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03-08-2001 EDA MINMEETING OF THE ELK RIVER ECONOMIC DEVELOPMENT AUTHORITY HELD AT THE ELK RIVER HIGH SCHOOL LITTLE THEATRE MONDAY, MARCH 8, 2004 Members Present: President Gongoll, Commissioners Koenig, Kuester, Tveite, Motin, Dwyer, and Klinzing Members Absent: None Staff Present: Director of Economic Development Catherine Mehelich, Assistant Director of Economic Development Heidi Steinmetz, City Administrator Pat Klaers, and City Clerk Joan Schmidt 1. 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 President Gongoll moved Item k6 to the Consent Agenda. MOVED BY COMMISSIONER TVEITE AND SECONDED BY COMMISSIONER KOENIG TO APPROVE THE MARCH 8, 2004 EDA AGENDA AS AMENDED. MOTION CARRIED 7-0. 3. Consider Consent Agenda MOVED BY COMMISSIONER MOTIN AND SECONDED BY COMMISSIONER DWYER TO APPROVE THE FOLLOWING CONSENT AGENDA ITEMS: 3.1. FEBRUARY 9, 2004 REGULAR MEETING MINUTES 3.2 CHECK REGISTER 3.3 BALANCE SHEET 3.4 REVENUE/EXPENDITURE REPORT 6.0 CALL SPECIAL MEETING FOR ECONOMIC DEVELOPMENT STRATEGIC PLAN WORK SESSION FOR MARCH 31, FROM 12-5 P.M. AND MAY 5 FROM 3-8 P.M. AT THE EMERGENCY OPERATIONS CENTER. MOTION CARRIED 7-0. 4. Open Mike Economic Development Authority Minutes Page 2 March 8, 2004 No one appeared for open mike. 5. Strateeic Industrial Marketing Activities Report Assistant Director of Economic Development Heidi Steinmetz presented the staff report. Ms. Steinmetz reported that the 2004 Community Profile has been updated and printed for distribution. She also reported that a labor market analyst from the state would present a report at the April EDA meeting. She reported that Monticello is considering acity-owned industrial park and that staff submitted two proposals for a large manufacturing prospect. Commissioner Kuester updated the Commission on the visit to Contour Mold stating that it was very impressive and that they produce large custom mold products. She stated that the owner had said that his shop was not in a desirable location and that traffic has always been an issue. She also stated that they have long-term employees. Ms. Steinmetz stated that the owner had expressed that he would appreciate any assistance from the City in the future in the sale of the business and in providing help to the new owner, since he is considering retirement soon. President Gongoll updated the Commission on the visit to The Cretex Companies, Inc. stating that this company has grown and has a great series of products. He stated that the company has invested in other areas but has experienced struggles. He said he heard the words "lean business" several times. Commissioner Dwyer stated that this has been a great family business and that the executive vice-president is planning on retiring a year from May. Commissioner Kuester suggested that when there is a turnover in management of local manufacturing companies, it would be good to visit and welcome the new owners and help in planning the transition. 5.1 2003 Prospect/Inquiry Report Director of Economic Development Catherine Mehelich gave a summary of the 2003 Annual Inquiry/Prospect Report. She stated that her department keeps a tracking report and handles the industrial related inquiries and that the Chamber of Commerce handles commercial related inquires. Ms. Mehelich reported that the total number of inquiries were back up to 2001 figures (75). The City had successfully located one manufacturer while four were reported to have located elsewhere. She stated shat Elk River remains a strong market for small to medium size light industrial companies. Consider Recommendation to City Council for Approval of Orluck Industries Inc Tax Rebate Financing Proposal Director of Economic Development Catherine Mehelich stated that at its February 9, 2004 meeting the Economic Development Authority and City Council approved the Economic Development Authority Minutes March 8, 2004 Page 3 Preliminary Expansion Siting Proposal that Orluck Industries be considered for receiving Tax Rebate (Abatement) Financing for the construction of a 20,000 square foot light industrial/business park building on the City-owned Joplin Street lot. Staff has completed the due diligence process for the land use amendment process, financial analysis and the City's Tax Rebate Financing process. Staff requests that the EDA consider recommending Council's approval of the sale of the lot and tax abatement request. Mr. Orluck is requesting that the city sell its Joplin Street lot to Orluck Industries for $1 and that the city and county abate its portion of the property taxes on the project for a period of approximately twelve years or up to a combined total of $201,520; the amount to reimburse the city for its land cost. Mr. Orluck has submitted a request to Sherburne County for tax abatement and staff believes that the term will likely be 8-9 years versus the projected 12 years, based upon inflationary market value and tax rate increases. MOVED BY COMMISSIONER KLINZING AND SECONDED BY COMMISSIONER KOENING TO RECOMMEND CITY COUNCIL'S APPROVAL OF THE PROPERTY TAX ABATEMENT REQUEST WITH BUSINESS SUBSIDY AGREEMENT AND SALE OF THE JOPLIN STREET LOT FOR THE ORLUCK, LLC PROJECT. MOTION CARRIED 7-0. 8. Consider Concept Approval of the Gradient Technology Inc Expansion Siting Proposal Director of Economic Development Catherine Mehelich reported that at its February 9, 2004 meeting the EDA postponed discussion of the Gradient Technology, Inc. Expansion Siting Proposal due to a request by the applicant and since then the City Tax Rebate Financing application has been completed. Staff has become aware of concerns about whether or not tax increment financing or tax abatement can be provided for prospects that locate in the Elk River Business Park due to its perceived association with the city's Tax Increment Financing District No. 19 redevelopment project (Shopping Center Retail Project). A written opinion was received from attorney Mary Ippel of Briggs & Morgan following her review of the TIF No. 19 documents. Ms. Ippel stated in her letter "the City is not precluded by the Contract from reimbursing a business locating in the Business Park Project for eligible costs of a manufacturing or warehousing and distribution facility in the Business Park". Ms. Mehelich reported that a Preliminary Expansion Siting Proposal was submitted by staff to Gradient Technology regarding the company's proposed relocation project. Staff has proposed that the company purchase a 2.05-acre lot within the Elk River Business Park and that the City do a write-down of the land cost to $0 through apay- as-you-go Tax Rebate Financing note to the company. The company will also submit a TRF application to the County. Ms. Mehelich stated the land cost is at $1.61/SF for a total assistance of $143,770 from the City and County combined. Economic Development Authority Minutes March 8, 2004 Page 4 Ms. Mehelich introduced Eric Haehn, Vice President/CFO of Gradient Technology, who explained that Gradient Technology is a core business doing demilitarization work of munitions. Having contracts with the military, Gradient Technology developed a technology using a water jet that cuts into the munitions. The company also sells the by-products to commercial and other industries. They are currently working with the Japanese Government wherein bombs from World War II will be collected and demilitarized. MOVED BY COMMISSIONER TVEITE AND SECONDED BY COMMISSIONER KOENING TO RECOMMEND TO THE CITY COUNCIL APPROVAL OF THE PRELIMINARY PROPOSAL CONCEPT FOR THE GRADIENT TECHNOLGY PROJECT AND FOR STAFF TO COMPLETE THE DUE DILIGENCE PROCESS FOR THE FINANCIAL ANALYSIS AND TAX REBATE FINANCING PROCESS. MOTION CARRIED 7-0. Other Business There was no other business. 10. Adjournment The meeting of the Elk River Economic Development Authority adjourned at 6:28 p.m. ~. Joan Schmidt City Clerk