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8.0. EDSR 03-08-2004 Item 8. • City of Elk -�-, River MEMORANDUM TO: Economic Development Authority Mayor & City Council FROM: Catherine Mehelich, Director of Economic Development, DATE: March 8, 2004 SUBJECT: Consider Concept Approval of the Gradient Technology, Inc. Expansion Siting Proposal Attachments • Correspondence from Mary Ippel,Briggs&Morgan P.A.regarding TIF No. 19, March 2, 2004. 40 • Staff Report to the EDA regarding Gradient Technology Proposal,February 9,2004. Issue 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. Since then staff has been working with the prospect Gradient Technology in completing the City Tax Rebate Financing Application. Representatives from Gradient Technology are prepared for the EDA and City Council to discuss the proposal at its March 8 meeting. Staff has become aware of some concern from Council and EDA members 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 (the shopping center). The attached correspondence from attorney Mary Ippel of Briggs &Morgan provides the city a written opinion following her review of the TIF No. 19 documents. Ms. Ippel states 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". Over the past year staff has been working under the EDA's direction to work with private landowners for the cooperative marketing and development of their business park/light industrial land. These discussions with the landowners have included the owners of the Elk • River Business Park. 2200 FIRST NATIONAL BANK BUILDING 332 MINNESOTA STREET SAINT PAUL,MINNESOTA 55101 TELEPHONE(651)808-6600 •B RI G G S AND M 0 R GAN FACSIMILE(651)808-6450 PROFESSIONAL ASSOCIATION WRITER'S DIRECT DIAL (651) 808-6620 WRITER'S E-MAIL mippel@briggs.com March 2, 2004 VIA E-MAIL Cathy Mehelich Community Development Director Elk River City Hall 13065 Orono Parkway Elk River, MN 55330-5600 Dear Cathy: I have reviewed the Contract for Private Redevelopment by and between the Economic Development Authority in and for the City of Elk River and Associated Investors of Elk River, Inc., Fischer Sand&Aggregate, LLP, and Elk River Business Park, LLC dated July 30, 1999 . (the "Contract"). The Contract reimburses Associated Investors of Elk River, Inc. from tax increments derived from Tax Increment Financing District No. 19 for a portion of the costs of acquiring, clearing and preparing the land(the "Reimbursable Redevelopment Costs")related to the development of approximately 250,000 square feet of commercial retail building space (the "Shopping Center Project"). The Contract provides that Associated Investors of Elk River, Inc. will be reimbursed for the Reimbursable Redevelopment Costs for the Shopping Center Project based upon an annual schedule of completed light industrial building space to be developed on business park property described in the Contract. In addition,the Contract provides that the City will be reimbursed from tax increments derived from Tax Increment Financing District No. 19 for public improvement costs related to the development of the Shopping Center Project. Because tax increments derived from Tax Increment Financing District No. 19 have not been used to reimburse for costs associated with the Business Park Project as defined in the Contract, 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 warehouse and distribution facility in the Business Park Project; provided that a new tax increment financing district is established and the applicable provisions of the tax increment financing law are complied with. 1623789v1 MINNEAPOLIS OFFICE•IDS CENTER•WWW.BRIGGS.COM MEMBER-LEX MUNDI,A GLOBAL ASSOCIATION OF INDEPENDENT LAW FIRMS BRIGGS AND MORGAN Cathy Mehelich March 2, 2004 Page 2 If you have any other questions,please do not hesitate to contact me. Very truly yours, /s/ Mary G. Ippet Mary L. Ippel MLI/tfy • 1623789v1 • ��-1,/ Elk River MEMORANDUM TO: Economic Development Authority Mayor & City Council FROM: Catherine Mehelich, Director of Economic Developmen t/, DATE: February 9, 2004 SUBJECT: Consider Concept Approval of Gradient Technology Expansion Siting Proposal Attachments • Preliminary Expansion Siting Proposal for Gradient Technology,February 2, 2004. S Issue The attached Preliminary Expansion Siting Proposal has been submitted by staff to Gradient Technology with regard to the company's proposed relocation project. Gradient Technology proposes to construct a 13,000-square foot light industrial/business park building for their office,research&development, and equipment fabrication operation. Staff has proposed that the company purchase a 1.5 acre lot within the Elk River Business Park and that the City consider a write down of the land cost to $0 through a pay-as-you-go note to the company. Staff anticipates that a representative from the Gradient Technology will be present for the EDA meeting to discuss the proposed project. Background Gradient Technology(G.D.O., Inc.) demilitarizes munitions for various branches of the military. None of the demilitarization is performed at the company's Minnesota facility,but rather at Crane Naval Service Warfare Center in Crane,Indiana. The Minnesota facility will be used for Gradient Technology's business office and for providing chemical engineering design services and equipment fabrication. The company will also have a lab for conducting research and development. The company currently employs 13 full-time staff, including 7 based in Minnesota and 6 in Indiana and elsewhere. The positions have an hourly wage between$16-75.00 per hour. The company projects to create 3 to 5 new positions at the Minnesota facility within 2-years. The new positions likely consist of management and engineers. Consider Approval of Gradient Technology Preliminary Proposal EDA Meeting February 9,2004 Page 2 of 2 • Staff has been in contact over the past one and a half years with Eric Haehn,Vice President/CFO of Gradient Technology. The company currently leases space in Blaine,MN and is seeking a suitable location within the northwest metro area to relocate. The City of Big Lake has aggressively pursued the company's relocation project,in addition to staff's efforts. Mr.Haehn proposes to construct a 13,000-square foot building,in which the company would occupy the entire space. Staff has proposed the following site and financial package for the project: • Location-A 1.5-acre parcel to be subdivided within the Elk River Business Park. The business park is owned by a partnership between Amcon Construction, Brookstone, Inc., and Fisher Land Development. • Write-down of 100% of land costs by way of a pay-as-you-go Tax Rebate Financing note that would then reimburse the company for land costs estimated at$105,197. As is often the case,this project is on a tight schedule and staff is doing its best to accommodate the timeframe where possible. Mr.Haehn is in the process of completing the necessary paperwork,including the TRF application and submitting site plans. Although the TRF application was not available for inclusion in this packet,it is staff's intention to provide a copy of the application and a rating sheet at the EDA meeting. • Action Requested Staff recommends that the EDA consider recommending to the City Council approval of the Preliminary Proposal concept for the Gradient Technology project and direct staff to complete the due diligence process for the financial analysis and Tax Rebate Financing process. Per the City's TRF policy, any requests over the amount of$25,000 requires financial review and but-for analysis by the city's financial advisor, Ehlers&Associates. 02/02/2004 16: 46 17152. 264‘J2 ��� lives Hum Feb 02 04 03:25p GRADIENT TECHNOLOGY 7637929972 p• 2 City of Elk River Preliminary Expansion Siting Proposal Gradient Technology Revised February 2, 2004 L Site A. Propsscd Location 1.5 acre lot A proposed subdivision of Lot 5. Block 1,Elk River Business Park Access from Industrial Circle. Set attached Location Map. B. 12 se Reg14ir n i tz Business.Park/Light Industrial An administrative subdivision (lot split) to be administered by the landowner prior to ill sale C. 1 1f1g Rc uirc lents Building and site to comply with Business Park Disuict Ordinance and other City requirements. An accessory building for materials storage could be allowed. See attached Bxrinecr Park District Otdinancr Regyirrments. D. I and Cost/ialuc $1.61/sf 1.5-acres Total: $105,197 Includes special assessments and park dedication. E. Project Tirnefrsung Upon acceptance of this Preliminary Proposal and a letter of intent,the Director of Economic Development will prepare and submit a comprehensive proposal including a detailed project timetable for finance and building per-rnit timing and application requirements. At this time the proposed site would reouirc an administrative subdivision application, to be submitted by the landowner to the City Council for consideration. This process could be completed within 30-days. Financing application review and considerations can take up to 45-days and can run concurrently with the administrative subdivision,building site plan and pemtit application review process. 02102!2004 lb: 4b 1 " OZ.Lo4Dc Feb OE 04 03: 25p GRADIENT TECHNOLOGY 7637929972 P. 3 City of Elk River Priiininazv Proposal for.Expansion Sitting Grndicnz Technology -January 14,2004 Page2of2 i II. Financing A. Project Costs Land $105,197 1.5 acres at$1.61/S}= Construction $650,000 Estimate - 13,000 SF at$50.00/SF trquprnent $ 0 Total Uses $755,197 B. Proposed Business Funancing Sources Bank $ 574,924 90 %Building Cost Owner Equity $ 75,076 10% if using SBA504 via Bank Tax Rebate Fjnance S 105.197 50/50 City and County Total Sources $755.197 *Total City Assistance Proposed: $ 52,598.50 Total County Assistance Proposed: $ 52,598.50 C. job &W gc Goals (to be met within 2 years of building occupancy) Job Creation 5 full-tune at$15.00/hour(minimum) Job Retention 13 full-time at$13.00-75.00,hour D. Financing Applications Tax Rebate Financing assistance, or Tax Abatement,is proposed to be provided in the form of"pay-as-you-go"basis,in which the buyer(Gradient Technology) pays IF improvement costs upfront, and then is reimbursed annually with 100% of abatement proceeds upon receipt of annual real estate taxes by the City and County for a maximum term/amount equal to the Land cost or 7-years, the earlier. The buyer could consider an assignment of the"pay-as-you-go"note to a bank for "upfront equity" financing. F. Other Proposal is contingent upon letter of approval front qi a1ified lending institution. Proposal is contingent upon approvals from the Elk River Economic Development Authority,City Council and Sherburne County Board of Commissioners. Proposal is exclusive of rroject contractor/builder. However,Arncon Construction or the landowner partnership would consider accepting an assignment of the abatement note in exchange if the buyer builds with Amcon Construction. Additional acreage, beyond buyer's initial needs, may also be considered if building with Amcon. See attached./union rorrerporideece re:Gradient T id,Ralogy.Prviosal Prelim roposal Accepted: C�t \...i . . ( ,...,c.:,4i.::-...,,,..... City E11of 1 ,.. e.. :..:.:,, ., ': River Business Sites 13065 Orono Parkway _Elk.Ri er,MN 5533 ' h / e 1 q-` ([v� �! `t� '-,-,--2-..____ /L_ _ \ ; -:-7';' %i ; >,l ham__ I��! H I, r5 - , J �1 CRD 33 3 ( r iI '/ r' l \irr‘,---1 .7 ° (''''' �� L i C it — 'c oil ,i I /% — ( = ,C � O !, iL l.--, l II � i �, ti- -0�1 � )& � , � y I •[ � I — Vl_,, � fir ,- � ; s , , _ _ Il , l I\, 5 �\ , )e tiC i�l P cc T II'� / I �� f f 1, 7 .-+ 1J I I'✓ I — _i i ar i j sC� ;� y �II --�' = � 1 .0 ____4-c J.. -l _ 0 r 14---,11 —� d L A —I I i ; off:— 0 -� ' r 'kb. �.,0 �r �FSCHOOL ST I��� � _. / mra 17 LT- E �HWIY 10� � , ( °�r�C© Li Inr`7'711 \-drr y (8, �u 1<< 'j✓ E �r >t Cu tl \ �I( O y Cs`U R sl i —_ ILC�� Il�c��I I���C���1���'� jl �� °�—�•����'\. "\ i�'�.! :Ly n� �'CO RD 12_1:.,___,,,,., I url II IEi\ ..A 7� �. `�-� --1-�r---,,,,,_-'7(---., /moi A�� \,„,,X, �`�r J v"" mom;/ ria :_: .--,-1";/ — ( 1� ,� i� iy f —� I� .,-,0\ 1 — i - § v a 3 5 - - ,I � \ �., . 175th AVE ' ` .�, PROPOSED NORTHSTAR CORRIDOR - ��. \, qi� � COMMUTER RAIL DEPOT _ 11 ?�, �� �� - lilst Av[+ — ELK PATH BUSINESS CENTER }t 1 U i'° I --I 80 ACRES II GAGNE PROPERTY — \ Ii:. ',p — 18 ACRES / I — ELK RIVER BUSINESS PARK -' l 65th AVE � "'" 0 1"•° 25 ACRES 1 II ELK RIVER EDA PROPERTY _11 i '\, ,4,,,- %. (( ;I = 5''''''''''''''' ' 45 USEABLE ACRES OUT OF 90 f0 !j ^i i CASCADE INDUSTRIAL PARK 1 �` 46 ACRES �� �� O NEW INDUSTRIAL DEVELOPMENT � � r .i —�\ , EXPANSIONS /RETENTION _ l -•-•'\LI J \\A.,I:7-1 I ;� -- For site specifics call Cathy Mehelich at 763-635-1041 ' 'I 1 i� Phone: 763.441.7420 Note This map does not show the entire I !i city limits of the City of Elk River Far. 763.441./4 5 w\n'ei.eik-river.mn.us §30-1293 ELK RIVER CODE 0 (19) Ministorage. d. Mail order operations. (20) All uses allowed as a conditional use in e. Telecommunication operations. the I-1 zone. f. Sherburne County fair. (e) Architectural standards. No provisions of g. Warehouse space not exceeding 50 section 30-938 except subsection 30-938(2) per percent of the entire building. taining to exterior building finish and subsection 30-938(3) pertaining to roofing standards applies h. Showroom space. to this-district. i. Repair and maintenance, excluding (Code 1952, § 900.12(15)) auto repair. Sec. 30-1294. BP business park district. (2) Permitted uses allowed when the under (a) Purpose. lying land use is highway business are as follows: (1) The business park district is established a. Health athletic clubs. to encourage a planned, integrated envi- ronment for certain industrial, office, and. b. Personal service establishments. commercial uses which are compatible c. Financial institutions. with and complement each other as well as the surrounding land uses. The under- (c) Accessory uses. Accessory uses in the BP lying land use designation within the dis- district are as follows: trict may vary and may be either light industrial or highway business. Develop (1) Off-street parking lots or facilities. ment within the business park district (2) Private recreational facilities. • will correspond with the land use desig- nation. Industrial and office uses are al (3) Public shelters and essential services. lowed where the land use designation is (4) Retail sales, provided the following condi- light industrial, and commercial uses are tions are met: allowed where the land use designation is highway business. a. The retail sales activity shall not be located in an administrative office (2) It is the intent of this section that devel- facility, but shall be located within a opment reflect common themes using corn- business, the principal use of which patible architectural design and consis- is not commercial sales. tency in signage,landscaping,and lighting. It is also the intent to encourage busi b. The retail sales activity shall not nesses which generate a high number of occupy more than 15 percent of the v jobs per square foot rather than predom gross floor area, or a maximum of inantly warehouse type uses. 5,000 square feet of the occupied quarters, whichever is less. (b) Permitted uses. Permitted uses in the EP district are as follows: c. The retail sales activity shall be re- lated and subordinate to the princi- (1) Permitted uses allowed when the under- pal use. lying land use is light industrial are as follows: d. No sign identifying or promoting that retail sales occur within the building a. Light manufacturing. shall be visible from outside the build- b. Research and development laborato- ing. ries. e. Freestanding retail shops and stores c. Government, business, and profes- shall be limited to those which com- 0 sional offices. plement other uses within the busi- CD30:138 LAND DEVELOPMENT REGULATIONS § 30. Ogg ness park and provide a service to (2) Conditional uses allowed when the under- those other businesses, and shall not lying land use is highway business are as exceed 20,000 square feet in size. follows: f. Retail/wholesale sales incidental to a. Hotels and, motels. products manufactured, assembled, b. Licensed day care facilities. or warehoused on the premises may c. Retail shops and stores which com be permitted as an accessory use element and serve the business park, provided no more than ten percent of subject to the standards set forth in the building is used for retail/whole- sale sales. tion. (5) Therapeutic massage when offered within d. Motor vehicle specialty service sta the confines of a medical or chiropractic tions. clinic. e. Loading •areas/overhead doors when located in front yards. (6) Temporary signs as permitted in section f. Class I restaurants. 30-851 et seq. (e) Additional standards. The following addi- tional Permanent signs. Not withstanding the tional standards apply in the BP district: provisions of section 30-850 et seq., the (1) Loading spaces and overhead doors. following requirements shall be met: a. Loading spaces/overhead doors shall • a. All freestanding signage shall be of a be located in designated rear yards monument style sign and have a and secondarily in designated side maximum size of 64 square feet and yards.Loading areas/overhead doors height of eight feet. shall not be located in designated front yards unless approved as a b. One on-premise business wall sign conditional use. per occupancy, not to exceed two b. Loading spaces and overhead doors square feet in sign area for each shall be designed to be compatible linear foot of the building frontage with the principal building.Architec- tural up to a maximum of 128 square feet tural techniques and landscaping per occupancy is permitted. shall be employed to reduce visual impacts from adjacent properties and (d) Conditional uses. Conditional uses in the roadways. BP district are as follows: (2) Dumpsters and refuse enclosures. (1) Conditional uses allowed when the under a. All dumpsters shall be completely lying land use is light industrial are as screened from public view by using follows: enclosures constructed of similar ma a. Warehouse space exceeding 50 per ma- terial as the principaLbuilding cent of the total building floor area b. Refuse enclosures shall include gates up to a maximum of 65 percent. and be located in designated rear or side yards. b. Vocational, technical and trade (3) Rooftop or ground electrical equapmerLt; schools: signs. c. Loading areas/overhead doors when a. All utility equipment shall either be: located in front yards. 1. Screened from the eve level view d. Aboveground storage tanks. of adjoining properties by use • of exterior walls and/or land- e. Government buildings and facilities. soaping; Supp. Nu. 2 CD0:139 § 30-1294 ELK RIVER CODE • 2. Painted to match or comple- durable nonfade surface and ment the building structures; their fasteners are of a corrosion- or resistant design. 3. Incorporated into an architec- 6. Stucco, E.I.F.S.; and other tural design, as approved by cementitious coating. the building and zoning admin- 7. Wood;provided the surfaces are istrator. -finished for exterior use or wood b. Notwithstanding the provisions of of proven exterior durability is - subdivision II of division 5 of this used, such as cedar, redwood, article, the following requirements and/or cypress. regarding signage shall be met: 8. Other materials determined as 1. X11 freestanding signage shall acceptable by the planning de- be of a monument style sign partment. and have a maximum size of 64 c. Major eterior surfaces that are ad- square feet and height of eight jacent to any public street, public feet. trail/path, or adjacent residentially 2. One on-premises business wall zoned properties shall be of one of sign per occupancy, not to ex- " the acceptable materials and shall ceed two square feet in sign be combined with at least 30 percent area for each linear foot of the of one or more acceptable materials, building frontage up to a max- or with 40 percent punched open- imum of 128 square feet per ings, with or without glass (or as occupancy, is permitted. much as allowed by the Uniform (4) Exterior building finishes. Building Code, whichever is less), 4111 neither of which are to be concen- a. It is the intent of the city to promote trated in any one location, unless to and encourage high standards of cre- accentuate a design feature. Major ative architectural design in the busi- exterior surfaces that are visible from ness park.district. but not adjacent to any public street, b. In the business park zoning district, public trai]path, or adjacent residen- the following are acceptable building tially zoned properties shall be con- materials and finishes: sidered transition walls and may have 1. Brick. less than the 30 percent combination 2. Natural or cut stone. or less than 40 percent punched open- ings, but either shall not be reduced 3. Integrally colored split face(rock to zero percent). Reductions below face), burnished, or glazed con- 20 percent shall require staff ap- crete masonry unit (excluding proval. Such walls shall be screened plain or painted). from view with additional landscap- 4. Integrally colored and exposed ing.The requirement to have at least aggregate precast concrete pan- 30 percent of one or more acceptable els (excluding single-T or dou- materials shall not apply to the load- bie-T panels; plain. uncolored, ing dock wall. or raked finish)or specially de- d. Major exterior surfaces that are ad- signed, cast-in-place concrete. jacent to any public street, public 5. Glass, architectural metal, fi- trail/path. or adjacent residentially berglass and aluminum. pro- zoned properties shall not exceed vided such panels are factory 160 feet zero inches in length with- • fabricated and finished with a out a minimum four-foot depth change Supp. No. 2 CD3O:140 • LAND DEVELOPMENT REGULATIONS §30-1310 (recesses,protrusions, or a combina- manner so that it cannot be seen tion thereof),with at least two feet of from the adjacent public street, pub such change to be in the entire height lic path/trail, or adjacent residen- of the facade. tially zoned property at the same e. Alternatively, exterior wall surfaces elevation of the first floor of the are to be designed with architectural building. interest through multiple design tech- (5) Landscaping. Notwithstanding the provi- niques such as, but not limited to, sions of subdivision IV of division 5 of this architectural forms. reveals, tex- article, the following requirements shall tures. cornice detailing, changes in be met: surface planes, color, punched open- a. Of the total number of overstory ings and/or changes in parapet ele- trees required, a minimum of 25 vations. The use of design tech- percent shall be ornamental trees niques alone or lower percentage of and 25 percent shall be conifer trees. additional acceptable materials noted in subsection (e)(4)c of this section b. A landscaping credit of up to 25 shall require site plan review and percent may be given to a site plan approval by the city planning corn- fountains,which contains exterior sculptures, ponds beyond those re- mission. quired for storm drainage and other f. The building shall be designed so as site enhancements as approved by to prevent the appearance of straight, the building and zoning administra- • unbroken lines in the horizontal and tor. vertical surfaces. c. Underground irrigation shall be in- g. Main entrances shall be emphasized stalled within the front yard and all with a complementary material which landscaped areas adjacent to a pub- is different from the primary build- lic right-of-way ing material. (Code 1982, § 900..12(16); Ord. No. 00-11, § 1, h. Garage doors shall have a color that 6-19-2000; Ord. No. 00-16, §§ 1-3, 9-18-2000; matches or coordinates with the Ord.No. 01-13, § 1, S-20-2001; Ord.No. 02-01,§ 1, building's primary body color. 1-22-2002; Ord. No. 02-04, § 2, 4-15-2002) Editor's note—At the city's request additional material i. The building shall be designed to was added to subsection 30-1294(c)(7) which expanded this screen equipment located on the roof subsection with a..b. of the building. Alternatively, such equipment shall be located in such a Secs. 30-1295-30-1310. Reserved. Sopp. No. 2 C.D30:141 S 30-1311 ELK RIVER CODE • Subdivision. II. Dimensional Regulations Sec. 30-1311. Principal structures. Principal structures shall comply with the following dimensional regulations: Building Setbacks • Minimum Lot Re- Garage Maximum Maximum quire- Front Side Side Rear Lot Cover- Height ments (feet) (feet) (feet) (feet) age (feet) I-11 1 acre 30 25 20 40% 45 100' width I-21 1 acre 30 25 20 40% 60 r 100' width U EP' 11/2 acres 35 20 30 40% 45 1 Must hook up to city sewer and water if within the city sewer district. (Code 1982, § 900.18(1)) Sec. 30-1312. Accessory structure setbacks. Accessory structures shall comply with the following dimensional regulations: Front Set- Side Set- Rear Set- Maximum Agricultural III back back back Height Fences Buildings District (feet) (feet) (feet) (feet) (feet) (feet) I-1 30 10 10 40 0 — 1-2 30 10 10 60 0 -- (Code (Code 1982, § 900.18(2)) Secs. 30-1313-30-1561. Reserved. DIVISION 9. OTHER NONOVERLAY (b) Permitted uses. Permitted uses in the A-1 DISTRICTS district are as follows: Subdivision I. In General (1) Agricultural uses (five-acre minimum lot size). (2) Public parks,playgrounds and open space. Sec. 30-1562. A-1 agricultural conservation (3) Facilities for flood and erosion control. district. (4) Horticultural uses. (a) Purpose. The agricultural conservation dis (5) Golf courses and country clubs. trict is established for the purpose of preserving, promoting,maintaining, and enhancing the use of (6) Single-family dwellings. land for commercial agricultural purposes, to pre- (7) Model homes in compliance with section vent scattered and leap-frog nonfarm growth. and 30-800. to protect expenditures for such public services as roads and road maintenance, and police and fire (8) Licensed day care facilities for 12 or fewer 411 protection. children. Supp. No. 2 CD30:142 • /Ai'Vp- \ i'?„.1,=, ,-,:::.-''';';1.-,l'-'---Li"— -l-.-',.::, i,, , Design o Construction 0 Construction Management January 14, 2004 Mrs. Catherine Mehelich Director of Economic Development City of Elk River 13065 Orono Parkway Elk River, Minnesota 55330 Re: Gradient Technology Proposal Dear Catherine: We are pleased to learn of Gradient Technology's proposed facility plans. We have prepared a site plan indicating 1.5 acres of prime property available for their proposal. The proposed purchase price, which is also the current listing price, is $1.25 per square foot, plus $.36 in special assessments.- Thus, the property price is as follows: ../. j%• �2L1 . 65,340 s.f. @ 1.25 $ 81 575 `— III 65,540 s.f. to .36 $ 25.522 $105,197 ,yea With the goal of achieving a land cost for Gradient Technology of one dollar both Amcon Construction Company or the land partnership will consider assignment of a Tax Rebate Financing (TRF) note for reimbursement of the land cost. With this type of transaction we can also propose, under a contract, to deliver the facility "key" ready to Gradient Technology. With the limited information we have, we estimate the cost for a 13,000 s.f. block building and associated improvements to be in the range of $55-60 per square foot. We hope that this satisfies the preliminary information for Gradient Technology and would emphasis the built-in value of the Elk River Business Park property should remain significantly higher than the existing Big Lake industrial Park. Sincerely, Amcon Construction Company Kevin G. Maas Director of Sales and Marketing 0 K9rnienclo5or H'"e';"'Me\elk""'\Gradient—PrellI�gprL;al,Qpc 11 VV`` HHwv. i3• Burnsville, Minnesota 55537 Phone: e52-890.1217<FAX. 952-890-0064 mu401f-..:;1€r� €. ,,,,..pr --VICSBNNIVN't3Nw y.-i@ I 1 Q I 1fb ,§ >!ElVd 1Vi�lsnaNi d3nid >-1 Salta . 7;” > I 1 I 1 W I ,� Q i Q N j i I v k Q 1 i I } I .1. 9,,-.1-1-98a-Lu I it II I 0. I • G '. 3Ml A11l30tld GSSOdONd 1 \ //) ,....,...... ck i I l /, ` . �� !'-� v 'CD w o>" ro ! u1 c (D W ,.u. �� 69[ 1 • 1 1 i • 1 r 1 • CITY OF ELK RIVER TAX REBATE FINANCING PROJECTION WORKSHEET Project Name: Gradient Technology Expansion/Relocation TRF Project: 13,000-sq.ft. light manufacturing facility,located on 1.5-acres Assumption: Projection is based on estimated payable 2004 tax rates and estimated project market value. The Project will be assessed upon actual tax rates and market value in the year following construction. I State Class Rate ASSUMPTIONS Up to $150,000 0.015 Pay 2004 Over $150,000 0.020 Pay 2004 Tax Capacity Rate City Portion 0.43734 Pay 2004 Est. , County Portion 0.44363 Pay 2004 Est. School District Portion 0.32709 Pay 2004 Est. State Portion 0.54447 Pay 2004 Est. Other Jurisdictions* 0.03559 Pay 2004 Est. • Total Tax Capacity Rate 1.78812 Pay 2004 Est. Land Value . -_ . ., •; Building Value -,;;Dii: 45:. Total Assessed Market Value $ 1 ,9Q00;O00 00 MAX Years of TRF Project0 $ . Property's Total Tax Capacity $ 19,250.00 Property Tax Breakdown 3 , Annua Estimate City Portion $ 8,418.80 County Portion $ 8,539.88 School District Portion $ 6,296.48 State Portion $ 10,481.05 Other Jurisdictions $ 685.11 Total Estimated Real Estate Taxes $ 34,421,31 'otai TRF Needed,tantl Cos`#. $i D5 19? T R LandCost= 1. sf ears ; C 61/ City 1/2: $52,598.50 6 County 1/2: $52,598.50 6 `Amount of abatement will vary depending on market value,tax rates, class rates, construction schedule and inflation on MV. • "Includes City HRA, City EDA, County HRA, County Rail Authority *Does not include Market Value School Excess Levy Referendum 2003 rate of 0.07597% FILE:gradtechTRF.xls 1/22/2004 Understanding Cor continued from page 23 :1 12 Key Corporate Location Trends To Watch George D. Livingston, president, NAI Realvest Partners, Inc., Maitland, Florida, has identified 12 corporate location trends to watch as the economy and confidence improves and as 4.Impact of 9/11 is ongoing. The impact of 9/11 will be corporations again enter the real estate markets. They are: ongoing, with ERM (Enterprise Risk Management) becoming a 1.Activity level increasing. Over the major force in shaping location strategy. Actions likely to be past two years, the number of corporate embraced include: real time data replication; redundant opera- relocation deals has been significantly tions; distributed work; decentralization; small, multiple opera 1,''41*N00 „ depressed.The majority of deals were tions; grow elsewhere; shift personnel within multiple buildings; ,, .4 , :.. , . ' expansions and occasional relocations relocation of back offices/critical parts manufacturing from by small to medium-size companies and offshore to U.S. or from one continent to anther; geography of - the consolidation of larger companies. supply chain better managed; increase in safety stock for ,;. As determined from a variety of different manufacturers; increase in outsourcing of disaster recovery and ` sources, Livingston said that is now other operations; likely to be less interested in downtown locations; George D.uvingston turning around and activity levels are site security; and terrorist insurance likely to be an issue. increasing. S.Labor markets will again assume primacy in most corporate 2. Today's active industries. Among location decisions. While this trend may be experiencing a today's locationally active industries are temporary lull, once the economy kicks up, there will again be health-related, food processing, auto a severe national shortage across skillsets/industries. parts, data centers, shared services 6.Logistics has emerged as a prime locational influence. centers, call center consolidation, 0 distribution (especially retail) and 7.Electric power is an influential locational variable. Electric outsourcing firms. power is exerting greater influence over location decisions, even for companies that are not that energy-intensive.The issues 3. Most active regions. The hottest areas include: cost, price stability, capacity, reliability and dual power are the Southeast from the Carolinas to feed. Florida and the South Central Region from Alabama through Tennessee. 8.Telecommunications is a crucial locational factor. This applies to call centers, other back offices, data centers and some manufacturing plants. 9.Decision cycle for�stablishing new facilities continues to Quotable shrink. This trend will place far greater emphasis on available Will @o-Not-Call Registry buildings, construction time and permit approval time. 10.Small town/rural areas are becoming increasingly nopuiar Nix Call Center Space? locations. "It is our approximation that five to 10 million square feet of 11. Offshore locations will continue to comprise viable options commercial space in the U.S. currently houses telemarketing for many companies. call centers and service providers.With the new telemarketing 12. High tech requires specialized criteria. These criteria include limits, many of these centers will be forced to reduce their critical mass of companies, people, research, universities, real estate or go out of business.A huge amount of square vendors and venture capital; perceived quality of life; image/ footage will come back into the market.With 50 million reputation; campus sites; and air access. If an area isnot Americans already registered for Da-Not-Call, if only 30 among the best perceived places in the U.S. to live, it must percent of the square footage occupied by call centers were have unique, industry-specific assets to attract high tech.■ to become vacant over the next two years, that would be an www.realvest.com influx of 1.5 to 3 million square feet back on the market. Call- For__more i,n f_o r m a ti_on center office space typically has large floorplates, which often Boomtown USA::.The r/z Keys to Big Iso ldon't suit a typical office tenant, and the challenge will be in Success-in Small.Towns.New book from G marketing this vacant space to the rest of the market." NAIOP on finding opportunities in small 03 —Tom Gustafson, Vice President of Colliers International. ■ z towns.,http://store.naiop.org By Ron Derven,co-editor, Development magazine. 24 Development WINTER 2003 Minnesota Technology, Inc. I Tech View I Minnesota Venture Capital Stages Rebound Page 1 of 2 ,II • I i t ( , . k a • ,i4,,,,,,.,,,,,./A it// q"i ,..., -,v ' – --------:=- ,--, `",,,' - – --‘, — - _=-_ - – - Try,s Search 0 Home About Us Contact Us t , t Tech View .�14:• 4.n • January 2004 utlts, Firs MN Tech Scene Manufacturing Paces American Economic Growth Lvall ts a 7rainin The nation's manufacturing sector experienced rapid growth during u ' � "' the third quarter, 2003 according to two new reports. These gains Oircrtoreshelped pace America's overall economic growth, and had ws itr_ economists talking about full economic recovery. "It now appears that the manufacturing sector is shifting into high gear and that makes it unanimous, the expansion is full blown," said Joel Naroff, president of Naroff Economic Advisors. In all, GDP grew by 8.2 percent during the third quarter, the fastest pace in nearly two decades. According to the manufacturing index issued by Institute for Supply ManagementTM Manufacturing Business Survey Committee, economic activity in the manufacturing sector grew in November 2003 for the fifth consecutive month. The index soared to 62.8 last III month. That marked the best reading since December 1983 and a large increase from 57 registered in October. An index reading above 50 indicates expansion; one below 50 indicates that manufacturing activity is contracting. In a press release, Norbert J. Ore, C.P.M., chair of the Business Survey Committee said that the "the manufacturing sector enjoyed its best month since December 1983... the momentum is coming from continued strength in new orders and production..." Of the 20 industries surveyed in the manufacturing sector, 18 industries reported growth: Instruments & Photographic Equipment; Glass, Stone, &Aggregate; Leather; Electronic uComponents & Equipment; Tobacco; Industrial & Commercial Equipment &Computers; Primary Metals; Food; Transportation & Equipment; Fabricated Metals; Wood & Wood Products; Textiles; Furniture; Miscellaneous; Printing & Publishing; Chemicals; Apparel; and Rubber & Plastic Products. In another report, the U.S. Department of Commerce reported that new orders for "durable" goods - costly manufactured products expected to last at least three years - rose by 3.3 percent in October 2003, up from a 2.1 percent rise registered in September. October's manufacturing performance was considerably stronger than economists were expecting. They were forecasting durable II orders to rise by 0.7 percent last month. The 3.3 percent increase represented the best showing since July 2002, when orders soared by 8.1 percent. http://www.minnesotatechnology.org/techview.asp 1/23/2004 Minnesota Technology, Inc. I Tech View I Minnesota Venture Capital Stages Rebound Page 2 of 2 The strength in October was fairly broad based, with orders rising for communications equipment, machinery and primary metals, which includes steel. Orders placed for cars and computers, however, dipped. « Back to Top I Back to Home Page» a ST Network 14th' Affiliate Home I Contact Us I Site Map I Privacy Policy I Terms of Use © 1994-2004, Minnesota Technology, Inc., All rights reserved webmaster@mntech.org PHONE: 612-373-2900 FAX: 612-373-2901 • • http://www.minnesotatechnology.org/techview.asp 1/23/2004 TechTrends e-Newsletter 1 February 2004 Page 1 of 5 it isota Ik �� 1 , fid - f Printf 1 Close III :0,4 1%.,,,,,t,,, ,,, ,, y a publication of , TE , ,,9 ren s Volume 5, Issue 2 February 2004 J(giver Story Technology Pays A new MTI study reveals that investments in technology reap substantial benefits. g The last few years have not been kind to small and medium-sized manufacturers (SME) in Minnesota, or around the United States, for that matter. Despite some recent bursts of growth in the sector, a number of factors, including the lingering economic downturn and ferocious offshore competition continue to make times for N challenging for most SME companies. 0 With that in mind, MTI recently conducted a comprehensive plant-level survey of • nearly 200 Greater Minnesota SME firms, collecting data on a number of characteristics, including technology use and related company and workforce impacts and outcomes, for manufacturers employing between 10 and 250 people. It also asked respondents to rank six factors (low price, high quality, quick delivery, innovation/new technology, adapting to customer needs, and value-added customer services) on which they compete for sales. The result: By a wide margin, SME manufacturers considered high quality to be their most important competitive factor-more than 80 percent of respondents ranked it first or second among the six factors. By contrast, innovation/new technology was rated lowest, with only 18 percent ranking it first or second. The other four factors ranked somewhere in- between. That said, SME manufacturers differ with respect to how they compete. Smaller, lower-paying, and less technology-intensive companies are more likely to compete , on lower price, and less likely on innovation and value-added services, than larger, high-paying, and more technology-intensive companies. 0 Now, the big question: Is there a relationship between an SME's competitive strategy and its level of success (as measured by sales and employment totals)? In a word, yes. Companies competing on price were far less likely to have experienced job and sales growth from 2000 to 2002. Only 46 percent of companies competing on the basis of low price outperformed their industry in job growth during that time, compared with 58 percent of those considering low price less important, and 55 percent within the survey population overall. By contrast, companies competing on quick delivery, innovation, and value-added services were more likely to have . shown positive outcomes. The survey also found that technology use and higher wages are closely related. http://www.minnesotatechnology.org/publications/techtrends/2004/February/printVersion.... 2/23/2004 TechTrends e-Newsletter 1 February 2004 Page 2 of 5 Survey respondents reporting the least usage of advanced manufacturing and information technologies had average wage levels nearly 20 percentage points lower . than SMEs overall, and almost 30 points lower than their respective industry averages. Technology-intensive companies, on the other hand, paid their employees • 5 percent better than their respective industry average, and 15 percent higher than SMEs overall, whose average wages lag behind industry standards by roughly 10 percent. The wage gap extends to the entry level, where technology-intensive companies pay a premium of 10-15 percent on starting wages relative to less technologically advanced peers. What accounts for this wage gap? Not surprisingly, higher-tech, higher-paying companies employ more highly skilled workers both in • "white collar" professional and technical jobs, but also on the shop floor in the form • of skilled or precision production workers. 0 The bottom line: Investments in technology allow SMEs to reap substantial benefits. And in an environment of growing competition from low-wage locations such as China, businesses seeking to remain viable in places like Minnesota have few • choices but to improve productivity through technology and capital investment. While technology alone won't ensure the viability and security of all manufacturing jobs and businesses, those that do invest in it will almost certainly be more technology-intensive, higher-skilled, and better paying. 4 1 For more information on MTI's Technology Adoption Survey, contact Greg Schrock, MTI's research associate, at 612-373-2973 or 800-325-3073, gschrock(amntech.orq. • TechNotes ''; Technology business news from around Minnesota. After three years of decline, Minnesota's manufacturing sector added 700 new jobs in December on a seasonally adjusted basis. During the second half of 2003, nearly 3,300 manufacturing jobs were added in the state. According to the state employment department, the increase in jobs can be attributed to a rise in U.S. exports; between the third quarters of 2002 and 2003, Minnesota's manufacturing '0 exports increased 17.2 percent to $2.7 billion. 0 The Blandin Foundation Board of Trustees has awarded more than $4.16 million to launch and operate a $1 million development fund that would promote high-speed broadband technologies in rural Minnesota communities. According to the Board, 0 the Foundation will raise $750,000 from philanthropic, public, and industrial 1H; sources-including telecommunications companies-to support the effort. H. '" Hutchinson-based Hutchinson Technology, a computer component manufacturer, recently reported that it added nearly 300 jobs during the last fiscal year. The company also noted that it plans to hire an additional 22 engineers and 18 technicians. According to the American Wind Energy Association, Minnesota added more new wind-driven electricity generation equipment than any other state in 2003; the new windmills will generate a total of 226 megawatts. Last year, total generating • capacity in the U.S. increased by 1,687 megawatts-enough to serve 425,000 homes, reports the association. http://www.minnesotatechnology.org/publications/techtrends/2004/February/printVersion.... 2/23/2004 TechTrends e-Newsletter i February 2004 Page 3 of 5 The Northeast Entrepreneur Fund has partnered with Virginia's new Quad Cities TechNorth Prep Center (TPC), a community-based training center where rural • residents learn high-tech trades. An initiative of the late Sen. Paul Wel!stone and Northeast Minnesota Higher Education District president Dr. Joe Sertich, TPC aims to re-train rural northeastern Minnesotans for tech jobs that increasingly have been outsourced overseas. The Quad Cities TPC will be one of three such centers in the state; a TPC in Ely will open soon, joining another TPC currently operating in Grand Rapids. Duluth-based Allete Inc. an automotive remarketer and communications and energy provider, has officially named Don Shippar its new president and chief executive officer. Previously the company's executive vice president and president of Minnesota Power, Shippar will oversee all non-automotive operations. Former Allete president and CEO David G. Gartzke will remain chairman of the board of directors, and will continue as CEO of Indianapolis-based Adesa, which encompasses Allete's auto service businesses. By mid-year, Allete plans to spin off Adesa as a publicly traded firm. il Luigino's Inc., a Duluth-based frozen food manufacturer, has announced plans to open an expansion plant in Jackson, Ohio, in summer 2004. _ Bob Bratulich, Dr. Don Fosnacht, and Doug Johnson were recently appointed to the Governor's Committee on Minnesota's Mining Future. Appointed by Sen. Mark Dayton, Bratulich is the assistant director of United Steelworkers of America, District 11. Dr. Fosnacht, appointed by U.S. Rep. Jim Oberstar, is the director of the Center for Applied Research and Technology Development for the Natural Resources Research Institute. Appointed by Sen. Norm Coleman, Johnson is a 411 „1 c, retired Minnesota state senator. Created by Governor Tim Pawlenty, the committee will advise the Governor on developing a sustainable mining and minerals industry in Minnesota. Comprised of a total of 15 members, the committee is expected to provide Pawlenty with its initial recommendations by June 1, 2004. Dakota Systems, a Dracut, Mass.-based engineering and manufacturing company, I has purchased an option to buy four lots in Cloquet's new business park, reports the Cloquet Development and Industrial Corp. (CDIC). The fabricator and manufacturer of fluid and gas distribution systems for the semiconductor industry is the 80-acre park's first tenant. According to the CDIC, Dakota Systems intends to begin building later this year. Otter Tail Power Co., a division of Fergus Falls-based Otter Tail Corp., has offered to buy the South Dakota utility operations of Sioux Falls-based NorthWestern Corp., q which filed for bankruptcy protection in September 2003. u CaLendar MTI Tech Forum: Information Technology Security Date: 2/19/04 Time: 9 a.m.-2:30 p.m. Location: RSM McGladrey Inc., Minneapolis Cost: $149 Featured Speakers: • / • • Michael Endrizzi, Allen Berg, and Daniel Endrizzi Security Evolution • Katie Krueger, United Security Group Inc. • Mark Lanterman, Espiria-Computer Forensic Services http://www.minnesotatechnology.org/publications/techtrends/2004/February/printV ersion.... 2/23/2004 TechTrends e-Newsletter I February 2004 Page 4 of 5 • Dr. Martin Carmichael, Upstream Solutions • MTI ISO Registration Series: Customer Satisfaction Measurement Dates: 3/1/04; 3/4/04 Time: 8:30 a.m.-4:30 p.m. Locations: 3/1-Edina; 3/4-Brainerd Cost: $150 Featured Speaker: • Techlogic Inc. Minnesota Trade Office program: Growing Global ti Dates: 3/4/04, 3/5/04 Time: 8 a.m.-4 p.m. Location: Holiday Inn Hotel & Suites, St. Cloud Cost: $195 if preregistered; $180 for multiple registrants; $225 at the door. (Advanced registration is highly recommended.) For registration information, contact Gloria Henck, 651-297-3920, clloria.henckCalstate.mn.us. For program information, contact Matthew Abbott, 651- 297-4282, matthew.abbott@istate.mn.us. • MTI Tech Forum: Quality Standards-ISO Six Sigma Dates: 3/19/04 Time: 9 a.m.-2:30 p.m. Location: TBA Cost: $149 • Featured Speaker(s): TBA .111 For more information on these and other MTI programs, call 612-373-2900, 800-325-3073, or e-mail: www.minnesotatechnology.org/events/TechForums/index.asp. • ['Perspective Secrets of Trade Secrets How can you protect your most vital intellectual property? Trade secrets are perhaps a company's biggest and most crucial intellectual property assets. Patents, trademarks, and copyrights round out the list of I.P. heavies, but trade secrets are even more likely to be misunderstood, and even harder to manage. Small and mid-sized manufacturers have discovered that rubber- stamping their processes "confidential" doesn't necessarily make them so. How can your company protect the foundations of its livelihood? Start by knowing what your secrets are. Practically anything of economic value, including customer lists, formulae, new product ideas, and manufacturing processes, should be considered trade secrets. The Uniform Trade Secrets Act (UTSA) defines them as any information with actual or potential economic value that is not widely known or readily obtainable. Unlike patented or copyrighted material that's publicly available for a fixed period of time, a trade secret must stay a secret. And there lies another key distinction: The owner of a trade secret must take "reasonable" formal measures to keep it that way. What are "reasonable" formal measures? Generally, you must identify and protect http://www.minnesotatechnology.org/publications/techtrends/2004/February/printVersion.... 2/23/2004 TechTrends e-Newsletter I February 2004 Page 5 of 5 trade secrets on three fronts: employees, physical security, and documentation. 11). Start with your employees. Insiders pose the most significant threat to information . security, due more to inadvertent info-sharing than to malicious intent. Vigorous employee education is vital; use employee handbooks, nondisclosure agreements, and exit interviews to clarify expectations of confidentiality, especially with respect to electronic files and Internet usage. Pay particular attention to confidentiality policies as they affect your telecommuting employees who routinely bring files home. Reassess, as well, the physical security of your I.P. Who controls I.D. badge distribution, access codes, and after-hours security? Where are sensitive files kept? Are they accessible only to the relevant staff members, or are they in plain view of visitors? Also, evaluate how well the files themselves are documented: Mark documents and computer files as confidential. Back up computer information and restrict access to servers. Remember that these common-sense measures protect your company twice over: They prevent an initial violation of your I.P. assets, and they ensure that a violation will be recognized as such by the courts if anything does end up in the wrong hands. (For more on trade secrets, see the Winter 2004 issue of Minnesota Technology magazine). �` _ ,,.. ,/,;,.� ,,....i:::.A.. 70/L/.,"9�,:i,.. A.1....iaili.:��tk1��"..+,F,.:�}�ytYN/J//9/////////H/„2,_Z.A lS�Y.a:::.::...,.i/ile '///.//.f .&:.....::::i:3flV3f333a3f •., F OlW ,,.".'.... '.4 a NISI” Network ME �.f liate Home I Contact Us I Site Map I Privacy Policy I Terms of Use © 1994-2004, Minnesota Technology, Inc., All rights reserved webmaster©mntech.org PHONE: 612-373-2900 FAX: 612-373-2901 http://www.minnesotatechnology.org/publications/techtrends/2004/February/printVersion.... 2/23/2004 TechTrends e-Newsletter l January 2004 Page 1 of 5 Minnesota TechnotoovInc Print Close -4 ii TE a publication of Mili sots hl ;,10 s en Volume 5, Issue 1 January 2004 In With the New Five New Year's resolutions for small manufacturers. I Like so much big talk between glasses of bubbly, high-minded personal goals for the new year are often all but forgotten by mid-January. But take heart: You still have plenty of time to make good on these five resolutions for improving your company's bottom line. With the sound advice of MTI's business consultants in hand, you'll have plenty to be proud of when next year's revels roll around. 1. Get mean about lean. Many small and mid-sized outfits know the value of reducing waste, but may shy away from adopting a systematic approach to III streamlining. But with stiff overseas competition and soaring external costs, manufacturers can't afford not to get tough about finding and eradicating waste in the entire business cycle. Invest the time to take a hard gaze at current practices, says Dick Pedersen, a business consultant with MTI. Gundars Stumbris, an MTI lean enterprise consultant, agrees. He encourages clients to "identify product/process families and manage them as value streams." Consider a strategic outside assessment of your current processes to help identify potential areas for improvement. 2. Leaders: Take charge. Company leaders, Pedersen maintains, should foster an environment where employees feel comfortable contributing to this "lean culture." Additionally, owners and leaders need to know when to delegate work so that they can devote themselves to the company vision. "Work on the company, not in the company," Pedersen tells his clients. 3. Do the right products right. "Innovation is essential for company survival in our global economy," says product development specialist Sam Gould. A small manufacturer's greatest share of revenue and profit comes from the launch of new products; after lean enterprise, smart marketplace introduction is the most critical way for your company to stay competitive. "Commit to producing superior products with unique benefits," Gould advises, "and keep it lean." Deliver the right products...on schedule, and on budget. 4. Measure customer feedback. It's not just for the marketing department anymore. Make sure your feedback measurement system brings the voice of your customers onto the shop floor as well, advises Stumbris. 5. Focus your marketing efforts. According to Pedersen, most small companies would benefit from increased marketing efforts-but focus your energies by • identifying industry pockets that are experiencing rapid growth. As with lean enterprise, an outside assessment of your current marketing program can be invaluable. http://www.minnesotatechnology.org/publications/techtrends/2004/January/printVersion.asp 3/2/2004 TechTrends e-Newsletter I January 2004 Page 2 of 5 Ter t4-1*.es • Technology business news from around Minnesota. In response to a series of statewide roundtable discussions with manufacturers in October 2003, Governor Tim Pawlenty has appointed Diane Knutson as Minnesota's official advocate for manufacturers. Since 1995, Knutson has served as a business development specialist in the Department of Employment and Economic Development . Effective immediately, Knutson will work on behalf of the state's manufacturers by preparing policies and recommendations, and by helping to resolve regulatory issues. Governor Pawlenty has also dubbed Minneapolis, St. Paul, and Rochester as Minnesota's new "Bioscience Zone." Around $1 million in state subsidies will be used to encourage biotech companies to relocate to the three Minnesota cities. Further incentives will include exemptions from corporate franchise tax, sales tax on business purchases, and property taxes. The city of St. Paul will administrate the Bioscience Zone program. Audobon's TEAM Industries, a high-precision manufacturer of gears for power trains and drivelines, has received part of a $25,000 state-awarded grant to expand its business operations. The grant was awarded through the Greater Minnesota Business Development Public Infrastructure Program, which assists rural communities in stimulating development and creating jobs. Fairmont's Tyco Plastics plant has announced that it will close on February 6, eliminating as many as 100 jobs. The closing is part of Tyco International's restructuring plan, as announced by the company in November. According to Tyco, the plan will eliminate 7,200 jobs and will lead to the closing of 219 facilities worldwide. Brewster-area Minnesota Soybean Processors (MnSP), which produces soy-based agricultural feed meal and crude oil for food additives, has begun production at its new, 100,000-bushel capacity plant, which was completed last year. According to the company, MnSP hopes to begin construction on a biodiesel refinery in spring 2004, with biodiesel production scheduled to begin in 2005. Duluth-based Northstar Aerospace, a manufacturer of aircraft seats and precision- machined components for the aerospace and medical-device industries, made a total of $300,000 in capital investments in 2003. The purchase of new machines and equipment will be followed by the addition of jobs as the company receives new orders. For the last five years, Northstar Aerospace has doubled its business every year. The Mayo Clinic in Rochester has received approval from the Food and Drug Administration to use the BC-10 MRI coil-a device designed to increase MRI X-ray resolution. The devices are built at IBM's Rochester plant. New Flyer Industries, a Winnipeg, Manitoba-based bus company with production facilities in St. Cloud and Crookston, will be acquired from KPS Special Situations • Funds by Harvest Partners Inc. and Lightyear Capital LLC,two New York City-based private equity firms. According to KPS, the acquisition will close in the first quarter of 2004, with production continuing at both of its Minnesota facilities. New Flyer is http://www.minnesotatechnology.org/publications/techtrends/2004/January/printVersion.asp 3/2/2004 TechTrends e-Newsletter I January 2004 Page 3 of 5 the largest manufacturer of heavy-duty transit buses in North America. The Minnesota State Colleges and Universities system (MNSCU) reports that it enrolled 4,914 dislocated workers in 2003-an increase of 18 percent over the previous year. Funded by state and federal government, labor unions, and employers, MNSCU provides nearly 95 percent of the state's training for dislocated workers. Itasca County's Itasca Development Corp. (IDC) has agreed to purchase Cohasset's Technimar building, with plans to turn the site into a business incubator. IDC secured funding for the $2 million deal from grants and loans from the Blandin Foundation, the Northland Foundation, and the Iron Range Resources and Rehabilitation Agency. According to IDC, the 109,000-square-foot facility will be renovated to accommodate about 10 manufacturing businesses, unless a single tenant is found. IDC officials hope that the facility will bring 75 to 150 new jobs to the area when it opens to tenants in July of this year. Hibbing Taconite Co. has received a $1.2 million grant from the U.S. Department of Energy to upgrade low-grade iron ore by in-pit crushing and cobbing. The project will be conducted jointly by Hibbing Taconite Co., the Minnesota Department of Natural Resources, Coleraine Mineral Research Lab, Metso Minerals, and Cleveland Cliffs. IKONICS Corp.,a Duluth-based imaging company, has announced that it has filed a patent application for its IkonMetal imaging technology, which it has been developing for more than a year. IkonMetal imaging may be used in place of acid etching, machining, or liquid metal casting to create imaged metal products such as signage, plaques, and molds. MTI Tech Forum: New Product Development: Payoff, Process,...Players Date: 1/29/04 Time: 9 a.m.-2:30 p.m. Location: Imation Corp., Oakdale Cost: $149 Featured Speakers: • Dr. Rod Greder, New Productivity Group • Samuel Gould, MTI • Rich Meiss, Meiss Education Institute • Dr. Jim Radtke, Dow AgroSciences • Subodh Kulkarni, Imation Corp. MTI ISO Registration Series: Root Cause Analysis Dates: 1/26/04; 1/29/04 Time: 8:30 a.m.-4:30 p.m. Locations: 1/26-Edina; 1/29-Brainerd Cost: $200 Featured Speaker: • Techlogic Inca • MTI Special Event: IT/Internet Services Date: 2/17/04 http://www.minnesotatechnology.org/publications/techtrends/2004/January/printVersion.asp 3/2/2004 TechTrends e-Newsletter I January 2004 Page 4 of 5 Time: 8 a.m.-11:30 a.m. Location: Technology Plus Center, Mankato, Minn. • Cost: $280 Featured Speaker: • Jan Hepola, MTI MTI ISO Registration Series: Internal Auditing Dates: 2/9/04 and 2/13/04 (two-day session) Time: 8:30 a.m.-4:30 p.m. Locations: 2/9/04-Edina, 2/13/04-Brainerd Cost: $600 Featured Speaker: • Techlogic Inc. MTI Tech Forum: Information Technology_Security Date: 2/19/04 Time: 9 a.m.-2:30 p.m. Location: TBA Cost: $149 Featured Speaker: • Dr. Mark Charmichael, Upstream Solutions MTI ISO Registration Series: Customer Satisfaction Measurement • Dates: 3/1/04; 3/4/04 Time: 8:30 a.m.-4:30 p.m. Locations: 3/1-Edina; 3/4-Brainerd Cost: $150 Featured Speaker: • Techlogic Inc. For more information on these and other MTI programs, call 612-373-2900, 800-325-3073, or e-mail: www.minnesotatechnology_.org/events/TechForums/index.asp, «Previous I Issue Home I Next >> The Smart Office Lean principles can work equally well in an office as they do on a shop floor. In recent years, lean manufacturing-a systematic approach to identifying non-value activities to improve quality-has become an increasingly popular tool for U.S. businesses. And with good reason-lean principles offer manufacturers a potent way Ai to trim waste, manage inventory, bolster shop floor efficiency, and increase profit margins. But lean isn't only for the shop floor. As anyone who's spent time in an office setting http://www.minnesotatechnology.org/publications/techtrends/2004/January/printVersion.asp 3/2/2004 TechTrends e-Newsletter I January 2004 Page 5 of 5 can attest, inefficiency is often the scourge of the typical white-collar environment. By some estimates, administrative tasks make up to 80 percent of the typical • company's cost of doing business. Eliminating wastefulness from administrative and office functions can also boost profit margins and help transform a company into a total lean-and highly efficient-operation. While the subject areas of lean manufacturing and lean office are different, the underlying fundamentals are similar. "In the factory, we talk about inventory. In the office, it's the paper, the information," says Dick Pedersen, an MTI business consultant. "We track it the same way. We look at each process and the time it takes to do each one of the steps. When it's sitting around, it's not adding value." Pederson adds that one area in which companies see immediate results is with custom orders. "When a company needs to get quotes, designs, schedules, and budgets together on a custom project, there tends to be more down-time," he notes. "Lean office helps tighten up those systems." For all of their potential value, however, lean initiatives are not without challenges. Companies often report resistance from employees. And as with any cultural change, implementation is an ongoing process; results won't happen overnight. To make the jump to lean, management support is critical. There also must be a company-wide understanding of the process-what lean is, why it's needed, and precisely how it will work-along with detailed steps for implementation and specific ways to measure progress. 411 Lean resources A quick Internet search will provide a wealth of information-perhaps too much-on lean office basics. Finding objective information can be a difficult task. That said, one site that offers solid information is the Lean Enterprise Institute (www.lean.org). Founded by James Womack, one of the top thinkers on lean practices, the Lean Enterprise Institute is a nonprofit organization that provides research and workshops on lean topics. MTI also offers a variety of customized lean consulting services. For more information on them, go to http://www.minnesotatechnology.orgibusinessilean.asp, or call 612-373-2900, 800-325-3073. Nj;s*1 Nei work MEP •Affiliate Home I Contact Us I Site Map I Privacy Policy I Terms of Use © 1994-2004, Minnesota Technology, Inc., All rights reserved I webmaster@ m ntech.org PHONE: 612-373-2900 FAX: 612-373-2901 http://www.minnesotatechnology.org/publications/techtrends/2004/January/printVersion.asp 3/2/2004