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.