CITY OF MAYFIELD HEIGHTS
COMMITTEE OF THE WHOLE MEETING MINUTES
February 7, 2012
The Committee of the Whole meeting was called to order at 6:08 P.M. by Council President Anthony DiCicco.
ROLL CALL: PRESENT: Mr. Anthony DiCicco, Mrs.
Mr. Nino Monaco, Mr. Paul Sciria, Mrs. Diane Snider (arrived 6:31 P.M.)
ABSENT: Mrs. Gayle Teresi.
Also present were Mayor Gregory Costabile, Clerk of Council Robert Tribby, Assistant to the Law Director Bryan Carr, and Acting Deputy Clerk of Council Renee Augustine.
The purpose of the meeting was to discuss Resolution 2011-69 the proposed Business Attraction and Anti-Poaching Agreement with Cuyahoga County. Mr. DiCicco welcomed Mr. Ed Jerse to the meeting.
Mr. Jerse introduced himself as the Director of Regional Collaboration with Cuyahoga County and provided a brief work history. He said that County Executive Ed FitzGerald proposed the anti-poaching agreement to unify the fifty-nine communities in Cuyahoga County so that our county is looked at as more of a region with the intent of attracting and expanding business in the county without taking the business from neighboring communities if those businesses are satisfied with their current location.
When he was with the Department of Development, there was a tool kit including grants and low interest loans that could be used for economic development issues. The county did not have tools for this purpose. Mr. FitzGerald proposes this agreement at the mandate of the people. Communities are asked to do four things: 1) designate and identify an economic development point person and submit the information to the county to be included in a central database, 2) agree not to poach businesses from signatory communities, 3) in the event that a company expresses an interest in moving, ask said business for approval to notify the first community. If approved, provide said notice to first community. If denied due to request for confidentiality, then discussions can move forward without notice to first community. Before final incentives are given and the company is ready to move to the new community, notice must be given to the current community, 4) if the first community asks, revenue sharing must be discussed. There is no mandate in place for revenue sharing, only to discuss if one community desires to discuss.
There is an opportunity with the new form of county government to improve Cuyahoga County. The new form of government allows matters to move more expediently, the economic development fund of $100 million can aid businesses and communities, the projects downtown such as the casino and medical mart will revitalize the city. With these changes, a message is being sent to businesses that our county is moving forward. The changes enable responsiveness to companies that are interested in moving to our county. The anti-poaching agreement was mentioned in a recent article of USA Today which indicates recognition at the national level of the changes being made in our county. Twenty (20) communities have signed the anti-poaching agreement which represents fifty-seven percent (57%) of the population of Cuyahoga County.
Mr. DiCicco opened the floor to questions from the Members of Council.
He asked Mrs. Finney if she had a question. Mrs. Finney asked why the $100 million economic development fund is not mentioned in the anti-poaching agreement, how the funds will be divided among the cities, and where the funds are being provided. Mr. Jerse responded by saying that the fund is being leveraged by the General Revenue Fund. They did a new two year budget and reserved $8 million per year to service the bonds that will be issued to generate the $100 million fund. The fund will not be divided among communities. There will be various pots dedicated such as some for expansion and some to attract businesses. Two informal commitments pending County Council approval are the Philips expansion in Highland Heights and the AmTrust move from out of state. Gap funding will take place with these projects. The fund is not referenced in the agreement because it is separate from the agreement. Instead, a community’s inclusion in the agreement will be a factor in the scoring criteria when an application is made for fund dollars.
Mr. DiCicco asked Mr. Sciria if he had a question. Mr. Sciria asked if any communities have said no to the agreement. Mr. Jerse said some councils have said no, but the Mayors are interested in further discussion. To his recollection, there have been no definitive negative responses. Mr. Sciria asked why Westlake and Highland Heights are waffling. Mr. Jerse believes some of the outer ring suburbs feel comfortable with the status quo. Westlake had concerns about competing with neighboring Avon that sits in Lorain County. The fact is that the agreement would have no impact on their dealings with Avon. Mr. Sciria believes the have nots want to join with the haves. Mr. Jerse said there is no substance to that belief because the outer ring suburbs have a natural advantage in economic development and would only receive an added benefit by inclusion in the agreement.
Mr. DiCicco asked Mr. Mercurio if he had a question. Mr. Mercurio asked who will police the agreement. Mr. Jerse said a penalty was not included in the agreement because penalties would lead to litigation which communities do not want. No cause of action is created by this agreement. So the enforcement mechanism is your word; it is a gentleman’s agreement. Mr. Mercurio asked if there is any thought that revenue sharing discussions could potentially stall a business’ move to another location. Mr. Jerse said the agreement does not require revenue sharing. Mr. Mercurio said if two communities cannot agree with revenue sharing it may become a hindrance. Mr. Jerse said if it becomes a problem you could avoid the revenue sharing. Agreement only calls for a discussion of revenue sharing if one community has a desire to discuss. No commitments are required or expected.
Mayor Costabile said that he properly vetted the agreement. He spoke directly with Mr. Jerse, County Executive FitzGerald, and was involved in economic development meetings with the Cuyahoga County Mayors and City Managers where this agreement was further amended to its present form. He addressed Mrs. Finney’s questions about the possibility of barring cities from having access to the funds. In his dealings with seeking dollars from other entities for city projects, there are usually certain requirements that determine how funds are dispersed. If the city does not sign the agreement, it does not mean it is barred, it is just another aspect considered when determining how best to use the funds. A community may seem disinterested in promoting the county and what is best for the region if it does not sign the agreement. This agreement articulates that the fifty-nine communities in the county are united as a region. He believes the city ought to be a part of the region’s economic development. We as a city must continue to think proactively to ensure a bright future for the City of Mayfield Heights.
Mr. DiCicco asked Mr. Monaco if he had a question. Mr. Monaco believes it is great to revitalize the city of Cleveland because the suburbs need it to survive. He is concerned that major cities such as Beachwood and Westlake have not signed the agreement yet. In a statement on November 15, 2011, Mr. FitzGerald said we must stop competing against each other and compete against other states. He asked what the county has done so far to attract companies. Mr. Jerse said the $100 million economic development fund was established. With use of that fund, AmTrust is
bringing 500 jobs from out of state to the county and Philips is expanding job opportunities in Highland Heights in the near future. Mr. Jerse said it is important to encourage entrepreneurship to build and grow companies in our county.
Mr. Monaco said it is ironic that we are trying to prevent county communities from poaching from each other, but we are promoting the poaching of businesses from other states. Mr. Jerse said the focus is to promote Cuyahoga County. There is a difference between competing with the State of Virginia and competing with the City of Lyndhurst.
Mr. Monaco said the $100 million fund is actually a loan. Mr. Jerse said it is a revolving fund. Mr. Monaco understands that there are five loans already in the approval process and one pending. Mr. Jerse said he is aware of the loans for AmTrust and Philips and has not heard of others.
Mr. Monaco asked Mr. Jerse how he would answer to a resident who says if it ain’t broke, don’t fix it. Mr. Jerse said he would respond by saying that a healthy county is based on making itself attractive to businesses. There is always a risk of losing businesses in any community. It is necessary to constantly adapt. Nothing in the agreement can hurt the community.
Mr. Monaco said it seems like the county is dangling the $100 million fund because if you don’t participate then you do not get as many points as participating communities. He asked the law director if it is legal to do this. Assistant to the Law Director Mr. Bryan Carr said that the $100 million fund is not tied to the anti-poaching agreement. In their review of the agreement, it seems like a good idea. Mr. Jerse said communities are not barred from the fund if they do not participate in the agreement. Many grants have scoring criteria. Theoretically, though, if a community does not sign on and then wants to tap into the fund, it may be offensive to signatory communities.
Mr. DiCicco asked Mrs. Snider if she had a question. Mrs. Snider said she did not.
Mr. DiCicco asked if there are any guidelines for the revenue sharing. Mr. Jerse said the concept was included as some communities wanted it and others did not. It is left up to the communities to decide if they are interested in revenue sharing.
Mr. Sciria asked if a company from a non-signatory community comes to discuss relocating to our community would there be any obligation to disclose it. Mr. Jerse said there is no obligation if your community is a signatory and the first community is not.
Mayor Costabile said there is the request in the agreement that as a courtesy the first city be notified prior to any press release. Negotiations should be in good faith. It is necessary to maintain a good reputation with other communities. Mr. Jerse said this agreement causes no changes with counties outside of Cuyahoga County. Additionally, if the business makes the demand, confidentiality can be maintained as long as the request to notify the first community is raised at the onset of discussions.
Mrs. Finney referenced sections 4 B and C of the agreement and said it mirrors what Mayor Costabile and Mr. Jerse stated, but Section C says you will not publicly propose or offer incentives to the business in support of relocation until either the business verifies that it has notified the home community or we have given that notice. In retrospect, if that business says they would rather keep it quiet, that means you will not receive any incentives according to this agreement. Mr. Jerse replied that it actually means that you will not publicly offer it. It is one of the items negotiated with County Council Member Scrhon because he wanted to know if you can still negotiate the deal and we said yes. He said the company will want to know the specifics of the deal. Therefore, we said you can negotiate the deal with the company and when the package is ready to be presented to Council, you must first give notice to the home Mayor. Mayor Costabile said, though there is plenty of literature stating otherwise, subpart C does seem to give the impression that you cannot begin to discuss the incentives until the first city is notified. Mr. Jerse said the key word is publicly and that is the difference. A guidance document with FAQ’s is available and there is clarification on that point. Mayor Costabile referenced to council the memo he sent on November 28, 2011, that contained detailed explanations of the agreement. In said document, as Mr. Jerse confirmed, it specifically explains that a community may indeed pursue economic incentives if the business asks for confidentiality of their interest to the first community.
Mrs. Finney believes they are being asked to sign the agreement without the explanation attached to the agreement. Mr. Jerse said the language in the document makes it clear that the first community must be notified before a public announcement is made.
Mrs. Finney asked if the $100 million is a loan or a grant. She was not aware prior to Mr. Monaco’s question that this was a loan. Mr. Jerse said it is a low interest loan paid back to the revolving loan fund to sustain it even further. There are various aspects to the fund and one is that banks would add another $100 million in loans a portion of which would be used to guarantee those loans. Mrs. Finney asked what percentage is the loan. Mr. Jerse said it is a favorable rate. Mrs. Finney asked how can we be guaranteed of these loans and that the county actually has the money if it is not in writing in this agreement. Mr. Jerse stated that the anti-poaching agreement is a stand-alone document that has no tie to the $100 million economic development fund. It does not create the fund, it does not raise money for the fund, and it does not set the parameters for the fund. The anti-poaching agreement simply states that we will give you a few points toward the scoring if you sign the agreement.
Mrs. Finney said our corporate park is strong, but understands there is always the potential that businesses could leave. She believes this agreement is no benefit to our city because anyone can obtain a business loan at about a three percent (3%) interest rate in this economy. She said this loan is not in writing. Mr. Jerse said the loan is in writing in a document separate from the anti-poaching agreement. That loan document, passed by the County Council, is available on line. Mr. Jerse, when in the Department of Development, was approached by many long standing businesses who were asking for help because their banks would not extend loans. He disagreed with Mrs. Finney’s statement that business loans are readily available. The voters said that the status quo in Cuyahoga County with regard to economic development is unacceptable and this agreement works to change that. Mrs. Finney said she just does not see the benefit for Mayfield Heights. The $100 million fund is no benefit. It is a loan. Mr. Jerse explained that it is a gap loan for those businesses who cannot obtain a full loan from their bank. He suggested that she contact the Mayors of Highland Heights and Cleveland to ask if they believe the fund is beneficial after these new jobs come to their communities.
Mr. DiCicco provided clarification stating that there are two separate issues. The first is the $100 million economic development fund. The second is the anti-poaching agreement. Again, the two issues are separate from each other. Mr. FitzGerald made this proposal to aid the county and to offer parameters for all communities to work within. The fund is available to help communities make an offer to interested businesses. It is something that was not available before. The $100 million fund is not what is before Council at this time. We are considering whether or not to sign the anti-poaching agreement.
Mr. Jerse said it is a benefit to the entire county to raise the level of responsiveness to businesses and to encourage economic development. There may be companies who want to come to the corporate park in Mayfield Heights that need assistance to close the deal. He reiterated that fifty-seven percent (57%) of the county population is participating in the agreement.
Mr. Mercurio asked if the county has a formal plan to promote signatory communities. Mr. Jerse said there is no plan at this time. Promotion is embedded in the scoring.
Mrs. Snider asked how many cities have signed the agreement. Mr. Jerse said twenty communities have signed.
Mrs. Snider said there was a news article in January that indicated that Mayfield Heights had signed the agreement. Mr. Jerse explained that the reporter transposed the names of communities that had signed erroneously reporting that one was Mayfield Heights. They immediately called the reporter to advise of the error.
Mr. DiCicco said he was approached by a resident who was concerned that we would lose control of our corporate park. He does not believe that would be the case, but asked Mr. Jerse for his comments on the concern. Mr. Jerse is not sure how signing the agreement would have that effect. The agreement is deliberately modest to address concerns of all county communities. There is no penalty clause included, there are not many restrictions included, and there is no disadvantage to non-signatory communities and other counties. The agreement simply confirms courtesies which most communities are currently willing to extend. It will be used as a stepping off point for future economic development programs.
Mr. DiCicco asked if there were any further comments or questions. There were none. He noted that this matter will appear on the Monday, February 13, 2012, Council Agenda.
There being no further business to come before Council, Mr. DiCicco adjourned the meeting at 7:07 P.M.
Approved: Respectfully submitted,
Anthony DiCicco Renee C. Augustine
Council President Acting, Deputy Clerk of Council