- All right, so this is the Economic Development Commission meeting. And it is, I think it's Tuesday,
- May 19th. And it's, because of me, 4.04 PM. Everybody else was here on time. Or you control time.
- That's true. You control time and space. All right, so let's first do the roll call. So call your roll.
- I'm Ms. Vidal, county council representative. Vanessa McClary. Tim Hankey. And I'm Kurt Soren.
- Dee De La Rosa. Jane Coversman. Staff. And we have a bunch of people in the room here. So let's start
- with Tyler. For the record, Tyler Kalachnik. I'm an attorney with Ice Miller LLP in Indianapolis. I
- practice municipal finance exclusively.
- Nathan, executive director for the Bloomington Housing Authority. Brian Still, director of real estate
- development for the Bloomington Housing Authority. And then we got Jeff and John back there. Jeff McKim,
- city controller. John Fernandez, amplify Bloomington. All right. So we have approval of minutes next
- on the agenda. And these are minutes from our, was it real Monday? We met on Monday?
- March 17th? No, that is me writing these on a Monday. OK. I was going to say, we don't usually meet
- on Monday. So if we could just make that small change, make sure we have the right thing. Vanessa caught
- another change that I didn't get communicated to Dee. And it said she was attended partially. Partially
- in attendance online.
- So I'd like to correct my mistake. Oh, because you were here. Yeah, you were here, but it was a. She
- was virtual. She's now here. Yeah, you were virtual, but I think you showed up a little bit late, and
- I did not. Listen, guys, I'm having a rough time. But the truth of the matter is she does such good
- work that even when she's here part-time, she's doing full-time work. Well, they would have to say Kirk
- was here partially today. That's exactly right. So let's not get into that, probably. That's right.
- Any other, thank you. Any other changes with regard to the minutes? We have a motion to approve that.
- All in favor say aye. Anybody opposed? So we have moved through number two on our agenda. We're really
- hopping along. New business.
- A bunch of bullet points. This is exciting. So we have a first on the new business of BHA bond finance
- project. So I'm going to turn it over to Jane to introduce. Sure. So we have Tyler Klatchnik, Nate Ferreira,
- and Ryan Still here from BHA and representing BHA. They're refinancing and repackaging some bonds, and
- they have an obligation to do
- meet some public reporting requirements. So they're going to offer a presentation to us today. Was that
- factual? Not refinancing yet. OK. Yes. Yeah. So it wasn't factual. Thank you for having us. OK. Tyler,
- do you have any more comments? For what? You can have those. Oh, copies, yes. Oh, no. There's an extra
- one right here at the end. So if anybody needs it. Thanks. OK. I have two. There. We're done. I have two.
- So we do appreciate the forum and ability to appear before the Economic Development Commission. I have
- been before you in the past on what we would term as a conduit financing, where the developer is seeking
- volume cap and 4% tax credits. So this is going to vary a little bit.
- And in those instances as well, we were under 36.712 Indiana code, which does require the Economic
- Development Commission as one means to advance to the city common council. So today is more a introductory
- meeting for purposes of
- letting the city know what the project is and where we are in the process. In order to ultimately issue
- bonds, not only will Bloomington Housing Authority have to approve it through their board, but these
- common council as well will need to adopt a resolution. So again, today is completely preliminary more
- to vet the project and kind of let the council know
- the commission know where we stand. Tyler, can I ask a general question? Just so I kind of
- have an understanding what you're doing here. What, or maybe it's to you, what is the Bloomington Housing
- Authority's current relationship with this property? Do they own it? No, no, no. Right now, we are solely
- pursuing getting rated to sell bonds. We are working with a broker.
- in relation to this property who is doing due diligence on these five properties from Hometown Group.
- So you have an interest in acquiring the property? Yeah. OK, thank you. Yeah. So importantly, with the
- past state legislative session, there was a change to Indiana Code 36-718 in
- the ability of local housing authorities, the method in which they sell bonds. Previously, they were
- one of the only entities left in the state that could not sell bonds at what's deemed a negotiated sale.
- In other words, they would have had, in order to sell bonds, these local housing authorities would have
- had to publish notice, take bids, and kind of whatever
- Purchasers said the rate was they had to take it a negotiated sale allows the issuer of bonds to work
- with an underwriter throughout the process in order to You know, hopefully the underwriter knows more
- about the market than the issuer about the capital markets and so it allows them to develop a structure
- that is more likely to be accepted in the market because
- on a competitive sale basis, if it's not a kind of run of the mill water sewer deal, a lot
- of the underwriters or bond purchasers don't understand the credit. And so housing particularly is a,
- I don't want to say a story credit, but more of a needs more explanation for an investor. Those types
- of investors are used to getting
- a disclosure document that shows things like market study, describes the properties, describes
- the improvements. You really can't do that through a competitive sale where you're publishing notice
- in a newspaper and hoping that someone sees it and picks it up. So all that to say, at the outset here,
- the contemplated team for this working group
- bring these bonds eventually to market for ultimately purchasing the properties and improving these
- properties. The entities that do have a fiduciary duty to Bloomington Housing Authority are Ice Miller,
- which would be myself. And there's several other attorneys, of course, working on it from Ice Miller.
- CFX is the financial advisor for the Indiana Housing Committee Development Authority.
- And they have a national presence in multifamily housing and single-family mortgage-backed revenue bonds.
- So I would say they are very quantitatively inclined. They understand the market, understand what's
- achievable with ratings. So they are a well-respected financial advisor.
- Colliers is probably everyone has heard that name from a real estate perspective. They do have a capital
- markets team that is in this project as an underwriter, wanting to take these bonds to market. So the
- job of the underwriter is to basically go call on investors. Once they have the securities ability to
- do so, there's certain steps that
- They can't obviously use insider information and things like that and tell people about a deal before
- it's public. But they are ultimately the ones that are going to be responsible for selling the bonds
- and trying to get the best interest rate for Bloomington Housing Authority. So the mechanics of the
- deal is Collier's has proposed not just a pledge of the project revenue, so rents and fees that
- are paid by the tenants to repay the debt that will be represented by the bonds. But surplus funds of
- the housing authority, which is a concept through HUD, and I'm sure Nathan and Ryan know it better than
- I do, but essentially after all your HUD obligations are paid, there's a bucket of money called surplus
- funds. And so the idea from Collier's
- And obviously, CFX will want them to confirm all this as we go through the rating agency process. But
- the idea would be that those surplus funds become available, if needed, to pay the project if rents
- and fees are not sufficient to make debt service payments. So as we mentioned, Standard & Poor's is being
- We're knocking on their door at this point to ask for a rating. These types of bonds are the nomenclature.
- They're not conduit bonds again. They're termed essential function bonds because instead of, and Kurt
- is familiar with this, I think from Indiana Finance Authority, volume cap is a special category of private
- activity bonds.
- These are not private activity bonds because the properties will be owned by a governmental entity.
- So they don't have to worry about things like the kind of tests that private activity bonds have to
- worry about. They don't have to go to the Indiana Finance Authority to get permission to issue on a
- tax-exempt basis because they are providing an essential function the same way the city could issue
- on its own.
- they are able to do so themselves. And in an abundance of caution, because you've got to get a rating
- that could affect other credit relationships, the first step will be to get a confidential rating from
- S&P to basically say, do we want to post this and put this up as our credit rating? So it's more of
- a prudent kind of deliberate step.
- rating might be. I know that's I mean it's definitely we've definitely been well sorry I shouldn't say
- the words like definitely. Indications have been that at least triple B so investment grade. We've met
- with a number of housing authorities on the west coast that have done this and they were mostly a minus
- rated that's what they reported. And so again going back to kind of Collier's rule I'm down here on
- the next to last bullet point on this first slide, the bonds will be offered not on a wide basis, but
- they have a set of investors that Collier's, I think, believes has an appetite for this kind of paper.
- So it's a limited offering. It won't be something you see in the bond buyer or published on the Municipal
- Securities Rulemaking Board's website.
- Just because they the underwriter believes that this is the proper method for getting the best interest
- rate Okay, and then as I mentioned the common Council must approve once Bloomington Housing Authority
- takes its steps and we've fully gone through the process to have documentation to call substantially
- final that would be when We would feel comfortable because we
- Our role as bond counsel, at the end of the day, we have to give an unqualified opinion that these are
- valid and that interest on the bonds are tax exempt. So we have to be certain in order to do that. So
- we want to make sure that when we present this transaction to the board of Bloomington Housing Authority
- and also to the common counsel that there's not much left to do in the documents other than
- Here's what came back from pricing the bonds. We went out to the market. Underwriter said, hey, this
- is the interest rate. OK, let's fill that in. So concurrently, due diligence on these properties is
- happening through a broker that we're working with. And so the five properties here total 924 units.
- I mean, Housing Authority is really interested in this.
- for preservation purposes. Some of these properties are in very poor shape and are at great locations
- for demoing and turning into student luxury housing. We would prefer to be able to retain these in the
- community as workforce housing, preserving some of those more naturally occurring affordable rents.
- There's some other benefits, obviously, to us, too. We don't have the capacity to property manage this,
- so we would bring in an outside property manager. And this is also a new source of revenue for us. HUD
- funding has become a bit more questionable in the last couple years, which is 90% of our budget, where
- this would create a new revenue source that's
- is more or less restricted, I should say, allowing us to operate and expand our affordable
- housing development initiatives. In addition, a couple of these properties are known for being poorly
- managed and are in bad shape. So I think the city, particularly Hand, has expressed interest in us acquiring
- these so that we can gradually bring them up to the standard that we believe they should be at.
- You can see some of those kind of naturally occurring rents there. Those are well below the average.
- Just to give you an idea, 100% AMI for a two-bedroom right now, the rent in Bloomington is around $1,800.
- So these average rents are well below that. Our intention would be to acquire these and do some capital
- expenses, expenditures to
- bring them up to a better standard and still maintain those lower rents. When you say lower rents, do
- you anticipate that you'd need to raise the rents some from what they are now to make the economics
- work? It's not how it's been presented to us at this point that rents could stay pretty close to that
- below 100% AMI range. And honestly, we wouldn't want to
- go above that or much above that just to stay in line with our mission and the tax abatement that would
- come with this that is part of what makes this whole deal possible. So one other purpose for this is
- it gives us kind of a runway for future affordable housing development, redevelopment projects. So our
- intent would be in the next five years to probably identify the worst of these and do some kind of HUD
- use some kind of HUD tool to redevelop these and build in some deeper affordability, closer to like
- what we have in our RAD units at Cresmont and Walnut Woods. So this gives us plenty of runway for the
- next 10 years to create more affordable units in Bloomington. So is there any correlation between the
- percent occupied and what the condition of the space may be?
- And I'm in here the second part. And what condition the space may be, the buildings may be in? Yes,
- I'd say there's a correlation. Some of the percentage occupied goes down to 69, it looks like. Yeah.
- Woodland Springs, Kingston Manor have, and not just the two of those, but have a number of units offline
- just to not having sufficient upkeep and management issues.
- There's un-repaired units that were damaged by fire. All of that would be brought up to code if we were
- to purchase these. I may have a question. So would this bond be acquisition and improvement? Do you
- have any money that you're putting into it? We are, the only pre-development funds we're putting in are
- for legal and financial advising. Nine million in CAPEX would be built into this deal. And that's, I
- kind of describe what some of that work would look like. In addition, there's some, we're hoping to
- do some energy efficiency upgrades through state programs in addition to this nine million. In addition
- to CAPEX, you're borrowing acquisition.
- Are you including that in capex? No, this will all be paid for through the sale of bonds. The total
- project, I think maybe if you're asking the total project, this $9 million just represents improvements,
- right? Yeah. And the total project will be what about? Last, so this is a bit of a shifting landscape
- at the moment, but it was $82 million. Is that? I'm sorry? $82 million. $82 million.
- This includes a $65 million existing Fannie Mae loan that we would assume. OK. And then you talked about
- this as being future recurring revenue. So you've done some kind of a pro forma that indicates that
- you'll be able to make your bond payments, your maintenance, and so on. Obviously, your management companies
- cost and have money left over.
- We have our broker has done a pro forma for us in it Over seven years. It would be about 25 million
- dollars in revenue for the Housing Authority access, right? Yeah Which would open lots of doors for
- us in terms of affordable housing development Do any of these do any of your managers and I bet the
- answer. Yes Cfx
- Do they also do that kind of a proforma? Oh, yes. That's why we brought them on. They will turn some
- proformas upside down. We understand this is a somewhat risky approach. We also feel obligated to take
- some risk, given the housing issues in Bloomington.
- also just given kind of a shifting landscape with HUD and what our housing authority is going to look
- like in the next 10, 20 years. We have remained kind of ahead of the curve with affordable
- housing development, and we just want to keep on the front of that and be carrying out our mission.
- So. Just from the Peanut Gallery, you were the first housing authority in the state to take advantage
- of the RAD program. Oh, were we? I didn't actually.
- Rental assistance demonstration. Does anybody want to go see a fun chart? It's an oldie but a goodie.
- I had to change some arrows. So I just mostly described this in the opening, but let's just start with
- BHA as the issuer of the bonds.
- So you can follow the Bloomington Housing Authority issues, the tax exempt bonds. The underwriter, for
- a moment in time, will purchase them pursuant to a bond purchase agreement. And there is risk to the
- underwriter between the time of when they go out to the market, the bond underwriter, Colliers in this
- case, they will go out to the market on a day, one or two days,
- and take orders from these investors. I don't necessarily know who they might be in this case, but I
- know Warren Buffett's company buys a lot of this paper, Invesco, Vanguard. And for a time period between
- when they have signed an agreement with these investors that are at the top here, basically Collier's is stuck.
- If something happens in the market, there are conditions that say if the stock market closes or there's
- hostilities that make sale impossible, then they get to cancel everything. But otherwise, it's locked
- in at that point. And so in exchange for the bond underwriter delivering the bonds to the investors,
- the investors say, thanks for the bond.
- bond here's 82 million dollars bond underwriter takes their cut sends that money back to Bloomington
- Housing Authority who then gets to improve and purchase these properties and over the course of time
- the project revenues flow from Bloomington Housing Authority's ownership from the tenants and constituents
- that live there and
- Again, there's the surplus funds component that's hopefully going to, if it was just the project being
- rated, the rating agency would not give it the same rating because of the ability of the Bloomington
- Housing Authority to make those surplus funds available. And this is contemplated probably to be 20-year
- debt, 25-year debt.
- fixed rate, nothing too exotic. So. You know what the current rates are for Triple B? I'm not a financial
- advisor. You don't want a lawyer with a calculator. I mean, on a deal like this, if I had to guess,
- I don't know. What have they been showing? Six and a half, seven?
- I don't know if I can answer your question specifically, but before we were thinking about getting rated
- ourselves to do this deal, so we were just thinking about using the properties themselves as kind of
- the collateral for the project, that was at 8%. When we decided to go through the bond rating process,
- it dropped to like five and a quarter, but I don't know where it's at right now. I wish I could do a
- cool market update like an underwriter,
- I can say the short end of the curve is going to move. The long end of the curve is going to stay the
- same. And you never know what's going to happen with the Fed. So the financing all it means is clear.
- But I'm more interested in our capacity to take on 900 extra units. Is BHA ready to have 900 extra units
- just administratively and so on? So we won't.
- property manage this property manager it's it's beyond our capacity we do have housing choice vouchers
- and for these five properties so that won't change our goal would be to gradually add more vouchers
- through something like another rat conversion okay
- And then what are the thoughts of, and not that you need to have an answer for this, but just as we
- think about economic development, what are the thoughts of reinvestment of the surplus income in the
- years ahead? That's a good question. And honestly, we've been mostly focused on trying to understand
- and make the deal work. But I can tell you there's some staffing
- that we would add to our team that would expand our ability to do. A lot of staff with $25 billion.
- Well, a small portion of this would add to our ability to do more complicated affordable housing deals.
- So we're going to add some expertise and bring it in-house. I'll add, too, that we have yet to see the
- document structure. I don't have a good idea.
- what the rating agencies and investors will say, hey, you've got to keep this amount of surplus funds
- on hand while this debt's outstanding. Certainly not that much, but they're going to want some sort
- of reserve, right? We've contemplated a number of other deals that we would like to do. These are all
- existing units, so it's more a matter of just improving them.
- getting those occupancies higher than they are right now. So just to bring it back with a nice little
- timeline of how we hope to proceed, today is step one. We're just trying to familiarize staff
- and representatives of the city with this financing.
- Nathan's board is having a meeting next week, right? Where we'll hopefully have a resolution introduced
- and adopted that serves the purpose of delegating some authority to executive staff for things like
- contracts, purchase agreements, as if that moves forward.
- And from a federal tax perspective, to the extent they start spending money on things like
- capital expenditures, they would be able to reimburse that with tax exempt proceeds. It's called, for
- tax purposes, an inducement resolution meant to induce a developer to go ahead and proceed. And then
- following that, again, we
- We'd like to see the documents come from the underwriting team. And that'll be our job as bond counsel
- and the financial advisor to look over those, make sure that they comport with what we're being told
- the rating agency criteria is, and ultimately make sure that it works for investors, that we can give
- an opinion for the tax-exempt interest on it, and that the AHA is getting
- you know, favorable and market standard terms. Our job as bond counsel, once we see the set of documents
- that will be provided from colliers and their counsel, will be to make sure that those documents,
- you know, kind of match what we've been told from the rating agencies, because the rating agencies will
- also review it and say,
- Yes, this meets our criteria. And we've examined your financials. Thus, your rating is triple B plus,
- A minus, because we see you've got good management. We see you've got liquidity. And also, you're using
- a structure that we believe, as we can tell investors, is this amount of risk, right? Not triple A,
- safe like a, well,
- I can't even say that about US government anymore. But did you also say, Tyler, that earlier you said
- you have fiduciary duty. Yes. Is that part of it regarding rates and fees that they're going to be offered
- ultimately? In other words, you can give them counsel as to what? Yes. OK. I would.
- Maybe Nathan can add some color, but I'm pretty proud of the job I did on this underwriter and broker
- recently. Ice Miller's known for cutting other people's fees down. In your own? No comment. OK. So I
- was going to ask about the communes, how they were chosen as the bond underwriters. So you chose them?
- Is that how it was? No. No. How does that work?
- So this all came to our awareness through a broker named Lighthouse. Collier's is somebody that they've
- worked with. So they brought that to the table. Yeah, there are, from what I've seen, maybe three or
- four groups that kind of do these essential function bonds. Collier's is one of them. Stiefel was another
- one I know that
- Lighthouse mentioned Key Bank. So how did you go about choosing Colliers then? Maybe that's the fundamental
- question, right? Yes. It was based on the recommendation. We asked around. I do know the banker that
- is leading it for Colliers. We've worked on a lot of, as I said, conduit deals together. So he has been
- in the housing space for
- 15 years. Todd, that's really, with a negotiated offering, that's generally the practice though, don't
- you go out and pick the... Yes, that's exactly, I mean that is the... Because on the competitive, that's
- where you let the underwriters compete with each other to get the lowest cost. Correct. But with negotiated,
- because it's a special type of issue, you're only gonna have a very small universe of people that can...
- Right. Can underwrite these. So that's the reason you basically pick the... And some of the
- I didn't mention. Jeffries, who's based in New York, is one of the, they were the vanguard of these
- deals in California. The size of these deals may not be attractive to a firm like Jeffries. Thank you.
- So that raises an interesting question. If you alluded to California, how many other
- Housing authorities have done this sort of similar thing. Just curious. It's primarily on the West Coast.
- I would give an example. The Midwest, kind of the leader in the Midwest right now would be the Columbus,
- Ohio Metropolitan Housing Authority. They've received a lot of attention awards. I believe they have
- an A-plus rating. Obviously, Columbus, larger city.
- And so they've done several transactions using this model. So we're on the smaller side to try this.
- So just to wrap this up, once we do have documents that have been through the ringer a few times with
- the rating agencies, with the underwriter and their counsel, from our perspective and from the financial
- advisor perspective and from BHA's perspective,
- You know, can't have too many people ever looking at a trust indenture. But we will present
- those substantially final documents, plus the offering document that basically says everything the documents
- say, if you ever notice that. We just repeat ourselves a lot. That's the document that will be used.
- The disclosure document or the limited offering memorandum gets used by the underwriter to go out and
- say, hey, Vanguard, I've got this deal.
- Would you mind taking a look at this book and telling me what you think the interest rate you'd buy
- these at would be? So we will take that to Bloomington Housing Authority's board. And then again, because
- of the statute, go to the Common Council at that point as well before we can take the bonds to market.
- And again, these vary from those conduit bonds just because they are payable from revenues of the Bloomington
- Housing Authority versus those when I've been before you in the past. It's solely from the project.
- But there's still no effect on the constitutional debt limit of the city. It's not like you're going
- to give a bank qualified status
- and issuing some of your essential, if you want to build a courthouse that you're not going to issue
- more than $20 million that year. You could still do that and get a good rate from a bank. So. Is there
- anything between now and the time that you talk to counsel that would be useful from this body outside
- of just giving us and telling us that this is happening? From my perspective, if you are in contact with
- city councilors just to let them know that you're- Try not to be. I understand. I think, aren't some
- of you representatives of the council? Also try not to do that. Okay, but so in sort of updating- Yeah,
- just an awareness that when we are able to come back with the documents to be able to say, I know about
- this project,
- You know, we've heard it. We don't have any objection, unless you do, for these people moving forward
- as an agenda item. And we'll be pleading to get on your city council schedule probably during budget
- time. Just throwing that out there. Hopefully, we'll get ahead of that. We have a longer time just here,
- so it's good. OK, but the timing of all this is going to be
- It's critical. Yeah. Okay. So what happened during that? We can go early. We'll try. Yeah. Does the
- project have a name? Not yet. Yeah, name it. Curt, do you have a comment? Signetti. Signetti apartments.
- I think it's a bold move. There's bunches of risks involved. Management, probably number one.
- but then the risk to the housing authority, because you're pledging surplus. But you couldn't build
- as much housing in 10 years, 20 years. And the cost would be much less. Even if certain counselors charge
- a lot, it's probably going to work out OK. If you can manage those management risks,
- I applaud you, I think. Good luck. Appreciate it. And I'll just add that if this deal doesn't work out,
- we will be raided and we will continue to look for other properties. So it may not end up being these
- 924 units. It could be another purchase.
- be in a more ready position then. So. Great. Thanks for your comments. Thanks for a thorough presentation.
- Yeah. Just take care of me at the AIF. These are all on bus mounts, right? These are all on bus mounts,
- all the units? They are. Yeah, they're all city. Women's Springs is partly in the county,
- Yeah, that's important to people we serve, for sure. Thanks for having us. Thank you. Are you kicking us out?
- Sometimes in the past when I've been here we all walked out together. I was just wanting to do a public
- finance presentation for the
- business school real estate club but I asked them if SPIA students could come and they said well there's
- limited space so I wanted to ask you because I one of my favorite people in the world is Dan Cole and
- I'm writing a law review article about zoning and it won't necessarily be about that but I think it'd
- be good to have the SPIA students you obviously give them a good exposure to it but
- The law school up in India only has public finance class once every two or three years. Let me know
- if I can help you with that. Yeah. Well, I'll email you. I just need a forum. Let me know, because I
- get in touch with the right people. I need to work on my public speaking. I'll see you in the IFA meeting
- sometime in the future. Yeah, I don't think I'm going to be there on Thursday. Yeah. It's a small agenda.
- Do you fly the flag everywhere, or is that special for your trip to Bloomington?
- You'll never know. That's a lawyer's answer. I'm a two-time grad. Come on. All right. That's actually
- pretty interesting. Yeah.
- at least they had more housing available in a decent price range for folks. Absolutely. Well, and stabilizing
- those aging units. Absolutely. Yeah, because I know the Kingston Manor, I see that all the time, and
- I think it's falling apart. Yeah, and now with on crossing a number of times. You have to go look at
- the other ones. There have been thousands, as you know,
- new luxury student housing. Bill. Have you? I didn't notice. Sometimes when you're walking your dog,
- look up. Yeah. Anyway, some of the, it's going to cause stress on some of these properties. Yeah. And
- we're going to have to deal with it as a community. And this, to have a plan for that many units is
- a good start. To keep them alive. It's a good outcome of having probably more luxury student housing
- than we need.
- Yeah, I agree with that. More than they can be afforded to. So opportunity zone update. So just a few.
- Sorry, back to the agenda. So there's one meaty item for discussion. That's the strategic sites discussion.
- So maybe I'll just zip through the opportunity zones and SB 89. Those should just be a few sentences.
- So Opportunity Zones are a federal program that was made permanent by the Trump administration. So this
- is known as OZ 2.0 or Opportunity Zones 2.0. And it's really a benefit that the program has been made
- permanent because one of the barriers to using this in the previous iteration was that it was capped
- at 10 years and the legal costs of setting up a zone or a fund were really burdensome. So the Opportunity Zone,
- They are established in distressed census tracts. And those are, what do I want to say, named by the
- governor as opportunity zones. So all across the state of Indiana, municipalities and counties will
- be putting our hands up and saying, here are the three or four census tracts that we think should be
- named opportunity zones. And so we want to make sure that we're nominating tracts that have potential
- pipeline and opportunity
- And then once they have that designation, it kind of is supposed to act as a magnet to the private sector
- to make investments in these areas because those investors can then get a 10-year shield from capital
- gains taxes. And then the structure of it facilitates reinvestment in those zones or other zones. So
- we're at the very early stages of this. The IEDC will allow applications to start coming in in July.
- We've got really great support through RJL consultants who are at lobbyists based out of Terre Haute,
- but they've been so awesome in helping us evaluate census tracts. So I don't know what the role of the
- EDC is. We could potentially come to you guys to have the census tracts that we want to nominate be
- blessed, and that would be a nice opportunity. There's not a statutory requirement there, but it could
- be just a nice way to loop you guys in and show that we are
- you know, making good choices for Bloomington. Yeah. Okay. So that's opportunity zones. So the first
- part is the application. And then the second part is, should there be a community fund? The municipality
- doesn't have any role with that, but there are ways that we can make our areas look attractive
- for investment. So that then attracting the investment is the whole other ball of wax that we have to
- get into. And then SB 89,
- That's the next item, Senate Bill 89. The full title was, sorry. Anyway, I guess I'm not going to read
- the full title. Three-way permits, maybe is all that it's called. It provides new three-way alcohol
- permits to certain municipalities in the state. This is a tool that the legislature has applied for years.
- The state has a quota system for three ways. And then there's a bidding process for those, or typically.
- And then above and beyond the quota system, there have been a number of times that the state just assigns
- additional three-way permits to different municipalities, mostly going to Fishers and Carmel. But in
- the last session, they assigned two additional ones to Bloomington. This is really important to Bloomington because
- we have a large population when the kids are here, but our quotas are based on our lower permanent
- population. So we actually have a market that's much larger than what it reads by population data. And
- so as a result, demand for three-way licenses has driven the cost up exponentially. So these costs $250,000
- for whoever the purchaser is.
- That's that's an estimate there on the private market so they can fluctuate. So what we think Sorry
- going into process so the process for this it's actually a council Process they will have to establish
- Legislation that kind of formally accepts these and creates the program and so then there will be some
- criteria that
- that evaluate the applicants. We've had a ton of interest from parties and that's partly why I wanted
- to talk about this on the public record. So council is in the process of developing that legislation
- and they've been communicating about it.
- And so that will be the next step. And Esau, would you like to say anything further about that piece?
- Could we just speak about, I think, in our past meeting, just really briefly. So the three of us are
- working, and also with Councilmember Zulek, on first establishing the criteria to make it really, really
- clear to people. Because there's a lot of different programs that, in the future, might be interesting
- to us as a city. So riverfront districts, historical downtowns, but I think
- The reason to start this obviously is because of these two additional ones, which as Jane said, I think
- a lot of people, just the knowledge that they exist, a lot of people are already reaching out basically.
- And this has been something that I think Jane and I have talked about for the last couple of years because
- it is a huge pain point right now for a lot of
- want to be businesses. So you can think about like Galen Cassidy, for example, you know, they're starting
- their new business. I mean, in order for that restaurant to succeed, you know, it sort of hinges and
- falls on their ability to sell wicker in many ways, or changes their whole model. And so we're just
- trying to think about, you know, how do we then make sure that we're protecting the assets that already
- exist in town while opening up new avenues for more people, you know, to start the type of restaurants
- that we want to see. I'm particularly really interested in
- sure that there's also similarly these things we're about to talk about that there's some buy-in into
- the community like we don't want all of these chains coming through we don't want you know 27 new bars
- or something like that but you want to really think about you know using this in a way that's relevant
- to economic development and then we sort of think about where these things go and so on and so forth.
- So through the eligibility criteria the council will attract
- the types of businesses that will be truly good for the community. So we won't be supporting more, sorry,
- but like student bars, for example. That's not what we're trying to foster in our community. So I think,
- again, there's no statutory or legislative role for EDC, but I think it would be great to keep this
- group apprised
- And once we have the whole criteria, which we would send around, because we love all of your comments
- on it. So also then, when we put it before council, it would be great to have a recommendation from
- us of some sort. So if you want to put that on an agenda when it's ready, yeah, it would be great. What's
- the timeline? I was actually hoping to get this first piece of legislation on before we break,
- so on June 10. But yeah, we'll see how successful we are in clearing our backlog. OK.
- That's exciting. And then the next item, if I can move to that, Kurt. OK. So there's a memo. And I apologize.
- There wasn't a ton of time for you all to read it. It's been just guns blazing and ESD. But I view this
- as our first conversation on this topic. And we can come back to it a number of times to iron it out.
- So big picture. The current state has been that.
- Our community has really been locked in terms of the types of development and economic development that
- can happen. We've all been locked by this annexation battle for decades now. So our municipal boundaries
- have been locked. And then when the lawsuit was going on, we were really restricted in what we could
- do because we didn't want to extend sewer service to one parcel and then have that compromise the potential
- outcome of that.
- that lawsuit. And so really moving to the other side of that has given us the ability to think about
- expansion again. And it may sound funny, but CBU was really front and center during this annexation
- battle because they were the ones who were fielding all of the requests for extension and growth. And
- there was a perception that the city was
- prohibiting development when really we want to facilitate that. So CBU is super sensitive to the need
- to be able to extend service to employers. And as a result, they added, so I think it's section 24,
- a clause to their rules and regulations that allow for extension of sewer service outside of city limits
- for strategic economic development sites. So this is a huge win.
- And now we get to have a conversation about how we want to shape that extension of service. So the mechanisms
- that are identified in those rules and regs, they say that ESD can just name a site as being strategic.
- And that's fine, but we need to have a rubric in order to do that. And we would like for EDC to help
- us do that. And I think, I don't know.
- We can talk about what you want the process to be, but sorry. And so yeah, the first step is just naming
- a site as being strategic. And then the second part is really a formal process, like a pilot. So there
- would be a formal application like we've had with other projects. And so that would come to EDC, and
- then EDC would make a recommendation to council. So it would be a two-step process.
- I think I'll move on to think a little bit about the criteria. What I described in this memo is that
- the state. So when we think about the moving pieces, what do we want to look at as the criteria? It's
- really capital investment, job creation, and wages. But wage growth is a key.
- you know, goal for our economic development strategy at the city. We know that our wages are extremely
- low. And so wage growth is maybe a top priority. So I would look at wage growth as being more important
- than number of jobs, because we know that we're already receiving 16,000 commuters from outside of our
- community every day. So we don't necessarily need to attract a huge number, but we really want to see
- those wages improve. And so I pointed out that the state
- has a new standard that they've expressed that is 125% of county average wages. So for the state,
- the IEDC, to extend an economic development incentive, they're looking at 125. This is a major increase
- for them, and this has actually caused a lot of reaction in the economic development community across
- the state. They hadn't expressed a blanket number in the past. I haven't seen this in press releases,
- but it's been discussed at meetings. And so I really like
- 125% of county average wages as a starting point for the wage discussion. The way that shakes out locally
- is the state looks at 25, 26 as our average wage. That's a 20, 25 number. And then that shakes, sorry,
- that shakes out to 65.
- 676 annually. So 2526 was the base average wage for 2025. And then if you increase that by 25%, it goes
- to 3175 per hour or 65,676 annually. How tough is that number? For people to hit? Yeah. I think Clark
- Greiner might still be on the call. Or is he not here anymore? He was prepping for a meeting. Clark's
- still on. Yeah. Clark, could you talk to us about that? The question was,
- How hard is it for employers to hit that $3175 average wage? I think it depends on the trade sector
- industry that you're in. Certainly on the life sciences side, as we've seen before in the past, certainly
- in the county, and I get with some of our other city life sciences groups, we've been able to hit that
- number, started that number, and they're able to do it. But I think on maybe some of the emerging small
- things that we want to be mindful of,
- And this is not a proposal. This is just a starting point for your discussion, to be clear. This is
- very superficial, high level. We want to get EDC's feedback. And so Clark, to summarize what you said,
- you're seeing it in certain areas, but you think
- younger companies in certain sectors might be challenged to hit that 125. Yeah, and I think the other
- thing you have to be a little mindful of, for instance, if you have some crisis maybe been identified,
- let's just use an example of the Brown Pike. There's a few parcels there that if somebody were to come
- in and develop something on speculation,
- that might create a little bit of a problem, because they may not have the exact employment number.
- So if somebody wanted to develop a location, that might create a little bit of a problem. But I think
- what I hear Jane saying, what we talked about before in the past, is that I think this is kind of the
- starting point to say, how does this work? And I think that we don't want things like that
- in that conversation. That's great. Thanks, Clark. And then moving through this,
- You know, the other key is looking at that capital investment. You know, what are they contributing?
- Because that would be the foundation for whatever in lieu of payment they might be making. But I didn't
- include information on the revenue side in this packet. I sort of just wanted to introduce the topic.
- And then we can add a framework for what that would look like if it's pilot payments, which is what
- the CBU rules and recs
- site as the mechanism. So I'll park that there and just say I'm happy to go into more detail in any
- of it. And Big Picture just interested to learn your feedback on how you think we should frame the extension
- of utility service outside of city limits for strategic economic development sites.
- And I love that we have a rep from the county council here for this discussion. Just to be clear, we're
- talking about a new policy that's been, or an updated policy by the utility service board, which now
- will allow extension of sewer to strategic locations. And they're going to let the EDC decide
- what a strategic location is. The rules and regs say that ESD, our economic and sustainable development,
- at a staff level, we can say what sites are strategic. And you're going to ask us to provide guidance
- to you, OK? And that makes sense to me. I mean, I think that makes a whole bunch of sense. I mean, I'm
- ready to get into the metrics
- Yeah. May I ask a question? Sure. Sure. I don't understand how pilot fits in. Would you explain that?
- Oh, yeah. So. Payments in lieu of taxes. Right. In lieu of property taxes. I understand that. Yeah.
- In lieu of city property taxes? Yeah. Right. So because. Because they wouldn't be in the city. They
- won't be in the city. But then they'll be receiving those benefits. And so there's an upside for us,
- for the city, to extend service. So.
- I just don't understand how pilot works. Does it become a pilot property, and they're taxed for the
- city, and it goes into the pilot. I know you know John. Yeah, John can come to the table. But there's
- just an agreement that's made, a payment in lieu of agreement. This is the contract. Yep, and a number
- is reached and named. My understanding is the university does that right now for fire protection. They
- have a pilot agreement. And historically, we've had
- west side, the industries you bring us. That's exactly what that is. And then you all approved two pilots
- last year for Glick properties. And it would be very similar where you use some type of logic to get
- at a number that is reasonable. And then that's the number that is paid annually.
- Yeah, go for it. Yeah, just a little bit more color behind this is a Clark, you know, weighing on this
- as well. But one of the biggest challenges we have from a economic development perspective is uncertainty
- across the board. Everything's uncertain. And especially as it relates to some of these big infrastructure
- items like sewer service, not knowing
- whether you're going to be served or not, you just might as well not even submit the site. Because we
- can't move quick enough. So the idea was to say that this isn't a blanket policy for everything outside
- the city. But are there some really strategic sites that are prime economic development opportunities
- for the community at large, the county and the city, that we could designate
- pre-designated, these are strategic sites that we've agreed based on criteria in a very transparent
- way. You have objective criteria that if you are meeting these criteria, you will get service.
- And that way, whether it's me or Clark or the university or anybody that's talking to a prospective
- employer that's interested in these sites, they know that yes, meet this criteria and you will get served.
- And I think it's an opportunity for the city of Bloomington and Monroe County to work together and present
- a united front to the broader world that we do want these kinds of high-quality job projects here. And
- so we just modeled it after the West Side Agreement in terms of the mechanism, because we think that
- works. And then it's just, you know, it's not every side. I mean, there's only a handful of them that
- really rise to this level.
- that we would want to have the certainty around. And I don't know if you talked about what those sites
- are, but I mean, Clark mentioned the Vernal Pike, but it's really the airport. The art. And it looks
- like I'm here. This report that on May 17th, they issued a blanket will serve letter, right?
- To the airport. Yeah, that was separate, but related. Yeah, I agree. Yeah, and so, and that was because
- we ran into all that uncertainty over the project that Clark was working. The art is another one.
- where that could be a potentially significant source of some very high paying jobs in the future. But
- they're going to need to know that they're going to have. John, just to clarify a little bit what you
- said. I mean, the way I'm reading this is the site must be named as strategic by the department of economic
- and sustainable development, and then
- the department would communicate to CBU. And CBU would do its due diligence to decide whether it can
- actually provide that service and make sense for it. And then it will do, if that's the case,
- it will serve. So you sort of said if they met the metrics, they would automatically get hooked up,
- but it's not quite that. They could meet the metrics that we have.
- I don't think your memo goes into all the detail, but there's other ways that you could bake that in
- where there's, you know, who pays for what is part of the agreement, too. No, I just want to clarify,
- though, that the metrics could be met, and you could sell that to them and say, you know, if you meet
- the metrics, then it's going to get a recommendation from the ESD, and then the CBU will do its due diligence
- And so there's a high probability, but there's not 100% certain. I think it's always trying to say.
- I assume part of this is the sites that we're selecting as strategic, we would already know that they're
- serviceable by CBU. So what would make them strategic is that we can extend. So then in your formula,
- you could look at a combination of things that are part of the payment in lieu of.
- And some of that is the payment for the capital expansion, extension of the service onto the property.
- I think all of these. These would vary by site then. Yes. So there could be negotiation between CBU
- and then back with ESD to decide what the pilot ought to do. Yes. And I think that that makes a lot
- of sense. And then just further, I can't remember what your words were, but probable, but not certain.
- Because CBU will have to do all of their engineering evaluation. And so I think there's a lot to it.
- But just to be really clear about what, so the process has two legislative constraints. One is what
- the CBU utility rules and regs say. And one is the state statute for pilots and how they function. And
- so everything in between,
- I think we have control over how it works. But we start with those rules and regs. And so we start with
- the naming of the site. And I think that we have to decide if we want to bless certain sites, pre-identify
- certain sites, which is effectively, Liz, what we did with the airport. So I'll just unpack this for
- the public record a little bit. Liz mentioned that there was,
- a will serve issue to the Monroe County Airport. We did name them a strategic site for two parcels,
- knowing that whatever potential employers wish to go out there, they would ultimately come back with
- a proposal and go through the evaluative process that this body is getting ready to identify. So that's
- a blanket will serve communicating CBU's willingness
- to extend service to a qualified employer at the airport. So that's really critical, especially for
- Clark, as he's working with the team at the airport to try to attract aerospace aeronautics employers
- there. Sorry, did I get through all the points that I wanted to make there? I think I did, yeah. Good.
- So I was a little interested in maybe this is sort of
- optimistic, optimism clouding clear question. But there's an opportunity cost when one person builds,
- there's somebody else can't. And so I'm interested, like one of the thoughts that was percolating my
- mind was like, as we start to say that we want
- things to develop in certain sites that ideally raises some competition for those sites. And how might
- we leverage this process to either sweeten the deal if it's something we really, really want? Or have
- we thought about that mechanism? Yeah, or this is a Clark question regularly. What do we want? Yeah,
- exactly. What do we actually want? And one thing we know we want are
- operations that are not water-intensive and that are not wastewater-intensive. So John's doing employer
- attraction really within the city and within the trades district and is operating in kind of a certain
- domain and then Clark is really in the county doing these kind of larger manufacturing. We're all working
- together but that's just to say I think
- Sorry, I'm losing track of it. So yeah, so we've already pre-identified that we just don't want to create
- more demand on water than we have to, and we know that we can say yes if there's light demand. And so
- what I think has been entertained at the airport are really cool operations that are doing primarily
- assembly, and that hasn't worked out as to John's point about the uncertainty. Clark, you have your
- hand raised.
- Yeah. I think one of the things that I also want to point out is that, you know, kind of this strategic
- site identification stuff is really kind of a shift up to recently through the annexation challenges
- that the community is confronted on. And I think this is a really good way to kind of start that dialogue,
- start working back together, really getting out there. Because if it's outside of the city, there's
- a good chance that I'll lead on that. Most likely some of those leads will come into me
- And then just through the natural defined process, I'll be contacting Jane and John to take it on the
- sites and locations, and we'll start that dialogue. I think the other positive thing is that, you know,
- what I hear on these different programs is that I think it's something we can kind of take a look at
- as far as the types of industries and stuff that come in. You know, we talked about how they were named
- on the matrix that Jane has identified. I think that's a good place to start.
- So I think the one thing we have to be really mindful of now is that there's a lot of different emerging
- industries that are out there. We've got a lot of things that some of our other stakeholders in the
- community are leaning into, certainly the ARC, as John mentioned. But there may be things that are coming
- from a national defense or national security perspective that maybe is going to be in a new emerging
- industry that we need to be mindful of. But from my perspective, I will certainly not leave any stone
- unturned, and I will certainly
- I worked with Jane and John on that to say, well, this is a possibility, and here's the good side of
- that. And certainly, there'll be things that we can screen and maybe even reject. But I think, to me,
- this is a real good start on saying, hey, look, there's a possibility to do this. Whereas up until recently,
- there wasn't as much flexibility built into that. So I see this as a real good starting point. And we
- get something figured out there. So I applaud them.
- I think to your question, Isaac, it's a good one, because in some of the scenarios that we played around
- with, the utility has to do the capacity analysis. And then if there's an extension of the lines into
- the property, that could be 100% developer paid. It could be a cost share. And that's where you're kind of
- get a little bit of an opportunity to play the incentive game if there's somebody you really want. That's
- great. And also just thinking about the, because I know Kurt wanted to get at this, and this is what
- I also jumped out at. And I think it's a draft to react to.
- You know, I like the categories. I think they're like way too broad, right? I think it would be better
- to have like, I mean, I think it's good within the toolkit to have broad. I think it's useful then with
- the sites to be like, and very specifically, we're looking for, you know, drone manufacturers or whatever,
- you know, to be, you know, very, I mean, at the arc, for example, you know, generally, there's a,
- you know, you don't, you don't want to
- bio thing there, necessarily you want reasonable things next to it. So I think that would be helpful.
- And then my only other thought. Sorry, can you just, so that's under B, priority sectors. You want that
- to be more specific. Well, I'm just reacting out loud. I think it may be useful to think about using
- those differently. You might say at the ARC, if that's a priority center, that it's not all five of
- these categories. But it's really just, you know,
- whatever category, like we want advanced manufacturing and technology there as an example that maybe
- you don't want life sciences there and that you would have the ESD and EDC would have the opportunity
- to play around with that as relevant.
- Yeah, but then even then, it's like lots of things fall under the categories of life science and health
- care services, right? And so that's where I get to that opportunity cost part and really building off
- of what Clark was saying, that it's not just the opportunity immediately now with who else is in line,
- but it's the opportunity of who could be there in five years or something like that. And again, it's
- overly optimistic to think that way. I mean, it'd be better to have people at these sites to be clear.
- I would probably position myself the opposite of that opinion. Because more like Clark said, we don't
- know what we don't know. And my experience with well-meaning intended
- things like regulations and zoning codes and so on. You start layering them on and you box yourself
- out about things. If somebody makes the wage hurdle, we'd be foolish not to consider whatever they're
- doing. They're a hula hoop manufacturer.
- But my point is more about co-location, right? So with the ARC, if we're doing defense-related stuff
- and then a life science place wants to
- Jeff, just because the site works, wants to be next to the Ark, do we want to say, well, actually, our
- strategy here is to develop things that make sense to co-locate? That's more what I meant. But I certainly
- agree with you. You don't want to create all these rules. It should just be a tool that is usable, i.e.
- give clear clarity. People want to come here. We're open for business. We will extend sewer in these
- sites. So look at them. The Ark is kind of a tool.
- Probably not the example you want to use, because they'll have a very clear vision. Exactly. Exactly.
- Exactly. And control on that recruiting there. Right. Some of these other sites. Yeah. Your point's
- well taken. Right. Right. Compatibility. Yeah. Yeah. And just give it, yeah, like in. I do like, I do,
- I'm sorry, go ahead, Liz. Oh, I was just going to say, but would co-location build competition? Like
- you'd have one.
- type of business here and another type, the same type of business here. You know what I mean? It might,
- but I think that you might think the edge. Would that be good? Would that be what the business is one?
- Yeah, it could. I mean, maybe it's not an apples to oranges. Maybe it isn't an apples to apples comparison.
- Maybe if somebody just wants to come and pay people a lot of money to be anywhere, maybe we're just
- really happy with that. But I'm just saying, how do we tie this to the broader strategy? I wonder if
- people are trying to come into the room. We do have a 530 in here. Oh, I see. OK. Sorry, so I'll stop.
- I just want to weigh in. I like the general approach that you've given us something to start with, the
- tier one, tier two. And I think we can do a lot of work to answer some of the things that we're saying.
- Because I'm saying I think we may be able to do some of the tier, some of the stuff you were talking
- about under B and tier two. And there's some things in tier one now after listening to a comment about
- some concern about the 125 being too much. Maybe we can figure out a way to be a little bit flexible
- with that. So I'm just throwing that. I think we have a lot of room within the structure to come up
- with a pretty good metric. Yeah, it's a pretty good start. Yeah, it really is. And maybe more incentives
- could be added to the 125 and less for the 120 or 110. Agreed. And I guess I'm walking away with kind of a
- big framing question, which is do we, so with the airport, it was beneficial for us to request a blanket
- wheelser from CBU. So that's like a signaling tool, but it's not legally going to extend service. But
- it was really important for them to have, to be able to attract employers. And so I'm just wondering
- now whether it would be better for us to pre-identify sites
- And then also have our criteria, if other sites become available. But can we just name where we think
- the important? I kind of like that approach. There may be some that are so obvious we just want to identify
- those. Just want to call them out. Right. Right. OK. OK. We probably ought to have a meeting where we
- can just sit down and roll up the sleeves. It would be good to have somebody with a utility now. That
- would be helpful. That would be very helpful. Because we know. I mean, we know that.
- The sewers are at the airport. You know that they're across the street from ARC. I don't know the rest
- of the map. So you're saying a meeting just to discuss strategic sites and dig into what? I think sort
- of a working session. I would imagine somebody like Clark would probably bring a lot to that, too. Yeah,
- I think so, too. OK, it's cool. I would open it to all those. I mean, John, of course, and Clark. Anybody
- else, you think? You bet.
- I will just note, because I get the idea around adding the overweighting the university partnership.
- I think that's also very cool. I think it puts IU at sort of this center of gravity, which is great.
- But I think in practice, it might be problematic, because it means that a modest project with university
- partnership could pete out another type of project. So if you're in the context of competing, how we
- weight things might matter a little bit. But maybe that's OK.
- Well, we're excited. Thanks for being here. Thanks, Clark. Thanks, Clark. See you tomorrow.
- Anything else? Because we want to be polite for the next group. This is awesome. We'll have tax abatement
- fun. Are we still shooting for the second? On June 2nd. So we will stand, sit adjourned.
- Thank you very much.