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6.0. EDSR 01-12-2004 ITEM 1 6. City of Elk -�-1 River MEMORANDUM TO: Economic Development Authority FROM: Heidi Steinmetz, Assistant Director of Economic Development S DATE: January 12, 2004 SUBJECT: Strategic Industrial Marketing Activities Update Attachments • Northstar Corridor Project Update,Dec. 2003 • "Minnesota's Fuel Cell Industry Heating Up"Auri Ag Innovation News,Jan.-Mar. 2004 • "Heartland Snapshots Industrial', Heartland Real Estate Business, 2003 Snapshot • Review I. Product Offering Strategy Industrial Land Issue The Director of Economic Development will provide a verbal report on recent activities and next steps. I I. Competitive Strategy There is no new information to report. I I I. Key Account/Lead Generation Strategy The Director of Economic Development will present the 2003 Inquiry/Prospect Report at the February meeting. Below is a listing of recent industrial prospects. Description Client Requirements Status Gamesa(2002 Inquiry) Needs up to 30-acres for Staff is developing partnership Spanish manufacturer of wind office/warehouse and with Great River Energy generation equipment manufacturing Finished wood operation(2003) Met with owner and toured Delayed Decision existing facility Strategic Industrial Marketing Activities Update Page 2 of 4 • Bixby Energy Systems (2002) Needs 50,000-100,000sf existing lease space within 30-45 days In contact with broker for new Biomass stove manufacturer, construction if can't find existing incubator graduate,Rogers inventory in Andover,Anoka, Coon Rapids Metal fabrication company,Blaine Needs land for 25,000sf building, Looking for 2.5-3 acres for to be in operation by Nov.2004 building,staff is submitting proposal for Joplin lot,company also considering Big Lake Cymbet Corporation(2002) Needs up to 100,000sf Financing Delay Manufacturer of solid-state manufacturing space for lease batteries,incubator graduate I V. Promotions & Advertising Strategy Advertising Last month, staff met with Tammy Miller Design to discuss the 2004 Strategic Industrial Advertising Campaign. It is anticipated that advertisements for 2004 will appear in The Business Journal, the MN Real Estate Journal's Leasing Guide, the Manufacturers Alliance Newsletter and the Elk River Star News (the full-page "thank you to all Elk River manufacturers" ad in October). More details on the 2004 Advertising Campaign will be provided in February. V. Public Relations Strategy Community Profile 2004 Staff has updated the Community Profile for 2004 and Tammy Miller Design will • incorporate the changes. The Profile will be available to the public and on the city web site later this month. Public Relations Strategy 2004 Last month, staff discussed the 2004 Public Relations strategy with public relations consultant Mike Porter of MCPorter Marketing Communications. Below is the anticipated public relations schedule for 2004. Jan. Community Profile Update MREJ Economic Development&Site Selection Conference (article&ad for conf.insert,booth, Cathy a Feb.26th panelist) Early Mar. 4th Edition Newsletter-Feature Elk River Business Park June 2005 Public Relations Planning Meeting 5th Edition Newsletter-feature Elk Path Business Center Early July &outcome of industrial land issue Sept. Consider updates to display booth 3rd wk. Oct. MN Manufacturing Week 6th Edition Newsletter-Feature Northstar Corridor& Early Nov. recap Manu.Wk. Event Early Dec. Holiday Greeting Card • Misc.Media Outreach/Media Relations as newsworthy Ongoing items arise Strategic Industrial Marketing Activities Update Page 3 of 4 • Ongoing Web site updates Ongoing Special articles as newsworthy items arise MN Real Estate Journal (MREJ) Economic Development& Site Selection Conference The conference is scheduled for February 26, 2004. Elk River Economic Development will receive a half page ad, small article,booth space and panelist position at the event. Technical Assistance& Operations Consulting Program Staff is awaiting a possible application from an Elk River manufacturer for the City's Technical Assistance & Operations Consulting Program, a partnership program with key account MN Technology. In May 2003, the EDA committed $5,000 of the EDA's Advertising/Marketing budget to implement a two-year partnership program with MN Technology. Companies may receive up to $2,000 for technical assistance services and must contribute 25% towards the services. Energy City At the February EDA meeting, the Action Committee for Energy (ACE) will present several projects completed since Energy City's inception in 1997. VI. Strategic Partnership Strategy Downtown Revitalization Project The HRA extended the Preliminary Redevelopment Agreement with MetroPlains to January • 30, 2004 to provide sufficient time to work together toward a development agreement. The HRA recently held a work session to discuss 2004 communication activities,parking options, and development agreement issues. Staff continues to negotiate development agreement issues with MetroPlains. VII. Business Retention Strategy Business Retention& Expansion (BRE) Visits Staff met with EDA President Gongoll to discuss joint BRE efforts with the Chamber of Commerce to coordinate with the MN Chamber's new BRE initiative, Grow Minnesota. Staff will continue to schedule BRE visits as planned (see below) yet some visits will include surveys completed by the Chamber in addition to the informal discussion points conducted by staff. Manufacturer Product EDA Rep. (s) AME Group Concrete Ready Mix Louise Kuester Contour Mold,Inc. Mold Manufacturing The Cretex Companies,Inc. Precast Concrete Products Jeff Gongoll,Pat Dwyer Cymbet Corporation Solid State Battery Manufacturer Paul Motin,Dan Tveite Louise Kuester,Jeff Dynetic Systems Co. Servo Motors Gongoll Great River Energy Electric Utility Dan Tveite E&O Tool&Plastics Plastics McChesney Cabinets Cabinetry Jeff Gongoll • Metal Craft Machine& Engineering/Neos Precision Machining Jeff Gongoll,Pat Dwyer Strategic Industrial Marketing Activities Update Page 4 of 4 • NRG Refuse Derived Fuel Dan Tveite ProTech Engineering Plastic Molds Jeff Gongoll Riverside Manufacturing Machining Jeff Gongoll SoftPac Industries Flexible Pouch Packaging Louise Kuester,Paul Motin Sportech Aftermarket ATV&Snowmobile Products Paul Motin,Pat Dwyer Superior Tool Grinding Tool Grinding&Machining Jeff Gongoll,Dan Tveite Louise Kuester,Jeff Timron Precision Gear,Inc. Precision Gears Gongoll In 2003, staff and EDA members visited eight companies. Nine companies were not interested in participating(2 of those 9 located elsewhere). Articles The attached article states that it is now anticipated that the Northstar Corridor will only reach Big Lake and not Rice. Tescom Corporation is mentioned in the attached Auri Ag Innovation News article. In the Heartland Real Estate News article,Dan Schwarz of CB Richard Ellis states that industrial growth will continue in the northwest market. • • • IMPORTANT NORTHSTAR PROJECT UPDATE 1.1 :(r 83 New Developments on the Progress of Northstar Over the last several months, the Northstar Corridor Development Authority (NCDA) has been working with the Minnesota Department of Transportation (MnDOT) to update ridership forecasts for input into a cost-effectiveness model that the Federal Transit Administration (FTA) will use to evaluate the Northstar commuter rail project. The NCDA has recently received important, yet mixed news in regard to these issues. Modified (Shorter) Northstar Line Likely to Pass a Key Hurdle with the FTA The FTA has developed a rigorous new cost-effectiveness index for evaluating transit projects seeking federal funding. Under the FTA's evaluation standard, a modified (shorter) Northstar line is likely to meet the cost-effectiveness index. The FTA may require that the NCDA reduce the current 82-mile configuration from St. Cloud/Rice to Minneapolis to a 40-mile segment that ends at Big Lake. This 40-mile segment — from Big Lake to Minneapolis -will likely meet the standard, but apparently extending the line to St. Cloud/Rice falls short of meeting the FTA's requirement. The NCDA will need to obtain a final evaluation of the entire project from the FTA before making a final decision on the configuration of the Northstar service. "A number of transit projects around the country are struggling to meet the more rigorous FTA criteria," said Yantos. "We're told that other projects around the country that have met FTA evaluations in the past will not meet the new standards, so we are pleased that the Northstar 41) project, with some modifications, is likely to meet this standard for federal approval." Governor Pawlenty has indicated he will use the FTA evaluation as a critical factor in his decision whether to recommend Northstar in his 2004 bonding bill. In addition, it is critical to scope the Northstar project to a configuration that the FTA will approve — without FTA approval we will not be able to move ahead with the project. Ridership Projections Look Good We are encouraged that by using the previously accepted FTA ridership model to develop an "apples-to-apples" comparison to earlier estimates, ridership on the full Rice/St. Cloud to Twin Cities route would exceed the previous estimates of approximately 10,000 daily riders. If the FTA requires Northstar to end at Big Lake, based on the new FTA evaluation criteria, the projected ridership is estimated to be approximately 5,600 riders per day. .. r. fi.. .v...., ,. !.. ..... . � S . . :: ,t,,,,,..4",_0-,,,,''4,R, � ..:K •{'tet}. t .!i. `�� yP3'r ,t'�4i3vxa tia : � '':.` i¢ y,� '" �C►'��C <+d- t != ��se% k.x 'r ra Ws .r•0 .. cr _ 2a '41,4414M, qra„?DOA .,.A 2„ x ��.1 -.i� . . , T< £E m � a :9« ',,i., ,. "-,"?;;;O-4441', .. 4 a1, I ... ' -,' z =�sa «, ,d ., � 47a; . ,- a.�,.d3.� ?n.w. k< .a: .:.,. 3. -s Ten state companies make components 4 Minnesota's fuel cell _,, :,. , , A,,,_=1 ,,,: industry ! % 4$ a Fa , R • r< &q�� t Ix s:+� r ' Minnesota could become a major hydrogen gas used to power fuel cells. : _ ,r,-:.:.;%,,,,,,,,21.- y j i� player in the rapidly emerging fuel Cummins Power Generation, 4 i i cell industry. E ; Minneapolis,designs and The sector is so young that the state manufactures power generation r i does not yet collect employment or equipment. I E i' -`' ; ` x lc. „4,,,, sales statistics on it.However,at least ,,. t # -,.,_,, ,, 10 Minnesota companies are now Donaldson Company,Minneapolis, -- ;rte makes filtration systems for fuel cells. t° making products for fuel cells,says i„# ® xi r a -I, i ` ,,, - tk t Linda Lirnback,research coordinator Entegris,Chaska,supplies materials 1 � ^ {i r ' at the State Energy Office. for the microelectronics and fuels i '4.44 cell industries.In August,Entegris -P,'"--,, .. ^ These businesses are investing § installed Minnesota's first multi- 4 i i significant dollars in research and it kilowatt,stationary fuel cell at its I development of fuel cell technology, t f �g'., Chaska plant. -- �-- and many are partnering with federalJON " agencies,she says. ICM Plastics,Rogers,makes x A - 'i g bipolar plates for proton exchange r� " , i Minneapolis-based Cummins Power ,.____-~~ , ,„, membrane fuel cells. - i��r Generation,for example,has been , a4r 3�k t�, x '� � « , � awarded a$75 million grant from Phillips&Temro Industries,Eden * ,* s '; � ` g T the U.S.Department of Energy to Prairie,makes cold-weather engine , . -. - tr l l' 1 Yak 7, +6mC "; +� �,�! * 4 �, Y - # 1 c 3.. develop an affordable, 10 kilowatt components,products for preheating ,� .; v modular solid oxide fuel cell. fuel cells,and fuel cell load banks. :'_ Another Minneapolis manufacturer, 6 ,J1" escom,Inc.,Elk River,makes s i Donaldson Company,has worked :,, with the Los Alamos National pressure regulators,valves and other Laboratory to develop filtration controls used in fuel cells. systems that prolong fuel cell life. TSI,Shoreview,makes air and gas 4, 3Y Although no Minnesota companies flow measuring sensors and controls used in fuel cells.■ , manufacture complete fuel cells, "; -''' - 'fir t1 " local companies do produce a wide Source:Minnesota Office of Environmental �14 �- range of fuel cell parts,from sensors Assistance ' to membranes to fuel purification Iti 1959p Allis-Chalmers harnessed a These cells converted propane and oxygen systems.Among the state leaders: century-old technology torts directly into electricity without combustion, usi 3M,St.Taul,a leading manufacturer power a tractor with no moving engine pa , no a chemical reaction first demonstrated in 1838 of proton exchange membranes for exhaust, no noise and twice the fuel efficiency of by the English scientist William Grove.The Allis fuel cells. any other tractor made. Chalmers fuel cell array generated 15 kilowatts The experimental tractor is now on display at the of current,which ran a 20-horsepower electric Atmosphere Recovery,Inc., motor that propelled the 5,300-pound tractor Plymouth,makes sensors and McLeod County Historical Museum in Hutchinson. plus a multibottom plow.■ controls for monitoring the purity ofor It was powered by 1,008 individual fuel cells. Community powered AURI is helping rural communities analyze the economics of anaerobic digesters BY DAN LEMKE assessment for producers and communities to see if they "No one component is going to make it work,"Sparby says. Is it economical for Minnesota communities to turn waste into have the resources for a community facility using municipal "It's a matter of matching up technical issues such as locative power?AURI now has a tool to help find the answer. and agricultural sources,"says Michael Sparby,AURI project and supply of feedstocks with the economics of the project. development director."Products that were once thought of as That includes things like construction costs and if you can Anaerobic digesters that break down agricultural and waste are now being looked at as a resource." obtain a purchased power agreement." food processing wastes to produce energy may benefit Anaerobic digesters use bacteria to break down solid wastes. "This tool helps put the puzzle together.If the pieces aren't municipalities as well as farms.Minnesota livestock facilities As a result,the bacteria give off methane gas that can be all there,then you've saved a lot of time and effort.If they arc are closely monitored for potential environmental impact captured and used for heat or electrical generation.The then maybe it's worth pursuing further." from odors and from nutrients in surface and ground waters. treated solid waste is then safe for land application or other Food processors pay fees to dispose of waste though regulated Sparby stresses the report is not designed for any particular uses.Since digesters operate most efficiently with a high land applications or sewer systems. community.However,Perham,Minn.is considering a digest! volume of solids,mixing manure with food processing wastes and a system in Oregon has already started operating. To help communities and producers determine if a jointly- can take the pressure off municipal systems and improve powered digester is feasible,AURI has produced a self digester operations.The assessment calculates the size For a copy of the self assessment guide,contact Michael Sparh assessment booklet:The Appropriateness of a Community and proximity of livestock and food-processing facilities to at AURI:(320)589-7280.II Manure Food Waste Digestion System."This is really a pre- determine if enough waste is available. PAGE 10 AURI AG INNOVATION NEWS•JAN-MAR 2004 Visit our Web site at www.auri.orf Minnesota HEARTLAND -- --- -- ------ ----- — — SNAPSHOTS - ---- -- 0 INDUSTRIAL MinneapolisMenomonee, and the General which we have seen positive Motors distribution facility was absorption is business related to { recently announced in Hudson. residential and consumer goods," "We are not expecting any major Swartz says. For example, HOM Furniture purchased the 332,000- s� � ��The one industry square-foot former Lund Industries 47* k building in Anoka,Minnesota. „ segment in which we Recent major leases in the Twin Cities area include Xpdexs'lease of have seen positive p 125,000 square feet in the LDI absorption is businessbuilding in Brooklyn Park; RR related to residential Donnelly's lease of a 110,000- and consumer goods.” square-foot build-to-suit in the Dan Swartz Crosstown North Business Center Vice President CB Richard Ellis in Brooklyn Park; Banta's lease of new developments in the near term 122,000 square feet in the 12th due to the vast amount of available Avenue Business Center in With today's market condi- existing space," Swartz says. There Shakopee; North American Mar- tions, new industrial are a few new developments in keting Group's lease of 67,000 development is sparse in Minnesota that are at the planning square feet in Park 2000 in the Twin Cities area. Only a hand- stage, including Lexington Com- Shakopee; and Land 0' Lakes' ful of local developers are attempt- mons,being developed by CSM in lease of 80,000 square feet in Pilot ing to lease speculative new con- Blaine; France Avenue Business Knob Distribution Center in Men- ai The majority of industri- Center III,being developed by Real dota Heights. 141, al development is taking place in Estate Recycling in Brooklyn Cen- Warehouse rental rates in the the outer-ring suburbs due to the ter; and Schmidt Lake Business Minneapolis area vary from $3 per scarcity of land in close proximity Center, being developed by First square foot to $5 per square foot to the metropolitan area. Industrial in Plymouth. "In order and $7 per square foot to $10 per The majority of new construction for construction on any of these square foot for office space. The projects are build-to-suit, single- projects to commence, the market overall vacancy rate in the industri- tenant buildings. Many are devel- needs to change for the better or a al market is 9.22 percent with a base oped for tenants new to the market pre-lease needs to be executed," of 314 million square feet. The east or for those wanting a second loca Swartz says. submarket has the lowest vacancy tion.As a result, the new construe—Minneapolis/St. Paul is an area rate of 5.82 percent, and the south- tion may create some additional with a diverse range of businesses. west submarket has the highest vacancy in the company's former Most landlords in town are trying vacancy rate of 11.66 percent. location, but not a significant to attract businesses for their devel- Regarding future development in amount, says Dan Swartz, vice but utthey aren't so focused the area,there are a number of s - president in the Minneapolis office of CB Richard Ellis. on the type of business because markets, to watch. "Growth will __----- There has also been significant they simply need to fill vacancies," continue in the northwest market development in office/warehouse Swartz says. all they way up in the Interstate 94 This diversity insures that no sin- corridor to St. Cloud," Swartz says. condos throughout the market. These developments have been gle tenant or tenants can drive the "When Shakopee is able to fill its successful with 2,000-square-foot market, but the activity of a large significant vacancies,it will indicate units to 4,000-square-foot units sell- tenant can affect it somewhat. For that the Minneapolis market has ing between $70 per square foot example, ADC Telecommunica- turned for the better. The northeast and$80 per square foot. tions created a vacancy rate of more has been solid for a number of Two large distribution facilities than 20 percent in the Shakopee, years and now has two, possibly • are being built across the border in Minnesota,market when it vacated three, major developers proposing Wisconsin. The Ford distribution 1 million square feet of space. significant developm ts—in center is nearing completion in "The one industry segment in Blame." ❑ 18 HEARTLAND REAL ESTATE BUSINESS 2003 SNAPSHOT REVIEW