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CITY OF MUSKEGON DOWNTOWN DEVELOPMENT AUTHORITY (“DDA”) REGULAR MEETING DATE OF MEETING: Tuesday, April 13, 2021 TIME OF MEETING: 10:30 A.M. PLACE OF MEETING: ZOOM for participants and Facebook Live/ Facebook “City of Muskegon Government” for public ______________________________________________________________________________ AGENDA I. Roll Call II. Approval of the regular meeting minutes of Nov. 24, 2020 III. Public comment on agenda items IV. Brownfield Redevelopment Authority business A. Update (Pete Wills) V. Downtown Development Authority business A. DDA financial report (Beth Lewis) B. DDA financial proposals (Dave Alexander) 1. Future of arena funding 2. Muskegon Museum of Art request 3. Events post-COVID support C. Downtown events update (Ann Meisch) VI. Public participation VII. Adjourn AMERICAN DISABILITY ACT POLICY FOR ACCESS TO OPEN MEETING OF THE CITY COMMISSION AND ANY OF ITS COMMITTEES OR SUBCOMMITTEES The City of Muskegon will provide necessary reasonable auxiliary aids and services, such as signers for the hearing impaired and audio tapes of printed materials being considered at the meeting, to individuals with disabilities who want to attend the meeting, 24- hour notice to the City of Muskegon. Individuals with disabilities requiring auxiliary aids or services should contact the City of Muskegon by writing or calling the following: Ann Meisch, City Clerk at 933 Terrace Street, Muskegon, MI 49440 or by calling (231) 724-6705 or TTY/TDD: Dial 7-1-1 and request that representative dial 231-724-6705 CITY OF MUSKEGON DOWNTOWN DEVELOPMENT AUTHORITY (DDA) / BROWNFIELD REDEVELOPMENT AUTHORITY (BRA) REGULAR MEETING MINUTES November 24, 2020 The meeting was held electronically via Zoom. Chairperson M. Bottomley called the meeting to order at 10:30 AM and roll was taken. MEMBERS PRESENT: M. Bottomley (Muskegon MI), B. Hastings (Muskegon MI), J. Riegler (Muskegon MI), M. Kleaveland (Muskegon MI), D. Pollock (Grand Rapids MI), F. DePung (Muskegon MI), M. Johnson Sr (Norton Shores MI), S. Black (Muskegon MI), J. Moore (Muskegon MI), H. Sytsema (Muskegon MI), D. Kalisz (Ft Myers FL) MEMBERS ABSENT: F. Peterson, J. Wallace Jr STAFF PRESENT: P. Wills, Director of Strategic Initiatives; J. Eckholm, Economic Development Director; M. Franzak, Planning Director; L. Mikesell, Director of Development Services; D. Alexander, Downtown Manager; B. Lewis, Finance Director; A. Meisch, City Clerk; D. Renkenberger, Administrative Assistant; R. Cummins, Zoom meeting facilitator OTHERS PRESENT: M. Bear, 592 W Muskegon Ave (via phone during public call-in period) APPROVAL OF MINUTES A motion to approve the regular meeting minutes of October 13, 2020 was made by J. Moore, supported by M. Kleaveland and unanimously approved. BROWNFIELD REDEVELOPMENT AUTHORITY BUSINESS Infill Housing Project (2nd Amendment) – P. Wills explained the request. City staff is seeking BRA approval to amend the Brownfield Plan to add additional eligible parcels to the City’s Infill Housing Project (2nd Amendment). The 2nd Amendment adds an additional 13 parcels beyond the 108 parcels adopted in the 1st Amendment. The BRA approved the Infill Housing Project (1st Amendment) on July 14th and the City Commission on July 28th. The following eligible properties are proposed to be added in this second amendment: 880 First Street (880 First St LLC development), 216 W. Clay (880 First St LLC development), 208 W. Clay (880 First St LLC development), 1095 Third Street (former Catholic Charities property), 301 W. Muskegon Ave (former Catholic Charities parking lot), 589 McLaughlin (Big Red Developer), 559 McLaughlin (Big Red Developer), 441 Isabella (Big Red Developer), 438 Isabella (Big Red Developer), 591 Catherine (Big Red Developer), 185 E. Muskegon Ave (former Farmers Market properties), and 209 E. Walton Ave (former Farmers Market properties). The address of 435 Isabella had been included originally, but P. Wills stated that that address could be removed. J. Eckholm discussed developments on the first 3 parcels on the list, and L. Mikesell provided background on Big Red Development and their parcels. The plan amendment involved the redevelopment of 119 total parcels, most located in the Nelson and Jackson Hill Neighborhoods. Some of these lots would be split, creating up to 255 subject parcels. The plan incorporated three types of redevelopment projects: infill housing on vacant City lots (up to 240 units), the rehab of existing homes (11 detached houses), and two separate mixed-use developments (former Catholic Charities parcels and 880 First St, LLC projects). Activities included the redevelopment and rehabilitation of subject parcels, and construction of new commercial and residential units. The City was marketing these downtown properties with the anticipation that private developers would acquire the sites and submit plans for productive redevelopment. City staff continued to market the former Catholic Charities building and attached parking lot at 301 W. Muskegon Ave, and had also been working with the owners of the former AmeriBank building at 880 First Street to finalize plans to redevelop that property. Staff worked closely with the developer’s project management team to coordinate extensive testing on the structure, foundation and design of the existing building. Initial development plans, to be complete in 2022, would include adding five additional stories to the existing structure to house over 50 rental apartments in the tower building as well as co-working space for residents who choose to work from their homes. Future phases would include additional apartments as well as a 3-4 story parking garage. The City Commission was expected to consider a purchase and development agreement with the developers which would allow the city to recoup site preparation expenses through the Brownfield TIF. The property was purchased by the city in 2015 for $150,000 and spent $350,000 deconstructing it in 2018. The current draft development agreement reflected both the City and Ferguson Development splitting Brownfield TIF reimbursement for their respective eligible costs related to the property. The 2nd Amendment also included the following updates (note that dollar figures are not exact): • Developer’s Reimbursement Costs: Infill Housing - $5,877,00; Mixed-use projects - $1,000,000; Total reimbursement costs - $6,877,000 • Estimated Total Capital Investment: Infill Housing - $49,000,000; Home rehab - $500,000; Mixed Use developments: $26,000,000; Total Estimated Capital Investment - $75,000,000 • The Plan anticipates eligible activities, paid through future capture of tax increments, to include $4,880,000 for cost of sale/seller concessions; $1,200,000 for demolition and potential costs of abatement; $777,000 to construct public infrastructure at the former farmers market; $20,000 for brownfield plan preparation and development; a 15% plan contingency fee of $1,031,550; and which reflects total eligible activities to be paid under this plan at $7,908,550. • The Authority intends to enter into Development & Reimbursement Agreements with future property owners/developers of properties included in the Plan to reimburse them for costs of eligible activities. • The duration of this Plan is not to exceed 30 years and complete recapture of eligible costs through tax increment revenue are expected to occur within this period. Estimated completion of all homes associated with this Project will be completed by 2023. • The plan contemplates continued five-year capture of tax increments for a local Brownfield Revolving Loan Fund if there is time left in the 30-year plan after eligible costs are covered. City staff prepared this Infill Housing Project (2nd Amendment) Brownfield Plan Amendment and recommends BRA approval. M. Bottomley asked if the remaining parcels were vacant lots. L. Mikesell confirmed that was correct. M. Franzak stated that staff had discovered that one property had been listed twice, so the dollar figures would be a bit different than originally shown. M. Johnson asked if staff was confident in the developers’ ability to secure financing and complete the projects. M. Franzak stated that he was, and that several projects had already been started. J. Eckholm stated that the developers of 880 1st St had already spent a significant sum of money to have environmental testing done, which showed that they were serious about the project. M. Bottomley asked about the houses being built at 8th & Muskegon Ave, and if the garages were planned to be in front of or behind the homes. M. Franzak stated that the alley that ran behind the houses was not usable, so the garages would be in the front; however, the renderings looked nice, especially with the porches in the front. F. DePung asked if the houses on Webster would be rental homes. M. Franzak stated that they were all Dusendang homes and some would be rentals. However, all must be available for sale. M. Kleaveland asked if the rentals were single- or multi-unit. M. Franzak stated that so far, the developers had preferred single family models, but staff wanted to see a mixture of single-family to quad-plexes for different income levels. He stated that developers had been speaking to neighboring residents, who had indicated that they didn’t want duplexes. There were no public comments. A motion to approve the resolution for the Brownfield Plan Amendment for the city’s Infill House Project (2nd Amendment), to request a public hearing before the Muskegon City Commission, and to have the City Commission consider adoption of the Plan, was made by M. Kleaveland, supported by M. Johnson and unanimously approved, with M. Bottomley, B. Hastings, J. Riegler, M. Kleaveland, D. Pollock, F. DePung, M. Johnson Sr, S. Black, J. Moore, H. Sytsema, and D. Kalisz voting aye. DOWNTOWN DEVELOPMENT AUTHORITY BUSINESS DDA Budget – D. Alexander reviewed the budget figures. He stated that there were no tax increment revenues shown yet; those would be added in the latter half of the fiscal year (July-June). He stated that he expected about $40,000 in available discretionary funds. B. Lewis stated that the city had done a bond issue for HVAC and roof improvements to Mercy Health Arena, so the DDA’s contribution to that would be less than originally thought. M. Bottomley asked what the cost difference was. B. Lewis explained that they just closed on the bonds earlier this month so there was not a specific amount yet, but it would depend on what the bond payments would be. However, it would be less than the $215,000 shown in the budget. M. Bottomley asked if the $215,000 figure was for 5 years; B. Lewis confirmed that was correct. M. Johnson asked if that was in addition to the amount that the DDA had previously contributed toward restroom renovations. B. Lewis stated that was correct; that money had already been paid. M. Bottomley asked for more precise financial information going forward. M. Kleaveland asked how long the DDA had been paying the $215,000. B. Lewis stated that there had been some money paid last fiscal year but this was the first full year of the $215,000 payment. B. Hastings asked if there was an update on the splash pad handrails. D. Alexander stated that the Engineering Dept was handling that; however, the DPW was dealing with staffing issues due to Covid so there were delays. H. Sytsema asked about the negative cash reserves. B. Lewis explained that the DDA was a debt fund; that money would be made up going forward. D. Alexander requested a motion to accept or reject the budget. B. Lewis stated that she would have better budget numbers at the next meeting, along with a 5-year outlook. M. Bottomley asked how the payments to the County were coming along. B. Lewis stated that $134,000 was the final payment. A motion to accept the final budget report was made by B. Hastings, supported by J. Moore and unanimously approved, with M. Bottomley, B. Hastings, J. Riegler, M. Kleaveland, D. Pollock, F. DePung, M. Johnson Sr, S. Black, J. Moore, H. Sytsema, and D. Kalisz voting aye. Proposal on Downtown Events – D. Alexander presented the staff report. City staff had been in contact with C. Flanders, previous director of the Lakeshore Art Festival (LAF) through the Muskegon Lakeshore Chamber of Commerce, about the possibility of the City taking over production of the art festival. The Chamber was no longer able to manage it, and because the festival brought thousands of people to downtown Muskegon and its businesses, it was posited that the DDA would be an appropriate organization to take over this event. The Taste of Muskegon was also suggested as an event that may be appropriate for the DDA. A. Meisch stated that she had spoken to the City Commission and explained the proposal outlining the possible city management of these events, which was favorably received. Financially however, the city’s attorney had advised that the city’s General Fund was not appropriate to act as fiduciary of the event. Due to the event’s economic impact and overall promotion of downtown Muskegon, staff believes that the DDA budget would be a good fit. DDAs across the state have historically produced events to promote and market their districts, and it fits within our DDA’s mission. If approved, the DDA would become the fiduciary, taking on the risk and reward for the Lakeshore Art Festival and the Taste of Muskegon. Due to Covid-19 restrictions, it is unknown at this point how 2021 events would be affected, and it’s possible that there could be a loss if the event had to be cancelled. Some cash expenditures are needed now for marketing and software expenses. However, it is anticipated that the events should at least break even and possibly make some profit, which would go to the DDA to spend to support its mission. The Clerk’s Office and the DDA Manager would work with the existing LAF volunteer organization under the direction of C. Flanders, who would work under contract with the Clerk’s Office to direct and produce the art festival. Regarding the Taste of Muskegon, staff will ask the DDA to enter a similar arrangement with the Clerk’s office at a future date, as those details are still being worked out. City staff recommends approval of the proposal, with the DDA Manager joining both volunteer event boards as a DDA liaison. A. Meisch discussed the proposal. She stated that the Chamber was no longer able to support the event, which was among the top 25 art festivals in the country. Although 2021 would be an uncertain year due to Covid-19 issues, the festival generally made a profit, which would benefit the DDA if they took over. The festival also benefitted downtown businesses, many of which had indicated that it was an important festival for them, due to the people and money it attracted to downtown. The Taste of Muskegon also made money, which was used to help support the Farmer’s Market. Both events had up-front costs which would later be covered by vendor fees. DDA funds would be needed to cover the up-front costs. A. Meisch also asked that the city be allowed to hire C. Flanders to run the art fair, as she had extensive experience. She would be paid a monthly fee under a contract with the DDA. D. Alexander stated that the city was looking for the DDA to become the fiduciary and accept a loan from the city’s cash reserves to pay festival expenses, not to exceed $25,000 per month. Once vendor fees started coming in, that money would be paid back. He suggested that the DDA commit to at least 2 years, in case Covid concerns had a negative effect on the 2021 festival. M. Bottomley asked for input from the board. D. Kalisz stated that the festivals were a great thing for the DDA to consider supporting, as it was good public relations for Muskegon and the downtown. He asked if C. Flanders’s services would be similar to what she did at the Chamber. C. Flanders stated that it would be within the scope of what she had previously done and somewhat beyond, and her committee was on board with the proposal. M. Kleaveland asked if she thought it could be more difficult for the DDA to secure donations for the festival, considering it was a quasi-governmental board. C. Flanders stated that she already had commitments from some sponsors and the Chamber had also agreed to assist with sponsors. In addition, she thought the continuity of having the same person running the festival would be beneficial. M. Johnson asked if the DDA was being asked to finance the event and provide staff/volunteers. D. Alexander clarified that the DDA was being asked for financing only. C. Flanders already had a dedicated volunteer staff and list, and A. Meisch and her team could also provide assistance. D. Alexander stated that he was willing to serve on the festival’s volunteer board. B. Hastings asked if the art festival could proceed without the DDA. C. Flanders stated that another organization would have to step forward to take over. A. Meisch stated that the Chamber had reached out to the City about taking over the festival, and city staff had reached out to C. Flanders. S. Black asked if there was a contingency plan in case covid restrictions were still in place. C. Flanders stated that, since it was an outdoor event, there was a plan to hold a smaller festival, providing there was no directive from the Governor in place that forbid it. J. Riegler concurred that the festival was very important for downtown businesses but was concerned about the money available in the DDA’s budget. M. Bottomley also expressed concern about taking on too much debt. J. Riegler asked C. Flanders how long she expected the initial $25,000 to last. C. Flanders anticipated that it would last into February or March; the biggest part right now was promoting the festival to draw in the artists. She would start working on sponsors right away, and vendor fees were expected to start coming in. However, if the festival had to be cancelled, those fees would have to be refunded. M. Bottomley asked what the city’s loan terms were for the $25,000. B. Lewis stated that if the festival revenue didn’t cover the loan amount, the city would look into a mutually agreeable arrangement with the DDA, as the city wanted to see the festival continue. Staff, board members, and C. Flanders continued to discuss financing sources, including grants. A motion that the DDA provide financing of $25,000 in beginning expenses for the 2021 Lakeshore Art Festival was made by D. Kalisz and supported by J. Moore, with discussion continuing on the motion. F. DePung asked where the money would go if the festival made a profit. B. Lewis stated that it would go to the DDA and it would be up to the board where they wanted to spend it. M. Bottomley stated that she would like to see a firmer contract outlining the terms discussed. M. Kleaveland stated that the details could be worked out, but board approval now would allow staff and C. Flanders to proceed with the festival, since preparation needed to begin as soon as possible. C. Flanders confirmed that timing was imperative, as artists were already looking to fill up their schedules for next year. D. Kalisz and J. Moore agreed to amend their original motion to match staff’s recommendation, as follows: I move that the Muskegon Downtown Development Authority accept the fiduciary responsibility of producing the Muskegon Lakeshore Art Festival (LAF) and Taste of Muskegon to be organized through the Muskegon City Clerk’s Office, and direct the DDA Manager to provide regular updates to the DDA board on both events. For the LAF, I move that the DDA accept monthly loans from surplus city funds as needed, not to exceed a total of $25,000 with event revenues paying back those loans. For Taste of Muskegon, I move that the DDA direct its manager to provide the DDA board with event details for further action. DDA support of these events will be reevaluated after the 2022 season. M. Bottomley stated that the board had not discussed the Taste of Muskegon, and asked if that reference should be removed from the motion. D. Alexander and A. Meisch stated that no funds were being requested for Taste of Muskegon at this time. A vote was taken on the amended motion above, which was unanimously approved, with M. Bottomley, B. Hastings, J. Riegler, M. Kleaveland, D. Pollock, F. DePung, M. Johnson Sr, S. Black, J. Moore, H. Sytsema, and D. Kalisz voting aye. D. Alexander thanked the board for their support and quick action. Downtown Report – D. Alexander stated that the last county bond payment would allow some extra funds in the DDA budget in the last half of the fiscal year. He stated that Downtown Muskegon lost over a million people over the summer due to event cancellations so it was vital to support downtown events going forward. He discussed beer tents and how the social district regulations could affect those, as currently, social district allowances had to be suspended during events. This could be problematic for enforcement, if regulations changed week to week. He would monitor upcoming legislation involving the issue. PUBLIC PARTICIPATION R. Cummins allotted time for public participation via call-in. M. Bear phoned in regarding the homes currently under construction on Webster Ave. She stated that she was not opposed to new homes being built, but she wanted to see more input from residents before decisions were made. OTHER None There being no further business, the meeting was adjourned at 12:05 p.m. dr CITY OF MUSKEGON DOWNTOWN DEVELOPMENT AUTHORITY (“DDA”) REGULAR MEETING DATE OF MEETING: Tuesday, April 13, 2021 TIME OF MEETING: 10:30 A.M. PLACE OF MEETING: ZOOM for participants and Facebook Live/ Facebook “City of Muskegon Government” for public ______________________________________________________________________________ AGENDA I. Roll Call II. Approval of the regular meeting minutes of Nov. 24, 2020 III. Public comment on agenda items IV. Brownfield Redevelopment Authority business A. Update (Pete Wills) V. Downtown Development Authority business A. DDA financial report (Beth Lewis) B. DDA financial proposals (Dave Alexander) 1. Future of arena funding 2. Muskegon Museum of Art request 3. Events post-COVID support C. Downtown events update (Ann Meisch) VI. Public participation VII. Adjourn AMERICAN DISABILITY ACT POLICY FOR ACCESS TO OPEN MEETING OF THE CITY COMMISSION AND ANY OF ITS COMMITTEES OR SUBCOMMITTEES The City of Muskegon will provide necessary reasonable auxiliary aids and services, such as signers for the hearing impaired and audio tapes of printed materials being considered at the meeting, to individuals with disabilities who want to attend the meeting, 24- hour notice to the City of Muskegon. Individuals with disabilities requiring auxiliary aids or services should contact the City of Muskegon by writing or calling the following: Ann Meisch, City Clerk at 933 Terrace Street, Muskegon, MI 49440 or by calling (231) 724-6705 or TTY/TDD: Dial 7-1-1 and request that representative dial 231-724-6705 Muskegon Downtown Development Authority Agenda item V/B-2 for 4-13-21 Request for a DDA pledge to the Muskegon Museum of Art Requesting party: City Manager and the Muskegon Museum of Art Outline of request: The Muskegon Museum of Art – a cultural foundation in downtown Muskegon, one of the finest small town art museum’s in the world and a huge West Michigan asset – is asking the DDA to support its Shaping the Future capital campaign with a pledge of $100,000 over five years beginning in July 1, 2022. Background: The MMA has embarked on its largest capital campaign of its 110 years of operations in downtown Muskegon. The $9.9 million campaign would pay for an addition to the museum to expand public display of its significant permanent collection on an ongoing basis and provide additional large exhibit space to allow the MMA to host major, national touring art exhibits. The MMA already has about 75 percent of its goal raised and anticipates completing the campaign by the end of the year, breaking ground this fall and opening the in 2023. The MMA is asking for a $100,000 pledge at this time to be paid over five years at $20,000 annually beginning in July 2022, which would be part of the 2022-23 DDA budget. Staff comments: City Manager Frank Peterson and city Business Development Manager Dave Alexander met with museum executives and campaign leaders. They agreed to bring this request to DDA. MMA Executive Director Kirk Hallman’s letter requesting DDA support for the Shaping the Future campaign is attached. Also is the copy of the MMA’s campaign brochure. Kirk Hallman or a representative from the MMA should be at your meeting to make the request and answer questions. Realize that other district institutions have capital campaigns but have not requested DDA support. Staff recommendation: The MMA request seems reasonable when considering its significance to downtown, the need for space that will serve the community and region for decades to come and the support already received from the community and West Michigan. Staff recommends approval knowing that the first payment would not be due until the fiscal year starting in July 2022. Suggested motion: I move for the DDA to pledge $100,000 to the Muskegon Museum of Art Shaping the Future campaign, $20,000 a year for five years beginning in July 2022. Muskegon Downtown Development Authority Agenda item V/B-3 for 4-13-21 Request to expend post COVID marketing funds Requesting party: Muskegon City Clerk’s event staff Outline of request: In August 2020, the DDA board approved expenditures of discretionary funds for the 2020-21 fiscal year, including $15,000 for post COVID marketing. As the downtown emerges from the 2020 COVID year, there is a need to support an array of downtown events that were not held in 2020 but are trying to revive themselves in 2021. The marketing funds could be used promote the upcoming summer events. Background: The DDA budget had $40,000 of unbudgeted funds starting the 2020-21 fiscal year. The board approved a spending plan that included $15,000 for post COVID marketing to help the downtown recover as COVID restrictions eased. The DDA took over promotions and events from the Business Improvement District as anticipated beginning the first of 2021. Through the City Clerk’s Office’s event staff, five events have asked for help as they climb out of 2020 when their events were cancelled due to public health restrictions. Those events have created a fund in the Community Foundation for Muskegon County. The group has asked for DDA support. Staff comments: Non-profit, community events have been damaged by the pandemic and not in line to receive COVID relief from other sources. Supporting these events and publicizing that Downtown Muskegon is opening back up to people this summer could be achieved through a collaboration with the event organizations. Unity Festival President Kevin Newton is making the request on behalf of the group. City Clerk Ann Meisch will present a less restrictive grant to the DDA to assist the 2021 downtown events. Staff recommendation: DDA staff is recommending spending the $15,000 post COVID downtown marketing funds dollar for dollar to support downtown event marketing expenditures. Staff recommends matching dollars spent on marketing renewed 2021 downtown events for those organizations requesting support with up to $15,000 total available. By May 1, many of the organizations will know if they are having an event this summer and what kinds of advertising/marketing budgets they expect. Staff suggests equally dividing the $15,000 among those with marketing budgets, expanding the downtown brand in process. For every $1 spent by the event on marketing, the DDA would provide $1 of further marketing support. Suggested motion: I move to spend $15,000 of DDA post COVID marketing dollars and direct DDA staff to equally distribute the funds to downtown 2021 events as matching grants for marketing.