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Home My WebLink AboutMinutes - Finance Committee - 01/26/2009 -C .Finance AdministrationI0215N.Mason2~FloorFortCoLLins ~9702216782-fax Council Finance Committee Minutes 01/26/09 10:30a.m.12:00 p.m. Council Attendees:Mayor Doug Hutchinson,Mayor Pro Tern KelLy OhLson,CounciLmember Ben ManveL City Staff Attendees:Darin Atteberry,Mike Freeman,Chuck Seest, Heather Shepherd,Kraig Ecton,Joe Frank Others:David May,Chamber of Commerce;John Knezovich,Resident &Library District Board Member;Mark Forsythe,RMI2 CEO Approval of the Minutes from the December 15th meeting. Ben Manvel moved to approve the December minutes and Kelly Ohlson seconded the motion. The December minutes were approved unanimously. GID Election Chuck Seest alerted the Committee that City Council would be seeing this topic as a ballot question later this year.Darin Atteberry asked if this election could occur either in November OR at any regular scheduled City election and staff will follow-up with that information.Kelly requested information on the recent DDA election (ballots issued and votes submitted,etc.). RMI2 Mike Freeman said the technology incubator was rebranded,in part,to have a more regional focus.Although the City of Loveland has not seen the value of the incubator so far,Loveland did make a financial commitment to RMI2.That commitment has yet to materialize.Kelly Ohlson commented that if the incubator doesn’t develop a regional focus,it should be rebranded as a Fort Collins initiative.Mike responded that the incubator would like to wait to see if it will develop regionally. Background Info. -Existing companies are in 10,000 sf of office space -Current companies need 16,000 sf within the next year. -Need to have a below market lease rate to be successful -Current lease is $7 to $10 a square foot,no NNN If the proposed Amphitheater is constructed at the Mason Street!Mtn Avenue site,it would displace all RMI2 companies except Sprig Toys. Cityof,E~~t$~Lins Mark Forsythe said there are 2 new companies applying to join the incubator in February.This demonstrates that the incubator currently has more demand than capacity. Land and Area Cost •The RMI2 building is one of four buildings planned within the Inverness Innovation Park. •The landowner/developer is proposing a land price of $8.00 per square foot for raw,unimproved land. •The site is an assemblage of parcels pieced together by the developer who paid between $3.40 and $4.50 per square foot in 2006 and 2007. Project Financing •The expected source for pre-construction,construction period and permanent financing is City of Fort Collins-backed financing funded to the project through a loan to the North College URA. •The current proforma projects financing at 2.75%amortized over 20 years. •The proposed URA/TIF equity participation is $2.8 million,or 66%of the overall TIF generated. After both interest costs and repayment of principal for the loan,this project is estimated to generate a net $700,000 for the URA to use for infrastructure projects in the North College URA Plan Area. Ben Manvel asked why the building isn’t built as a City building so there would be no risk related to a private building using public financing.Mike Freeman stated that unless there was private ownership that no tax increment would be generated and that revenue stream would be lost to the URA.In order to protect the City/URA investment in the project,the financing agreement would grant the City an option to purchase the property that would be intact for 40 years.This would insure the property was used as either an incubator or whatever other purpose the City deemed a priority. Mike said this site was selected because a downtown location is preferred since it will dramatically impact both the Downtown and the types of companies who participate in the Incubator.Since this is a reduced rent scenario that enables these companies to deploy the limited capital available to them for development of technology,the Incubator has criteria for what type of companies can participate.The intent is that after they have a proven technology and a viable business plan,the companies exit the incubator and grow the business and increase employment here in Fort Collins. C Cf F&t°CoL[ins RMI2 Funding •City of Fort Collins $60K $1 09K real estate value (2008 actual) •CSU /CSU Ventures -$50K •NCEDC-$IOK •$22K Platt River ‘pass through’ •City of Loveland -$1OK (was supposed to be 40K) •Fundraising and events —tbd --The board has decided that in 2009 there will be a much larger fundraising push.Mike said they’re Targeting?million in fundraising over the next ?years. Programs and Services •Professional Services Service provider network/referrals Attorney I CPA-in-Residence (new in 2009) Market research reports (new in 2008) •Networking and Education Weekly CEO Roundtable (upgraded in 2008) Innovation After Hours (new in 2007) Seminars (first in 2008,more planned) •Facilities 200 W Mountain Suite C (2004),Suite C (2008) Innovation Cottage (2008) •Marketing and PR Web site —www.rmi2.org Press releases Newsletter •GIS (2007)and BioScience (2009)Cluster initiatives Metrics •27 startup companies •138 net new jobs created •$71,000 average salary •$50.9M capital raised Kelly asked if median AND mean salary information could be provided. Darin Atteberry asked when this item will come to City Council and Mike said the only thing that will affect the schedule is when the real estate deal can be finalized between RMI2 and the property owner.The URA Citizens’Advisory Group would also need to provide a recommendation on the project. City of~CcWn~Lins Darin asked Mark Forsythe what response and support has RMI2 seen from the community and the City for their project.Mark said response has been excellent,and the partnership with RMI2 and CSU is unprecedented. Investment Performance Update Harold Hall reviewed where the City ended with investments in 2008. YTD return was 3.91%which was pretty good,in light of the Fed rate cuts in the second half of the year.For 2009,Treasury had budgeted a yield of 4.40%,but are now revising the projection to 2.30%to account for the low rate environment. •The Fed reduced the Fed Funds rate in December from 1.00%to a range of 0% to .25%. •Interest rates will likely remain at these levels for some time as the Fed tries to alleviate the worst effects of the credit market meltdown and the recession. •Investment earnings in 2009 will drop below 2008 as investments mature and are re-invested at lower rates.As a result,earnings will be approximately $908,000 lower for the City’s General Fund in 2009 as compared to 2008. Kelly asked what the City is doing to make up for the losses over the last year (like the $109,000 from the General Fund fro 2008).Mike said that there most service areas within the City under spent their budgets,so that offset the decline in revenues. Mike asked for direction from Council Members on topics of interest to them related to investments.Kelly said he’d like more detailed breakdown of information in the area of ‘Socially Responsible’investing for the City (‘green’companies,etc).Mike said that information on that specific topic would be brought back to this Committee in the Fall of 2009. Mike asked Committee members to be thinking of what topics are priorities to discuss in future meetings to address concerns or broad topics of interest to them. The initial response from the Committee was as follows: Kelly--List of what’s been tackled in the last 2-3 years and how it’s been improved. Ben—Basic funding mechanisms for the City’s primary services.