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HomeMy WebLinkAbout05-26-26 EDA MinutesEconomic Development Authority Meeting Minutes May 26, 2026 Chairwoman, Ms. Cox called the meeting to order at 10:02 a.m. and asked for a roll call. Marlin Reeves- Absent Collette Hash- Absent Sabrina Cox- Aye Jeffrey Worrell- Aye Peter Huber- Aye Christopher Conner- Aye Lisa Webb- Absent Adoption of May 5, 2026 Meeting minutes Mr. Huber commended Ms. Hale for the thoroughness and detail included in the meeting records, noting that technically only motions are required in formal minutes but expressing appreciation for the additional effort and detail provided. The motion was made by Mr. Huber and seconded by Mr. Conner to adopt the minutes. The motion passed unanimously. Discussions Business Incentives- Shannon Ainsley, Economic Developer Ms. Webb joined the meeting at 10:04 a.m. Ms. Ainsley first directed the board’s attention to the current incentives already contained in the town code. A brief overview sheet summarized the proposed incentive structure, while the stapled packet contained more detailed descriptions. Ms. Ansley explained that most existing incentives could remain in place with only minor revisions, particularly correcting outdated wording referencing both commercial and residential uses. However, she emphasized that staff believed the meals tax incentive should be eliminated. Discussion focused heavily on the drawbacks of the meals tax incentive. Ms. Ansley explained that the incentive currently benefits four businesses and results in a substantial loss of tax revenue over multiple years. She also noted a public perception concern: customers pay meals taxes believing the money supports town services, but the town then refunds portions of those taxes to participating businesses. Staff felt that the arrangement created an unfavorable impression among taxpayers. Mr. Huber discussed whether the EDA should formally recommend ending the meals tax incentive for future applicants. He argued that incentives should generally follow several core principles, including being available equally to all businesses, and stated that the meals tax incentive failed that test because it only applied to specific businesses or locations. The board discussed the process for formally recommending changes to the Town Council, and staff confirmed that any modifications to incentives would ultimately require council approval. A suggestion was made that if the meals tax incentive were removed, the EDA should simultaneously explore alternative incentive programs to replace it so businesses would not simply lose support opportunities without replacement options. The motion was made by Mr. Huber and seconded by Ms. Cox that no future businesses be eligible for the meals tax incentive while allowing current participants to continue under existing arrangements. The motion also directed the EDA to pursue recommendations for alternative incentives to present to the Town Council. The motion passed unanimously. The board then turned to the revised proposed incentive programs discussed at the prior meeting. Ms. Ainsley explained that highlighted sections in yellow represented either new language or provisions requiring further board discussion. One of the first additions established that incentives would not be granted “by right.” The proposed language stated that incentives could be approved, modified, conditioned, reduced, or denied based on project eligibility, available funding, compliance with program requirements, consistency with redevelopment goals, and overall public benefit. The purpose of this language was to protect the town’s flexibility and discretion in administering the programs. The discussion then shifted to the proposed Downtown Business Activation Program and whether incentives should remain geographically limited to the historic district. Mr. Huber argued that tying incentives to particular districts unnecessarily complicates economic development efforts and creates confusion for businesses. He stated that zoning ordinances already regulate where businesses can locate, and if a business meets zoning requirements anywhere in town, it should generally be eligible for incentives. He further argued that simpler programs create clearer expectations for businesses and reduce the need to explain why certain areas qualify while others do not. While he acknowledged that targeted incentives could still make sense in enterprise zones or specialized redevelopment districts, he believed the broadest possible eligibility would be preferable unless the Town Council intentionally wanted to focus resources on downtown revitalization. Mr. Worrell largely agreed with the concern about limiting incentives geographically. However, Ms. Ainsley noted that the historic district designation exists specifically to support downtown revitalization and Main Street initiatives, and that some incentives connected to those programs may still appropriately target downtown businesses. The group generally agreed that broader eligibility may make sense in many cases while recognizing that some specialized programs could remain district-specific. Mr. Ainsley noted the feedback and indicated revisions would be considered. The conversation then moved to administration and funding limits for the proposed incentives. Ms. Ainsley explained that highlighted language in the administration section proposed establishing spending caps on incentive programs. She stated that the EDA would ultimately need to determine both which incentives to prioritize and how much of its budget should be allocated toward them, since funding every proposed program would likely not be feasible. Questions arose about how certain incentives would actually be funded. Mr. Conner used the example of waiving a $500 business license fee and asked whether the town itself would absorb that loss or whether the EDA would reimburse the amount from its own budget. Ms. Ainsley acknowledged that the issue still needed clarification and said some incentives might fit better under the EDA budget while others could potentially be funded through the Community Development budget. She indicated that determining the correct funding sources would be part of later discussions. The board then reviewed the proposed administrative language in more detail. The draft specified that participation in incentives would be subject to town approval and annual funding availability. Ms. Ainsley explained that the intent was to ensure the programs remained limited and targeted rather than automatically available to everyone, which could quickly exhaust available funds. The proposed Downtown Business Activation Program included a preliminary annual funding estimate of approximately $3,200, enough to support around four businesses per year through items such as waived fees and chamber memberships. The draft also proposed that grants would be awarded on a first-come, first-served basis until funds were depleted and that each business could receive the benefit only once. The board then briefly reviewed the proposed Pulaski Small Business Milestone Grant, which was designed to encourage long-term business retention and longevity. Ms. Ainsley explained that the broader “not by right” language discussed earlier would also apply to this incentive. She noted that the board had previously adjusted the proposed grant amount to $800. As the discussion continued, a board member requested a more detailed walkthrough of the program provisions. The board resumed discussion of the Pulaski Small Business Milestone Grant, focusing specifically on the eligibility timeline for businesses seeking assistance. Mr. Conner revisited an earlier conversation about reducing the required operating history from three years to a shorter period. Ms. Ainsley reminded the board that the current draft proposed lowering the requirement and asked whether the group wanted to reduce the threshold to one year. Mr. Conner reflected on earlier discussions suggesting that many small businesses fail within their first year of operation if they are going to fail at all. Ms. Ainsley noted that the Downtown Business Activation Program already provides support after six months of operation, meaning a business could potentially qualify for another incentive only six months later if the Milestone Grant threshold were set at one year. Concerns were raised by Ms. Cox that the incentives would be clustered too closely together and might not provide meaningful staggered support. As a compromise, members discussed setting the eligibility threshold at 18 months instead of one year or three years. Several participants felt that 18 months could strike a balance by helping businesses overcome their most difficult startup period while still encouraging some operational stability before additional funding is awarded. While some uncertainty remained about the ideal timeline, the board generally appeared receptive to the 18-month approach. The board then moved to the proposed Pulaski Revitalization Incentive Program. Ms. Ainsley explained that the program was largely similar to an incentive already existing in the town code and reiterated her belief that it was not a particularly good fit for administration by the Economic Development Authority. She stated that the incentive would likely function more effectively if managed directly under the town budget rather than through the EDA because it primarily involves tax-related matters. The only significant revision currently needed was correcting language in the original ordinance that referenced both commercial and residential properties. Since the structure of the program was already established, Ms. Ainsley suggested the board did not need to spend substantial time revisiting it. Members generally agreed with that assessment. The board then turned to the Small Business Stabilization and Growth Program, which Ms. Ainsley explained had undergone the most substantial revisions since the previous meeting. Members had previously expressed interest in incorporating a loan component, and the draft had therefore been rewritten to establish both Tier 1 and Tier 2 assistance categories. Ms. Ainsley explained that the program was intended to help businesses recover from operational disruptions such as floods, fires, forced relocations, or other emergencies that could interrupt operations. The Tier 1 component would provide a stabilization grant of up to $2,000 based on demonstrated need. The Tier 2 component would add an expansion and recovery loan option of up to $10,000 at a proposed 3% interest rate. These funds would be available only to businesses physically located within the Town of Pulaski. Mr. Conner clarified that the program could be used not only for relocation expenses but also for repairing damage caused by events such as flooding. Ms. Ainsley confirmed that the goal was to minimize business downtime regardless of the exact nature of the disruption. Ms. Ainsley emphasized that the loan component remained only a conceptual framework at this stage and that substantial legal and administrative work would still be necessary. She noted that attorneys would need to assist in structuring underwriting standards, repayment terms, and legal protections because administering loans is considerably more complex than administering grants. The board then reviewed the eligibility requirements in detail. Businesses would need to be for-profit entities physically located within the Town of Pulaski and would need to have operated for at least two years before applying. Ms. Ainsley explained that this longer operational requirement differed from the other incentives because the stabilization program was intended for businesses that had already demonstrated some degree of longevity and stability. Additional requirements included remaining in good standing with the Town of Pulaski and other local jurisdictions by being current on taxes, utilities, permits, fees, and regulatory obligations. Applicants would also need to demonstrate either a qualifying operational disruption or documented growth and expansion activity. Ms. Ainsley reviewed the compliance requirements as well. Businesses receiving assistance would be required to reopen, expand, or complete approved improvements within timelines established by the town. Grant recipients could potentially be required to repay funds if operations ceased prematurely, and loan recipients would be required to comply with repayment and reporting requirements. Ms. Ainsley also cautioned the board that lending to small businesses inherently carries substantial risk and that defaults should be expected as a possibility. The review process would prioritize businesses demonstrating long-term viability, job retention or creation, occupancy of vacant commercial space, and increased economic activity within town limits. She reiterated that highlighted language throughout the draft was intended to create funding caps and prevent the program from becoming too broad or financially unsustainable. Board members then engaged in a detailed discussion about the structure and risks associated with the proposed loan component. Mr. Huber suggested clarifying the eligibility language regarding the two-year operating history requirement. Specifically, he proposed specifying whether the requirement applied to the business itself regardless of location or only to operation at its current site. Examples were discussed involving businesses that had relocated within town limits but maintained continuous operations over several years. Another example involved a business currently located outside the town that might relocate into Pulaski. Ms. Ainsley clarified that such a business would not qualify under the current draft because eligibility required the business to already be located within the town. The board acknowledged that the language needed refinement to avoid ambiguity regarding relocations and continuity of operation. Discussion then shifted to collateral and repayment expectations for the loan program. Mr. Huber suggested that the policy should eventually specify what forms of security or collateral the town would require. He observed that many applicants would likely already have mortgages or other debt obligations, meaning the town’s loans would probably occupy secondary positions behind traditional lenders. He also pointed out that some businesses lease their spaces and therefore may not possess real estate collateral at all. Mr. Huber argued that the EDA should internally view the loans more like grants because the authority is not functioning as a traditional bank. He stated that if a deal were fully bankable under normal lending standards, a commercial bank would likely already provide financing. Since the EDA would be taking on riskier situations than conventional lenders, he suggested the board should expect some defaults and consider repayment “gravy” rather than relying on full recovery of funds. He further warned that aggressively pursuing collateral or liens against struggling businesses could undermine the purpose of the program and create the appearance that the town was harming rather than helping businesses. Ms. Ainsley acknowledged that these were important philosophical and operational questions the EDA would need to resolve internally before finalizing the program structure. The discussion also explored whether the program should remain structured as a loan program at all. Ms. Ainsley asked whether it might make more sense to convert the assistance into a limited grant program supporting only one business annually, though she acknowledged that such a change would remove much of the stabilization and revolving-fund concept originally envisioned. Board members generally expressed support for retaining the loan structure while recognizing the need for realistic expectations regarding losses. Mr. Huber emphasized that widespread disasters such as floods or tornadoes could simultaneously affect numerous businesses, quickly overwhelming a small loan pool if many businesses required assistance at the same time. The board continued discussing the risks associated with the proposed stabilization and growth program, particularly how it would function during large-scale disasters. Mr. Huber pointed out that if a flood, tornado, or similar widespread event affected numerous businesses simultaneously, the EDA’s limited funding could quickly be exhausted because many businesses would be seeking assistance at once. Ms. Ainsley noted that in large-scale disaster situations, outside disaster relief funding is often made available to support affected businesses broadly. Based on that, members discussed limiting the stabilization program so it would not apply to major natural disasters impacting many businesses at the same time. Instead, the program would focus more on isolated disruptions affecting individual businesses or smaller groups of businesses. The group generally agreed that language should be added to clarify this limitation. Ms. Cox also questioned how frequently the stabilization component would realistically be used. Members discussed whether forced business relocations occur often enough to justify the program. Ms. Ainsley responded that there are currently at least two businesses operating in buildings that are for sale, meaning new ownership could potentially displace tenants unexpectedly. She emphasized that the program would also apply to business expansion situations, which would likely make it more frequently utilized than emergency relocations alone. The board returned to the question of whether the loan component should require collateral. Mr. Worrell raised concerns that if a business later sought additional financing elsewhere, any EDA loan would still appear as debt on its financial statements, potentially affecting its ability to secure future funding even if the EDA itself did not aggressively enforce repayment. Ms. Cox questioned whether there was any real benefit to structuring the program as a secured loan if the EDA was not prepared to actively pursue collateral in the event of default. Referencing earlier comments, she noted that enforcing collateral rights would involve additional legal costs and administrative burdens. She suggested that unsecured loans might make more sense if the EDA’s primary goal was supporting businesses rather than operating like a traditional lender. Ms. Cox acknowledged that unsecured loans could increase the likelihood of defaults because borrowers would have less “skin in the game,” but also recognized that pursuing repayment actions could become expensive and counterproductive. Ms. Ainsley then suggested another possibility: separating the stabilization and growth components into entirely different programs with different funding levels and expectations. Building on that idea, Ms. Ainsley proposed creating one program focused exclusively on stabilization assistance and another focused on business growth and expansion. She suggested that the stabilization assistance could potentially remain smaller, perhaps around $5,000 or less, while larger loan amounts could be reserved for businesses demonstrating successful growth and expansion. Board members discussed how the motivation behind each application would differ. A business seeking stabilization assistance after displacement or disruption would represent a higher-risk situation than a business seeking funds to expand due to strong performance and increasing demand. Several members agreed that growing businesses likely present better repayment prospects and therefore justify larger loan opportunities. The board also explored whether applicants should be allowed to receive both types of assistance. Mr. Conner described a scenario in which a business might be forced to relocate because a landlord sold the building and then decided to expand during the relocation process. However, members generally leaned toward requiring businesses to choose one category at a time to avoid overlap and reduce risk exposure. Discussion also clarified that businesses would need to repay expansion loans before becoming eligible for additional assistance. Members emphasized that maintaining repayment expectations was important even if the EDA accepted that some defaults might occur. As the conversation continued, the board increasingly moved toward a framework where stabilization assistance would operate more like a grant program while growth assistance would remain structured as a repayable loan program. Ms. Cox felt businesses facing emergencies or forced relocations would likely appreciate even modest grant assistance, while businesses pursuing expansion would already be operating in a mindset more compatible with taking on debt financing. The board gradually reached consensus on restructuring the program into two clearly separated components. Under the revised concept, Tier 1 would become a standalone stabilization grant program providing approximately $2,000 in direct grant assistance to businesses facing qualifying disruptions such as displacement or isolated emergencies. Tier 2 would become a separate low-interest expansion loan program aimed specifically at businesses pursuing growth opportunities. Members agreed that separating the programs would make the structure cleaner, easier to understand, and less administratively complicated. Ms. Cox noted that the distinction also addressed many earlier concerns about mixing grants and loans within a single application framework. The group also revisited the earlier decision to exclude widespread natural disasters from eligibility for stabilization grants, noting that affected businesses in those situations would likely pursue broader disaster relief resources instead. Members emphasized that the stabilization grant would help businesses facing sudden financial strain, while businesses seeking expansion loans would likely already be prepared to work with debt financing and repayment obligations. Ms. Ainsley stated that she would rewrite the program language to reflect the board’s direction, separating the stabilization grant and expansion loan into distinct programs and incorporating the various comments and clarifications discussed during the meeting. After completing the discussions of the various incentive structures, the board shifted toward prioritizing which incentives should move forward. Ms. Ainsley reminded members that the EDA likely did not need to implement every proposed incentive and would eventually need to allocate portions of its budget toward the selected programs. The group first agreed that the Pulaski Revitalization Incentive Program should likely rank last among the priorities because members believed it fit more appropriately under the town’s direct administration rather than under the EDA. Attention then turned to identifying the strongest and most impactful incentive among the remaining options. Several members identified the proposed growth and expansion loan program as their top priority. Mr. Huber stressed that clear criteria would still need to be established defining what constitutes “growth,” such as adding employees, increasing square footage, or demonstrating revenue expansion. Participants emphasized that the ultimate goal of the incentive strategy was to encourage businesses to grow within the Town of Pulaski. Members also observed that the growth loan program would likely stand out to prospective businesses reviewing available incentives because of its potential financial impact and practical usefulness. Ms. Ainsley noted that the growth loan program effectively combined two goals: encouraging revitalization while simultaneously supporting business expansion. By the end of this segment, the board generally appeared to agree that the expansion loan program should rank as the highest-priority incentive moving forward, though members continued discussing what measurable growth criteria should eventually be required for eligibility. The board continued refining the ranking of the proposed business incentives and discussed how each program should be prioritized moving forward. Members emphasized the importance of having measurable and verifiable standards for eligibility, particularly regarding business growth indicators such as additional employees or other clear signs of expansion. As the discussion progressed, the board reached general agreement on the overall ranking structure. The Growth Loan Program was identified as the top priority because members believed it would have the greatest direct impact on economic development and business expansion within the Town of Pulaski. Participants felt the program offered meaningful assistance while also encouraging measurable business growth and long-term investment. The Small Business Milestone Grant Program was selected as the second-highest priority. Mr. Conner expressed support for recognizing and rewarding businesses that had successfully remained in operation for an extended period, particularly after overcoming the difficult startup phase. He stated that extending support to businesses that had “put in the effort for a year and a half” represented an important investment in business retention. The Downtown Business Activation Program was ranked third. Members then placed the newly separated Stabilization Grant Program fourth, while the Revitalization Incentive Program was placed fifth because the board continued to believe it would be more appropriately administered directly through the town rather than the EDA. By the end of the discussion, the board had established the following general priority order: first, the Growth Loan Program; second, the Small Business Milestone Grant Program; third, the Business Activation Program; fourth, the Stabilization Grant; and fifth, the Revitalization Incentive Program. With the incentive rankings established, the board shifted its focus to the financial implications of implementing the programs. Ms. Ainsley explained that the next major task would be determining how much funding from the EDA budget should be allocated toward incentives, particularly the loan programs. Members acknowledged that they would need to carefully consider how many loans or grants the EDA could realistically support at one time. A discussion followed regarding the EDA’s current financial position. One member referenced prior financial reports showing that the EDA maintained approximately $107,000 in available funds and asked how quickly the balance was growing through monthly revenues or investment income. Ms. Ainsley indicated that additional information would need to be gathered from the finance department regarding the type of account holding the funds and any associated earnings. Several members stressed that the purpose of the EDA’s funds should be to support economic development rather than simply sit unused in an account. Mr. Huber argued that keeping large sums untouched might feel financially comfortable but ultimately does little to help businesses or stimulate economic activity. He suggested that the money would provide greater public value if it were actively invested in business support and growth efforts within the community. At the same time, members agreed that the EDA should still maintain a reserve balance for emergencies or future opportunities. Mr. Huber suggested retaining somewhere between $25,000 and $50,000 as a baseline reserve while directing the remaining funds toward incentive programs. Ms. Ainsley emphasized that this discussion was not about making final allocations immediately but rather about developing an overall financial philosophy for how aggressively the EDA should use its resources. Ms. Ainsley stated that she would work with the finance department to gather additional information regarding the EDA’s accounts, possible investment options, and income generation. She also committed to revising the Growth Loan Program language based on the board’s feedback and consulting with the town attorney regarding the legal and administrative requirements associated with operating a loan program. Mr. Huber also discussed the importance of formally defining the EDA’s overall financial philosophy. Ms. Ainsley remarked that the EDA had remained relatively inactive for a long period, and this process represented an opportunity to clearly establish what the organization intended to accomplish moving forward. Mr. Conner agreed and stated that the group should first decide how much money it is comfortable deploying overall before determining exact allocations among individual programs. The board then discussed how the proposed town incentives compared with those currently offered by the county. Mr. Huber suggested reviewing county-level incentive programs to ensure the town was not unnecessarily duplicating existing assistance and to identify potential gaps where the town could provide complementary support. Ms. Ainsley explained that the proposed incentives had already been developed with county programs in mind. She noted that the county currently did not have many active incentives available, although additional programs were expected in the future. She also mentioned that some prior county incentives had focused on agriculture rather than small business development. Although the incentive proposals had originally been drafted with county offerings in consideration, Ms. Ainsley agreed to revisit the county’s current programs and report back to the board with updated information at the next meeting. As the meeting drew toward a close, staff summarized the next steps. Ms. Ainsley stated that she would revise the incentive documents, gather additional financial information from the finance department, consult with legal counsel regarding the loan program, and return to the board with updated materials at the next meeting. Board Member Comments Before adjournment, Mr. Worrell reminded everyone that the first Marketplace event of the season would take place later that day and noted that the event would continue every Tuesday from 4:00 p.m. to 7:00 p.m. through August or September. Mr. Conner publicly thanked Shannon for the considerable work involved in organizing the event series, describing it as only one small portion of the many responsibilities she handles regularly. Ms. Cox thanked the board members for their participation and stated that the collaborative discussions had generated valuable ideas. She commented that the board’s discussions were productive because each participant brought different strengths and perspectives to the conversation. Reminder of Next Meeting Date Tuesday, July 7, 2026 at 10:00 a.m. Adjournment With no further business, Chairwoman Ms. Cox adjourned the meeting at 11:00 a.m.