EDA welcomes new board member, considers HRA

The Cook County/Grand Marais Economic Development Authority (EDA) met on February 9 and after welcoming a new board member tackled a variety of issues, including continued discussion of the possible formation of a Housing and Redevelopment Authority (HRA) for the county.

Welcomed to the board was Virginia Palmer, who was appointed by the city of Grand Marais.

Executive Director Mary Somnis shared some information about the exploration of the HRA and asked for feedback from the EDA board. She asked the board to consider what geographic area an HRA could or should cover. There was consensus that an HRA would be for all of Cook County, including the Grand Portage Reservation. It was noted that in the past the EDA had shared efforts on housing programs with Lake County, but the EDA board agreed that the EDA should just focus on Cook County.

There was also discussion about the possible structure and staffing of an HRA. Would it be a joint city/county authority, a stand-alone entity, or part of the EDA. There appeared to be consensus that an HRA would be a part of the EDA.

That led to a discussion of staffing. Board Member Bev Green said she was supportive of having an HRA be part of the EDA, but said she had concerns about the workload. The board agreed that Director Somnis had more than enough to do and could not take on this additional staff. After considerable discussion, the EDA board agreed another staff person would be needed, but just how it would work needs more thought.

There was also discussion of what sort of projects the HRA could take on such as new housing, redevelopment of substandard properties, as well as ownership of any constructed buildings. Some board members said they did not want an HRA to be a building manager, but new board member Virginia Palmer said she would like the EDA to not completely rule that out, as having an HRA own a property could be the only way to develop affordable housing. She said there is a great need for affordable housing for people in the service industry.

Funding for the HRA were discussed, including a levy option. Somnis said HRAs have other options such as special assessments, tax increment financing (TIF) and interest reduction for projects. An HRA is eligible for state and federal funding that an EDA cannot apply for.

The Minnesota Housing Partnership representatives that have been working with the EDA in this HRA exploration attended a recent joint meeting of the city, school, county and Grand Portage to answer questions.

The subject of tax-increment financing came up again later in the meeting. Somnis and EDA President Howard Hedstrom said that a number of potential project developers have asked if the EDA could offer (TIF) or some sort of tax abatements. Somnis said she had heard that Cook County had a negative experience with TIF in the past, it seems that it would be a good tool if used properly. The last time TIF was used in Cook County was in the 1980s and Somnis said a lot has changed regarding the state tax system and financing since then.

Somnis said she reached out to Bruce Kimmel of Ehlers Associates, the financial advisor/bond counselor for the city and county for more information. He suggested talking to the city and county to see if they would consider helping get projects going by offering these incentives.

Somnis gave a brief explanation of how the TIF program works. She said under TIF, the taxes to be paid because of the increased value of a property are instead used by the developer to pay interest on loans used for development. Somnis acknowledged that it means the county does not get those property taxes right away, but it brings something to the community that is needed, such as affordable housing or assisted living.

EDA Treasurer Scott Harrison added that sometimes a project doesn’t get 100 percent of the TIF and would still pay some property taxes, which is better than nothing if a project doesn’t move ahead.

The EDA board reached consensus to authorize Director Somnis to learn more about how TIF works and to return with that information
A successful year for Small Business Development Center
Small Business Development Center Representative Pat Campanaro gave an annual report on her SBDC activities in 2020. She reminded the EDA board that the SBDC is funded on a federal level by the Small Business Administration. She said the SBA believes small businesses are “the heart of America.”

Campanaro said most SBDCs are operated by universities, which was the case for her office until last year, when the Northland Foundation became the SBDC sponsor. Campanaro’s office is one of nine in the state.

She shared specific Cook County information. She said she assisted with eight new business starts. She assisted 186 clients and had 956 counseling hours. There is no charge to the people she assists and the Small Business Administration pays for her time, so there is not cost to the EDA itself. Campanaro said through the efforts of the SBDC $3,040,563 in capital funding came into the community.

EDA Board Chair Howard Hedstrom said the community is very lucky to have the SBDC office and especially lucky to have Pat Campanaro.

Cedar Grove Business Park lot sale canceled
Director Somnis told the EDA board that North Superior Fisheries, which wanted to purchase a lot next to the one where they currently use to operate the boat storage area, has decided not to proceed with the purchase right now.

Somnis said the reason is because of the excessive cost of developing a storm water plan and wetland remediation. Somnis said she is looking for a way to help them (and other businesses) meet these costs. She said there may grants that could be used to assist those wanting to buy a business part lot. Somnis will be meeting with Cook County Soil & Water for help on this.

In related news, the closing for the sale of Cedar Grove Business Park, Lot 5, Block 7 to the Cook County Historical Society will be taking place soon.

Cook County Workforce Solutions turning to South Dakota
Efforts to recruit workers from Puerto Rico have slowed down, but the idea of bringing workers from the economically-depressed area of Pine Ridge, South Dakota is being explored. Local business owner Sarah Hamilton is working on recruiting workers from Pine Ridge. The EDA will work with her on this.

Somnis said a Lloyd K. Johnson Foundation grant for building Cook County’s workforce can be used for this work.

The next EDA meeting will be a special meeting to learn more about the Taconite Area Business Relief loan program on February 23 at 4 p.m. The next regular meeting will be March 9 at 4 p.m.
WTIP’s Rhonda Silence spoke to EDA Executive Director Mary Somnis about all of this.

Rhonda Silence February 13, 2021