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02-09-2004 EDA MINMEETING OF THE ELK RIVER ECONOMIC DEVELOPMENT AUTHORITY HELD AT THE ELK RIVER HIGH SCHOOL LITTLE THEATRE MONDAY, FEBRUARY 9, 2004 Members Present: President Gongoll, Commissioners Kuester, Tveite, Motin and Klittzing Members Absent: Commissioners Koenig and Dwyer Staff Present: Director of Economic Development Catherine Mehelich, Assistant Director of Economic Development Heidi Steinmetz, Finance Director Lori Johnson, and City Clerk Joan Schmidt Also Present: Action Committee for Energy (ACE) Members: Bill Poppers, Technology North; Bryan Adams, Elk River Municipal Utilities; Ron Bxatlie, Elk River School District Ed Stoutenberg, NRG; Deb Dehn, Elk River Landfill; Jeff Gongoll, Elk River Chamber of Commerce Councilmember John Dietz Call Meeting To Order Pursuant to due call and notice thereof, the meeting of the Economic Development Authority was called to order at 5:30 p.m. by President Gongoll. 2. Consider Agenda MOVED BY COMMISSIONER TVEITE AND SECONDED BY COMMISSIONER MOTIN TO APPROVE THE FEBRUARY 9, 2004 EDA AGENDA. MOTION CARRIED 5-0. 3. Consider Consent A,¢enda MOVED BY COMMISSIONER MOTIN AND SECONDED BY COMMISSIONER TVEITE TO APPROVE THE FOLLOWING CONSENT AGENDA ITEMS: 3.1. JANUARY 12, 2004 REGULAR MEETING MINUTES (with typo to be corrected) 3.2 CHECK REGISTER 3.3 BALANCE SHEET 3.4 REVENUE/EXPENDITURE REPORT MOTION CARRIED 5-0. 4. Open Mike No one appeared for open mike. Economic Development Authority ;Vlinuxes Page 2 February 9, 2004 ~. Strategic Industrial Marketing Activities Report Assistant Director of Economic Development Heidi Steinmetz presented the staff report. She noted that the three main objectives of the Strategic Industrial Marketing Plan aze to attract growth-oriented, light industrial businesses which would increase and diversify the tax base, complements the existing industrial base, and guides prospective clients through the entire site selection and development process which builds long-term relationships. She mentioned the marketing strategies as being the product-offering strategy, competitive strategy, key accounts/lead generation strategy, promotions and advertising strategy, public relations strategy and business retention strategy. She stated that the marketing activities update is looked at and followed by staff day-by-day with a monthly report given to the EDA. 6. Consider Concept Approval of the following Expansion Siting Proposals 6.1. Prospect - Orluck Industries, Inc. Director of Economic Development Catherine Mehelich reviewed with [he Commission the Preliminary Expansion Siting Proposal that was submitted by staff to Oxluck Industries, Inc. regarding the company's proposed expansion and relocation project. Staff has proposed that the City sell its city-owned Joplin Street lot to Oxluck Industries for the construction of alight industrial/business park building. Oxluck Industries is requesting the City and County provide Tas Rebate Financing (TRF) in order to write-down the land cost to $0. Ms'. Mehelich distributed the Economic Development Tax Rebate Financing Policy, a copy of the Orluck Industries, Inc. completed application, and a copy of their preliminary site plan. Mark Orluck, President of Oxluck Industries, Inc., proposes to construct an approximately 23,000 square Foot building, in which his company would occupy 13,000 square feet with the balance leased to business park district eligible users. His company conducts hght, precision machining of plastic and metal components for the medical, computer, semi-conductor and telecommunications industries. In addition to writing down the cost of the land, a land use amendment must also be processed by the City. While the zoning is Business Park, the underlying land use is Community Commercial. The land use must be changed to Light Industrial for the project to move forward. Ms. Mehelich reviewed the TRF Proposal Review VG'orksheet and the project rankings that were given. Thirty points (out of a total possible of 45 points) were awarded to this project. Ms. Mehelich stated that Ehlers and Associates, Inc. has reviewed the initial numbers and told hex that in regards to equity they did not see any additional inflated numbers and the EDA should consider that other tides do not have equity requirements. She stated that she feels that $50,000 is a fair number to start with,and realizes that this could set a precedence and deviation from [he 20% requirement for TRF projects. She stated that after this has gone forward with the approval from Council, a public hearing would be scheduled. Commissioner Motin stated that he would like to see the project not limited to a certain number of square feet and suggested perhaps requiring expansion to take place within so- Economic Development Authority 1~linutes Febmary 9, 2004 Page 3 many years. Mr. Motin expressed he is less concerned with the amount of private money since it doesn't add up to much and can be financed by a bank. Commissioner Klittzing stated that the commission has gone through enough of these proposals and knows that there axe no perfect proposals, and that this is a good project for the City of Elk River. She stated that she does not want to pass up this opportunity. Gary Santwire, representing adjacent property owners, expressed concerns with the project. He stated that this building is proposed to have 20,000 square feet and that it should be an additional 10,000 square feet; it needs to be of maximum use now, which would be 30,000 - 36,000 square feet. He expressed that he did not feel the need for additional multi-tenant space is market driven, and if it was not rented out, them could be negative market problems as a result. He stated that cuxxendy Elk River industrial lease space has a 20% vacancy. He stated that the East Business Paxk was required to be built as part of a development agreement and has had land-use changes and vacancies. He feels the market is not strong here for Light Industrial space. It is his desire to see Orluck Industries in Elk River; however, he has concerns with not fully using [he City's Joplin Street site. Ms. Mehelich stated that the company always intended to build more than what is needed for future growth and fox tenant space. Commissioner Tveire asked if blx. Orluck had a tenant in mind. Mr. Oxluck stated that he does have someone in mind that would possibly take 12,000 square feet. Commissioner Tveite stated that he felt the proposal fox the city's lot was a little underutilized, but likes the project. Ms. Mehelich stated that staff initially proposed to Mr. Orluck splitting this acreage two years ago, however, Big Lake is currently offering to Ivlr. Orluck three acres with the same type of Financial incentive. President Gongoll thanked Mr. Orluck for his interest in locating to Elk River and expressed concerns of underutilization and stated that he is bullish for good quality development. He is concerned with the equity portion of financing. He stated that he is looking for at least 10% equity on the part of the owner, and he felt that, for hhn, utilization of the site is less of a problem than the equity. MOVED BY COMMISSIONER KLINZING AND SECONDED BY COMMISSIONER MOTIN TO RECOMMEND APPROVAL OF THE PRELIMINARY PROPOSAL CONCEPT FOR THE ORLUCK INDUSTIRIES PROJECT AND FOR STAFF TO COMPLETE THE DUE DILIGENCE PROCESS FOR THE NECESSARY LAND USE AMENDMENTS, FINANCIAL ANALYSIS, AND TAX REBATE FINANCING PROCESS. STAFF SHOULD ALSO INITATE THE LAND USE AMENDMENT PROCESS TO CHANGE THE LAND USE FROM "COMMUNITY COMMERICAL" TO "LIGHT INDUSTRIAL". MOTION CARRIED 5-0. Economic Development Authority Minutes Page 4 February 9, 2004 _____________________________________________________________ 6?. Prospect -Gradient Technology, Inc. Director of Economic Development Catherine Mehelich reported that a Preliminary Expansion Siting Proposal was submitted by staff to Gradient Technology regazding the company's proposed relocation project. Staff has proposed that the company purchase a 1.5-acre lot within the Elk River Business Park and that the Ciry do a write-down of the land cost to $0 through apay-as-you-go Tax Rebate Financing note to the company. Ms. Mehelich reported that the applicant had called to state that more time was needed to complete the TRF application and consequently the request Eor concept approval would be postponed fox another month. Commissioner Motin asked if the lot next to the proposed site was sold. Ms. Mehelich stated she understands from the landowners that the land was sold to a machine shop with a contingency to build within 12 months. She noted that the proposed lot would need to be subdivided to accommodate Gradient Technology. Business Incubator Prospect Report -Harlan Tacobs Genesis Business Centers Incubator Consultant Harlan Jacobs presented to the Commission his semi-annual Incubator Prospect Report. 8. loin[ Meeting with Action Committee for EnergyfACEI and Citv Council Regarding Elk River Enema City Prog am Mayor Klinzing wished to have it on the record that this is a special meeting of the Ells River Ciry Council. It is a joint work session with the EDA and ACE to provide an update on the Energy City Program. Bill Poppert discussed the Energy City accomplishments explaining that Elk River has an energy efficiency/renewable energy industry cluster, and Minnesota has a lazge critical mass of these types of companies. This is renewable energy that does not take phosphorus fuel. Currently the utility buildings axe using it and the Ciry also has renewable lights. Minnesota continues to be the leader in the renewable energy industry. In 1996 the MN Environmental Initiative had looked Fox geographic locations to demonstrate renewable energy technology and Elk River, through Energy Alley, became Energy City. Elk River became Energy City with a great number of utilities in this geographical area, a long history, the electrification programs, having the First nuclear power plant (which no longer exists as nuclear), having the RDF (refuse-derived fuel) Plant, etc. This is a very lively and growing industry that is also doing what is environmentally correct. Through a PowexPoint presentation, Bryan Adams illustrated the various activities that have been undertaken through this program over the past seven years. This involvement has included giving tours, showcasing GeoSource heat pumps., using RDF to produce electricity from garbage, use of LED lights (MnDOT project), reducing electric consumption by 80% - 90%, First to have energy homes in 1998, use of methane-gas derived from cow manure turned into electricity to sustain 50 homes, sustainable buildings, the use of wind power for 80 homes, the use of landfill gas to mm into electrical source for 50 homes, the Environmental Learning Center as an education model Eor other communities and educating and raising awareness of energy efficiency in Elk River. Economic Development Authority Minutes Febmary 9, 2004 Page 5 Mr. Poppert stated that there is no city the same size of Elk River that has this kind of technology and that Elk River is years ahead of other cities. IVir. Jacobs stated that we could use fuel cells through Cymbet's battery technology that will be very important and in demand in a few years. Mayor Klinzing stated that ACE is a way to market the City, and that Russian engineers had come to visit and form partnerships. She stated this is a way in which the government, businesses, and environment have all pulled together. She stated that she wanted the EDA to know that the Energy City is here and happy to participate. 9. Other Business There was no other business. 10. Adjournment The meeting of the Elk River Economic Development Authority adjourned at 6:58 p.m. Mayor Klinzing also adjourned the special meeting of the City Council at 6:58 p.m. ~.-:~ Joan Schmtdt Ciry Clerk