Loading...
HomeMy WebLinkAbout2010-03-08 Finance Committee Minutes FINANCE COMMITTEE March 8, 2010 Minutes Councilors: Bronson, Weston, Stone, Hawes, Blanchette, Nealley, Wheeler, Gratwick, Palmer Staff: Cyr, Farrar, Warren Others: Mike Aube, Wayne Mallar, Eric Russell 1. Review of EMDC’s Proposal – Funding the New Arena and Meeting Space Prior to discussion of this item, Blanchette said she had read the proposal from EMDC and she believes that if something of this magnitude is to be done in the City that the City’s own Economic Development Department should be utilized or it needs to go out to bid. If the proposal is discussed publicly, it will place EMDC at a disadvantage if, in fact, five of the Council decide to go out for bid. Cyr said this was actually part of a published agenda so it is public information. Stone said he had approached EMDC to see if they might be interested in presenting a proposal to the City. Stone felt that EMDC is in a unique position within Maine and on a national level to work on potential additional funding for the proposed arena and in a position to help move this arena project forward. Stone noted that in the past the City has not gone out for bid for certain functions and he believes this is one that is appropriate. He has no problem supporting Eastern Maine Development Corporation working on behalf of the City of Bangor. Bronson suggested further discussion of the concept before moving on to the actual presentation. Nealley believes that EMDC is in a unique position to work on securing grants at the government level as well as other non-profit organizations. Blanchette stated she has nothing against EMDC. They serve a good purpose, but it is insulting to the City’s Economic Development Department in that they have not been given the opportunity to try this approach. She spoke about the expense of $10,000/ annually for the EMDC proposal when the City has a department for this purpose. She said it sends mixed messages. She will not be voting to move this issue on to a fast track. She said she is hurt and insulted by this action’s impact on the Economic Development Department of the City. Weston asked that the Finance Committee move forward to hear the EMDC proposal. Before turning the meeting over to Aube, Bronson asked if he was comfortable in making the presentation following the preceding commentary. Aube responded by saying that it is important to share the role of EMDC. It is the City’s economic development district notwithstanding that many communities within this six-county region have community and economic development departments. EMDC does provide services on behalf of all communities within the district. One of their strengths is the ability to identify public uses and sources of funds that match up dollars for projects using federal or state dollars. It was in that context that EMDC was approached to add value to the existing City staff and to what the City does, not to circumvent that process. Aube does not feel EMDC is disadvantaged by discussing their proposal. Many communities ask EMDC for services. He provided the example of Lemforder in Brewer. Responding to Bronson, Cyr said that if the Finance Committee wishes to move forward with this action, it would require a recommendation to the full Council as the potential cost of the contract could exceed the established amount allowed by the Finance Committee. In response to Weston, Cyr said that the not-to-exceed amount is $50,000. Aube proceeded with the presentation. EMDC’s proposal is for a 24-month contract, which is $10,000 per year in a retainer, a $1,000/month with a pre-approval for expenses associated with the activity, and a 3% incentive fee for the resources that might come forward from the state or federal government in the form of grants or cash disbursements for this purpose. EMDC proposes to find out the total funding gap in the current arena plan and then look at the items that EMDC would recommend working on with City staff and Council. Those items would most likely be targets for obtaining federal and/or grant support for, and there would be match requirements. EMDC would work with the City as to the allocation of those resources which would be leveraging the other dollars and to tie it specifically. The grant funds would come to the City. EMDC would help write proposals, applications, work with the federal and state agencies that have access to these dollars in such a way as to build a collaborative network that understands the magnitude of the goal. He talked about developing an inventory list, itemizing funding needs and where they might be found. EMDC would then try to go after those funds. Responding to Bronson, Aube said that EMDC doesn’t want to duplicate what the City’s Community and Economic Development does but rather add value to what they offer. EMDC brings a regional perspective to solving the funding gap, and it has a very thorough network and relationship with people in funding positions in Washington DC that could help with this type of endeavor. Bronson said it sounds as if EMDC will not find the bulk of the required arena funding but is discussing multiple grants for various aspects of the project. Aube doesn’t want the Council to look at this in terms of EMDC finding just the scraps that are available. He thinks that an understanding needs to be reached as to what the funding gap is; i.e. $20M or 25M. And then how might EMDC nibble that gap down. A strategy will need to be developed for big cash. Weston asked that the Committee consider a potential conflict of interest on his behalf before he goes forward. The company in which he is a partner has a business relationship with EMDC and, while this particular conversation will not benefit that relationship, he felt it necessary to disclose it. Nealley said that given this is an exploratory item with no business at hand at this point he didn’t feel there would be an conflict. Bronson agreed with Nealley. Bronson asked Weston to move forward. Weston talked about Council discussion of the scope of a construction manager vs. working with an architect and how those two will work hand in hand. The real cost of the project won’t come until better defined plans are in place and moving forward. Looking at spending gap vs. opportunity, Weston asked at what phase of that timeline would EMDC become a part with value. Aube said collectively those very specific cost items would need to be identified. Engineers and architects would do the plan and then a construction plan would be implemented. EMDC needs to be certain when tapping federal or state funds. Weston asked if it helps the process for EMDC to be involved prior to that time. Aube argued that the current context of the federal largess suggests that waiting is not a good use of anyone’s time when asking for money but the sooner, while dollars are still available, the better. Gratwick talked about the timing of 24 months saying he would not support it unless there is some assurance that the project is going to move forward. Aube said that EMDC could identify potential funding sources under current programs with 60-90 days. The question is if you want to have impact on future funding mechanisms there needs to be a decision as to the project moving forward; i.e. by Council, by referendum. If EMDC is retained for this, Aube said that within 60-90 days they would provide a list of the sources of funding available. It would further reduce the gap and strengthen the opportunity to make a decision to move forward. Responding Gratwick’s concern about a conflict of interest, Aube said he is on the advisory board for the Maine Community Foundation and Penobscot County but there is a process by which EMDC recuses itself. Responding to Wheeler, Aube said that EMDC operates on a fee basis, not a percent of grants obtained. If this proposed arrangement is entered into by the Council, Wheeler asked how EMDC would be paid. Cyr said that staff’s recommendation would be to use the Arena Fund. Aube said he had read the consultant’s report regarding the arena project. Based on the shortfall between available money and projected revenues from Hollywood Slots, Wheeler asked what Aube would identify as the maximum immediate funding gap. Aube said it looks to be $1.5M/year in looking at a twenty-year bond. In response to Wheeler, Aube said EMDC has been involved in several grants over the year each totaling about $2.5M for educational and training programs. The total grant project amount to the entities, however, is around $9M. Wheeler assumed EMDC would not be making this proposal if it did not have a relatively high degree of confidence in producing/securing a significant number of grants. Aube stated that the region needs a quality arena to continue to maintain the economic and community development activities of this region. EMDC is willing to put in its effort and can make the case to secure the dollars. Aube said there are studies that demonstrate the economic impact of the arena to this region and there are models that would suggest the number of jobs it would create. It is a magnet to a region. He doesn’t see this as just an arena. No one can deny that the Portland Civic Center has had significant impact on the growth and opportunities in that city. Bangor needs to be able to move in that direction. Nealley said if a majority of the Committee votes to move forward with the EMDC proposal he felt there are certain things that need to be recognized noting that never before was there a potential to handle the bond debt with something other than the property tax. The federal level is looking for regional cooperation. He felt the proposed EMDC retainer fee is insignificant relative to the size of the monies that will be tracked. Nealley made a motion that this proposal be moved to full Council for consideration. Bronson suggested that between now and when the item arrives at full Council that the City’s Community and Economic Development Department be asked for their thoughts on the proposal and what they might be able to do. Weston seconded the motion. Palmer spoke but was not near a microphone. Responding to Palmer, Aube talked about Phase I and II. When putting the proposal together, it was EMDC’s intention, unless there is significant movement to the $25M gap within the next 24 months, it may not be there. Enough time needs to be allowed to go through at least one and a half federal fiscal years and through a new Legislature starting in January 2011. At the end of 24 months, if nothing is produced there would be a sunset provision. EMDC is committed to the process. The establishment of some level of regional capacity for an arena/civic center in this area is absolutely critical to the economic future. Whether EMDC or someone else is involved, it has to happen in order to grow the region. Weston spoke about the need to be creative and aggressive in funding the project. Bronson stated that the item had passage to move to full Council. 2. DEP Brownfield Site Assessment – 498 Maine Avenue Cyr noted there is a local business interested in acquiring this property. The location was part of Dow Air Force Base, and the site had a pump house, valve pits, pipelines and underground storage related to the military operation. One of the requirements for the purchase is that the City completes a Phase II environmental assessment. There is an opportunity to have the assessment completed at no cost to the City. Maine DEP has a Brownfield Site Assessment program. Wendy Warren applied to Maine DEP and the City was selected. An initial walk through was done earlier in the week by Maine DEP. If approved, a Council Order will be done after the fact allowing the action. Phase I will need to be redone and needs to be completed with 180 days of Phase II. If any environmental cleanup is found to be necessary on the site, there is money within the DEP Brownfield Assessment program that would cover that cost and allow a voluntary response action program to preclude any future State environmental issues. A motion was made and seconded to approve staff recommendation. A motion was made and seconded to move into Executive Session. Meeting adjourned at 6:25 pm.