9.0. EDSR 01-12-2004 ITEM 1 9.
City of
Elk --�-�
River
MEMORANDUM
TO: Economic Development Authority
FROM: Catherine Mehelich, Director of Economic Development
DATE: January 12, 2004
SUBJECT: EDA Micro Loan -- Riverside Manufacturing, Inc.
This memo serves to provide the EDA notice that Riverside Manufacturing, Inc. has
recently provided payment in the amount of$43,768.31 on its past due EDA Micro Loan.
The payment did not include interest accrued over the past year,nor attorney fees. Staff will
continue to recover these items,totaling approximately$4,500.
r
•
}
City of
Elk
River
MEMORANDUM
TO: Economic Development Authority
FROM: Catherine Mehelich, Director of Economic Development
DATE: January 12, 2004 ('
SUBJECT: Informational Items
The attached items are for informational purposes only. Following is a brief summary:
• "Governor Pawlenty Unveils Job Opportunity Building Zones Statewide",Press
Release December 18, 2003.
• "Tax-free zones raise questions",The Pioneer Press,December 21, 2003.
Describes how the new Job Opportunity Building Zones (JOBZ) areas were selected
and the areas selected. The City of Elk River did not qualify based upon the "need"
criteria,nor did Sherburne County. The City of St. Cloud is the nearest community
that received JOBZ designation.
• "Minnesota Community Capital Fund Making Loans",Northspan Group, Inc. 2003
Newsletter.
As you may recall,the City of Elk River became a member of the newly formed MN
Community Capital Fund in year 2002 at a$50,000 membership level. Since the
Fund's inception in early 2002,thirteen loan projects have been approved to date in
member communities. Elk River has not had the opportunity with the "right"
project to utilize the Fund yet. However,if a sizeable project comes along Elk River
may be able to partnership with Sherburne County and Great River Energy's
membership for a total$1.75-million loan.
• Correspondence to SoftPac Industries, Inc. regarding completion of job creation and
wage goals.
• Correspondence from the Initiative Foundation for the EDA's 2003 financial
•
contribution.
•
Governor Pawlenty Unveils Job Opportunity Building Zones Statewidey _Page 1,of 4
.......
•
• y • : STATE OF MINNESOTA
jltre
��, OFFICE OF GOVERNOR TIM PAWLENTY
s- =�� = $ 130 State Capitol • Saint Paul,MN 55155
Governor Pawlenty Unveils Job
Opportunity Building Zones Statewide
--JOBZ is "most significant economic development
initiative in state history", Governor says—
Date:
aysDate: Thursday, December 18, 2003 Contact: Leslie Kupchella
FOR IMMEDIATE RELEASE Governor's Office
651/296-0001
Louis Jambois
DEED
(651)297-3172
t Paul Communities in Greater Minnesota will have a powerful new tool in creating jobs,
ellikrnor Tim Pawlentysaid on Thursdayas he unveiled the boundaries of new Job Opportunity
Building Zones (JOBZ).
"Access to good-paying jobs is one of our quality of life cornerstones in Minnesota," Governor
Pawlenty said. "Parts of Greater Minnesota have experienced economic hardship and they need
help. Today, we're here to give it to them."
Governor Pawlenty continued, "This is the most significant rural economic development initiative
in state history. These have been called 'tax-free zones' in the past,but they're not about taxes,
they're about jobs. JOB Zones will empower communities to attract new and better jobs in Greater
Minnesota."
The zones cover 10 geographic regions, but exclude 11 counties surrounding the Twin Cities
metropolitan area. The zones contain a total of 28,902 acres and include 325 sub-zone
communities.
"The response to this initiative has been nothing short of staggering," said Governor Pawlenty.
"Many communities need an economic development tool with this kind of muscle behind it. They
recognize JOB Zones have real strength to stimulate business startups, expansions and
relocations and — most important— retain and grow jobs."
e governor's marquee economic development initiative of 2003 legislative session, the JOBZ
program was created to stimulate economic development activity in distressed areas of
Minnesota by providing local and state tax exemptions, including corporate franchise tax, income
http://www.deed.state.mn.us/news/release/2003/business18Dec03.1nin 12/18/03
Governor Pawlenty Unveils Job Opportunity Building Zones Statewidey Page 2 of 4
tax for operators or investors, sales tax on business purchases, capital gains tax, and property
taxes. It also provides an employment tax credit for high-paying jobs.
arheaded by the Department of Employment and Economic Development (DEED), an
Ifiragency team that also included the departments of Revenue and Administration weighed and
scored each region's application based on a demonstrated need for incentives and the likelihood
of success. The process determined how many acres and sub-zone communities would be
included in each zone.
The "need" crite„ included such factors as poverty rates, population loss, job loss, area income
and wages, i ng values, business startups, expansion rates and site characteristics. The
"success" criteria evaluated the viability of development plans; the level of private and public
commitment; the availability of other development resources; regulatory burdens; the linking of
job creation to job training; and a focus on high-paying jobs.
The typical JOBZ sub-zone community has several vacant parcels of land in an industrial area,
has the necessary infrastructure adjacent or nearby to service the land, and has space that would
allow an existing manufacturing or value-added company to expand in a new location.
All applicants asked for more acres than were ultimately approved in each zone, and some zones
received fewer sub-zone communities than they requested. Zones were modified if they contained
excess acreage, retail property, land with an unknown end use or a lack of infrastructure, said
DEED Commissioner Matt Kramer.
"Ijkie focus is on creating good, well-paying jobs," said Kramer. "Anything that potentially
diracted from that focus was removed from the zones."
Each zone will have an administrator to evaluate proposals from companies seeking JOBZ
program incentives. And the zones will be expected to adhere to strict accountability measures,
including annual reports that detail job growth, wages and benefits, capital investments, zone size
changes, amendments, and compliance with program conditions.
"The JOB Zones represent the shift in economic development policy this administration has
sought: focusing on where the need is greatest and helping our communities be more competitive
in the global economy," Governor Pawlenty added.
The state will also begin a coordinated and aggressive marketing campaign through a variety of
channels to promote the job zones with site selection companies, regional and national
accounting firms, at trade shows and through business-to-business contacts. The state's
Positively Minnesota marketing group and its MnPRO Site database will also be used in the
marketing effort.
"Our goal long-term is to make the whole state more competitive by creating an environment for
investment and growth. In the meantime, we need some emergency tools — and JOB Zones
provide that," the Governor concluded.
*following is a description of each zone:
Southwest Region
http://www.deed.state.mn.us/news/release/2003/business 18Dec03.htm 12/18/03
Governor Pawlenty Unveils Job Opportunity Building Zones Statewidey Page 3 of 4
Includes portions of Kandiyohi, Meeker, McLeod, Sibley, Renville, Redwood, Lyon,
Lincoln, Pipestone, Murray, Nobles, Rock and a thin slice of western Jackson counties.
• Proposed 5,596 acres and 66 sub zone communities. Received 4,007 acres and 60
sub-zone communities, which include 31 cities, nine townships and one agricultural
zone in Brewster.
Positively Southern Minnesota JOBZ Growth Corridor
Includes portions of Brown, Cottonwood, Watonwan, Blue Earth, Waseca, Houston,
Fillmore, Mower, Freeborn, Faribault, Martin, and most of Jackson counties.
Proposed 4,478 acres and 61 sub zone communities. Received 4,195 acres and 57
sub-zones communities, which include 59 cities and seven townships.
West Central Region
Includes portions of Clay, Becker, Wilkin, Ottertail, Douglas, Grant, Traverse, Stevens
and Pope counties. The city of Freeport, a separate application, was added to the zone.
Proposed 4,940 acres. Received 3,858 acres. All 28 sub-zone communities were
approved, including include 28 cities and six townships.
Ar owhead Region Northeast Minnesota
Includes portions of Koochiching, Itasca, Aitkin, Carlton, St. Louis, Lake and Cook
counties.
Proposed 5,569 acres and 50 sub-zone communities. Received 4,329 acres and 46 sub
zone communities, which include 41 cities and 10 townships.
Headwaters Region
Includes portions of Lake of the Woods, Beltrami, Clearwater, Hubbard and Mahnomen
counties.
Proposed 3,167 acres. Received 2,076 acres. All sub-zone communities approved,
including nine cities and two townships.
Northwest Region — Land of the Dancing Sky
Includes portions of Kittson, Roseau, Marshall, Pennington, Polk and Red Lake
counties.
Proposed 3,353 acres. Received 2,710 acres. All 26 sub-zone communities approved,
including 22 cities and four townships.
Region 5 Regional Development Commission
http://www.deed.state.mn.ushiewskelease/2003/business 1 8Dec03 him 12/18/03
Governor Pawlenty Unveils Job Opportunity Building Zones Statewidey Page 4 of 4
Includes portions of Cass, Crow Wing, Wadena, Todd and Morrison counties, plus the
City of St. Cloud. The city of Sartell, a separate applicant, was added to the zone.
Proposed 4,668 acres. Received 3,500 acres. All 40 sub-zone communities approved,
including 31 cities and nine townships.
Region 7E East Central
Includes portions of Pine, Kanabec, Mille Lacs, Isanti and Chicago counties. Proposed
1,802 acres. Received 1,456 acres. Approved sub-zone communities include 14 cities.
Upper Minnesota Valley
Includes portions of Big Stone, Swift, Lac qui Parle, Chippewa and Yellow Medicine
counties.
Proposed 2,894 acres. Received 1,801 acres. All 19 sub-zone communities approved,
including 17 cities and 7 townships.
Southern Minnesota JOBZ Alliance
Includes portions of Nicollet, LeSueur, Rice, Goodhue, Wabasha, Steele, Dodge,
Olmsted and Winona counties.
Proposed 1,675 acres. Received 1,133 acres. Includes 28 sub-zone communities.
Copyright®1999-2003,Minnesota Department of Employment and Economic Development.All rights reserved.
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minnesota north Star)
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http://www.deed.state.mn.us/news/release/2003/business 18Dec03.htm 12/18/03
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The\orthlat d Mstitute and the Northspan Communitms Gin still opt ni under ogle of
- •Mt14•itsitSerlik COM:3 ' .1,,_,L., -, .
'- ' '' Minnesota Group traveled me state for:Minn a year.. e soliciting three m.embershmx;loarsstmismColioisps.tAom$270b,oeoros.i.
CAPrrL.F.X.INA, ,: berships The goal was to raise$2.3 million to contribute$100.0t : Class 1• :.
•• -,,Tt'litt"t-T-i-t-t•-;-''.----"•Jtt,;t,--,,tr-----t—rcl-------''---t-''
CapitalFundcnaleptintaiize the fund.They were able to recruit 59, B memberships start at S50,000 and Class C begin
members and raise$3 million in commitments, at$25,000.Members iltioalsapinpalyt.'afoot suipitittoirdwintaiiinedes
' 1Mal5 has approved 13 loans since MCCF was
launched in February 2003.Northspan senior - •-•, . the amount of funds they
Mr:Ai,A7, ,,4-1 _ -D...„..-kt.' .1t447,:,..:--,?---' .!:!:::1'::,:, ,i -` ,'
business developer Bob Palmquist.'Aim serves as -4,,x..;•4,„,-,t•Assi.t.::,itz,itrt,,,,,-' '4' ''q*qtq.,,.' ,,... ,.,,,Z. ,.4.,..iV'''..'.:. 1 I iave 00 oeposit.
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\1((F senior loan officer.sass the inaugural loan -„Avetiticy- i,„e.:-:tre,,,AE44...qA,„4„,,,,,:,-i-A.,,„1,„1,„:4,,tvtigjeta4id ,,,4, ,
for Sa000 helped a Dodge County resident
I IN'tg.''''''''''I'''r'''''" .''':'''...4 ''I''''''‘Ii1'*'''''''''''''''''''''4'.t'''''.144:44;'-'Y-'4.' 'a' to manage the'mild because 1'.: .• --',':
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purchase and renovate a car wash in Kassala,
tl.- IIMMeSS(.,Pe op,-- -
' if'..:' ' Ntinn.Twelve other projects worth$4.4 million 111,, .ix,„..„3.4.,Jj,,...2...---,-Lf....::.,:411,0,,,!,..--.7.„-,... ..- , •••:.. .„t.:•,. .,, „„r ..,„.„.fact ,.„...
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dollars
,,-,,,„ • beenNailed to utile -----:.A.,,,,..TY'-,-- i: „ 0,,f•-:.X;;',',.....! .•.c.::,,:..40nR.,,P45:..-.:
in MCA"'loans have Ap. ,.,,m,..t.-t.„.-.-.„0::::.,,,.-,-.,..-, ,...1.,,. _., ..
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- -•-'•-.' (see table on page 2).
MCCE was an outgrowth of a 1997 study ,:rileil ,,,,,,,,,,„. :- '41 ,,,, -441# ' -'--- - --- -
that determined there were millions of dollars - . , ,,
in idle'.' • :' ' capital in revolving loan funds throughout ..i:BchPahnn-uts t discusses the early. ssets„coetsti . . _tconductingiouiithe due diligence."said Barb Hayden.
or MCCF with Board mom or.n., . , s. County planning director and MCCF
• rural Minnesota.The Corporation for Entegnise
•:. , .
,-County Planr4n." .1;Director,Barb:ffalfile'n'' - board member.'And as part of the financial review.
Development and the Fond Foundation concluded ..,.... ,... , •
new"conduit'was needed to pool
,
a n
tbr emeinicthdees‘eiellaort;melvent "The beauty of MCCF is that the Yal ue of.theentire fund isbrkavaabilabbrfeeprbignht
purposes.
unused- NorthlandedTphdenia'servesInstitute,in partnership after each deal is made," said Scott Martin. "Also, papaw
• with The Northspan Group,Minnesota Power filings required under the Minnesota business subsidy law are handled by
and the Northland Foundation,developed the
.....,,•„„-,..,„.„,,
our fund manage. (Northspan), allowing members to focus on the next
ti;..•. ,- .' MccF concept to activate and leverag these .. development project that comes along.
••ri,-4-41•,,,,r,s,..
underutilized resources and access national
• -,J.s.•-..tt-,J-
ISIMIXEMIONISSIMIN :.„,,c,._, ,
capital markets to increase the mitailability of
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-ts,"::.•: gap-financing capital for Greater Minnesota. Additionally,the Blanch Foundation provided a • Northspan can learn from other parts oisfnatgihdteusbtaetea•
$200,000 working capital grant to pay for startup costs
The Northland Institute is a Minneapolis-
,!1-,-,4•-•- • - on how in anpmperoal5cohrothieeosetspwrOoirelits;2 million -•-i„.,:',,,,,,.,,,,,,i.,,1-1...,,
One example of an MCCF-financed project
''''''••:,'-',•'ii based non-profit corporation,which was
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'' •'•-:;''' ' L established in 1996 by the Northland
-...-. is Cloquet Community Memorial Hospital the dollars in. MCCF loansedintheip.uipnedthisieg,0"
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.- Foundation of Duluth. hospital is planning a multi-million dollar Palmquist.As
• Northland institute President and expansion over the next several years.tile first popular optionefloPrencrieffiber organizations a a time
•-•' ' •:-. MCCF CEO Scott Martin says loans are originated : phase of the project ctim.,e in at 313.3 million.When when other financial resources are shrinking.." ',,,-'•.,,,,,--,,,,,,,--,,,,,...-. •
on behalf' of MCCF members,The loans are sold to the financing pactage was put together Cloquet For more information on MCCE.Pahquist can
be reached by calling 218.329.7562 or by emiail at
..,•,
the secondary market through the Community officials determined they were short:,2..)million.
Reinvestment Fund fCRFI,a Minneapolis-based, "MC...LF catnetdong at ape. a time tor us. said bpalinquisOmnamununitycapitalfundorg.
•
private ii
' on-profit corporation that purchases and Cloquet y administrator Brian FriNinger, We were
-a 7r-6,or
• packages development loans and other services able to put MCCF to good use right away by Bob RI/aqui:sr at 218.1.4..... J.--
• nadon'ally.This allows MCC.?to fully recapitalize teaming up with Carlton County, EnergyGret.,iltrRiver. birilm.quist4--knorthspan..ctrg,
1 after each loan is made. and Minnesota Power to close that s,...)million gap..,
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' 0--ti Aitkn County SrPeter -
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.:4- ::10-'41:14:4114.'4:611.-41114i451414115-11\ CCF Projects to Date •
i `* Community Project MCCF Loan Value
� b
��� C;arit(in E tpancl title and abstract services business $150,000
t (1locluet h panci.Community Memorial Hospital $2,500,000
x x Dodge Center. Construct new commercial building for
: l ` i electrical contractor $1t?1000
Arley MCcDonoutgh. Dodge Center Construct new commercial build#ng for
�� D vel me ii[TCr � masonrtrcontractor $i.09,00(1
I.?Muth Conatru(:r new commercial buildiiag f()r
a B - � water testing laboratory $200,0}ot)
x Hayfield Purchase commercial ial building_ for certified
54 @ Ra11 1" public accountant $1 11,000
tl €l titt CQ g.� C Hibbing Purchase and renovan tire service center $150,000
• Kristin Purchase and rentiv ate ear wash S75,(10ii
, � r
Kassort Construct new c(>nanterc�i:ii k)uililing fci r.
§ x ib Sa hautl r� n$ . ''f • painting contractor 513:),00()
1&�I 1� New[Tlm Finance equipment fur promotional products business $500,000
Onarnia Purchase resort on Mille Lacs Lake $169,301)
� �� Apt 'Cato C Construct lar e child care facilzt ti t,0t)i)
�s r Eted irVitii g
i fox, F Redwood Falls Construct new car wash $250,000
Tax_
•
zones
•
raise
•
questions
State JOBZ program
lures cities, counties
BY MIKE HUGHLETT
Pioneer Press
KASSON, Minn. — City Planner Dan King
can step outside of city hall in this southern Min-
nesota town and envision the power of JOBZ,
shorthand for a deep well of tax breaks for
greater Minnesota and the largest state-run
business subsidy program in recent state
history.
Just across the street,King foresees a couple
of acres of vacant city-owned
land sprouting businesses now
that they're part of a Job Oppor- t4 A
11,
tunity Building Zone. Ditto for
two lonely, privately owned x ,
parcels behind city hall. 3
And then there's JOBZ's x
potential for Kasson's fastest- 1 } aa
growing employer, a bakery Y
equipment firm located across a Dan
cornfield from city hall. With a King
tax-free zone next to the plant,
King figures Kasson would be a lock for the com-
pany's eventual expansion.
The promise King sees in JOBZ is cropping up
in city halls and courthouses throughout the
state, setting off a land rush of sorts. Failure to.
land a tax-free zone, many believe, might put
cities and counties at a competitive disadvantage:
More than 300 Minnesota communities will
host tax-free zones, as Gov. Tim Pawlenty
announced last week.Businesses that move into:;
the zones,or expand in them,will pay almost no
taxes. No sales taxes. No taxes on property
improvement. No taxes on equipment purchas;.�
• es.No income taxes.
TAX-FREE ZONES,9A
•
•
ST.PAUL PIONEER PRESS•WW W.TWINCITIES.COM 'NEWS SUNDAY,DECEMBER 21,2003 W 9A'
FROM PAGE 1A
m V free r7 y�es much richer program.(than TIFI said ? r� x - v t0 yes,the more the subsidy is a waste
Il l�t1-ll l�l� L��lll.t,7 Dan Greensweig,director of the taxf '' i;„, �, � of public money.Unfortunately,govern-
+ increment finance division of the state x a= c
'^ i t a; ,. T ments-ofien never know if the answer
(continued) auditor's office. . < -, ,. f1� is yes or no,so they settle for maybe
In Kasson,Dan King agreed,calling t r y. "j, ,j `4. That's the situation in Kasson.But
Tens of millions of dollars in taxes JOBZ"TIF on steroids." r , C --,s - King said a tax-free zone would cer-
are likely to be forgiven during the 12- King said that,at first,JOBZ didn't S e z ie ( \ fainly expedite any expansion. "Our
year lifespan of the.zones,reshaping sound like it would be useful to Kasson ' u.,,, sf �. " 'x , hope is that thiswill speed up the
the states economic development land- a town of about 9,800 tucked amid the 1. S."...i.4?-v!,', 4. process."
scape while raising irksome questions farmland of Dodge County. Sure, s5 t �'
along the way,according to a Pioneer Kasson struggles with a dearth of ,, 4"p .?,1 PPROFITEERING POTENTIAL
Press analysis of tax-free zone propos- hometown employers. But JOBZ K
sls submitted to the state. seemed aimed at distressed cities,and - ing and economic developers
Fos example.do several cities and Kasson didn't fit that description,King I s ' l,t across the state also hope JOBZ
counties that will host tax-tree zones said. 07,5;. - t f -x r'. will spark development on land that,
really need them?Economic develop- In Dodge County,the median annual , t F, ,3&•-ro, ,,,L;,,,,,,-.2,,,,,i has long hosted little more than dande,
ment.experts say that if a state is corn- household income in 1999 was$47,437, s r lions and snowdrifts.
pelted to dole out tax breaks,it's best to about$300 higher than the state's meds `4g „_ - ,. "rA Tax-free zones include dozens.of
- target the neediest regions.Indeed,the an,according to the Minnesota demog- ='r 4rv+ rug yy ',, parcels of vacant land,some of it pub;
JOBZ program—a favorite of Pawlen- rapier's analysis of U.S.Census data ,-4,:,--?,:,:.,t.,,,,,,,,,,,,-- , _ >, ,, ;fin .� 1: hely owned,but much of it privately
ty's—was pitched to the Legislature Meanwhile,Dodge County's population :,s^ ya � - -' - f ="f owned.The latter brings another
nn s up
last winter as a balm for depressed grew a ba faster than the state's during , . J prickly issue. g
rural areas.Those areas were awarded the 19900. " " When privately owned land is
- tax-tree zones,but so were many towns Kasson,the county's largest town, TM , +-x n granted tax-free zone status,it could,
like Kasson that would hardly qualify saw its population balloon 25 percent, r --, 1 de (1 W s- a , suddenly become more valuable.
as downtrodden. about twice the state rate.Much of the - "That's a serious problem," said
In fact,just about every part of Min- growth stems from nearby Rochester. 43. Iw , ,,i rx 40' Timothy Bartik,an economic develop-.'
nesola will be in a tax-free zone,even Kasson is a magnet for Rochester rest ' ' a -� 5 ,x �'.- : a ment expert at the W.E.Upjohn Moti-
- though only parts of the state—the dents looking for a more bucolic place ,,y, t w �,` c mute,a Michigan-based research group,
northwest corner and several far to live,King said. _ +;Y_ �+- +l,tl that focuses on employment-related
southern and far western counties— Rochester,like Kasson,is part of the s. * ,., ,'*,;,. r policies. --
could be described as chronically tax-free zone that spans nine southern - A'e r ' , s' Subsidies.are supposed to provide
depressed. Minnesota counties, most of which •:•.•.,,,,-:" public benefits,and what private bene-
Here's another question, a classic sport median household incomes near fits they create should be limited,
economic development conundrum: or above the state's median. rwa "fx.. Battik said.But some benefits of the
When JOBZ is applied to existing busi- The.region probably is the wealtht rr -t. s _g., C 1 JOBZ program are likely to be
nesses with hopes that tax breaks will est with a tax-free zone,but others also a -af" t` t:,,,:::::,-.`
w^t. - "capitalized" — built into — land
spur-future expansions—as dozens of include communities that have been a i" ,-,.,t- s, values,he said.
cities plan to do—is the state subsidiz- economically vibrant over the past 9, r 11®\ - • And owners of vacant land generat-
ing something that might have decade. a: '44r $ 9 x, ly aren't creating the jobs that.
occurred even without a subsidy? Tax-free zones even stretch into +� ,,f " ,, „,'. pf.� l ' programs like JOBZ seep to create.
And one more:By bestowing tax Chisago and Isanti counties.Both are I (\ - tv 'f a King and officials in other cities
breaks on hundreds of acres of private- relatively well-off, and both are )' t< 't. fi -u said they're aware of the potential
ly owned land,will government poten- increasingly bedroom communities of . _r t $r a problem.
belly be creating windfalls for private the Twin Cities.But neither is among ` "' ,-A,. `? Take Lake City,for example.It won.
property tuners? the seven metro counties that are r .tax-free status for five privately owned.
The answers to those questions are exempted hnm JOBZ by law. Ix , „ - .1h. ,.,'-',,SP ',.«' y --1::".‘-, acres that once hosted a restaurant,
murky and often draw fervent econom- Chisago already has been "'F '' but have been devoid of business for
is debate. announced as the site for two big A;' > .=_. °,.,� ....�.. _. t. ,. ..?,v' years.The city hopes to attract light
III There will be 10 tax-free zones,each JOBZ-aided projects.a new factory for
spascow misusat PIONEER PRESS manufacturing to the site
spanning several counties.Each zone window manufacturer Andersen Corp.. Kasson,Minn..won a state JOB zone adjacent So.Advantage Equipment. The land's current owner put the
will include dozens of sub-zones scat- and a new research center for snowmo- which reconditions bakery and restaurant equipment and employs 73.Cam parcel up for sale last year for$500,000,,
tered over nmny square miles.Most bile maker Polaris Industries. JOBZ Banks,left,and Chris Stuhr recently worked on a dough machine at Advantage. and recently hiked the price to$575,000
sub-zones will be further divided into helped land both projects in Minnesota after razing a vacant building,on the
individual properties — 10 barren instead of Wisconsin,the state said - site.
acres on one side of a town,an aban- State officials say most of the tax- League of Cities has often heard such Call,a baker by trade.There,he began Ron Zeigler,head of Lake City's Eco-
doned factory on another—and so on. free zones are in economically dis- .concerns. reconditioning industrial-strength bak- nomic Development Authority,agreed
State administrators nixed propos- tressed areas.But the law that created "No community feels it can sit on its ing equipment in 1991.By the late 1990s with a reporter's statement that.
ars for some sub-zones because they JOBZ defines"distressed"broadly. hands and do just nothing." said Call's sideline had become a full-scale $500,000 seemed like a relatively high.
included too much acreage.didn't seem For instance,Rochester, the Ohn- Frazell,the league's director of mem- business,which is now run by his sons. price for the property."l would agree
feasible or didn't comport with JOBZ's sted County seat and home of the Mayo ber services.The thinking is,`If I don't The elder Call scours the nation for that is a reason why it hasn't sold,"he
goals.No proposals were axed because Clinic, is an economic dynamo. Its win,the other guy down the street does equipment — doughnut fryers, bun said. One of the propjerty's owners,
a community was deemed too well off unemployment rate is lower than the — and then where does that leave makers, 140-quart mixers, etc. The Mike Lowther,disagreed.noting that
economically. state's as a whole,its wages higher me?'" machines are stripped to their gears it's in a prime highway location and.
The zones, which officially cram- than the state average. So cities throughout the statecon- and bearings,then reassembled and already has utilities.
mence next year,are prohibited in the But JOBZ's neediness criteria suited their economic development sold all over the world. Either way,by putting the property
Twin Cities. include"sudden and severe,job loss," playbooks and picked JOBZ for the Advantage's 30,000-square-foot plant in a tax-free zone,wouldn't the city and
and Rochester has been hit hard by fac- plays that looked most promising. was built last year,with the help of state be making it easier for the
'TIP ON STEROIDS' tory closings.Olmsted County saw a One common strategy: putting Tax-Increment Financing from the City landowner to fetch that$500,000 price?.
much larger percentage increase in abandoned factories into tax-free zones of Kasson.The city chose the land next Zeigler- said he didn't think so
Economists generally deride tax unemployment benefit applications in order to spur redevelopment.The to Advantage as a tax-free zone because nearby property—including
breaks and other business subsidy between 2000 and 2002 than did the former Celestica plant in Rochester is because Advantage has the best some that also won JOBZ designation.
programs as economically useless at state as a whole,state data shows. an example. The 2-yea--old circuit growth prospects of any Kasson busi- could be priced more competitively._:
best.wasteful at worst.But in the real board factory closed earlier in 2003, ness, King said. "They're expanding Essentially.the market will work to-
world subsidies are a prime currency COMPELLED TO JOIN erasing 550 jobs. exponentially." minimize windfalls to landowners,he-
for cities and states scrapping for jobs. Another common strategy placing Advantage also plans to begin man- said.
JOBZ is sort of a cousin to a muchn Icing's view,JOBZ has morphed property next to an existing factory ufacturing its own doughnut machines, Louis Jambois, the state's JOBZ
used—and critics say overused—sub- unto a general rural development pro- into a tax-free zone, with hopes of which the company said would add coordinator,agreed.So many parcels of
sidy called Tax Increment Financing, gram—not just a tonic for dying farm prompting an expansion. more than 20 jobs and probably double vacant land will be granted tax-free
With'OF.taxes generated by a new towns and crumbling mining villages. For instance,Kasson won a zone sales. status that they will compete against„
commercial development help pay the It's a program that will make rural adjacent to Advantage Equipment, So would this expansion happen each other,he said.
costs of that development. cities like Kasson stronger.he said. which reconditions bakery and restau- even if JOBZ never existed? Among "I expect people to hp to profiteer,
Many cities have had a harder time It's also a program,King said,that rant equipment and employs 13. economic development experts,such a from this,but for the most part they.,
using TIF since the Legislature over- Kasson felt compelled to join to stay Advantage is just the sort of home- question brings up the "but for" will flunk because there is enough,
• hauled Minnesota's property tax sys- even with neighboring cities and coon- grown company that small cities love to .maxim: Would a new business or available land."
tem in 2001.JOBZ could fill the breach, ties."We don't want to be ata cornpeti- see:a fast-growing provider of decent expansion occur in a particular loca-
and then some.That's because JOBZ live disadvantage to areas 40 miles jobs. tion but for the subsidy involved? Mike Hughtett can be reached at
offers bigger subsidies than TIF. away" Advantage started in a shed on the The closer the answer is to no,the rnhaghlettuhpioneerpresscorn or at
"On an annualized basis.JOBZ is a Kevin Frazell at the Minnesota rural Dodge County property of Daron more sensible the subsidy.The closer 651-228-5428.
s/j
it fkk
River
13065 Orono Parkway
Elk River,MN 55330
December 29, 2003
SoftPac Industries, Inc.
Bill McMullen,President&CEO
13512 Business Center Drive
Elk River,MN 55330
Dear Mr.McMullen:
This letter is to inform you that SoftPac Industries, Inc. has successfully completed the job creation
and wage goals as required within the Development Assistance Agreement by and among the City of
Elk River, Opus Northwest, L.L.C, and SoftPac Industries, Inc. dated August 28, 2000.
The Development Assistance Agreement specified the following Job Goals in Section 3.5. (Business
• Subsidy Agreement) subdivision (h):
"... SoftPac covenants that it will provide at the Project 60 full-time equivalent permanent
employee positions within two years of the Benefit Date (November 20, 2003),with these
jobs having wage levels of at least $10.00 per hour, exclusive of benefits."
Sean Lawler has recently reported to me that SoftPac Industries, Inc. has created a total of 61 full-
time jobs and 7 part-time jobs as of November 20, 2003. Attached is a copy of the most recent MN
Business Assistance Form,which will be submitted to the MN Department of Employment&
Economic Development (formerly DTED).
The City of Elk River is pleased that SoftPac Industries, Inc. has held true to the job creation and
tax base goals that were established with its location to Elk River. Please feel free to contact me to
discuss any issues related to SoftPac's continued growth and success in Elk River.
Sincerel ,
...41,"&
Catherine Mehelich
Director of Economic Development
CC: Sean Lawler, SoftPac Industries, Inc.
Elk River Mayor&City Council
vEttc River Economic Development Authority
•
Phone:763.63 5.1000
Fax:763.635.1090
www.o.elk-river.mn.us
"Nte.)
December 12, 2003 INITIATIVE
FOUNDATION
DEC 1 5 200
3
Patrick Klaers
City of Elk River
13065 Orono Pkwy
Elk River, MN 55330-0490
Dear Mr. Klaersr. .
c
Please extend our thank you to the City of Elk River and to the Economic Development
Authority for supporting the Initiative Foundation's five-year "Unlock the Potential"
Campaign.
The special partnership we share with generous friends like you has enabled the Initiative
Foundation to distribute $33 million throughout the region, including $2.1 million in grants and
loans in Sherburne County alone. Please note the enclosed project list, which details the work
we have supported in your area. We have been, and continue to be, an active force for economic
• development, community planning, leadership development, and donor services in Central
Minnesota.
Because of your support, the Initiative Foundation is able to continue its mission serving greater
Minnesota by partnering with county economic development offices and city government on
issues such as job creation/retention,business start-up/expansion, workforce development,
technology, affordable housing, and business financing resources. Your contribution assures our
continued economic development activity in your community.
Again,your continued support of our programs and services is very much appreciated.
Sincerely,
Kathy Gaalswyk
President
405 FIRST STREET SE
• 1
LITTLE FALLS, MN 56345
WWW.IFOUND.ORG
PHONE: 320.632.9255
Fax: 320.632.9258
EQUAL OPPORTUNITY LENDER,
PROVIDER AND EMPLOYER.
III II , - - *
, „ -,,L-, i,sii,,,,,s,i,s, ,,„ ,., 4
ST. PAUL PIONEER PRESS ■ WWW.TWINCITIES.COM 'NEW$ SUNDAY, DECEMBER 21, 2003 W 9A'
FROM PAGE 1A
Tax-free ZOl leS much richer program(than TIF),"said r g to yes,the more the subsidy is a waste
Dan Greensweig, director of the tax ; ;' q. of public money.Unfortunately,govern-
+ increment finance division of the state . ments often never know if the answer
(continued) auditor's office. 17, ., is yes or no,so they settle for maybe.
In Kasson,Dan King agreed,calling ,,� ,' That's the situation in Kasson. But
Tens of millions of dollars in taxes JOBZ"TIF on steroids." t t. King said a tax free zone would cer
tis '' '
are likely to be forgiven during the 12- King said that, at first,JOBZ didn't ,, tainly expedite any expansion. "Our
year lifespan of the zones, reshaping sound like it would be useful to Kasson, 's ....4 . hope is that this will speed upthe
the state's economic development land a town of about 4,800 tucked amid the ` , process." P
scape while raising irksome questions farmland of Dodge County. Sure, Is
along the way, according to a Pioneer Kasson struggles with a dearth of q,,,,,,9„.,, PROFITEERING POTENTIAL
Press analysis of tax-free zone propos- hometown employers. But JOBZ t i` 'r iE
als submitted to the state. seemed aimed at distressed cities,and4i ".„71,-
71 ¢ �
��� �•7,$,� Rig and economic developers
For example, do several cities and Kasson didn't fit that description,King ' , ' - ''across the state also hope JOBZ
counties that will host tax-free zones said. }�{ � V 43,: will spark development on land that,
really need them? Economic develop- In Dodge County,the median annual G � has long hosted little more than dander,
meat experts say that if a state is coin- household income in 1999 was$47,437, c 9? lions and snowdrifts.
pelled to dole out tax breaks,it's best to about$300 higher than the state's medi 71tf, ,- ,t iy�,&'e Tax-free zones include dozens.of
target the neediest regions.Indeed,the an,according to the Minnesota demog f i�l s, : n, ;. parcels of vacant land, some of it pub;
JOBZ program—a favorite of Pawlen- rapher's analysis of U.S. Census data. ' licly owned, but much of it privately„
ty's — was pitched to the Legislature Meanwhile,Dodge County's population �ftfr � ..FI , , 6`11/4., > i FAN,: owned. The latter brings up another:
3
last winter as a balm for depressed grew a bit faster than the state's during .0 •a� > �' .;, prickly issue.
rural areas.Those areas were awarded the 1990s. , 4q< r, ' ° When privately owned land is.
tax-free zones,but so were many towns Kasson, the county's largest town, ,` r, F ;_; granted tax-free zone status, it could:
like Kasson that would hardly qualify saw its population balloon 25 percent, I i $� ! " ) suddenly become more valuable.
a
out
e rata
asIn fact just about every part of Min growth twice
tems,from nearby Much
pester. <;', ,ef; , fi.• -, Timothy Bartike an economic develop:,rious problem"
nesota will be in a tax-free zone, even Kasson is a magnet for Rochester resi ! . _ , r ..• ment a ert at the W.E. Upjohn Inti-
though only parts of the state - the dents looking for a more bucolic place ` g yrs pJ
� � � .� �� ��� �� �� tute,a Michigan-based research groin,
northwest corner and several far to live,King said. ' . . that focuses on employment-related
southern and far western counties — Rochester,like Kasson,is part of the �' ' policies.
could be described as chronically tax-free zone that spans nine southern L „ Subsidies are supposed to provide
depressed. Minnesota counties, most of which ,P�, y i't° "°_ public benefits,and what private bene-
Here's another question, a classic sport median household incomes near s= = " ,` 3,1"` •; fits they create should be limited,
economic development conundrum: or above the state's median.
.1...t....,!,,,,, � Bartik said. But some benefits of the
When JOBZ is applied to existing busi- The region probably is the wealthi- ,t;:(,, JOBZ program are likely to be
nesses with hopes that tax breaks will est with a tax-free zone,but others also , "capitalized" — built into land
spur future expansions—as dozens of include communities that have been values,he said.
cities plan to do—is the state subsidiz- economically vibrant over the past And owners of vacant land general-
ing something that might have decade. ., � '" ly aren't creating the jobs that,
occurred even without a subsidy? Tax-free zones even stretch into ; " programs like JOBZ seek to create.
And one more: Bybestowingtax Chisago and Isanti counties. Both areAKing
g I and officials •in other cities,
breaks on hundreds of acres of private- relatively well-off, and both are , said they're aware of the potential
ly owned land,will government poten- increasingly bedroom communities of g 1.. problem.
tially be creating windfalls for private the Twin Cities. But neither is among x•f' ,'" � V .1t -: Take Lake City,for example.It won,
property owners? the seven metro counties that are . 1'' tax-free status for five privately owned;
The answers to thosequestions are exempted from JOBZ bylaw. "�F
p � - acres that once hosted a restaurant
murky and often draw fervent econom- Chisago already has been sir Z`x t
� b � l�� � �� �_; but have been devoid of business for
is debate. announced as the site for two big \,----,,,-�•, _ '�� �,_. , ., :•AA years. The city hopes to attract light
There will be 10 tax-free zones,each JOBZ-aided projects,a new factory for SCOTT TAKUSHI,PIONEER PRESS manufacturing to the site.
spanning several counties. Each zone window manufacturer Andersen Corp.. Kasson, Minn..won a state JOB zone adjacent to Advantage Equipment, The land's current owner put the
will include dozens of sub-zones scat- and a new research center for snowmo- which reconditions bakery and restaurant equipment and employs 13.Cam parcel up for sale last year for$500,000,,
tered over many square miles. Most bile maker Polaris Industries. JOBZ Banks, left,and Chris Stuhr recently worked on a dough machine at Advantage. and recently hiked the price to$575,000
sub-zones will be further divided into helped land both projects in Minnesota after razing a vacant building on the.
individual properties — 10 barren instead of Wisconsin,the state said. site.
acres on one side of a town, an aban- State officials say most of the tax- League of Cities has often heard such Call,a baker by trade.There,he began Ron Zeigler,head of Lake City's Eco-
doned factory on another—and so on. free zones are in economically dis- concerns. reconditioning industrial-strength bak- nomic Development Authority, agreed
State administrators nixed propos- tressed areas.But the law that created "No community feels it can sit on its ing equipment in 1991.By the late 1990s with a reporter's statement that,
als for some sub-zones because they JOBZ defines"distressed"broadly. hands and do just nothing," said Call's sideline had become a full-scale $500,000 seemed like a relatively high
included too much acreage,didn't seem For instance, Rochester, the Olm- Frazell, the league's director of mem- business,which is now run by his sons. price for the property. "I would agree
feasible or didn't comport with JOBZ's sted County seat and home of the Mayo ber services.The thinking is,If I don't The elder Call scours the nation for that is a reason why it hasn't sold,"he
goals.No proposals were axed because Clinic, is an economic dynamo. Its win,the other guy down the street does equipment — doughnut fryers, bun said. One of the property's owners,
a community was deemed too well off unemployment rate is lower than the and then where does that leave makers, 140-quart mixers, etc. The Mike Lowther, disagreed, noting that,
economically. state's as a whole, its wages higher me?'" machines are stripped to their gears it's in a prime highwaylocation and,
The zones, which officially com- than the state average. So cities throughout the state con- and bearings, then reassembled and already has utilities.
mence next year, are prohibited in the But JOBZ's neediness criteria suited their economic development sold all over the world. Either way,by putting the property
Twin Cities. include "sudden and severe job loss," playbooks and picked JOBZ for the Advantage's 30,000-square-foot plant in a tax-free zone,wouldn't the city and,
and Rochester has been hit hard by fac- plays that looked most promising. was built last year, with the help of state be making it easier for the
`TIF ON STEROIDS' tory closings. Olmsted County saw a One common strategy: putting Tax-Increment Financing from the City landowner to fetch that$500,000 price? ,:
much larger percentage increase in abandoned factories into tax-free zones of Kasson.The city chose the land next Zeigler said he didn't think so
ti conomists generally deride tax unemployment benefit applications in order to spur redevelopment. The to Advantage as a tax-free zone because nearby property — including
breaks and other business subsidy between 2000 and 2002 than did the former Celestica plant in Rochester is because Advantage has the best some that also won JOBZ designation
programs as economically useless at state as a whole,state data shows. an example. The 2-year-old circuit growth prospects of any Kasson busi- —could be priced more competitively.,
best,wasteful at worst. But in the real board factory closed earlier in 2003, ness, King said. "They're expanding Essentially, the market will work to
world, subsidies are a prime currency COMPELLED TO JOIN erasing 550 jobs. exponentially." minimize windfalls to landowners,he=
for cities and states scrapping for jobs. Another common strategy: placing Advantage also plans to begin man- said.
JOBZ is sort of a cousin to a much Tn King's view, JOBZ has morphed property next to an existing factory ufacturing its own doughnut machines, Louis Jambois, the state's JOBZ
used—and critics say overused—sub- 'into a general rural development pro- into a tax-free zone, with hopes of which the company said would add coordinator,agreed.So many parcels of
sidy called Tax Increment Financing. gram—not just a tonic for dying farm prompting an expansion. more than 20 jobs and probably double vacant land will be granted tax-free'
With TIF, taxes generated by a new towns and crumbling mining villages. For instance, Kasson won a zone sales. status that they will compete against,,
commercial development help pay the It's a program that will make rural adjacent to Advantage Equipment, So' would this expansion happen each other,he said.
costs of that development. cities like Kasson stronger,he said. which reconditions bakery and restau- even if JOBZ never existed? Among "I expect people to try to profiteer;
Many cities have had a harder time It's also a program,King said, that rant equipment and employs 13. economic development experts,such a from this, but for the most part they;
using TIF since the Legislature over- Kasson felt compelled to join to stay Advantage is just the sort of home- question brings up the "but for" will flunk because there is enough,
hauled Minnesota's property tax sys- even with neighboring cities and coun- grown company that small cities love to maxim: Would a new business or available land."
tem in 2001.JOBZ could fill the breach, ties."We don't want to be at a competi- see: a fast-growing provider of decent expansion occur in a particular loca „
and then some. That's because JOBZ tive disadvantage to areas 40 miles jobs. tion but for the subsidy involved? Mike Hughlett can be reached at
offers bigger subsidies than TIF. away. Advantage started in a shed on the The closer the answer is to no, the mhughlett@pioneerpress.com or at
"On an annualized basis,JOBZ is a Kevin Frazell at the Minnesota rural Dodge County property of Daron more sensible the subsidy. The closer 651-228-5428.