Everyone at one time or another has mentioned money, and it comes up in rumors and innuendo, and you’ve mentioned loans and grants. How does this department fund itself? Does the money come from the City? Do you get paid through the grants?
Don – One of the major funding sources for the department staff is the Block Grant and Home programs. Doug’s contract used to be funded solely by Block Grant. His contract is now funded solely by the interest earned off of our investment portfolios. Our Block Grant budget is now about $1.2 million and change. Our Home is down to about $400,000. But we generate approximately $2 million in program income on an annual basis. So, in reality, we’re talking about a pot of funds that’s about $3.6 million.
Doug – The commercial loan portfolio that I deal with, that doesn’t go back into other overhead expenses. We turn that over, the revolving loan funds, back into new loans. My contract is the only one that hits the loan funds but we make more than enough interest. And these are all low-interest rate loans, anywhere from 3 – 5%. But there’s more than enough interest there that allows my contract to be funded, just by the interest, and then we get all of our principal back. So, from that portion of it, we do have some of that, but some of that just gets funded back into the business, as we’re not using the loans to pay for that other stuff, some of the other expenses.
Don – But that allows us to continue the economic development while the grant is picking up… So, you’re talking about a pot of funds there about $3.6 million. Colorado Industrial Park which morphed into Colorado Commerce Park which became Riverbend, that’s us looking at the reality of the market, beginning to position ourselves for marketing the park as we got closer and closer to… Then we cobbled together $7 million in different financing, and part of that was to cover the administration, the actual overhead of doing all of that work: Installing over a mile of roadway, acquiring over 400 and some acres, and the negotiations that that took. And, so we also have grants in projects that generate revenue for the department.
By the time it’s said and done, that’s how we do it: the projects we work on, either they’re eligible for federal funding and so the Block Grant and Home picks up the staff costs; or the individual project – we have money budgeted within that project to administer it, to oversee it and implement it. So there’s never, you won’t find a Community Development line item in the General Fund but, on occasion, like projects with the sewer collapse, Council saw that it was appropriate for them to provide some money to help cover our costs in reviewing that. So we set up these projects like that. It creates some interesting conversations and it also creates some tight budgets because there’s not necessarily a baseline that you can count on. When Camaco expanded, we served as their construction manager. They actually asked us to serve as their construction manager. We ended up serving in that role, and $60,000 was given from Camaco to the City, to pay for our costs to manage that project. That way, that’s fairly entrepreneurial. You’re not going to see many cities that are able to do that, and it also keeps us available for other projects. Otherwise, Rey would be hired and laid off, and hired and laid off, and you would lose that…
Jan – …continuity?
Don – Well, not only continuity but when you need that 5 minute phone call for a little bit of help, ‘Well, gee, he’s not here! We let him go last week!’ It’s important that you do your best to keep everyone together and we’ve been looking at how the City does business and there are some things that can be done better, and there are some things that the City does incredibly well.
The one thing that’s amazing is how much work has been gotten out on such tight budgets. Everyone is understaffed. Everyone has been understaffed for a looooong time.
Jan – I might add that we’re a sophisticated staff and we have the education and other departments sometimes turn to us for assistance. Chris here has actually taught GIS (Geographic Information Systems) and helps with some grant requests that come to us.
So those are things that aren’t as obvious. I was going to add that so often what we do is a long time in doing and is hidden. We don’t broadcast it. That’s necessary at times. Because the type of work we do, sometimes we can’t be obvious. It has to be kept under wraps until the proper time for it to be advertised. There’s a lot of work being done, sort of under the surface, to make sure that it’s done correctly.
Don – When a developer expresses interest in the City, we can’t say ‘Company XYZ is coming or has an interest.’
Jan – But there’s an awful lot of work that has to be done behind the scenes in preparation.
Don – There’s been a lot of other projects that we’ve gotten into, and we’ve spent a lot of time, but unfortunately, nothing comes to fruition. You know, typical salesman, if you get one close for every 10 leads then you’re doing good. It’s not that here, but there’s times that we put a lot of work in, and then unfortunately, we don’t get this company or we can’t get this grant, and a lot of that does happen. It’s just a fact of life. So there is a lot of work that’s going in, we just don’t always get the results we’d like to. I think we do a fairly good job of closing what we do work on.
I guess one example is we’ll serve sometimes as a consultant. Chris was very busy with the Soccer Academy. They received no funding from the City, but they were looking for sites, and they hit a wall on where they thought they would want to be, which was around Avon. They just could not locate a site that would fit their needs, their budgets and whatnot.
Chris – We served as an effective middleman. We were able to hook them up with a property owner that had a site that they were really interested in. Got them together in multiple meetings and kinda mediated. They were able, from those meetings, to find some common ground, and we were able to execute the deal. They had some very specific criteria, and we came up with about 7 sites to show them around Lorain. The last site we showed them was Emerald Valley, and they loved it, because it’s flat and there’s hardly any trees.
Don – But there was some resistance and how could you go, from some people in the organization, how could we go here, we have a golf course that’s operating. It took a little bit of convincing even though, in the end, it was the perfect site for them. Just because it was an ongoing business, it was a greenfield, but it wasn’t your typical greenfield.
Chris – We were extremely fortunate that they decided to locate here. That is one of our premier developments.
Don – It was fortunate, but we sort of made our own fortune. It was 7 sites, and Chris driving around with them, talking to them and calling the different property owners, and working on all of that. Unfortunately, they hit a little roadblock that, I don’t know why they weren’t able to overcome it in Avon, but we were more than…
Chris – It was wet. Over 80% wet. Very wet and that was the problem. So this site has small pockets but definitely workable.
This whole department really functions…Team Approach. Everybody has their niche, so to speak, and we all draw upon each other on our specific projects. It’s nice to see everybody come together toward the common goal. That’s the really nice thing about the 5th Floor. Everybody works well together, and when we have an issue, when something comes up, we’re all there, ready to tackle it. It’s kind of a nice way to do business.
Don – And it allows that creativity as well, because Chris will see a problem one way, or an issue, and Jan will see it another, I’ll be a third, and then there’s Doug…
Chris – He’s always out in left field anyway.
Don – But everyone will come together, they bring their own expertise, their own ideas, and sometimes you have, sometimes there’s heated discussions and other times it’s simple 1-2-3. But I think we get the answers right, or closer to right, much more often than not. That’s why when we do go down to Council, we typically do OK. There haven’t been a lot of projects that we’ve brought down where Council has said, ‘Absolutely not.’ Part of it is, we try to communicate with the Administration and Council. They’ve given us an idea of where to go, or when an opportunity comes up we’ll let them know ‘Hey, here’s an opportunity, we’d like to take advantage of it.’
We talk it through with them; we kinda give them our best advice on how we think it will go. Very rarely will we make a guarantee. We’ll say, ‘It’s our understanding, it’s our belief for these reasons that it’s good, but here are the things to be concerned about.’ Council and administration has really appreciated that they go in with eyes partially open if not fully open, based on our ability to take a look at things. We do try to be creative because of the limitations that we do have on our funds, on putting things together.
To do what we did in that Commerce Park was just outrageously difficult in that….
Jan – Don’t ask him to give you the whole litany of…20 minutes, just on that. (laughter)
Don – I mean some State grants, you can’t use them to pay sewers, so you had to make sure that when you were…certain expenses weren’t allowed with the State loan.
Chris – Tell him about the archeological grid. Tell him about the grid.
Don – Oh, Wow! Well, before we even started up any of that, we were trying to figure out whether this was a viable project. Because Federal money was going to go into it, we needed a full-blown environmental assessment in accordance with the Federal regulations. And because of how the land was never really fully developed at any time in its recent history, like, going back 200 years, we had to do an archeological survey. At first they were even talking about whether or not we had to do the landfills, we said ‘Trust me, the landfills’ been disturbed.’ You’re not going to find anything there. And then, all the other land was farmed. I think we had pictures from the -20’s, what the vineyards looked like, and the steel mill on a small portion of the US Steel land.
They had to dig holes, every 3 meters?
Chris – They wanted to do every foot.
Don – On 200 acres. A grid of every foot you dig a pit. Are you nuts? No way, are you nuts? But since the public was footing the bill, they didn’t care. We kept at’em, we kept negotiating, we’re not doing a foot, we’ve gotta figure something else out. We eventually got to 10 meters?
Chris – It was something like that.
Don – It was still a lot of pits dug! And what it was, was if they found something in one of those, then they would (unintelligible). We found, over 200 acres, we found 2 sites that were ‘of interest.’ And they weren’t eligible for national historic; the report came back ‘more investigation needed before development.’ It was like, OK, ‘we’re not developing here, we’re not developing there,’ we’ll just protect them for now. And if a company came along that needed to then we’d invest the money. But it didn’t make sense for us, for the public, to spend the money to figure out whether or not there was really anything there. Especially when we could just say, ‘we just won’t develop here unless we have a real use.’ So that was the approach we took.
We similarly had to do a wetlands survey, a wetland delineation, file a wetland permit, we actually came up with the idea with Elmwood, where we were able to keep the wetlands in the City of Lorain. We created our own wetland bank that the City controls. And then West Nile broke out and we had a bit of a furor. And there was just a public education. It didn’t matter what we wanted to do, people were afraid and they couldn’t overcome this fear. Those wetlands are still there, and the furor has died down, so I’m hopeful that sometime in the future, as development continues on our West Side and wherever, that people look at some of the groundwork that was laid, where, keep the wetlands within the City, added to existing assets. We just finished a $25,000 investment to improve the trails through Elmwood, that we did fairly quietly (it’s not quiet anymore! – hh) Again, it’s improvements to the quality of life, and it’s also an economic development engine, to be able to replace wetlands within the City, while developing other places, and then create a nice park.
Chris – That’s just some of the things that we have to do. Make sure that everything’s done correctly. And that’s why it took so long. Ten years, lining up funding, lining up the purchase of the site. All of our due diligence, including the archeological (survey), had to be done first, before we could take title, to the US Steel site on the East Side. It was a long, carefully thought out process. So far, we’ve been fairly successful. You know, ten years is a long time. It’s a long term goal, a long term project. We went into this knowing it’s going to take 20 to 30 years to build this thing up.
Don – That’s the one thing, I think everybody wants stuff done now, particularly with commercial development. We have to have some patience. On the City’s West Side, out on Baumhart, the Industrial Park that the City participated in out there, that took 15 years to fill up with those companies. Most of the land on that Industrial Parkway is full. The one thing that they have to remember is, this, the Riverbend Commerce Park that we’re looking at, it’s not going to get filled in 3 years, 4 years. It’s going to be a 15 to 20 year project. And it’s all going to depend on the economy. So, while we’d like to fill it up right away, the reality is: it’s going to take a while. This is not something that happens overnight. Even getting the project to where it has…It’s taken us a while; it’s not been a perfect trip. We’ve taken a look at those, we’ve adjusted, and we still think we’ve got a real good project. The economy is down, so that doesn’t help. But the nice thing is, when it’s ready to heat back up again, we’re now well-positioned, we’re ready to move.
So it’s all in positioning yourself. Businesses are becoming a little bit more anxious. When they say ‘Hey, I’ve gotta move,’ before it used to be ‘I’ve gotta plan for two years out.’ Now, they say ‘We’ve gotta be ready to go in 6 months.’ So that’s why we’ve put that out there is so we are at that point so when we tell them ‘You need to move, we can move, here’s the timeframe.’ You have to position yourself to be ready for development when it’s ready to happen. Having the control of the land, the roads in there, all you need to do us put your building down, and you’re ready to go, and that’s within the timeframes of building.
Chris – That’s the best role for development departments like this one, is to make development as easy as possible. And as friendly to the business as possible. You can’t make a company go… ‘Well, why can’t we put Eat n’ Park here?’ Well, Eat n Park doesn’t want to go there. But if somebody wants to go there, we can make that transition, that move to our community for them as easy as possible. As beneficial to them as possible. That’s kind of what our role is; the urban commerce park’s the best example. When that rolls open, when we really start marketing that, the economy picks up a little bit, we’re ready for them. We have incentives we’ve tried, our IRG facility, testing them out, see how successful that is, bringing investment to Lorain. I think we’re seeing it work, and if it keeps going, we can still do it over in the Industrial Park.
Don – With IRG, they’ve only had that for just over a year now and pretty shortly here they’re going to have four, 3 – 4 good-sized companies. 200 employees, not the 1700 that they used to have. Again, we’re talking 3 million square feet is a lot to fill; it’s not going to go quickly. But if you’re patient, and the City’s willing to take the time and make the investment, eventually it’s going to pay.
But you have to show a little patience. That’s the one thing, we’d like the people to be just a little more patient. Give us the time to develop it, because you don’t want us to throw just anything in there. You want to make sure that you do the right thing.