$ ’( (*"1)2 3,( "#$ ! !" ()*"#$ +,)’-* . /0*/ 3,( " ! "#$% ! $&’( Study Session Meeting of November 28, 2011 (Item No. 8) Subject: October 2011 Monthly Financial Report Page 3 4!" 4 /) 4) 5/"0/ +""/6*" % . (’"0/ +""/ &.7) +""/3/ , &"$# % ( -* &"$# &) /8 974!" /8 971)) /8 973 &) *%+ ’3/ 2 2 2 +/2 2 *%+ ,-+ ! 3):!0 0 + 7. 9;! 1*" <, . !,-+ "#$,-+% ! $&’( Study Session Meeting of November 28, 2011 (Item No. 8) Subject: October 2011 Monthly Financial Report Page 4 Meeting Date: November 29, 2011 Agenda Item #: 9 Regular Meeting Public Hearing Action Item Consent Item Resolution Ordinance Presentation Other: EDA Meeting Action Item Resolution Other: Study Session Discussion Item Written Report Other: TITLE: Charter Amendment for Civil Penalties. RECOMMENDED ACTION: No action at this time. The purpose of this report is to update the Council on the proposed Charter Amendment process for Civil Penalties. POLICY CONSIDERATION: Not Applicable. BACKGROUND: On August 22, 2011, staff discussed a new civil penalty process with Council to allow for a more efficient method to resolve code violations. After discussion with Council, staff was directed to proceed. As part of this, our attorney recommended we move ahead with a request for a Charter Amendment and an ordinance change to allow for a simpler and more direct code enforcement procedure. This procedure would impose penalties that can be appealed at the City level, providing a quicker and more efficient process than working through the County Court system. The proposed changes will streamline the process and reduce the cost of code enforcement. CIVIL PENALTIES: A civil penalty is a citation issued to the owner of a property where a code violation exists. It imposes a fee to a property owner or citizen charged with a code violation. While the City has a civil penalty procedure in place now, the proposed change is to use the process for many more items, including zoning violations. It would also include a city process to appeal such fees, and a process for assessing unpaid fines in a manner similar to a special assessment. CHARTER AMENDMENT PROCESS: The Charter Commission is meeting on December 6, 2011 to consider the proposed Charter Amendment. The Amendment would specifically address civil penalties, and give the City the authority to assess the penalties against property when they are unpaid. The proposed amendment is attached. If the Charter Commission recommends the amendment, it will be forwarded to the City Council for consideration. Under this method of amending the Charter, the Council would need to adopt the Charter Amendment unanimously in order for it to be put in place. It is also proposed the Council adopt an ordinance amending the current ordinance, as discussed below. ORDINANCE AMENDMENT: The proposed Ordinance Amendment would modify the current ordinance section 1-14 Administrative Penalties. It would allow the Civil Penalty procedure to be used more widely, establish a formal appeal process, and allow the city to place a lien against a property to collect Study Session Meeting of November 28, 2011 (Item No. 9) Page 2 Subject: Charter Amendment for Civil Penalties the fines. This procedure would not replace the Hennepin County court procedure, but be another method of code enforcement; the City could utilize the court system when necessary. NEXT STEPS: 1. Charter Commission meets on December 6, 2011. 2. If recommended by the Charter Commission, the Charter Amendment and Code Amendment would be considered by City Council in January 2012. 3. The Charter Amendment takes effect 90-days after passage and publication. FINANCIAL OR BUDGET CONSIDERATION: It is the intent of the civil penalty process to respectfully resolve code violations in a manner that reduces staff time and ensures all fines are paid. VISION CONSIDERATION: Not Applicable. Attachments: Proposed Charter Amendment Prepared by: Gary Morrison, Assistant Zoning Administrator Reviewed by: Meg McMonigal, Planning & Zoning Supervisor Kevin Locke, Community Development Director Approved by: Nancy Deno, Deputy City Manager Study Session Meeting of November 28, 2011 (Item No. 9) Page 3 Subject: Charter Amendment for Civil Penalties HOME RULE CHARTER PROPOSED AMENDMENT Section 11.05. Civil Penalties. (1) The City Council may establish by ordinance a procedure for imposing a civil penalty for any violation of a city ordinance. The procedure must provide an opportunity for any person charged with a civil penalty to be notified of the penalty and to have an opportunity to respond to the charge. The procedure must provide an opportunity for the accused to be heard by a neutral party. (2) The City Council may provide by ordinance that unpaid civil penalties be collected through a process similar to a special assessment against real property if the penalty relates to the maintenance of the property or to an activity, use, or delivery of City service associated with the property. The ordinance must provide that the City should first attempt to obtain voluntary payment of the penalty. The ordinance must also provide that notice and an opportunity to be heard be given to the property owner listed on the official tax records before the penalty is assessed. (3) With respect to unpaid civil penalties assessed against real property pursuant to Paragraph (B) of this Section, the assessment may include a late payment penalty to cover the administrative and legal costs incurred by the City in connection with collecting the unpaid penalties. Meeting Date: November 28, 2011 Agenda Item #: 10 Regular Meeting Public Hearing Action Item Consent Item Resolution Ordinance Presentation Other: EDA Meeting Action Item Resolution Other: Study Session Discussion Item Written Report Other: TITLE: Cavalia Summary Report. RECOMMENDED ACTION: Council requested an update from staff on the set up, operations and visit of Cavalia in St. Louis Park /West End. POLICY CONSIDERATION: Does Council need any additional information on this item? BACKGROUND: At a recent City Council study session, staff was asked to prepare a summary report about the experience of having Cavalia in town and any thoughts or lessons learned. Below is a summary from each department that was involved along with our CVB. In review of the information, we can see that this event was a big success for our community. Public Works  The general “role” in working with Cavalia was in our Utilities in providing water and sewer services.  Staff contacted cities that had previously held the event to insure the water and sewer services could be provided and to insure Golden Valley of the minimal sanitary sewer volumes presented by Cavalia were accurate. Our public service workers provided assistance in setting up the water connections and checked on operation a couple of time. Total hours involved were less than 20 from all staff.  Everything I asked for from Cavalia was received in a timely manner. They were really great to work with.  The take away or positive you see or experienced with your staff was that by working together we can make it work.  Overall it was a very fun experience. Police  PD provided traffic and crowd control via additional duty for officers.  Our folks said it really went well and that the advance planning with other city staff and Cavalia really paid off operationally.  There were few traffic glitches in routing but they were identified and resolved fairly quickly. There was also some increase in volume around West End particularly after the week-end evening shows, but really no incidents or behavior problems that appeared to be related to Cavalia.  We handled a few calls on site (medicals and assists) and also help Cavalia with some security and cash handling practices.  All in all very successful from PD perspective. Study Session Meeting of November 28, 2011 (Item No. 10) Page 2 Subject: Cavalia Summary Report Inspections  Director: Brian Hoffman coordinated plan intake and approval review. Building Official: John Tilton performed tent review and inspection. Inspectors: Bernie Riley performed electrical review and inspection. Dave Skallet performed plumbing review and inspection. Jim Dube performed inspections. Inspections Services Manager: Ann Boettcher coordinated required licensing and inspections. Health Inspectors: Manny Camilon and Candice Carmichael reviewed plans and inspected all food services, both initially and on a weekly basis for the duration of the event. Permit Technicians: Aaron Borken, Andrea Smith, and Kari Mahan processed permit/license applications and scheduled inspections.  Cavalia is an experienced production company and put on good show with minimal issues. The site was tight, yet worked well. Application of Codes in different parts of the USA and Canada resulted in the biggest frustrations.  Many city staff worked well together in quickly accommodating the multiple approvals needed.  Improved communication between some staff would have helped coordination during the final occupancy process.  Several comments about horse waste were voiced early on the in the process. As it turned out, this was a non-existent concern. Fire  The role of Fire staff was a Code Enforcement/safety role with the event.  Several on-site inspections and tours with crews “in case of an emergency”.  The Fire Department had a very positive working relationship with Cavalia staff in achieving a safe and successful show.  The ability to work with a large production to ensure a safe/positive event. Representing the City of St. Louis Park very positively.  The importance of communicating and working with other City staff for successful outcomes.  No issues or complaints with how it all came together. Convention and Visitors Bureau (CVB)  CVB helped promote the show, our hotels, and City. Prepared and sent out to Twin West members and Friends of the SLP and CVB e-mail list info.  Sold about 30 tickets on group nights and our efforts yielded in total about 70 ticket sales to help Cavalia (estimated) most being SLP residents.  The CVB referred many callers to our Hotels and we know a few booked at Marriott West and Double Tree. It was a good hectic time for us in the startup phase.  Additionally we met and guided many Cavalia employees to SLP stores outside of the West End for their needs.  How did it go? Great - It was nice to be part of, have the event here, and assist as needed.  Good events like this give SLP a great image.  Lessons learned: Book group tickets directly through event versus CVB.  Any additional tidbits that you want to share: A wish or dream from our CVB is for Duke to see if they would give that property to the City for a new Convention and Community Center. Study Session Meeting of November 28, 2011 (Item No. 10) Page 3 Subject: Cavalia Summary Report  We received quite a bit of good press about Cavalia and also about our businesses at the West End in St. Louis Park. Attached is an article from the October 27 Finance & Commerce.  From Nemer Fieger who did the PR work reports: “We are still awaiting final numbers from Cavalia. We generated over $700,000 in publicity for them. We do know anecdotally that they were hugely successful here”. FINANCIAL OR BUDGET CONSIDERATION: None. VISION CONSIDERATION: This item is linked directly to the Vision Strategic Direction that St. Louis Park is committed to being a connected and engaged community. Attachments: October 27 Finance & Commerce Article Prepared by: Nancy Deno, Deputy City Manager Assisted by: Staff from Police, Public Works, Inspections, Fire and CVB Approved by: Tom Harmening, City Manager Study Session Meeting of November 28, 2011 (Item No. 10) Page 4 Subject: Cavalia Summary Report Events like ‘Cavalia’ draw attention to commercial properties Posted: 3:31 pm Thu, October 27, 2011 By Matt M. Johnson Tags: Cavalia, commercial real estate, Duke Realty, Pat Mascia, Rachel George, Shops at West End, Sip Coffeebar A recent Saturday night at the Shops at West End in St. Louis Park bustles as an estimated 2,000 people drive into the new commercial development to attend “Cavalia,” the circus- like horse show running under the big top. (Photo: Matt M. Johnson) Since completing construction on the Shops at West End in St. Louis Park in 2009, Indianapolis developer Duke Realty has been looking for the right time to build 1.1 million square feet in office towers at the same site. The time hasn’t been right yet, so the company put up a tent instead. Since late September, a small city of circus tents as tall as 100 feet has shined as a bright white beacon amid 14 acres of otherwise vacant property at Interstate 394 and Highway 100. Under the big top, the circuslike horse show called “Cavalia” — by a troupe based in Montreal — has played to nightly crowds of about 2,000 for the past six weeks. While the short-term income has been nice, Duke is looking to reap bigger benefits from hosting the high-profile, itinerant show. Duke, which estimates traffic related to “Cavalia” at about 60,000 people, is betting that the West End will be a bigger draw than ever after the tents come down next week. “It takes time to establish these developments as destinations,” said Pat Mascia, a senior vice president with Duke’s Twin Cities operations. “The biggest attraction for us is to get people there.” The occupancy rate at the Shops at West End is 80 percent, he said. Duke is making a play that is not unique in the commercial real estate sphere. Whether it is the Mall of America hosting Cirque du Soleil this past summer or free gallery space given out by leasing agents in northeast Minneapolis for the annual Art-A-Whirl, commercial property is getting seen — thanks to short-term events. While leasing agents generally cannot point to deals signed as a direct result of these events, they are creating a buzz among potential renters. Bruce Bahneman, a C. Chase Co. leasing agent representing the Keg House building in northeast Minneapolis, said Art-A-Whirl keeps current clients, such as Sip Coffeebar, in the black. The event also gets potential clients calling. “What happens is they see the excitement of being in a building like that,” he said. Bahneman said he made one direct lease as a result of Art-A-Whirl, to art tile producer Clay Squared to Infinity. Vacancy at the Keg House is 16 percent, which leaves three basement-level spaces open. About a mile east on Broadway, another Art-A-Whirl building, Waterbury, is 96 percent leased. Bahneman is an investor in that property. Study Session Meeting of November 28, 2011 (Item No. 10) Page 5 Subject: Cavalia Summary Report Anecdotal evidence Whether special events or shows like “Cavalia” drive interest in commercial properties is more anecdotal than statistical. Other than collecting feedback from retail establishments and noting calls from potential leasing customers, cities and property owners don’t do much in the way of collecting hard data. When the Mall of America hosted the Cirque du Soleil show “Ovo” on one of its surface parking lots earlier this year, the mall did not conduct a market study of its economic effect. Even so, Dan Jasper, vice president of public relations for MOA, said the show drove traffic to the mall. He just couldn’t say how much. “Several shops and restaurants were very pleased with it,” he said. In the Bloomington mall’s case, hosting the show was not an outright commercial real estate play. The acres of parking lot where Cirque du Soleil set up are intended to be the site of MOA’s Phase 2 development, Jasper said. Traffic from the show, however, supported businesses already leasing space in the mall. The same theory played out in St. Paul in 2009, when the city brought Cirque du Soleil’s “Kooza” tent show to a parking lot near Broadway Avenue and Kellogg Boulevard. Jake Spano, director of marketing and convention planning for the city, said the general feeling is that the month-long show was a revenue generator and that it increased interest in doing business downtown. But because of the difficulty of tracking the economic impact of the show through tax receipts, Spano said, the city doesn’t have hard numbers to back that feeling. “We track it anecdotally,” he said. Spano said the National Collegiate Athletic Association studied the economic effect of its Frozen Four hockey tournament when it came to St. Paul last April. The NCAA estimated a $13 million benefit to the city for the three-day event. Neither “Cavalia” nor Cirque du Soleil was able to provide economic impact details for the shows. Even business owners that benefit from events don’t keep close tabs on the economic effect. Rachel George, co-owner of Sip Coffeebar, said the extra income from Art-A-Whirl has only a small effect on the cafe’s choice to lease in the Keg House. “We’re really glad it happens,” she said. “I wouldn’t say it has that big of an impact.” Y’all come back now Those hosting events and shows on commercial property seem happy to accept word-of-mouth evidence as reason enough to keep the welcome mat out. In the case of “Cavalia,” Duke Realty wants to see the show return, as long as the space is still available and the show’s management is interested. “That’s up to them,” Mascia said. For this year’s run, the management of “Cavalia” made the first contact with Duke. In the future, Duke may take the initiative and look for other events to bring to its open acreage. The company is open to ideas but takes care in its choice. “Not everything will fit well,” Mascia said. “Cavalia” finishes its six-week Twin Cities run Sunday. From here, the show moves to Portland, Ore.