MINUTES MISSOURI DEVELOPMENT FINANCE BOARD Governor Office Building 200 Madison Street, Room 1010 Jefferson City, Missouri MARCH 24, 2009

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1 CHAIR: Linda M. Martínez Director, Economic Development EX-OFFICIO MEMBERS: Peter D. Kinder Lieutenant Governor MEMBERS: Dr. Jon Hagler John D. Starr Director, Agriculture Larry Neff L. B. Eckelkamp, Jr. Mark N. Templeton Danette D. Proctor Director, John E. Mehner Natural Resources Brian H. May Marie Carmichael Missouri Development Finance Board EXECUTIVE DIRECTOR: Robert V. Miserez MINUTES MISSOURI DEVELOPMENT FINANCE BOARD Governor Office Building 200 Madison Street, Room 1010 Jefferson City, Missouri MARCH 24, 2009 The Missouri Development Finance Board met in regular session on Tuesday, March 24, 2009, beginning at 10:30 a.m. Notice of the meeting was duly posted as required by RSMo. Section at the MDFB principal office. The following members and officers of the Board were present or absent at the meeting as follows: Linda Martínez Director, Dept. of Economic Development and Chair Present John D. Starr Vice Chairman and Member Absent Larry D. Neff Secretary and Member Present* L. B. Eckelkamp, Jr. Member Present Danette D. Proctor Member Present* John E. Mehner Member Present Peter D. Kinder Lieutenant Governor and Member Present Jon Hagler Director, Dept. of Agriculture and Member Present Mark Templeton Director, Dept. of Natural Resources and Member Absent Robert V. Miserez Executive Director and Assistant Secretary Present *Participated via telephone conference call. Chair Martinez called the meeting to order and declared a quorum was present. In addition to the above, those in attendance included: Board Staff: Board Counsel: Others Present: Kathleen Barney, Mike Golden, Krystal Davis, Dawn Holt, Kimberly Martin and Valerie Haller David Queen Jerry Dowell, Lieutenant Governor s Office; Scott Totten, Missouri Department of Natural Resources; Crystal Narr, Main Street Chillicothe; Bob Lewis and Larry Marks, Development Strategies; Mike Whittle and Amelia Frankel, Armstrong Teasdale LLP; Peter Czajkowski, Stifel Nicolaus; Ron Waterman, St. Louis Cardinals; Chase Martin, Frank Cipolla and Michelle Reisner, Cordish Company; Jon Giokas and David Richardson, 200 Madison Street, Suite 1000 P.O. Box 567 Jefferson City, Missouri Telephone: (573) Fax: (573) Visit our Web site at

2 Husch Blackwell Sanders; Rodney Crim, St. Louis Development Corporation; Russell Runge, City of Mexico; Mike Mills, Spectrum Consulting Group; Dustin Allison, Governor s Office; Sallie Hemenway, Ann Perry and Tom Reichart, Missouri Department of Economic Development; Keith Wenzel, Hendren & Andre LLC; Virginia Young, St. Louis Post- Dispatch; Jason Noble, Kansas City Star; and Davie Lieb, Associated Press Chair Martínez presented a plaque to Lieutenant Governor Kinder for his service as Board Chairman from September 15, 2005 to March 2, Chair Martínez expressed her sincere appreciation to Lt. Governor Kinder for his leadership and service to the Board. I. Secretary s Report Secretary Neff Secretary Neff presented for approval the minutes from the February 17, 2009 meeting. The minutes were included in the Board materials distributed in advance of the meeting. Director Hagler asked that an addition be made to reflect his favor of the remaining action items after he excused himself from the February meeting for another engagement. There being no questions, corrections or further additions, Secretary Neff made a motion to approve the minutes with the addition added. Member Mehner seconded the motion. The following vote was recorded: Aye: Nay: Absent: Neff, Eckelkamp, Proctor, Mehner, Kinder, Hagler and Martínez None Starr and Templeton Chair Martínez declared the motion passed. II. Treasurer s Report Krystal Davis Krystal Davis presented for approval the Treasurer s Report as of and for the seven months ended January 31, The Treasurer s Report was included in the Board materials distributed in advance of the meeting. There being no questions, corrections or additions, staff recommended approval of the Treasurer s Report. Secretary Neff made a motion to approve the Treasurer s Report as submitted. Member Eckelkamp seconded the motion. Lt. Governor Kinder questioned whether Nelson Grumney was still the Board Treasurer. Chair Martínez responded that because Mr. Grumney s term was terminated through the transition process, he was no longer a Board member or Board Treasurer. Chair Martínez acknowledged Mr. Grumney s service and other individuals services that were terminated. 2

3 With a motion made and seconded, the following vote was recorded: Aye: Nay: Absent: Neff, Eckelkamp, Proctor, Mehner, Kinder, Hagler and Martínez None Starr and Templeton Chair Martínez declared the motion passed. III. Department of Economic Development Report Director Martínez Chair Martínez reported the Department continues to work with the House and Senate on legislation. Chair Martínez stated the Department has committed a sizeable amount of work to the economic stimulus plan. IV. Department of Agriculture Report Director Hagler Director Hagler reported that MASBDA is in the process of awarding their Value Added grants and that the Department continues to work on the economic stimulus plan. Director Hagler met with the USDA Secretary to discuss broadband availability for rural Missouri and expanding the broadband access throughout the State. Secretary Neff asked if there was funding available from the stimulus plan for the broadband in rural Missouri. Director Hagler responded the USDA has $2.5 billion available to be distributed and the Department of Commerce has a larger sum available. The two Departments combined hope to provide extended broadband throughout rural Missouri. V. Department of Natural Resources Director Templeton In Director Templeton s absence, Scott Totten reported the Department continues to heavily concentrate on the stimulus funding. The Department will be receiving approximately $148 million in additional state revolving funds from the stimulus plan for water and wastewater infrastructure. Mr. Totten stated the Department will be receiving substantial increases in funding for their state energy programs. Chair Martínez commented that the Department of Natural Resources and the Department of Economic Development have collaborated on projects with a component of assisting companies evaluate the energy utilization for manufacturing and make suggestions so the companies can operate more profitably and continue to operate in Missouri. 3

4 VI. Lieutenant Governor s Report Lt. Governor Kinder Lt. Governor Kinder reported he has been addressing concerns of a few state Senators in regards to tax credits and also is assisting with efforts to pass the Governor s economic development bill. Lt. Governor Kinder commented that during the last administration he chaired a broadband task force comprised of various stakeholders throughout the state and that they ran up against the issue of no funding for the broadband mapping. The task force was not successful in convincing the legislature, with all other demands on general revenue, to place the line item in the budget. Lt. Governor Kinder stated he hopes some of the stimulus funding for broadband will be used for mapping, which most stakeholders thought was a very necessary step. VII. New Business A. St. Louis Ballpark Village Robert V. Miserez MODESA Application Chair Martínez welcomed the representatives of the project and commented that the project was for presentation only and that there would be no decision made at the meeting. Mr. Miserez presented the MODESA application from the City of St. Louis for the Ballpark Village project. Mr. Miserez noted the project had come before the Board in the past as a totally different project and that it was not completed at that time for various reasons. Mr. Miserez reiterated that the project was for presentation only for purposes of briefing the Board as the project had not been through the complete review process with DED and Board staff. Mr. Miserez reported that currently the project envisions a structure that can float based upon the size of the various component pieces of the project. Mr. Miserez introduced Rodney Crim with the St. Louis Development Corporation. Mr. Crim commented that the MDFB has been very instrumental in many great projects and the City has had the benefit of working with the staff and Board on a number of those projects and the relationship has been wonderful. Mr. Crim distributed handouts of their PowerPoint presentation. Mr. Crim stated Bill DeWitt and Mayor Slay are very committed to the project, and Mr. Crim read a letter that Mayor Slay wrote in support of the project to Chair Martínez and Mr. Miserez. 4

5 Mr. Crim reported the project has some flexibility, and the financial markets have required the City to be flexible in how they approach realizing the maximum potential of the project and how the Developer plans to accomplish this through phases. Mr. Crim introduced Chase Martin with the Cordish Company. Mr. Martin gave a brief presentation on the Cordish Company s history and projects they have completed throughout the United States. Mr. Martin reported that the Ballpark Village project will include office, retail/entertainment, residential units, parking, and infrastructure, and is approximately 10.5 acres in downtown St. Louis. Mr. Martin noted that a portion of the area now includes the Bowling Hall of Fame parcel, which was not a part of the original presentation years ago. Mr. Martin commented they feel the connectivity between Busch Stadium and Ballpark Village is very important in drawing people to its downtown destination. Mr. Martin noted that downtown St. Louis during 81 days of the year, at Busch Stadium, is packed with people currently drawing approximately 3.5 million people to the site. The Developer hopes to draw people downtown in January, February and off-seasons and know they can give people a reason to stay downtown and visit St. Louis. Mr. Martin referenced that one very important part of Cordish s projects is the minority participation in their projects. Mr. Martin reported the maximum project components to be built in phases included up to 1.1 million square feet in office/retail/entertainment, up to 250 residential units, a minimum of 1,200 parking spaces, and infrastructure. The total development cost would be approximately $551 million; with costs most likely increasing during construction. Mr. Martin commented that the planned initial development phase would include 325,000 square feet of office, 250,000 square feet of retail, 1,200 parking spaces, and all the infrastructure for the project, with a projected total development cost of this phase to be approximately $302 million. Mr. Crim introduced David Richardson with Husch Blackwell Sanders. Mr. Richardson explained the key terms of the development proposal completed in 2007 versus the current development proposal. Mr. Richardson discussed the development incentives, minimum incentives, maximum incentives, pledge of available revenues, financing structure, development project area, and future development. Mr. Richardson also addressed and discussed the MODESA requirements for the project. Mr. Richardson discussed the comparison of 2007 and present proposals for New Market Tax Credits, the completion guaranty, clawback provisions, bond closing, timing of the project completion, green elements, and no incentives for a hotel. 5

6 Mr. Crim introduced Larry Marks and Bob Lewis with Development Strategies, Inc. to discuss the benefits and highlights of the project. Mr. Marks referenced the maximum benefits for the amount the City has approved in terms of the incentives for the maximum development. Mr. Marks commented that Development Strategies reviewed the market study and feels this type of unique, mixed-use development can be supported and that when the residential market relaxes, will be one of the premier residential locations in the region. This major new destination will attract other development, will capture visitors and tourist spending, and will help the overall economic benefit for the City and state as well. Mr. Marks discussed the economic feasibility, estimated jobs, annual earnings, and cost benefit analysis of taxing jurisdictions of the project. Mr. Marks introduced Bob Lewis. Mr. Lewis discussed the shift-share ( net-new ) of the project and anticipation of how the benefits will improve as a result of this new development. Mr. Crim recapped the current request for approval for the maximum size project with the understanding that it is to be accomplished in phases the total project size at approximately $551 million; total public incentives of approximately $188 million; and state portion requested at $61 million (present value) for the maximum period. Mr. Crim noted there will be continued work with DED staff on the project phases. Mr. Crim reported on the timeline of the project and was available for questions. Lt. Governor Kinder asked for clarification if the 250 housing units were rental or condos, and if the KC Live! project for the last 18 months of operations were at, above, or below projections for debt service and what was projected for those businesses to be doing in the Power & Light District. Mr. Martin responded that housing remains a part of the plan for Ballpark Village and there is a great amount of interest in housing for the project, but unfortunately the housing market does not allow them to include the housing portion in the first phase; however, housing is a definite part of Ballpark Village and whether it will be condo or apartment will depend on the market conditions. Mr. Crim reiterated that the housing portion is not in the planned first phase, but will be in subsequent phases up to the maximum project potential. Mr. Martin commented that the financial structure between KC Live! and Ballpark Village are two totally different projects. The Ballpark Village project does not have any general obligation by the City and in Kansas City it does. Mr. Martin considers the KC Live! District a huge success. Lt. Governor Kinder asked that they quantify the projections and actual numbers and submit them to the Board. 6

7 Chair Martínez asked for an update on leasing. Mr. Richardson responded that leasing continues to do extremely well and there are various levels of commitments, with progression of leasing on target at this stage of development. Director Hagler noted the projection was 88% net-new shift and asked if it is was keeping in present with the Kansas City experience or other development projects. Mr. Martin responded that he couldn t speak specifically for Kansas City, but that they have done demographic research in Kansas City by the visitors and from that research they have been able to understand that more than 26% of the visitors were coming from approximately 100 miles away. Director Hagler asked about the tenants. Mr. Martin responded that approximately 75% of the tenants were drawn from other Cordish developments and others were local tenants that were able open additional locations within the districts or were able to re-open something that was dormant for years or to create a new concept. Director Hagler asked that they provide information on the tenants that exist in the Kansas City project. Director Hagler questioned why there was all public money and no private funding for parking. Mr. Richardson responded that part of the reason is that there are restrictions on how public funds can be used and that the MODESA funds are used for true publicly owned facilities and that is why they are fully subsidizing the parking. Board counsel David Queen commented that DED, who has the primary responsibility for reviewing all the details and making a recommendation to the Board, spends a great deal of time on net-new because they have experience from past projects, although it has been the most difficult thing to assess because of changes in the market. Chair Martínez thanked the representatives for their presentation. B. City of Chillicothe/Main Street Chillicothe Kimberly Martin Downtown Tax Credit for Contribution Application Ms. Martin presented the downtown tax credit for contribution application from the City of Chillicothe on behalf of Main Street Chillicothe for the Silver Moon Plaza project. Ms. Martin reported that Chillicothe is a DREAM community and is working through the various planning phases with PGAV. One of the projects that has been identified as a priority in the DREAM process is the development of Silver Moon Plaza. Ms. Martin explained the project would remove a blighted area of downtown and be used as a venue for public events drawing additional foot traffic and interest to downtown. Ms. Martin noted that the total project is estimated at approximately $402,630 and the request is for $121,100 in contribution tax credits to leverage $242,200 in 7

8 donations in CY2009. Ms. Martin introduced Crystal Narr with Main Street Chillicothe. Ms. Narr gave a brief history about Chillicothe and gave a presentation on the Silver Moon Plaza project. Ms. Narr explained there were three buildings located on the north side of the historic downtown square that had to be razed out of necessity. The owner of the properties is a long-time business owner in Chillicothe and is supportive of the efforts to improve the downtown area. Ms. Narr explained the City would be in integral partner in making the project happen and the monetary support would come from a multitude of various places including public and private funding, in-kind services and labor, and community organizations. Ms. Narr was available for questions. Secretary Neff made a motion to approve $121,100 in contribution tax credits to leverage $242,200 in donations in CY2009 in accordance with the application. Director Hagler seconded the motion. Chair Martínez commented this project was a great testament to the DREAM program. The following vote was recorded: Aye: Nay: Absent: Neff, Eckelkamp, Proctor, Mehner, Kinder, Hagler and Martínez None Starr and Templeton Chair Martínez declared the motion passed. Lt. Governor Kinder questioned if it was the disposition of the current administration to continue the DREAM program. Chair Martínez responded that the Governor s budget recommended $500,000 in funding from DED to the DREAM Initiative, but it was taken out of the budget in the House and Senate; although DED is willing to provide staff support for a fourth round of DREAM programming. Mr. Miserez commented he has had preliminary discussions with Sallie Hemenway regarding the fourth round of programming and continues to watch the Department s budget, although he feels he is ready to propose that the Board move forward with a fourth round. Mr. Miserez stated that the Department s support always has been the most valuable and the most important in the amount of staff they can assist us with. Member Eckelkamp commented he was glad that the DREAM program would be continuing. 8

9 Chair Martínez noted there would be discussion at the April Board meeting regarding the DREAM Initiative. C. City of Independence Public Entity Direct Loan App Kathleen Barney Final Authorizing Resolution Kathleen Barney presented an application from the City of Independence for a direct loan of up to $1.5 million. The loan would be from the Board s balance sheet from the Industrial Development and Reserve Fund. Ms. Barney explained that the City was facing high interest rates when looking into financing for telephone switching equipment at a cost of $166,000; therefore they sought options with the Board. There are several other small projects that the City may need to finance that led to the request for total borrowing ability of $1.5 million. The City can only fund loans under the $1.5 million loan authority through June 30, The proposed term for the telephone switching equipment is 36 months and the other loans may have up to a five-year term. Ms. Barney reported the interest rate proposed for the direct loan to the City is 3% and staff recommended adoption of the Final Authorizing Resolution. Lt. Governor Kinder made a motion to approve the following Final Authorizing Resolution: RESOLUTION AUTHORIZING THE MISSOURI DEVELOPMENT FINANCE BOARD TO MAKE A LOAN TO THE CITY OF INDEPENDENCE, MISSOURI IN AN AMOUNT NOT TO EXCEED $1,500,000 FOR THE PURPOSE OF PROVIDING FUNDS TO PAY VARIOUS CAPITAL PROJECTS. Member Mehner seconded the motion. The following vote was recorded: Aye: Nay: Absent: Neff, Eckelkamp, Proctor, Mehner, Kinder, Hagler and Martínez None Starr and Templeton Chair Martínez declared the motion passed. D. Request for Micro Loan Program Funding Robert Miserez Chair Martínez referred to the exhibit that was distributed in advance of the meeting, which contained a letter from the DED requesting the micro loan program, and recommendation from Board staff to distribute a Request for Services to solicit organizations to administer the loan program. 9

10 Chair Martínez reported the DED recommends the program be structured as a revolving loan and with the interest and fees that are paid, if any, be added to the principal for future loans. Chair Martínez stated that DED has had a tremendous response to the Governor s Executive Order There are a large number of companies all over the state and the demand is too excessive to satisfy all with the requested amount of funds; however, there is hope to help the citizens and businesses of the state to advance their opportunities by providing funds through the micro loan program. Mr. Miserez reviewed the draft form of the Request for Proposal ( RFP ) and commented that the Board does not have the staff to directly administer this type of program and therefore would necessitate the need for an outside provider to service the loans. Director Hagler asked if there would be one or multiple outside service providers to administer the program. Mr. Miserez responded that he anticipated it would most likely be multiple providers or it could be one statewide provider, depending on what types of responses are received. It is more than likely it will be regional, multi-county, regional planning commissions or certified development corporations that are already authorized by either state or federal governments to operate these type of programs. Lt. Governor Kinder commented it was his understanding that the Board had previously administered loan programs not too dissimilar from the proposed program or loan guarantees and the Board abandoned those programs. Mr. Miserez reported the Board was in the loan guarantee business throughout the 80s and into the early 90s. The Board had a loan guarantee program that was modeled after the SBA 7(a) loan guarantee that would guarantee up to 85% of loans. Mr. Miserez reported Board policy imposed throughout that time was not to exceed $400,000 and most of the loans were in the range of $100,000 to $400,000 and were targeted to manufacturers, although there were a few retail and commercial loans done as well. Mr. Miserez also commented that the Board had a direct loan program where the Board funded three direct loans having an average size of $350,000 each that used those moneys appropriated for direct loans and did not continue the program since no new appropriations were provided to fund these loans. Chair Martínez noted DED has a micro enterprise loan program that fortunately received $1 million of general revenue a few years ago and it is a revolving loan program. The program is used only for the urban areas of Kansas City and St. Louis. Lt. Governor Kinder referenced Chair Martínez s letter indicating that the maximum loan amount should not exceed $25,000 and that his thought was that these would be micro loans. Chair Martínez commented that hopefully the loans 10

11 will provide entrepreneurial training and show evidence of the ability to help them with their needs. Lt. Governor Kinder commented that his concern was about collateral for the loan. Mr. Queen referenced an item in Chair Martínez s letter that loan collateral may be the decision of the loan servicing entity but should recognize a higher risk potential than any commercial lender. Lt. Governor Kinder noted that the fees generated by the Board would provide the source of the funds to be loaned. The largest fee income within the last 100 days was the Truman Sports Complex/Kansas City Chiefs/St. Joseph proposition. The Lt. Governor has discussed the status of this project with the Senate Pro and that the project was in some jeopardy at the time. Lt. Governor Kinder questioned the availability of funds to start the micro loan program. Lt. Governor Kinder made a motion to refer the micro loan program process to the MDFB Finance Committee for their review and report. Member Mehner seconded the motion. Secretary Neff spoke in favor of the DREAM Initiative and the $2 million loan program, but mentioned news articles referencing current legislative bills that would restrict certain tax credits and the fact that the fee income for the micro loan program is generated by tax credit fees. Member Eckelkamp commented that he thought there would be a huge loan loss factor with the program and that the Board should look at the program as a grant or a loan loss. Director Hagler noted that the administration of the program will make a difference. Member Eckelkamp noted he was in favor of the program; however he was concerned with how the loans were to be repaid. Mr. Miserez responded that staff was proposing that the Board grant the money to a local service provider to then be used as a revolving loan program. Chair Martínez commented that with the amount of loan applications in process and once the qualified were identified, a lottery-type system would most likely be used. Chair Martínez proposed to amend the motion on the floor and made a motion to go forward with the recommendation set forth as presented with regard to issuing a RFP for loan servicing companies on administering an up to $2 million revolving loan fund, and also direct the MDFB Finance Committee to review the Board finances and the Board s ability to handle the $2 million request, as well as the possible request for loan servicing support for a five-year period, and submit a report, as well as the results of the RFPs at the next Board meeting. Director Hagler seconded the motion. The following roll call vote was recorded: 11

12 Aye: Nay: Absent: Neff, Eckelkamp, Proctor, Mehner, Kinder, Hagler and Martínez None Starr and Templeton Chair Martínez declared the motion passed. E. Election of Officer MDFB Treasurer Robert Miserez Secretary Neff nominated and made a motion that Board member John Mehner be appointed the new MDFB Treasurer. Lt. Governor Kinder seconded the motion. The following vote was recorded: Aye: Nay: Absent: Neff, Eckelkamp, Proctor, Mehner, Kinder, Hagler and Martínez None Starr and Templeton Chair Martínez declared the motion passed. VIII. Executive Director s Report Robert V. Miserez Mr. Miserez briefed the Board on a project in Mexico, Mo. that includes the University of Columbia, and involves an innovation center/high-tech facility to recruit companies. Mr. Miserez introduced Russell Runge with the City of Mexico. Mr. Runge gave a brief history about the plant science research center. Mr. Runge commented that the property will be donated and that they are working on grants to bring infrastructure to the site. Mr. Runge introduced Mike Mills with Spectrum Consulting Group. Mr. Mills briefly discussed the financial aspects of the project and was available for questions. Director Hagler commented that it is not often when you can find a company of the caliber of the soy lab that is doing research with UC Davis and wants to relocate to Missouri where it can be a hub for agricultural research. Chair Martínez thanked the gentlemen for their briefing. VII. New Business (cont d) F. Legislation Relating to the American Recovery Act and Robert V. Miserez Reinvestment Act (Stimulus Bill) 12

13 This item was tabled for discussion at a later date. G. Report on MOSERS Legislation Krystal Davis This item was tabled for discussion at a later date. H. Other Legislation Robert V. Miserez This item was tabled for discussion at a later date. IX. Adjournment There being no further business before the Board, it was consensus to adjourn the meeting. The meeting was adjourned. [Secretary Neff s Signature] 13