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7.0. EDSR 04-12-2004 ITEM I • iSkj , River MEMORANDUM TO: Economic Development Authority Mayor & City Council FROM: Catherine Mehelich, Director of Economic Developmen DATE: April 12, 2004 SUBJECT: Consider Tax Rebate Financing Request for Badger Ventures, LLC Attachments( Issue Technology, Inc.) • Preliminary Expansion Siting Proposal for Gradient Technology, February 2,2004. • Revised Preliminary Expansion Siting Proposal for Gradient Technology,March 9,2004. • Tax Rebate Financing Application from Gradient Technology, Inc. • Tax Rebate Financing Projection Worksheet, Gradient Technology • Public Hearing Notice,published March 31, 2004 • Resolution Approving Property Tax Abatement • DRAFT—Tax Abatement and Business Subsidy Agreement At its March 8, 2004 meeting the Economic Development Authority and City Council approved the attached Revised Preliminary Expansion Siting Proposal and that Gradient Technology be considered for receiving Tax Rebate (Abatement) Financing. Staff anticipates that a representative from Gradient Technology will be present at the EDA meeting to discuss the proposed project. Prior to the Council's final consideration, staff typically requests that the EDA review, comment, and often times provide a recommendation to the City Council regarding tax abatement and tax increment financing requests. 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 911) 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. Consider Property Tax Abatement for Badger Ventures,LLC EDA/City Council Meeting April 12,2004 Page 2 of 3 • 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 anticipates creating up to 5 new positions at the Minnesota facility within 2-years. The new positions will likely consist of management and engineers. 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. Project Description Badger Ventures,LLC proposes to construct a 13,000-square foot light industrial/business park building for lease to Gradient Technology's office,research&development, and equipment fabrication operation. Badger Ventures proposes to purchase 2.05-acres within the Elk River Business Park and has requested that the city and county consider a write down of the land cost to $0 through a pay-as-you-go note to the limited liability company. The attached Preliminary Siting Proposal dated February 2, 2004 and the Revised Preliminary Proposal dated March 9, 2004 indicate the revised land cost/tax abatement assistance following the EDA's concept approval. . Analysis Staff has been working with the company through the due diligence process for the financial analysis and the City's Tax Rebate Financing process. The Sherburne County Assessor's office has reviewed the building information and has provided the following estimated market value (EMV) of the proposed building project for 2005: EMV Building $ 609,700 EMV Land $ 107,300 Total EMV $ 717,000 The attached Tax Rebate Financing Projection Worksheet indicates the payment period given the assessor's estimates. The estimated payment period to provide a land write down to $0 is 12 years city and county. The MN Tax Abatement Statute allows jurisdictions to provide tax abatement over a 10-year period. A period longer than 10-years is allowed only following another jurisdiction (school district in this case) denying the abatement request in writing. Staff believes that the term will likely be 10-years simply based upon annual inflationary increases to the market value and tax rates. Staff completed the ratings worksheet used to help analyze such proposals. The proposed project scored a "32", out of a total possible of 50 points,which equates to a"moderately desirable"project. • Consider Property Tax Abatement for Badger Ventures,LLC EDA/City Council Meeting April 12,2004 Page 3 of 3 • There are several issues that remain unresolved,including: • Identification of a bank lender and proposed project financing terms • The possibility of a City Micro Loan request of up to $100,000 • Identification of the amount and source of eligible equity • Completion and review of a but for analysis Recommendation At this time there is not enough information for staff to provide a recommendation to the EDA regarding the tax abatement request for the project. The City Council may continue to hold a public hearing and receive comment on the tax abatement request. Staff recommends postpone any action regarding the abatement request until staff and the company to finalize the project details and resolve the remaining issues. Staff will report at a future regular meeting of the City Council for final action. • 4110 City of Elk River Preliminary Expansion Siting Proposal Gradient Technology Revised February 2, 2004 I. Site A. Proposed Location 1.5 acre lot A proposed subdivision of Lot 5,Block 1, Elk River Business Park Access from Industrial Circle. See attached Location Map. B. Zoning/Land Use Requirements Business Park/Light Industrial An administrative subdivision (lot split) to be administered by the landowner prior to sale. C. Building Requirements Building and site to comply with Business Park District Ordinance and other City requirements. An accessory building for materials storage could be allowed. See attached Business Park District Ordinance Requirements. D. Land Cost/Value $1.61/sf 1.5-acres Total: $105,197 Includes special assessments and park dedication. E. Project Timeframe 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 permit timing and application requirements. At this time the proposed site would require 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 permit application review process. • City of Elk River Preliminary Proposal for Expansion Siting Gradient Technology —January 14. 2004 Page 2 of 2 II. Financing A. Project Costs Land $105,197 1.5 acres at$1.61/SF Construction $650,000 Estimate - 13,000 SF at$50.00/SF Equipment $ 0 Total Uses $755,197 B. Proposed Business Financing Sources Bank $ 574,924 90 %Building Cost Owner Equity $ 75,076 10%if using SBA504 via Bank Tax Rebate Finance $ 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 &Wage Goals (to be met within 2 years of building occupancy) Job Creation 5 full-time at$15.00/hour (minimum) Job Retention 13 full-time at$13.00-75.00/hour 411 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 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. E. Other Proposal is contingent upon letter of approval from qualified 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 project contractor/builder. However,Amcon 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 Amcon correspondence re:Gradient Technology Proposal • Preliminary Proposal Accepted: By Date I City of Elk River Preliminary Expansion Siting Proposal Gradient Technology Revised March 9, 2004 Site A. Proposed Location 2.05 acre lot A proposed subdivision of Lot 5,Block 1, Elk River Business Park Access from Industrial Circle. See attached Location Map. B. Zoning/Land Use Requirements Business Park/Light Industrial An administrative subdivision (lot split) to be administered by the landowner prior to sale. • C. Building Requirements Building and site to comply with Business Park District Ordinance and other City requirements. An accessory building for materials storage could be allowed. See attached Business Park District Ordinance Requirements. D. Land Cost/Value $1.61/sf 2.05-acres Total: $143,770 Includes special assessments and park dedication. E. Project Timeframe 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 permit timing and application requirements. At this time the proposed site would require 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 permit application review process. City of Elk River Preliminary Proposal for Expansion Siting Gradient Technology —Revised March 8,2004 Page 2 of 2 II. Financing A. Project Costs Land $143,770 2.05 acres at$1.61/SF Construction $650,000 Estimate— 13,000 SF at$50.00/SF Equipment $ 0 Total Uses $793,770 B. Proposed Business Financing Sources Bank-TBD $ 574,924 90%Building Cost Owner Cash Equity $ 79,377 10%Project Cost Tax Rebate Finance $ 143,770 50/50 City and County* Total Sources $ 793,770 *Total City Assistance Proposed: $ 71,885 *Total County Assistance Proposed: $ 71,885 C. Job &Wage Goals (to be met within 2 years of building occupancy) Job Creation 5 full-time at$15.00/hour (minimum) Job Retention 13 full-time at$13.00-75.00/hour (7 based in MN) 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 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 10-years, the earlier. The buyer could consider an assignment of the "pay-as-you-go" note to a bank for "upfront equity" financing. E. Other Proposal is contingent upon letter of approval from quaffed 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 project contractor/builder. However,Amcon 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 Amcon correspondence re:Gradient Technology Proposal Preliminary Proposal Accepted: • By Date GRADIENT TECHNOLOGY, 2004 S '‘''>111C4*. City of Elk R. .ver Economic Development Tax Rebate Financing Policy & Application Amended: August 2002 Adopted: April 10,2000 City of Elk River,Minnesota Table of Contents • I. Policy Purpose 3 II. Difference Between TRF & TIF 3 Ill. Objectives of Tax Rebate Financing 3 - 4 IV. Policies for the Use of TRF 4 - 5 V. Project Qualifications 5 - 6 VI. Subsidy Agreement & Reporting Requirements 6 VII. Application Process 7 City of Elk River 7 Application to Other Political Subdivisions 7 VIII. Application 8 Applicant Information 8 Project Information 9 410 Public Purpose 9 Sources &Uses 10 Checklist&Additional Information 1 1 IX. Application Review Worksheet 12 X. Exhibits 14 A Corporation/Partnership Description B Project Description C Shareholders D But for Analysis E Prospective Lessees F Legal Description and PID Number XI. Sample But-For Analysis 15 • City of Elk River Tax Rebate Financing Policy,Amended August 2002 -2 - I. POLICY PURPOSE For the purposes of this document, the term "City"shall include the Elk River City Council,Economic DevelopmentAuthority, and Housing and RedevelopmentAuthority. The purpose of this policy is to establish the City of Elk River's position relating to the use of Tax Rebate Financing (TRF), otherwise referred to as Tax Abatement, for private development above and beyond the requirements and limitations set forth by State Law. This policy shall be used as a guide in the processing and review of applications requesting tax rebate assistance. The fundamental purpose of tax rebate financing in Elk River is to encourage desirable development or redevelopment that would not otherwise occur but for the assistance provided through TRF. The City of Elk River is granted the power to utilize TRF by the Minnesota Tax Abatement Act, as amended. It is the intent of the City to provide the minimum amount of TRF, as well as other incentives, at the shortest term required for the project to proceed. The City reserves the right to approve or reject projects on a case by case basis, taking into consideration established policies,project criteria, and demand on city services in relation to the potential benefits from the project. Meeting policy criteria does not guarantee the award of TRF to the project. Approval or denial of one project is not intended to set precedent for approval or denial of another project. II. DIFFERENCE BETWEEN TRF & TIF The primary difference between Tax Rebate Financing (TRF) and Tax Increment Financing (TIF) is the way in which the dollars are awarded to the project. When TIF is awarded to a project by the city, the other political subdivisions (the school district and the county) are required to contribute their portion of the increased taxes to the project. Conversely,when TRF is requested, each political subdivision has the option of granting its portion of the increased taxes to the project. Subsequently, the dollars generated for the project with TRF are generally less than the dollars generated with TIF. III. OBJECTIVES OF TAX REBATE FINANCING As a matter of adopted policy,the City will consider using TRF to assist private development projects to achieve one or more of the following objectives: • To retain local jobs and/or increase the number and diversity of jobs that offer stable employment and/or attractive wages and benefits. • To enhance and diversify the city of Elk River's economic base. • To encourage additional unsubsidized private development in the area, either directly or indirectly through"spin off" development. • To facilitate the development process and to achieve development on sites which would not be developed without TRF assistance. • To remove blight and/or encourage redevelopment of commercial and industrial areas in the city that result in high quality redevelopment and private reinvestment. City of Elk River Tax Rebate Financing Policy,Amended August 2002 - 3 - • To offset increased costs of redevelopment (i.e. contaminated site clean up) over and above the costs normally incurred in development. • • To create opportunities for affordable housing. • To contribute to the implementation of other public policies, as adopted by the city from time to time, such as the promotion of quality urban or architectural design, energy conservation, and decreasing capital and/or operating costs of local government. IV. POLICIES FOR THE USE OF TRF a. TRF assistance will be provided to the developer upon receipt of taxes by the City, otherwise referred to as the pay-asyougo method. Requests for up front financing will be considered on a case-by-case basis. b. Any developer receiving TRF assistance shall provide a minimum of twenty percent (20%) cash equity investment in the project. Projects utilizing the SBA504 program will be required to provide a minimum of ten percent (10%) cash equity investment. c. TRF will not be used in circumstances where land and/or property price is in excess of fair market value. d. Developer shall be able to demonstrate a market demand for a proposed project. e. TRF will not be utilized in cases where it would create an unfair and significant competitive financial advantage over other projects in the area. f. TRF shall not be used for projects that would place extraordinary demands on city services or for projects that would generate significant environmental impacts. g. The developer must provide adequate financial guarantees to ensure completion of the project,including,but not limited to: assessment agreements,letters of credit,personal guaranties, and etcetera. h. The developer shall adequately demonstrate, to the City's sole satisfaction, an ability to complete the proposed project based on past development experience,general reputation, and credit history, among other factors, including the size and scope of the proposed project. i. For the purposes of underwriting the proposal, the developer shall provide any requested market, financial, environmental, or other data requested by the City or its consultants. • j. TRF proposals shall not be used to support speculative office projects. Speculative projects are defined as those projects which have pre-leasing agreements or letters of intent for less than 50% of the available space. City of Elk River Tax Rebate Financing Policy,Amended August 2002 -4- In addition,leasible office projects must meet the following guidelines: 1. Evidence of the 50% occupancy must be reported to the Director of Economic Development six months following an issued certificate of occupancy. 2. 50% of the jobs within the leasible office building space must be considered "new"jobs to the City of Elk River,meaning jobs not located in the City at any time prior to occupying space in the project. 3. Business retention jobs will be considered on a one-for-one match to job creation only in cases where job loss is specific and demonstrable in accordance with the MN Business Subsidy Law. Evidence may include documentation that the company will have to close involuntarily, or the company has received an attractive offer to move to another state or community. k. All TRF proposals shall optimize the private development potential of a site. V. PROJECT QUALIFICATIONS All TRF projects considered by the City of Elk River must meet each of the following requirements: a. The project shall meet at least one of the objectives set forth in Section III of this document. • b. The use of TRF will be limited to: • Industrial development, expansion,redevelopment, or rehabilitation; or • Commercial redevelopment or rehabilitation; or • Research and development facilities that satisfy Business Park zoning requirements; or • Office facilities with a minimum new construction of 25,000 square feet and minimum market value of$1,000,000 upon project completion; or • Residential development and redevelopment maybe eligible for TRF under a separate set of policies and only with the recommendation of the HRA. c. The developer shall demonstrate that the project is not financially feasible but for the use of TRF. Evaluation of the project's financial feasibility without TRF shall be provided by the City's financial advisor on requests of over $25,000 total. d. The project shall comply with all provisions set forth in the state's Tax Abatement Law, statues 469.1812 to 469.1815, as amended. City of Elk River Tax Rebate Financing Policy,Amended August 2002 - 5 - e. The project must be consistent with the City's Comprehensive Plan,Land Use Plan, and Zoning Ordinances. • f. The project shall serve at least two of the following public purposes: • Job creation or job retention. • Increase of tax base. • Enhancement or diversification of the city's economic base. • Development or redevelopment that will spur additional private investment in the area. • Fulfillment of defined city objectives, such as those identified in the Strategic Plan for Economic Development or the city's Comprehensive Plan, among others. • Removal of blight or the rehabilitation of a high profile or priority site. VI. SUBSIDY AGREEMENT & REPORTING REQUIRMENTS All developers/businesses receiving Tax Rebate Financing assistance from the City of Elk River shall be subject to the provisions and requirements set forth by the City's Business Subsidy Criteria as adopted, and State Statute 1161993 as summarized below. All developers/businesses receiving TRF assistance shall enter into a Subsidy Agreement with the City of Elk River that identifies: the reason for the subsidy, the public purpose served by the subsidy, and the goals for the subsidy, as well as other subsidy agreement criteria set forth by Statute 1161993. • The developer/business shall file a report annually for two years after the date the benefit is received or until all goals set forth in the application and Subsidy Agreement have been met,whichever is later. Reports shall be completed using the format drafted by the State of Minnesota and shall be filed with the City of Elk River no later than March 1 of each year for the previous calendar year. Businesses fulfilling job creation requirements must file a report to that effect with the city within 30 days of meeting the requirements. The developer/business owner shall maintain and operate its facility at the site where TRF assistance is used for a period of five years after the benefit is received. In addition to attaining or exceeding the jobs and wages goals set forth in the Subsidy Agreement, the borrower shall achieve at least one of the objectives set forth in Section III of this document. Developers / Businesses failing to comply with the above provisions will be subject to fines, repayment requirements, termination of the assistance, and be deemed ineligible by the State to receive any loans or grants from public entities for a period of five years. • City of Elk River Tax Rebate Financing Policy,Amended August 2002 - 6 - VII. APPLICATION PROCESS FOR TRF • A. CITY OF ELK RIVER 1. Applicant submits the completed application along with a $5,000 application fee. The application fee will be used toward the cost of services provided in the evaluation of financial feasibility and preparation of legal documents. The balance of the application fee will be returned to the applicant. 2. City staff reviews the application and completes the Application Review Worksheet. 3. Results of the Worksheet are submitted to the appropriate governing authorities for preliminary approval of the proposal. 4. If preliminary approval is granted, all necessary notices,resolutions and agreements are prepared by City staff and/or consultants. 5. Public hearing(s) on the proposed project are held. 6. The EDA or HRA recommends approval or denial of the proposal to the City Council. 7. The City Council grants final approval or denial of the proposal. • B. APPLICATIONS TO OTHER POLITICAL SUBDIVISIONS It is recommended that applicants intending to seek TRF from Sherburne County and/or School District 728 make their applications to those bodies concurrent with their application to the City of Elk River. For more information on applying for TRF through Sherburne County and/or School District 728, contact: Alex Wikstrom Sherburne County Budget/ Economic Development Coordinator 763-241-2700 Dr.Alan Jensen Superintendent- School District 728 763-241-3400 • City of Elk River Tax Rebate Financing Policy,Amended August 2002 - 7 - VIII. APPLICATION FOR TAX REBATE FINANCING A. APPLICANT INFORMATION Name of Corporation/Partnership: G.D.O., Inc., d/b/a Gradient Technology Address : 8744 35W West Service Drive, Suite A,Blaine, MN 55449 Primary Contact : Eric Haehn,Vice-President/CFO Address: Same as above Phone: 763-792-9990 Fax: 763-792-9972 Email : haehn@gradtech,com On a separate sheet,please provide the following: • Brief description of the corporation/partnership's business,including history, principal product or service, etc... Exhibit A. • Brief description of the proposed project. Attach as Exhibit B. • List names of officers and shareholders/partners with more than five percent (5%) interest in the corporation/partnership.Attach as Exhibit C. • • A but for analysis and narrative. Attach as Exhibit D. PENDING Attorney Name: Sholly Blustin Address: 5775 Wayzata Blvd, Suite 700, Minneapolis,MN 55416 Phone 763-550-1133 Fax: 952-545-0071 Email: Accountant Name: Silverman Olson Thorvilson&Kaufmann LTD Address: 1550 Kinnard Financial Center, 920 2nd Ave. S.,Minneapolis,MN 55402 Phone: 612-373-9000 Fax: 612-373-9010 Email Contractor Name Address Phone Fax Email Engineer Name Address Phone Fax Email Architect Name: Auth Consulting/Associates Address: 406 Technology Drive E., Suite A, Menomonie,WI 54751 Phone: 715-232-8490 Fax: 715-232-8492 Email • City of Elk River Tax Rebate Financing Policy,Amended August 2002 - 8 - B. PROJECT INFORMATION 1. The project will be: X Industrial: X New Construction Expansion Redevelopment/ Rehab. • X Office/research facility that conforms to business park standards Commercial Redevelopment/Rehabilitation Other 2. In addition to the City of Elk River, applicant is requesting TRF funds from: X Sherburne County School District 728 3. The project will be: X Owner Occupied Leased Space • If leased space,please attach a list names and addresses of future lessees and indicate the status of commitments or lease agreements.Attach as Exhibit E. 4. Project Address Industrial Circle, Elk River Business Park • Include Legal Description and PID Number. Attach as Exhibit F. PENDING 5. Site Plan Attached: X Yes No 6. Total Amount of TRF Requested: $143,770 over 10-12 years. (Equal to land cost) City Portion of TRF: Annual$ $5,943 Total$ 71,885 County Portion of TRF: Annual$ $6,028 Total$ 71,885 ISD 728 Portion of TRF: Annual$ Total$ • 7. Current Real Estate Taxes on Project Site: $Est. MV $62,509 (2.05acres) Estimated Real Estate Taxes upon Completion: $Est. MV $717,000 Taxes $24,784 8. Construction Start Date: May 2004 Construction Completion Date: October 1, 2004 If Phased Project: Year % Completed Year % Completed C. PUBLIC PURPOSE It is the policy of the City of Elk River that the use of Tax Rebate Financing should result in a benefit to the public. Please indicate how this project will serve a public purpose. _X Job Creation/Retention Number of existing jobs 13 Number of jobs created by project 3-5 Average hourly wage of jobs created/retained $30 X New industrial development which will result in additional private investment in the area. X Enhancement and/or diversification of the city's economic base. X The project contributes to the fulfillment of the City's Strategic Plan for Economic Development. Removal of blight. • Rehabilitation of a high profile or priority site. Other: City of Elk River Tax Rebate Financing Policy,Amended August 2002 - 9 - D. SOURCES & USES • SOURCES NAME AMOUNT Bank Loan TBD $ 575,000 Other Private Funds $ Equity $ 75,000 Fed Grant/Loan $ State Grant/Loan $ EDA Micro Loan $ Tax Rebate Financing $ 105,000 ID Bonds $ TOTAL $ 755,000 USES AMOUNT Land Acquisition $ 105,000 Site Development $ Construction $ 650,000 Machinery&Equipment $ Architectural&Engineering Fees $ Legal Fees $ Interest During Construction $ Debt Service Reserve $ • Contingencies $ TOTAL $ 755,000 • City of Elk River Tax Rebate Financing Policy,Amended August 2002 - 10 - E. ADDITIONAL DOCUMENTATION AND CHECKLIST Applicants will also be required to provide the following documentation. • _X A) Written business plan,including a description of the business, ownership/management, date established,products and services, and future plans _X_ B) Financial Statements for Past Two Years X Profit&Loss Statement X Balance Sheet X C) Current Financial Statements x Profit&Loss Statement to Date x Balance Sheet to Date _X_ D) Two Year Financial Projections _X_ F) Personal Financial Statements of all Major Shareholders Profit&Loss _x_Current Tax Return _X G) Letter of Commitment from Applicant Pledging to Complete During the Proposed Project Duration PENDING H) Letter of Commitment from the Other Sources of Financing, Stating Terms and Conditions of their Participation in the Project • X I) Application fee of$5000 X J) Itemized Project Construction Statement K) Attach the following documentation as Exhibits X Exhibit A—Corporation/Partnership Description X Exhibit B—Description of Project X Exhibit C—List of Shareholders/Partners PENDING_Exhibit D—But-For Analysis X Exhibit E—List of Prospective Lessees PENDING_Exhibit F—Legal Description Note: All Major shareholders will be required to sign personal guarantees if up front financing of the project is.required. The undersigned certifies that all information provided in this application is true and correct to the best of the undersigned's knowledge. The undersigned authorizes the City of Elk River to check credit references,verify financial and other information, and share this information with other political subdivisions as needed. The undersigned also agrees to provide any additional information as may be requested by the City after the filing of this application. • Applicant Name Date City of Elk River Tax Rebate Financing Policy,Amended August 2002 - 11 - r w 0 1I • \ \ I _, 1 \ � _ - - / 1 — _ I � I I - - • I / m I IL_ — — 002137°E _ _ . 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I\\ 4— — _____— _/ — — — A111111111111111 \ .•% 896 I — �� _-------- L_____:- F ', i_• p `� rsi • j 0 ii 1 v .� dpi PFOJECT: - CORPORATR OPPICR BRANCH OPPICR DRAWN BY: RJN 11111r21.0 I� GRADIENT TECHN0LOGY 1�Teehnalap R..1 2020 Woe 84..1 Ci CHECKED 9Y: ONN WWIIII W Suitt A Rude 101 Yeuamade,11 51751 Tel n 51018 j% Dnp, 02/02/04 ELK RIVER INDUSTRIAL PARK T.1715-272-040 T4 715-901-5277 • Pas 715-212-8102 fax 715-881-5998 DWG FRE: 303- ELK RIVER, MINNESOTA Wauoauthcaaauluue.aaa, euaeauil.uwa054141LinteoW • 44h8441.4 REF FILE: 303-002 CONCEPTUAL SITE LAYOUT III Auth•Consulting/associatesCaa.liacOoo .la``° y aNea,eal JON NDAIBEfl: 303-002 ftE1AS10N OESCftIPilOfl: 1=11 DATE: TAX REBATE FINANCING PROPOSAL REVIEW WORKSHEET TO BE COMPLETED BY CITY STAFF ji(11 1. The project meets the criteria set forth in Section V of the Tax Rebate Financing policy V a) Meets at least one of the objectives in Section III. fi'Vdd 77fb) Demonstrates need for TRF with the but for analysis. c) Consistent with all city plans and ordinances. d) Serves at least two public purposes as defined in Section V. 2. Ratio of Private to Public Investment in Project: Points: $ 773 7 7 Private investment 5:1 5 $ /'' 3,0 770 Public Investment 4:1 4 Z Ratio Private : Public Financing 3:1 3 _ 2:1 2 Less than 2:1 1`..._._.........` 3.Job Creation in the City of Elk River: Points: 5 Number ofnew 'obs as a result of the project. 25+ 5 -7j? Number of existing/retained jobs 20+ 4 /2 Total 15+ 3,_ ink Less than 10 1 4. R 'o of TRF to new jobs created/retained: Points: $J%.' 7,C© TRF request $8,000 or less 5 /2_ Number of new jobs created/retained $10 000 or less 4 $ 7/�, ??O of TRF per newjob created/retained 12000 or less_'---:› $15,000 or less 2 Over$15,000 1 5. Wage Level of jobs created: Points: Average hourly wage k. (-0-;--j--$21/ hour of jobs created/retained: Q $18-21 / hour 4 $14-17 / hour 3 $10-13 / hour 2 Under$10 / hour 1 6. Project size: Points: 2" The project will result in the construction 40,000+ 5 of square feet / . (C) C-3 30,000+ 4 20,000+ -------_3 10,000 or less I i City of Elk River Tax Rebate Financing Policy,Amended August 2002 - 12 - 7. Ty f Project: Points: ! • 100%G/ Owner Occupied 5 J Mix Owner Occupied& Investment 4 Investment Property 3 8. Use Points: Industrial or Business Park Project Commercial Rehabilitation/Redevelopment 4 9. The project will pay annual Points: property taxes in the first fully 35,000+ 5 assessed year of$ 7i 79" 25 000+ 4 1000+ 3 10,000+ 2 Under$10,000 1 10. Likelihood that the project will result in Points; unsubsidized, spin-off development. High 5 1"-Moderates Low 1 Sub -Total Points: 2 7 of a possible 45 points. . 9. Bonus Points Bonus Points: ( The project will be 100%Pay-asyougo TRF. points The project contributes to the goals of Energy City. 2 points • Product promotes sensible use of energy, OR • Project utilizes significant energy efficient design&/or materials in construction. Total Points::32 Overall project analysis: High 45-38oints Moderate 37-29 poin ow 28- points Not Eligible 19-0 points 411 City of Elk River Tax Rebate Financing Policy,Amended August 2002 - 13 - 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 2.05-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. YEAR..209y 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. INPUTs.F. Land Value $ 1°7,300.0(0' Per Co.Assessor 3/23/04 • Building Value 109,700 0 Per Co.Assessor 3/23/04 Total Assessed Market Value 717,000„00 Per Co.Assessor 3/23/04 Yr MAX Years of TRF Project 10, Property's Total Tax Capacity $ 13,590.00 Property; y 4e li d0 wr% . //;rlual Estimate. City Portion $ 5,943.45 County Portion $ 6,028.93 School District Portion $ 4,445.15 State Portion $ 7,399.35 Other Jurisdictions $ 483.67 Total Estimated Real Estate Taxes $ 24,300.55 Total TRF Neede and'Cost '$143,770, ' F _ sem, Land Cost= 1.61/sf City 1/2: $71,885.00 12 County 1/2: $71,885.00 12 *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 3/23/2004 • 3%Annual Increase • Total MV Total NTC Total City&County Tax 2005 717,300 13,590 11,972 2006 738,819 13,998 12,331 2007 760,984 14,418 12,701 2008 783,813 14,850 13,082 2009 807,327 15,296 13,475 2010 831,547 15,755 13,879 2011 856,494 16,227 14,295 2012 882,189 16,714 14,724 2013 908,654 17,215 15,166 2014 935,914 17,732 15,621 Total TRF 137,246 Total MV Total NTC Total City&County Tax 2005 717,300 13,590 11,972 2006 745,992 14,134 12,451 2007 775,832 14,699 12,949 2008 806,865 15,287 13,467 2009 839,140 15,898 14,006 2010 872,705 16,534 14,566 2011 907,613 17,196 15,148 2012 943,918 17,884 15,754 2013 981,675 18,599 16,385 2014 1,020,942 19,343 17,040 Total TRF 143,737 Total MV Total NTC Total City&County Tax 2005 717,300 13,590 11,972 2006 753,165 14,270 12,571 2007 790,823 14,983 13,199 2008 830,364 15,732 13,859 2009 871,883 16,519 14,552 2010 915,477 17,345 15,280 2011 961,251 18,212 16,044 2012 1,009,313 19,122 16,846 2013 1,059,779 20,079 17,688 2014 1,112,768 21,083 18,573 Total TRF 150,583 For publication on Wednesday,March 31, 2004 • Please contact Heidi Steinmetz with any questions at (763) 635-1042. CITY OF ELK RIVER NOTICE OF PUBLIC HEARING REGARDING PROPOSED PROPERTY TAX ABATEMENTS FOR THE GRADIENT TECHNOLOGY PROJECT NOTICE IS HEREBY GIVEN that the City Council of the City of Elk River, Minnesota, will hold a public hearing at a meeting of the City Council beginning at 6:30 p.m., on Monday, April 12, 2004, to be held at the Elk River Senior High School Little Theater, 900 School Street (enter through door H on the north side of the building), Elk River, Minnesota, on the request of Badger Ventures, L LC (the "Company") to have the City abate to the Company 100% of the property taxes to be levied by the City on 2.05 acres of Lot 5, Block 1, Elk River Business Park located off of Twin Lakes Road on Industrial Circle in the City (the "Property") for an approximately 13,000 square foot light manufacturing facility (the "Improvements") to be constructed by the Company and leased to Gradient Technology. The total amount of the taxes proposed to be abated by the City on the Property for up to a ten year period is estimated to be • not more than $75,000. This abatement would constitute a "business subsidy" under Minnesota Statutes, Sections 116J.993 through 116J.995, and the City would impose specific wage and job goals for the Project under that law. The City Council will consider granting this property tax abatement in response to the request. A draft of a proposed Abatement Agreement between the City and the Company, which includes the proposed b usiness subsidy a greement, a s w ell as a s ummary of the t erms oft he subsidy, are available for review from the office of the City's Economic Development Director at City Hall. All interested persons may appear at the April 12th public hearing and present their views orally or in writing. Anyone needing reasonable accommodations or an interpreter should contact the City Clerk's office at the City Hall, telephone (763) 635-1000. [Publish on March 31, 2004] I 1630387v1 RESOLUTION NO. RESOLUTION APPROVING PROPERTY TAX ABATEMENTS 411 BE IT RESOLVED by the City Council (the "Council") of the City of Elk River, Minnesota(the "City"), as follows: 1. findings: Recitals. (a) Badger Ventures, LLC (the "Developer") proposes to construct an approximatelyabatementwill 13,000applyto square100%footofthe lightCitymanufacturing'sshareofthe facilityproperty in taxes the City(the(the"Abatement"Project"").) The Developer has requested that the City provide financial assistance to the Developer for the Project. The City proposes to use the abatement for the purposes provided for in the Abatement Law (as hereinafter defined), including the Project. The proposed term of the abatement will be for up to ten years in an amount not to exceed $71,885. The derived from a 2.05 acre portion of the property described as Lot 5, Block 1, Elk River Business Park (the "Property"). (b) On the date hereof, the Council held a public hearing on the question of the Abatement, and said hearing was preceded by at least 10 days but not more than 30 . days prior published notice thereof. (c) The Abatement is authorized under Minnesota Statutes, Sections 469.1812 through 469.1815 (the "Abatement Law"). 2. Findings for the Abatement. The City Council hereby makes the following (a) The Council expects the benefits to the City of the Abatement to at least equal or exceed the costs to the City thereof. (b) Granting the Abatement is in the public interest because it will increase or preserve the tax base of the City and provide employment opportunities in the City. (c) The Property is not located in a tax increment financing district. (d) In any year, the total amount of property taxes abated by the City by this and other resolutions, if any, does not exceed the greater of ten percent (10%) of the current levy or$200,000. 3. Terms of Abatement. The Abatement is hereby approved; provided, however, the this approval is contingent upon the approval by Sherburne County of an abatement program for the Project upon the same terms as set forth below for the County's share of property tax amount which the County receives from the Property. The terms of the Abatement are as follows: (a) The Abatement shall be for up to ten (10) years and shall apply to the taxes payable in the years 200_through 20_, inclusive. 1630423v1 (b) The City will abate 100% of the City's share of property tax amount which the City receives from the Property, not to exceed $71,885. (c) The Abatement shall be subject to all the terms and limitations of the Abatement Law. (d) The Abatement may not be modified or changed during its term. The motion for the adoption of the foregoing resolution was made by member and duly seconded by member and, upon a vote being taken thereon after full discussion thereof, the following voted in favor thereof: and the following voted against the same: Whereupon said resolution was declared duly passed and adopted. 1630423v1 2 S OF MINNESOTA ) COUNTY OF SHERBURNE) SS i) I, the undersigned, being the duly qualified and acting Clerk of the City of Elk River, Minnesota (the "City"), by reason of my office as Clerk, DO HEREBY CERTIFY that I have compared the attached and foregoing extract of minutes with the original thereof on file in my office, and that the same is a full, true and complete transcript of the minutes of a meeting of the City Council of the City, duly called and held on the date therein indicated, insofar as such minutes relate to property tax abatements for the Badger Ventures Industries, Inc. Project. 1630423v1 WITNESS my hand this 12th day of April, 2004. City Clerk • DRAFT TAX ABATEMENT AND BUSINESS SUBSIDY AGREEMENT BY AND BETWEEN CITY OF ELK RIVER, MINNESOTA AND BADGER VENTURES, LLC S S 1630424v1 TABLE OF CONTENTS S DRAFT ARTICLE I DEFINITIONS 1 Section 1.1 Definitions 1 ARTICLE II REPRESENTATIONS AND WARRANTIES 3 Section 2.1 Representations and Warranties of the City 3 Section 2.2 Representations and Warranties of the Developer 3 ARTICLE III UNDERTAKINGS BY DEVELOPER AND CITY 5 Section 3.1 Construction of Project and Reimbursement of Tax Abatement Property Cost 5 Section 3.2 Limitations on Undertaking of the City 5 Section 3.3 Commencement and Completion of Construction 5 Section 3.4 Damage and Destruction 5 Section 3.5 No Change in Use of Project 5 Section 3.6 Prohibition Against Transfer of Project and Assignment of Agreement 5 Section 3.7 Real Property Taxes 6 Section 3.8 Business Subsidies Act 6 Section 3.9 Duration of Abatement Program 7 ARTICLE IV EVENTS OF DEFAU 8 Section 4.1 Events of Default LT Defined 8 Section 4.2 Remedies on Default 8 Section 4.3 No Remedy Exclusive 8 Section 4.4 No Implied Waiver 8 Section 4.5 Agreement to Pay Attorney's Fees and Expenses 9 Section 4.6 Release and Indemnification Covenants 9 ARTICLE V ADDITIONAL PROVISIONS 10 Section 5.1 Conflicts of Interest 10 Section 5.2 Titles of Articles and Sections 10 , Section 5.3 Notices and Demands 10 Section 5.4 Counterparts 10 Section 5.5 Law Governing 10 Section 5.6 Duration 11 Section 5.7 Provisions Surviving Rescission or Expiration 11 1111/ 1630424v1 _i_ TAX ABATEMENT AND BUSINESS SUBSIDY AGREEMDRAFT THIS AGREEMENT, made as of the day of , 2064, by and among ih City of Elk River, Minnesota (the "City"), a municipal corporation and political subdivision of the State of Minnesota, and Badger Ventures, LLC, a Minnesota limited liability company (the "Developer"), W1TNESSETH: WHEREAS, pursuant t o Minnesota Statutes, Sections 4 69.1812 through 4 69.1815, the City has established a Tax Abatement Program; and WHEREAS, the City believes that the development and construction of a certain Project (as defined herein), and fulfillment of this Agreement are vital and are in the best interests of the City, will result in preservation and enhancement of the tax base, provide employment opportunities and are in accordance with the public purpose and provisions of the applicable state and local laws and requirements under which the Project has been undertaken and is being assisted; and WHEREAS, the requirements of the Business Subsidy Law, Minnesota Statutes, Section 116J.993 through 116J.995, apply to this Agreement; and WHEREAS, the City has adopted criteria for awarding business subsidies that comply 011/ with the Business Subsidy Law, after public hearings for which notice was published; and WHEREAS, the Council has approved this Agreement as a subsidy agreement under the Business Subsidy Law. NOW, THEREFORE, in consideration of the premises and the mutual obligations of the parties hereto, each of them does hereby covenant and agree with the other as follows: ARTICLE I DEFINITIONS Section 1.1 Definitions. All capitalized terms used and not otherwise defined herein shall have the following meanings unless a different meaning clearly appears from the context: Agreement means this Agreement, as the same may be from time to time modified, amended or supplemented; Business Day means any day except a Saturday, Sunday or a legal holiday or a day on which banking institutions in the City are authorized by law or executive order to close; City means the City of Elk River, Minnesota; • County means Sherburne County, Minnesota; 1630424v1 • Developer means Badger Ventures, LLC, a Minnesota limited L t:RAFfit successors and assigns; Event of Default means any of the events described in Section 4.1; Project means the construction by the Developer of an approximately 13,000 square foot light manufacturing facility to be located in the City; State means the State of Minnesota; Tax Abatement Act means Minnesota Statutes, Sections 469.1812 through 469.1815; Tax Abatement Program means the actions by the City pursuant to Minnesota Statutes, Section 469.1812 through 469.1815, as amended, and undertaken in support of the Project; Tax Abatement Property means a 2.05 acre portion of the property described as the real property identified as [Lot 5, Block 1,] Elk River Business Park, located in the City; Tax Abatements means 100% of the City's share of real estate taxes on the Tax Abatement Property abated in accordance with the Tax Abatement Program. • 1630424v1 2 • DRAFT ARTICLE II REPRESENTATIONS AND WARRANTIES Section 2.1 Representations and Warranties of the City. The City makes the following representations and warranties: (1) The City is a municipal corporation and a political subdivision of the State and has the power to enter into this Agreement and carry out its obligations hereunder. (2) The Tax Abatement Program was created, adopted and approved in accordance with the terms of the Tax Abatement Act. (3) To finance the costs of the Project to be undertaken by the Developer, the City proposes, subject to the further provisions of this Agreement, to reimburse the Developer for the costs of the Tax Abatement Property as further provided in this Agreement. (4) The City has made the findings required by the Tax Abatement Act for the Tax Abatement Program. Section 2.2 Representations and Warranties of the Developer. The Developer makes the following representations and warranties: (1) The Developer has the power to enter into this Agreement and to perform its obligations hereunder and is not in violation of its articles, operating agreement or member control agreement or any local, state or federal laws. (2) The Developer is a limited liability company validly existing under the laws of this State and has full power and to enter into this Agreement and carry out the covenants contained herein. (3) The D eveloper w ill c ause the Project to be constructed i n accordance with the terns of this Agreement and all local, state and federal laws and regulations (including, but not limited to, environmental, zoning, energy conservation, building code and public health laws and regulations). (4) The Developer will obtain or cause to be obtained, in a timely manner, all required permits, licenses and approvals, and will meet, in a timely manner, all requirements of all applicable local, state, and federal laws and regulations which must be obtained or met before the Project may be lawfully constructed (5) The construction of the Project would not be undertaken by the Developer,and in the opinion of the Developer would not be economically feasible within the reasonably foreseeable future, without the assistance and benefit to the Developer provided for in this Agreement. 1630424v1 3 (6) Neither the execution and delivery of this Agreement, the cFilt4oForttransactions contem lated hereb , nor the fulfillment of or com liance wit hl��is an p Y P conditions of this Agreement is prevented, limited by or conflicts with or results in a breach o , the terms, conditions or provision of any contractual restriction, evidence of indebtedness, agreement or instrument of whatever nature to which the Developer is now a party or by which it is bound, or constitutes a default under any of the foregoing. (7) The D eveloper w ill c ooperate fully with the C ity with respect t o any 1 itigation commenced with respect to the Project. (8) The Developer will cooperate fully with the City in resolution of any traffic, parking, trash removal or public safety problems which may arise in connection with the construction and operation of the Project. • a 1630424v1 4 ! DRAFT ARTICLE III UNDERTAKINGS BY DEVELOPER AND CITY Section 3.1 Construction of Project and Reimbursement of Tax Abatement Property Cost. (1) The costs of the Tax Abatement Property and the construction of the Project shall be paid by the Developer. The Developer will construct the Project in accordance with the approved construction plans and at all times prior to the termination of this Agreement will operate and maintain, preserve and keep the Project or cause the Project to be maintained, preserved and kept with the appurtenances and every part and parcel thereof, in good repair and condition. (2) Upon submission to the City of a purchase agreement and settlement statement relating to the purchase of the Tax Abatement Property in an amount not less than the Reimbursement Amount, the City shall reimburse the Developer for the costs of the Tax Abatement Property actually incurred in an amount not to exceed $71,885 (the "Reimbursement Amount")pursuant to the Abatement Program as provided in Section 3.8. . Section 3.2 Limitations on Undertaking of the City. Notwithstanding the provisions of Sections 3.1, the City shall have no obligation to reimburse the Company for the costs of the Tax Abatement Property, if the City, at the time or times such payment is to be made, is entitled under Section 4.2 to exercise any of the remedies set forth therein as a result of an Event of Default which has not been cured. Section 3.3 Commencement and Completion of Construction. The Developer shall complete the Project by December 31, 2005. All work with respect to the Project to be constructed or provided by the Developer shall be in conformity with the construction plans as submitted by the Developer and approved by the City. Nothing in this Agreement shall be deemed to impair or limit any of the City's rights or responsibilities under its zoning laws or construction permit processes. Section 3.4 Damage and Destruction. In the event of damage or destruction of the Project the Developer shall repair or rebuild the Project. Section 3.5 No Change in Use of Project. The City's obligations pursuant to this Agreement shall be subject to the continued operation of the Project by the Company. Section 3.6 Prohibition Against Transfer of Project and Assignment of Agreement. The Developer represents and agrees that prior to the termination date of this Agreement the Developer shall not transfer the Project or any part thereof or any interest therein, without the • prior written approval of the City. The City shall be entitled to require as conditions to any such approval that: 1630424v1 5 (1) Any proposed transferee shall have the qualifications and fini4e ty, in the reasonable judgment of the City, necessary and adequate to 1.1 11 the-o-6rgaions J undertaken in this Agreement by the Developer. (2) Any proposed transferee, by instrument in writing satisfactory to the City shall, for itself and its successors and assigns, and expressly for the benefit of the City, have expressly assumed all of the obligations of the Developer under this Agreement and agreed to be subject to all the conditions and restrictions to which the Developer is subject. (3) There shall be submitted to the City for review and prior written approval all instruments and other legal documents involved in effecting the transfer of any interest in this Agreement or the Project. Section 3.7 Real Property Taxes. The Developer shall, so long as this Agreement remains in effect, pay all real property taxes with respect to all parts of the Tax Abatement Property acquired and owned by it which are payable pursuant to the provisions of the Assessment Agreement and any other statutory or contractual duty that shall accrue subsequent to the date of its acquisition of title to the Tax Abatement Property(or part thereof) and until title to the property is vested in another person. The Developer agrees that for tax assessments so long as this Agreement remains in effect: (a) It will not seek administrative review or judicial review of the 411 applicability of any tax statute relating to the ad valorem property taxation of real property contained on the Tax Abatement Property determined by any tax official to be applicable to the Project or the Developer or raise the inapplicability of any such tax statute as a defense in any proceedings with respect to the Tax Abatement Property, including delinquent tax proceedings; provided, however, "tax statute" does not include any local ordinance or resolution levying a tax; (b) It will not seek administrative review or judicial review of the constitutionality of any tax statute relating to the taxation of real property contained on the Tax Abatement Property determined by any tax official to be applicable to the Project or the Developer or raise the unconstitutionality of any such tax statute as a defense in any proceedings, including delinquent tax proceedings with respect to the Tax Abatement Property; provided, however, "tax statute" does not include any local ordinance or resolution levying a tax; (c) It will not seek any tax deferral or abatement, either presently or prospectively authorized under Minnesota Statutes,Section 469.181, or any other State or federal law, of the ad valorem property taxation of the Tax Abatement Property so long as this Agreement remains in effect. Section 3.8 Business Subsidies Act. (1) In order to satisfy the provisions of Minnesota Statutes, Sections 116J.993 to 4 116J.995 (the "Business Subsidies Act"), the Developer acknowledges and agrees that the amount of the "Business Subsidy" granted to the Developer under this Agreement is the 1630424v1 6 Reimbursement Amount, which is approximately $71,885, and that the needed because the Project isnot feasible for the Developer to in�c egsAirriKii e wie sufficiently Business Subsidy. The public purpose of the Business Subsidy is to develop new Jobs within the City and to increase the tax base in the City. The Developer agrees that it will meet the following goals (the "Goals"): It will create at least [5] full-time equivalent jobs in connection with the development of the Project at a direct hourly wage of at least $[15.00] per hour within two years from the "Benefit Date",which is the date the Project is completed. (2) If the Goals are not met, the Developer agrees to repay all or a part of the Business Subsidy to the City, plus interest ("Interest") set at the implicit price deflator defined in Minnesota Statutes, Section 275.70, Subdivision 2, accruing from and after the Benefit Date, compounded semiannually. If the Goals are met in part, the Developer will repay a portion of the Business Subsidy (plus Interest) determined by multiplying the Business Subsidy by a fraction, the numerator of which is the number of jobs in the Goals which were not created at the wage level set forth above and the denominator of which is [5] (i.e. number of jobs set forth in the Goals). (3) The Developer agrees to (i) report its progress on achieving the Goals to the City until the later of the date the Goals are met or two years from the Benefit Date, or, if the Goals are not met, until the date the Business Subsidy is repaid, (ii) include in the report the information required in Subdivision 7 of the Jobs Act on forms developed by the Minnesota Department of Employment and Economic Development, and (iii) send completed reports to the • City. The Developer agrees to file these reports no later thanMarch 1 of each year commencing March 1, 2005, and within 30 days after the deadline for meeting the Goals. The City agrees that if it does not receive the reports, it will mail the Developer a warning within one week of the required filing date. If within 14 days of the post marked date of the warning the reports are not made, the Developer agrees to pay to the City a penalty of$100 for each subsequent day until the report is filed up to a maximum of$1,000. (4) The Developer agrees to continue operations of the Project for at least five (5) years after the Benefit Date. (5) Other than the Tax Abatements and comparable tax abatements from the County, there are no other state or local government agencies providing financial assistance for the Project other than the City and the County. (6) is the sole member and parent corporation of the Developer. Section 3.9 Duration of Abatement Program. The Tax Abatement Program shall exist for a period of up to ten years beginning with real estate taxes payable in 20_through 20_. On or before February 1 and August 1 of each year commencing August 1, 20_ to and including February 1, 20 the City shall pay the Developer the amount of the Tax Abatements received by the City in the previous six month period. The City may terminate the Tax Abatement Program and this Agreement at an earlier date if an Event of Default occurs and the City rescinds ior cancels this Agreement. 1630424v1 7 • DRAFT ARTICLE IV EVENTS OF DEFAULT Section 4.1 Events of Default Defined. The following shall be "Events of Default" under this Agreement and the term "Event of Default" shall mean whenever it is used in this Agreement any one or more of the following events: (1) Failure by the Developer to timely pay any ad valorem real property taxes, special assessments, utility charges or other governmental impositions with respect to the Project. (2) Failure by the Developer to cause the construction of the Project to be completed pursuant to the terms, conditions and limitations of this Agreement. (3) Failure b y the D eveloper t o observe o r p erform any o ther covenant, c ondition, obligation or agreement on its part to be observed or performed under this Agreement. Section 4.2 Remedies on Default. Whenever any Event of Default referred to in Section 4.1 occurs and is continuing, the City, as specified below, may take any one or more of the following actions after the giving of thirty (30) days' written notice to the Developer citing with specificity the item or items of default and notifying the Developer that it has thirty (30) days • within which to cure said Event of Default. If the Event of Default has not been cured within said thirty(30) days: (a) The City may suspend its performance under this Agreement until it receives assurances from the Developer, deemed adequate by the City, that the Developer will cure its default and continue its performance under this Agreement. (b) The City may cancel and rescind the Agreement. (c) The City may take any action, including legal or administrative action, in law or equity, which may appear necessary or desirable to enforce performance and observance of any obligation, agreement, or covenant of the Developer under this Agreement. Section 4.3 No Remedy Exclusive. No remedy herein conferred upon or reserved to the City is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement or now or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver thereof but any such right and power may be exercised from time to time and as often as may be deemed expedient. Section 4.4 No Implied Waiver. In the event any agreement contained in this Agreement should be breached by any party and thereafter waived by any other party, such waiver shall be 1630424v1 8 limited to the particular breach so waived and shall not be deemed to waive a rAf fnt, previous or subsequent breach hereunder. Section 4.5 Agreement to Pay Attorney's Fees and Expenses. Whenever any Event of Default occurs and the City shall employ attorneys or incur other expenses for the collection of payments due or to become due or for the enforcement or performance or observance of any obligation or agreement on the part of the Developer herein contained, the Developer agrees that they shall, on demand therefor, pay to the City the reasonable fees of such attorneys and such other expenses so incurred by the City. Section 4.6 Release and Indemnification Covenants. (1) The Developer releases from and covenants and agrees that the City and its governing body members, officers, agents, servants and employees shall not be liable for and agrees to indemnify and hold harmless the City and its governing body members, officers, agents, servants, and employees against any loss or damage to property or any injury to or death of any person occurring at or about or resulting from any defect in the Project. (2) Except for any willful misrepresentation or any willful or wanton misconduct of the following named parties, the Developer agrees to protect and defend the City and its governing body members, officers, agents, servants and employees, now or forever, and further agrees to hold the aforesaid harmless from any claim, demand, such, action or other proceeding • whatsoever by any person or entity whatsoever arising or purportedly arising from a breach of the obligations of the Developer under this Agreement, or the transactions contemplated hereby or the acquisition, construction, installation, ownership, maintenance and operation of the Project. (3) The City and its governing body members, officers, agents, servants and employees shall not be liable for any damages or injury to the persons or property of the Developer or its officers, agents, servants or employees or any other person who may be about the Project due to any act of negligence of any person. (4) All covenants, stipulations, promises, agreements and obligations of the City contained herein s hall b e deemed to be the covenants, stipulations,promises, agreements and obligations of the City and not of any governing body member, officer, agent, servant or employee of the City in the individual capacity thereof. 1630424v1 9 • DRAFT ARTICLE V ADDITIONAL PROVISIONS Section 5.1 Conflicts of Interest. No member of the governing body or other official of the City shall participate in any decision relating to the Agreement which affects his or her personal interests or the interests of any corporation, partnership or association in which he or she is directly or indirectly interested. No member, official or employee of the City shall be personally liable to the City in the event of any default or breach by the Developer or successor or on any obligations under the terms of this Agreement. Section 5.2 Titles of Articles and Sections. Any titles of the several parts, articles and sections of the Agreement are inserted for convenience of reference only and shall be disregarded in construing or interpreting any of its provisions. Section 5.3 Notices and Demands. Except as otherwise expressly provided in this Agreement, a notice, demand or other communication under this Agreement by any party to any other shall be sufficiently given or delivered if it is dispatched by registered or certified mail, postage prepaid, return receipt requested, or delivered personally, and (1) in the case of the Developer is addressed to or delivered personally to: • Badger Ventures, LLC (2) in the case of the City is addressed to or delivered personally to the City at: City of Elk River Elk River City Hall 13065 Orono Parkway Elk River, MN 55330-5600 or at such other address with respect to any such party as that party may, from time to time, designate in writing and forward to the other, as provided in this Section. Section 5.4 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall constitute one and the same instrument. Section 5.5 Law Governing. This Agreement will be governed and construed in accordance with the laws of the State of Minnesota. • 1630424v1 10 • Section 5.6 Duration. This Agreement shall remain in effect throe,gD unless earlier terminated or rescinded in accordance with its terms. Section 5.7 Provisions S urviving Rescission o r Expiration. S ections 4.5 and 4.6 s hall survive any rescission, termination or expiration of this Agreement with respect to or arising out of any event, occurrence or circumstance existing prior to the date thereof. • S 1630424v1 1 1 • IN WITNESS WHEREOF, the City has caused this Agreement to be �E��. Tt; name and on its behalf, and the Developer has caused this Agreement to b cTuly execu in it; name and on its behalf, on or as of the date first above written. BADGER VENTURES, LLC By Its By Its 110 This is a signature page to the Tax Abatement and Business Subsidy Agreement by and between • the City of Elk River, Minnesota and Badger Ventures, LLC. 1630424v1 S- • I 11. FT CITY OF ELK RIVER, M i l By Its Mayor By Its Administrator • This is a signature page to the Tax Abatement and Business Subsidy Agreement by and between the City of Elk River, Minnesota and Badger Ventures, LLC. • 1630424v1 S-2 • Grow Minnesota! Update As of March 29,Grow Minnesota!partners leaders from around the state.This board had conducted about 160 retention visits will provide direction for the program's to companies around the state.Company overall administration and strategy. The executives have responded very positively board is chaired by Jon Campbell, Re- to the proactive efforts of our chamber ex- gional President, Great Lakes Region, ecutives and their business volunteers to Wells Fargo&Company thank them foro a GROW IJNNESOTA' business in Minnesesota Grow Minnesota! part- and offer assistance ners meet on a quarterly with obstacles they Building our economy by building business basis for training and de- might be facing.Business leaders have al- velopment purposes.The next session will ready remedied a number of obstacles fac- take place on April 22 in Elk River. ing their peers. Our goal is to complete 500 visits by the first of September. Applications for participation in Grow Min- nesota! in year two are now available. The Minnesota Chamberrecentlyconvened Please contact Kendra Shank at the first meeting of the Grow Minnesota! kshank@mnchamber.com or 651-292- Advisory Board, made up of 12 business 4674 for more information. • Welcome to the New Chamber Executives Mary Keppers,Becker Area Chamber—Executive Director Kirsten Hanson,Big Lake Chamber-President Sara Waibel,Fairfax Civic and Commerce—President Lorraine Cappuccino,Hinckley Area Chamber—Secretary Tina Vorlicek,Hutchinson Area Chamber-President(Vi Mayer remains on the scene as a consultant to the Chamber!) Randy Rothstein,Richmond Civic and Commerce—President Carol Dunker,Lake Crystal Area Chamber—Executive Secretary Karen Bjur,Lake Lillian Civic and Commerce—President Mel Ott,Lewiston Chamber—President Ron Gilsrud,Longville Lakes Area Chamber—Board Secretary Chengny Thao,MN Hmong Chamber—Chair Shirley Dove,Morton Area Chamber Libby Revier,Olivia Area Chamber-President Brad Meier,Owatonna Area Chamber—President/CEO James Rohweder,Proctor Area Chamber—President Karen Theisen,Renville County West Area Chamber—President Melanie M.Hedberg,Rush City Area Chamber—Executive Director Lee Humble,Rushford Area Chamber—President Cindy Uhlenkamp,Sauk Centre Area Chamber—Executive Director Erik Wennberg,Swedish American Chamber—Executive Assistant Vicki Hoeft,Watertown Area Chamber—Executive Secretary Angela Sorenson,Wells Area Chamber—President Stay tuned for the 2004 edition of the MCCF.Directory in April! • 4 Why Minnesota? 10 Good Reasons to do Business in Minnesota Proven Performance Minnesotagets tap grades far economic performance, development capacity and business vitality for the thir traight year fromthe Corporation for Enterprise Development.State Paiicy Reports ranks Mnne sota first in the country in job based assets,second in human capitol assets and third in financial assets. 2 Business Friendly Climate Government imposed business costs have fallen to theirs lowest level in more than a decade,vith a 40%redaction in the average COSI of unemployment insurance,and a 34%drop in commercial property taxes. Renowned Work Ethic Minnesota is the nation's"hardest working"state, with the highest labor force participation rate in the nation and low absen- teeism.In'fact,the United Health Foundation ranks Minnesota the second healthiest'state in the nation. 46 • Excellence in Education Minnesota has the nation's highest percentage of high school graduates and ranks eighth in'college graduates.The state's eighth graders in public schools rank first in the U.S, for their scores on national math tests,while'82 of the state's public schools have been recognized for academic excellence by tle U.S.Department of Education, Fertile Ground in Innovation-The University of Minnesota ranks among the top three public research universities,and there's no end to our creativity.An international consulting firm found the'Twin Cities to'be the world's fifth most "knowledge-competitive region based on its ability to translatenew ideas,processes and production into economic value and wealth. Minnesota is among the nation's top seven technology states. Best in the Business Entrepreneur magazine calls the Twin Cities the nation's best place to operate a small business. Some of the world's most recognized corporations make their home in Minnesota,including major manufacturers of industrial and medical products,and 19 Fortune 50 companies.Ten Minnesota companies'rank among Fortune's 100 Fastest Graving Small Companies,and the state is'one of only three in the country with at least six Malcolm Baldridge National Quality awards. • 4110 Why Minnesota? 10 Good Reasons to do Business in Minnesota Foundations of Commerce Expansion Management ranks the'Twin Cities 13`"among the nation's metro regions based on,logistics-supporting infra- structure and well-trained workers in transportation industries.Minneapo- lis-St.Paul International Airport ranks first in customer'satisfa€tion among North American airports and among the top five worldwide.Minnesota also boasts plentiful and cost-effective energy and the ninth best digital economy in the nation8 . Global Competitor - Minnesota products are in demand in more than 1$5 countries around the world. Exports of computerand electronic productions rank ninth'nationwidetyith$3.2 billion while exports of miscellaneous manu facturing,including medical and scientific devices',rank seventh with$11 bil- lion. Agricultural exports rank seventh with more than$2'billion. Wealth of Resources-Minnesota is richly endowed with the expertise an9d 11111111 capitol needed to support businesses at every stage. The Twin Cities have around 100 public relations agencies,350 advertising agencies and 150 mar- keting and economic research firms.Minnesota ranked l4`' in the country— tops in the'Midwest—in venture capitol investments in 2002,with more than $325 million. A Most Livable State Minnesota's cultural attractions,outdoor recreation and scenic landscapes,along with affordable housing,safe streets,a strong education system and excellent health care,helped propel the state—far the seventh straight year—to the top of Morgan Quinto's"Mast Livable State" J MARK 'YOUR CALENDAR April 22 Membership Council Bloomington Council April 27-29 Washington D.C.Trip f une 3 Mini Institute' St.Cloud r 4111 Invest in Minnesota continued from page 1 of state.Our progressive neighbor to the east has allocated up to$120 million for tablished principle of fiduciary responsi- this very purpose—a Wisconsin only di- bility is that pension funds invest about 95 rected venture investment fund.Yet,here percent in investment grade stocks and we sit with similar economic develop- bonds.The other five percent should be in ment goals but with no comparable in- "alternative investments"which includes vestment strategy to offer to our own lo- real estate and venture capital funds. By cal companies within our borders. his own admission in the August 2003 is- sue of Twin Cities Business Monthly,Mr. This disgusting scenario has almost played Howard Bicker of the Minnesota state pen- itself out here in Elk River.A local high- sion fund acknowledged a goal of allocat- tech company started in our Business In- ing up to fifteen percent of its assets into cubator,grew enough to locate in a research those alternative investments to enhance facility in the City and is now looking to returns to the overall pension fund. expand its operation further with a plan to build a new 50,000 square foot facility In 2003, the state pension fund totaled employing 50—75 people,many of whom $39.0 billion.Total commitments to alter- would attract salaries of up to $75,000. native investments were up to$2.9 billion. They have been trying mightily to secure a Fifteen percent would obviously allow a second round of investment to make this significant amount of money to be avail- happen. The local investment markets are able for investments.I would postulate this dry because the venture fund managers scenario;of the$2.9 billion already com- describe high-tech as"risky"(I thought that mitted to alternative investments,dedicate was a definition of a`venture'fund) and 1.0%of the funds,or$29 million,into a their product is not"a medical device"(an venture capital fund that would be avail- apparent albatross for any non-medical able for investment only into early stage start up company in Minnesota). Minnesota companies. This amount would not diminish in any material way the pm- Let's stop this nonsense and put the pres- dent investor principles of the fund and sure on our venture capital funds to cre- would continue to protect our pensioners ate a mechanism for careful and prudent and provide a well balanced return on in- investment into Minnesota companies. vestment to their entitlement. Yes, we have learned that our economy and our businesses are poised to take the Although the state pension fund does in- next step in expansion;why can't we take vest in venture capital funds,these invest- the logical step to make sure we keep ments go into capital markets across the these businesses in our state and our com- country and do not preclude investing in munity. The Value Proposition is simple; a venture fund based for example in Cali- by creating a forward thinking posture fornia or Massachusetts.Those"coastal" through a slight change in investment funds then come here,invest in early stage policy, business will have a recognized Minnesota companies,and demand that vehicle to expand their operations,pro- the company move to their location — duction and employment,and we become thereby removing a growing Minnesota capable of protecting and enhancing our company,its employees and tax base out assets and our community. • cu o > y �-� ,. 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N I t O• Q O s~ O W j LAI ., tl) 'o3x o H a aiC5M ~ 8 oo o3 ° a . � o xo L • ci ci) ). to ,N, ,..).0a.+ c,.y U bA ' cti a) U ...4) , c,., ,..... = .::i .„) m — N N Q .0 E N 0 U . = ,d O Z Market data suggests buying SW Florida in the off season ca Invest now for your future. Jack Benke, Broker, GRI, service–based economic devel- Minnesota High Tech Associa- opment opment organization to one tion (which acts primarily asAkt Southwest Florida that is becoming self-funded. a lobbying and educational �� � Minnesota sum The organization's continuing body)in hopes that sharing ex ` ` The best of both mission is to help small- and pertise will benefit both medium-sized companies groups. ° Offices conveniently located grow and thrive through its Pletcher says that if MTI has Real Estate Opportunities,Inc. (N fee-based technology consult- to become self-sufficient,there Downing-Frye Realty,Inc. (FL) No ing services, and providing in- are worse times to be pushed Call Jack Benke at 651-398-3183 Toll free 866-639-I formation through its quarter- out of the nest. With the econ- ly Minnesota Technology mag- omy in general and the tech at jtbenke@pro-nS.rlet to invest in your future in azine and its monthly Tech economy in particular showing • 4.4:f , Trends newsletter (no longer signs of a rebound, smaller Association for 1• Corporate available for free). MTI also businesses in tech-heavy fields P PEES@ join, conducts research on technol- are poised for success. Growth Tuesday Apn20th,. ogy and manufacturing issues "I'm convinced we're on the Mmaesuta chapter 1 t 30 a.tr4 Lunch ME that it provides to its clients right side of the curve," says " ate Marquette ribte!, Mir and to the public through Pletcher. "Technology is con- May,e zeros F�fifC%A the media. In addition, MTI stantly evolving,but the differ- EEOiflTYPANEL " Bill McLaughlin, I�fbstedby Goldsmith Agio Helms S Co offers access to its Minnesota ence between now and five ,uesasy,aao.2otr+,zoos President CEO Technology Directory, which years ago is that at the mo- Gan Outing - '.. lists more than 2,000 high- ment,its not creating so many Majestic Oaks Golf Club .. x ,� ,-• tech firms, plus events that new kinds of businesses. In- �araadluo>,art maeo� ► MTI coordinates, such as the stead, technology initiatives h. „; t illtechnology forums it held in are far more likely to help ex- c a February. isting businesses grow." ■ Moo�v �, Meanwhile,MTI is exchang- ing board members with the —Dan Heilman si p r We sea en ti p g 6 not geeks tvoltrot a Implex.net—Offering a Total Internet Technology e - ' ff business worldwide, including "QwikCast", webcasting tool. Information available at www We canhelp you plan, build, maintain and e Internet presence. Bottom line? We want to bottom line!Call us at 612-339-8255 orvisit wwvt sfi to find out what we can do for your business! _ .111 x rr - G We help people do business with tec TechTrends e-Newsletter I March 2004 Page 1 of 6 ` II 1 Ii (. ]O ()! 1'. Print Close i TE 101 a publication of • rinroda Teclulkv;lac,a Volume 5, Issue 3 March 2004 Cover Story MTI Technology Directory: Info to Go! Looking for detailed information on Minnesota's manufacturing and technology sector? Look to the 2004 edition of the Minnesota Technology Directory . An essential guide to companies that use and produce technology, the Directory provides a direct point of entry to more than 2,000 state firms and features meticulously compiled information, including: names, titles, addresses, sales ranges, business descriptions, and phone/fax/e-mail contact data. Price for a print version is $155. A CD version—which includes a fully searchable, sortable database is $350. To order your copy, go here. or call 612-373-2900 or • 800-325-3073. 6 Innovation Trends 2004 Three currents that make a competitive difference to manufacturers. In some ways, it seems that the worst is over: Minnesota manufacturing is in the 0 midst of its fastest expansion in 20 years, keeping pace with a national cyclical rebound in exports and investment. While the National Association of Manufacturers (NAM) expects the sector to maintain a 6 percent rate of growth this year, the recovery still hasn't made it down to the supply chain—at least not in Minnesota. Many workers lost to the downturn simply haven't returned, and overseas competition is as intense as ever. What's more, soaring production costs plus limited pricing power will continue to dog manufacturers, taxing their workforces and most importantly, their capacity for innovation. To put this in perspective, NAM notes that while manufacturing comprised 17 percent of the U.S. economy in 2000, it accounted for 62 percent of technological research and development. With little room to recoup losses in production costs, innovation has been, and will continue to be, the bedrock of manufacturers' competitiveness—in lean times and good. How can small and mid-sized manufacturers respond to these projections? Three sector-wide currents are quickly becoming essential to long-term survival strategies built around innovation: • • • Innovate beyond product development. The "innovate or die" mantra echoes a loudly throughout the business world, observes MTI product development consultant http://www.minnesotatechnology.org/publications/techtrends/2004/March/printVersion.asp 3/17/2004 TechTrends e-Newsletter I March 2004 Page 2 of 6 Sam Gould. But manufacturers are being challenged to create a "learning culture" 1 I le across an entire company, not just in the lab or on the drawing board. "Innovation, • intelligence, agility" is the new mantra, claims Gould. "The concepts of innovation must extend to marketing intelligence—and to the agility required for operational excellence." In other words, Minnesota enterprises need to create an effective continuous learning environment in which all three elements of the mantra hold equal weight in tech, marketing, and operations. • CEO support groups. Leaders at small companies tend to draw on their strong entrepreneurial spirit to fill several roles at once. By nature, they're less reliant on outside assistance, says Vicki Prock, MTI's director of Grants and Contracts, Operations and Research. She helps bring together company leaders who want the support of a trusted peer group that can share their experiences—and reap competitive benefits. "CEO roundtables have been around since the 1950s," she says, "but despite that longevity, the concept is still a relative secret." More and more small manufacturers are catching on to i their value, however. Rather than learning by trial and error, roundtable y members can glean much from the foresight of their peers on the other end of the learning curve. "Right-sizing"your strategy. In corporate-speak, it's a dreaded euphemism for layoffs. But for small manufacturers in transition, right-sizing involves adopting a formalized, comprehensive strategy for growth. "As companies mature, they have to grow up in their management style," says MTI's Bill Martinson, a strategic management consultant, who adds that a smaller, family-run venture that has struggled to survive may not recognize strategic planning as such. "For them, it isn't a separate process, and that's an advantage, at first." Leaders at smaller companies can become so adept at survival that they don't take the time to assess their competitive game plan, from evaluating the competition to assessing their ability to introduce new products and go after bigger accounts. Any small company that hopes to build revenue will eventually have to sit down with a strategic tannin team to draw upa mapfor growth, advises Martinson. planning 1 OTech Notes r. Technology business news from around Minnesota. On Monday, April 5 , Minneapolis will host the Manufacturing Tomorrow: A Call to Action summit. The event will be hosted by the National Association of Manufacturers , the Minnesota Precision Manufacturing Association , and the Precision Metal Forming Association . The summit will convene national and local manufacturers to examine the U.S. manufacturing supply chain and its role in the national economy. Industry leaders will discuss means of steering state and federal policies to support future growth among large and small suppliers. For more information on the summit itinerary and registration, see this month's Tech Trends Calendar of Events. Duluth-based Northstar Aerospace 's Director of Operations Richard Lien has been elected president of Arrowhead Manufacturers and Fabricators http://www.minnesotatechnology.org/publications/techtrends/2004/March/printVersion.asp 3/17/2004 TechTrends e-Newsletter March 2004 Page 3 of 6 Association (AMFA). Rusty Hoglund , president of Duluth's Superior Steel , has il been named president-elect. AMFA is a membership-based organization serving • manufacturers and related industries in northeast Minnesota and northwest Wisconsin. The U.S. Department of Agriculture (USDA) has awarded a record $53.8 million loan to Bemidji's Paul Bunyan Telephone Cooperative to help develop high-speed Internet service in central and northern Minnesota. According to USDA Rural Utility Services, the loan is the largest ever given for broadband development, as part of a $1.9 billion loan program initiated by the Bush Administration as part of the 2002 farm bill. One expected result: A total of 10,236 homes and businesses in rural Minnesota will be able to connect to the broadband network. cl0 Early this month, the U.S. Food and Drug Administration granted marketing approval to St. Paul-headquartered 3M for Aldera , a cream for the treatment of 1 actinic keratosis, a precancerous skin condition caused by sun exposure. The Minneapolis office of intellectual property law firm Merchant & Gould has announced the nomination of Leonard Hope to its board of directors, and the election of Sandra Epp Ryan and Timothy Scull to the partnership. Hope specializes in electrical, computer, and software technologies, and counsels clients 1 on patent, copyright, and trademark matters; litigation; licensing; and due diligence. Epp Ryan has expertise in securing and enforcing trademark rights in the United States and foreign jurisdictions, company name changes, and brand • launches. Scull specializes in electronics, computer architecture, and software applications. He has prior experience as an electrical engineer at General Motors . China's burgeoning demand for steel has restored jobs to Minnesota's struggling Iron Range. Mountain Iron-based Minntac steel plant reports that it recently received a 650,000 metric ton order from China's Shandeng Taishan Iron and Steel Co. In December more than 300 laid-off workers were called back to work in Eveleth after Cleveland-based Cleveland-Cliffs Inc. partnered with China's Laiwu Steel plant to buy and restore a bankrupt ore operation. Last month, Cleveland- Cliffs announced that higher ore prices are projected to improve its operating earnings by $40 million in 2004. Cleveland-Cliffs has also finalized a deal with Vancouver, B.C.-based metals developer Polymet Mining Corp ., under which Polymet would acquire crushing, o concentrating, and warehouse facilities at the former LTV Steel Mining Co. property near Hoyt Lakes, where Polymet hopes to develop an 800-million-ton • metals deposit. Under the deal, Polymet will pay Cleveland-Cliffs $500,000 to 0 • maintain the facilities while it conducts a three-year feasibility study. Hector-based Communications Systems Inc. has announced that it will acquire • Minnetonka-based Image Systems Corp. The boards of directors of both companies have approved the proposed acquisition, which is to be completed by the end of March. Communications Systems Inc. manufactures modular connecting and • wiring devices for voice and data communications. Image Systems manufactures high-resolution displays and accessories for the medical imaging market. Wichita, Kan.-based Flint Hills Resources has announced that it will spend between $325 million and $400 million to produce cleaner-burning diesel fuel at its • Rosemount refinery. The equipment, slated for installation this summer, will produce fuel with lower levels of sulfur. Flint Hills estimates that the project will create 500 construction jobs until its completion in 2006. http://www.minnesotatechnology.org/publications/techtrends/2004/March/printVersion.asp 3/17/2004 TechTrends e-Newsletter I March 2004 Page 4 of 6 Midwest Motion Products , a Watertown-based manufacturer of motion-control equipment, motors, and feedback devices, has announced the release of a new CD- • ROM "E-catalog."The CD describes the company's line of DC gearmotors, Servo motors, and motion-control products. Central States Cryogenics , a Glenwood-based cryogenic processor for metal fabrication tools and other industrial applications, has launched a new Web site, centralstatescryogenics.corn The site describes the deep-freezing process and its wear-reduction and strengthening properties for metal cutting edges. Central States Cryogenics has operated in Minnesota since 2002. Brainerd's Missota Paper Co. is seeking a partner or buyer for its mill, which it purchased from Spokane, Wash.-based Potlatch Corp. for $4.4 million in February 2003. The mill, which employed 600 people before its sale to Missota, shut down production indefinitely in November. According to Missota CEO Dan Alexander , the mill is worth about $18 million to $20 million. N Calender Manufacturing Tomorrow: A Call to Action Date: 4/5 Time: 7:30-4:30 Location: Hilton Hotel, Minneapolis Cost: $80 Featured Speakers: • % • Erick Ajax, Precision Metalforming Association • Tim Pawlenty, Governor of Minnesota • Leo Reddy, founder and CEO, National Coalition for Advanced Manufacturing • The Honorable Michael 3. Rogers, U.S. Representative, R-MI-7 1] • The Honorable Charles E. Grassley, U.S. Senator, R-IA lb il For itinerary and registration form, visit http://pub.psbpr.com/MnMfg/2004/manufacturing tomorrow.html , or call 763- 566-6098. MTI Tech Forum: Quality Standards and Awards Date: 3/19/04 Time: 9 a.m.-2:30 p.m. Location: Pearl Conference Center, Mill Place Building, 111 Third St., Minneapolis Cost: $149 Featured Speakers: • Praveen Gupta, Quality Technology Co. • Eric Anderson, CH Robinson • Brian Lassiter, President, MN Council for Quality II • Ann Burns, Sunny Fresh Foods t Click Here To Register http://www.minnesotatechnology.org/publications/techtrends/2004/March/printVersion.asp 3/17/2004 TechTrends e-Newsletter I March 2004 Page 5 of 6 0 MTI Tech Forum : Advanced Sensors and Automation III Date: 4/7/04 Time: 9 a.m.-3 p.m. Location: MacNamara Alumni Center, University of Minnesota, Minneapolis Cost: $149 Featured Speakers: 0 • Bryan Fuhr, Red Wing Technologies 1. • Phil Berger, Mass Sensors • Jose A. Gutierrez, Ph.D., Eaton '44 • Jeff Sather, Cymbet • Brian Isle, Adventium Labs X31' Click Here To Register 33,. 0' . ]PersPective Web site ROI How do you make sure your company's Web site extends your business strategy, ii sets you apart, and delivers a return on your investment? Over the last few years, Web sites—and the process of Web site revisions—have • a become an established and necessary aspect of doing business. To the relatively uninitiated, however, the Web world might appear to be a mysterious planet of • unanswerable questions. How can you ensure that your company's site extends your business strategy. Do you know if your Web site sets you apart? Are you being noticed by search engines? As bewildering as it might all seem, numerous Web experts say that it's now easier than ever for company leaders ever to answer these questions—and to squeeze true value out of their Web sites. Two big reasons why: A combination of advanced technologies and a fundamentally revised notion of the Internet as a serious ✓ business tool. "For a number of years Web sites were written off as a loss leader, but as newer technologies mature, companies are starting to realize they should be able to measure ROI from this," says Jan Hepola, an MTI Internet business consultant. `s • The key, as Hepola and others note, is to design (or redesign) a Web presence using some carefully scripted steps. 04 33 1. Assess your goals f g In a sense, a Web site is like any other business activity: You need specific goals and a plan that will allow you to reach them. A Web site can serve numerous aims, including providing information about a company's products and services, communicating a specific image or brand identity, generating sales leads, or providing customers with an online store. It pays to initially decide on what you ID want to accomplish—and to make each goal specific. "A goal to sell more stuff is not specific enough," says Hepola, noting that you need to clarify what "more stuff" • actually means. "Does that mean 10 qualified leads? Does that mean 15 people i http://www.minnesotatechnology.org/publications/techtrends/2004/March/printVersion.asp 3/17/2004 TechTrends e-Newsletter I March 2004 Page 6 of 6 clicked through and offered their contact information? Does that mean you had • 1,000 visitors to a white paper?" • 2. Assess the competition Another smart first step: Assess what your competitors are doing with their sites. Consider what's working, what isn't, and why. By the same token, it also pays to mull over other Web sites—perhaps from outside your industry—that you admire. 3. Assess your customers' goals • What do your customers want and expect from your site? If your Web site is at odds • with customer needs, then it probably won't generate ROI. Here again, research pays. 4. Seek to be found A superbly designed, well thought-out Web site is useless unless the world sees it. And increasingly, search engines such as Google are the key to making that happen. Choosing the right search terms and having Web site builders craft your site so that • search engines can find it is critical. Here are a few sites that lay out the basics of the art and science of Web site optimization: • h www. ar h n inestrate ies.biz ttp // se c e g g / • http://www.searchengineguide.com • http://www.webworkshop.net/search engine optimization basics.html • http://www.search-this.com/ For more information on MTI's Internet services, go to www.minnesotatechnology.org/business/IT ebusiness.asp , or call 612/373-2900, 800-325-3073. 1'3333 afii d -,M,A.'n»»».sX,1rut.£� E,,IMAW %WO::✓•.• a N1ST I Network NIEP 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.orq PHONE: 612-373-2900 FAX: 612-373-2901 • http://www.minnesotatechnology.org/publications/techtrends/2004/March/printVersion.asp 3/17/2004 • MEETING OF THE ELK RIVER ECONOMIC DEVELOPMENT AUTHORITY HELD AT THE ELK RIVER HIGH SCHOOL LITTLE THEATRE MONDAY, MARCH 8, 2004 Members Present: President Gongoll, Commissioners Koenig,Kuester, Tveite, Motin, Dwyer, and Klinzing Members Absent: None Staff Present: Director of Economic Development Catherine Mehelich,Assistant Director of Economic Development Heidi Steinmetz, City Administrator Pat Klaers, and City Clerk Joan Schmidt 1. Call Meeting To Order Pursuant to due call and notice thereof,the meeting of the Economic Development Authority was called to order at 5:30 p.m. by President Gongoll. 2. Consider Agenda President Gongoll moved Item#6 to the Consent Agenda. MOVED BY COMMISSIONER TVEITE AND SECONDED BY COMMISSIONER KOENIG TO APPROVE THE MARCH 8, 2004 EDA AGENDA AS AMENDED. MOTION CARRIED 7-0. 3. Consider Consent Agenda MOVED BY COMMISSIONER MOTIN AND SECONDED BY COMMISSIONER DWYER TO APPROVE THE FOLLOWING CONSENT AGENDA ITEMS: 3.1. FEBRUARY 9,2004 REGULAR MEETING MINUTES 3.2 CHECK REGISTER 3.3 BALANCE SHEET 3.4 REVENUE/EXPENDITURE REPORT 6.0 CALL SPECIAL MEETING FOR ECONOMIC DEVELOPMENT STRATEGIC PLAN WORK SESSION FOR MARCH 31, FROM 12-5 P.M. AND MAY 5 FROM 3-8 P.M. AT THE EMERGENCY OPERATIONS CENTER. MOTION CARRIED 7-0. 4. Open Mike Economic Development Authority Minutes Page 2 March 8,2004 • No one appeared for open mike. 5. Strategic Industrial Marketing Activities Report Assistant Director of Economic Development Heidi Steinmetz presented the staff report. Ms. Steinmetz reported that the 2004 Community Profile has been updated and printed for distribution. She also reported that a labor market analyst from the state would present a report at the April EDA meeting. She reported that Monticello is considering a city-owned industrial park and that staff submitted two proposals for a large manufacturing prospect. Commissioner Kuester updated the Commission on the visit to Contour Mold stating that it was very impressive and that they produce large custom mold products. She stated that the owner had said that his shop was not in a desirable location and that traffic has always been an issue. She also stated that they have long-term employees. Ms. Steinmetz stated that the owner had expressed that he would appreciate any assistance from the City in the future in the sale of the business and in providing help to the new owner, since he is considering retirement soon. President Gongoll updated the Commission on the visit to The Cretex Companies, Inc. stating that this company has grown and has a great series of products. He stated that the company has invested in other areas but has experienced struggles. He said he heard the words "lean business" several times. Commissioner Dwyer stated that this has been a great family business and that the executive vice-president is planning on retiring a year from May. Commissioner Kuester suggested that when there is a turnover in management of local manufacturing companies, it would be good to visit and welcome the new owners and help in planning the transition. 5.1 2003 Prospect/Inquiry Report Director of Economic Development Catherine Mehelich gave a summary of the 2003 Annual Inquiry/Prospect Report. She stated that her department keeps a tracking report and handles the industrial related inquiries and that the Chamber of Commerce handles commercial related inquires. Ms. Mehelich reported that the total number of inquiries were back up to 2001 figures (75). The City had successfully located one manufacturer while four were reported to have located elsewhere. She stated that Elk River remains a strong market for small to medium size light industrial companies. 7. Consider Recommendation to City Council for Approval of Orluck Industries, Inc. Tax Rebate Financing Proposal. • Director of Economic Development Catherine Mehelich stated that at its February 9, 2004 meeting the Economic Development Authority and City Council approved the Economic Development Authority Minutes Page 3 March 8,2004 • Preliminary Expansion Siting Proposal that Orluck Industries be considered for receiving Tax Rebate (Abatement) Financing for the construction of a 20,000 square foot light industrial/business park building on the City-owned Joplin Street lot. Staff has completed the due diligence process for the land use amendment process, financial analysis and the City's Tax Rebate Financing process. Staff requests that the EDA consider recommending Council's approval of the sale of the lot and tax abatement request. Mr. Orluck is requesting that the city sell its Joplin Street lot to Orluck Industries for $1 and that the city and county abate its portion of the property taxes on the project for a period of approximately twelve years or up to a combined total of$201,520; the amount to reimburse the city for its land cost. Mr. Orluck has submitted a request to Sherburne County for tax abatement and staff believes that the term will likely be 8-9 years versus the projected 12 years, based upon inflationary market value and tax rate increases. MOVED BY COMMISSIONER KLINZING AND SECONDED BY COMMISSIONER KOENING TO RECOMMEND CITY COUNCIL'S APPROVAL OF THE PROPERTY TAX ABATEMENT REQUEST WITH BUSINESS SUBSIDY AGREEMENT AND SALE OF THE JOPLIN STREET LOT FOR THE ORLUCK, LLC PROJECT. MOTION CARRIED 7-0. 8. Consider Concept Approval of the Gradient Technology, Inc. Expansion Siting Proposal Director of Economic Development Catherine Mehelich reported that at its February 9, 2004 meeting the EDA postponed discussion of the Gradient Technology, Inc. Expansion Siting Proposal due to a request by the applicant and since then the City Tax Rebate Financing application has been completed. Staff has become aware of concerns about whether or not tax increment financing or tax abatement can be provided for prospects that locate in the Elk River Business Park due to its perceived association with the city's Tax Increment Financing District No. 19 redevelopment project (Shopping Center Retail Project). A written opinion was received from attorney Mary Ippel of Briggs &Morgan following her review of the TIF No. 19 documents. Ms. Ippel stated in her letter"the City is not precluded by the Contract from reimbursing a business locating in the Business Park Project for eligible costs of a manufacturing or warehousing and distribution facility in the Business Park". Ms. Mehelich reported that a Preliminary Expansion Siting Proposal was submitted by staff to Gradient Technology regarding the company's proposed relocation project. Staff has proposed that the company purchase a 2.05-acre lot within the Elk River Business Park and that the City do a write-down of the land cost to $0 through a pay- as-you-go Tax Rebate Financing note to the company. The company will also submit a TRF application to the County. Ms. Mehelich stated the land cost is at $1.61/SF for • a total assistance of$143,770 from the City and County combined. Economic Development Authority Minutes Page 4 March 8,2004 • Ms. Mehelich introduced Eric Haehn,Vice President/CFO of Gradient Technology, who explained that Gradient Technology is a core business doing demilitarization work of munitions. Having contracts with the military, Gradient Technology developed a technology using a water jet that cuts into the munitions. The company also sells the by-products to commercial and other industries. They are currently working with the Japanese Government wherein bombs from World War II will be collected and demilitarized. MOVED BY COMMISSIONER TVEITE AND SECONDED BY COMMISSIONER KOENING TO RECOMMEND TO THE CITY COUNCIL APPROVAL OF THE PRELIMINARY PROPOSAL CONCEPT FOR THE GRADIENT TECHNOLGY PROJECT AND FOR STAFF TO COMPLETE THE DUE DILIGENCE PROCESS FOR THE FINANCIAL ANALYSIS AND TAX REBATE FINANCING PROCESS. MOTION CARRIED 7-0. 9. Other Business There was no other business. 10. Adjournment The meeting of the Elk River Economic Development Authority adjourned at 6:28 p.m. 4100 Joan Schmidt City Clerk 110 • April2004 Vol.3 No.4- 40:;:::,15;:l'.,,-, is,r,o‘ritlEv ao,,,iv.,,,, rg:i!,,, %,:ii: 0 ,,,'-',1, , if:: :w.,,,! ..,4, 1 , .. ,,,,, — 7 ,,,,,,,,,_, „,, ri, ..., , ,....„ ..„, , A 4 jj Let's Invest in Minnesota! By Jeff Gongoll, president, Elk River Area Chamber of Commerce, MCCE Board Member As stated in a recent press Not to put a damper on the positive as- release, "an overwhelm- pects of our re-emerging economy, but ing majority of Twin Cities businesses are Minnesota has had a history of under fund planning to make new investments this ing its all-important business and capital year in job growth,capital equipment and investment markets.Wisconsin seems to new or expanded facilities. . ." This was have it together when it comes to invest- according to a survey produced by the ment principles.They have established a Center for Rural Policy and Development, policy of providing a modest allocation Minnesota Technology Inc.(MTI)and the of its state pension funds into a venture Minnesota Department of Employment capital fund that is dedicated to invest in and Economic Development(DEED). early stage high tech and biotech compa- nies locating within their state. This is great news.Finally we maybe see- ing the light at the end of that long tunnel Minnesota's state pension fund managers of economic recovery. We have already have resisted this approach for years for a been seeing the upturn from our manu- variety of management policy and philo facturing sector in their operations and sophical reasons including the "prudent production. But up until now it has been a investor"rule which implies that pension "jobless" activity. Now, according to this fund managers are careful to protect the report,we may be able to see and feel the security of the pension funds.A long es other part of the upturn with investments in equipment and human capital. Invest in Minnesota continued on page 6 Washington D.C. Trip Over fifty people, representing 16 chambers of commerce, are regis- IN it tered for the upcoming MCCE trip to Washington D.C.Over April 27- '11 w 29,the Minnesota delegation will have a very unique opportunity to r be a part of the national political scene.Besides meeting with the `' Minnesota Congressional Senators and Representatives on Capi- P4tol Hill,the group will attend a White House Briefing,in which White House officials will include an inside look at the work- N. Ings of the executive branch.Later in the day,the participants olikk ',,\ will be in the audience for CNN's Crossfire,the daily po- litical commentary program. Special thanks to Teresa Bohnen,St.Cloud;Doug Loon,U.S.Chamber and Vicki irk ,. Stute,Saint Paul for their help on this event. IIIIIII Business Day at the Capitol - Another Successful Year Over 600 business leaders from 44 local chambers of commerce and 15 trade associa tions across the state attended the 11`''Annual Minnesota Business Day at the Capitol: IIIII event on March 18::Local chamber groups from across the state assembled buses and vansto bring their members to the event.Morning sessions kicked-off with legisla tive updates from the House and Senate leadership as well as a luncheon keynote from Governor Tim Pawlenty.Hundreds of business representatives loaded buses and headed to the Capitol to meet with their legislators to discuss topics like health care costs and transportation funding::As the largest business lobbying day,Minnesota Business Day at the Capitol has been'known to play a significant roll in the business community success each year.Thanks to the sponsoring and participating chambers that helped to make this day possible. • s E q Aillyi 63si Senator David Knutson(R-Burnsville)speaks with'a Senator Brian LeClair (R- delegationfronithe Burnsville ChamberofCommerce. Woodbury) talks with Jac Lan- ners, MGM Liquor Warehouse, Woodbury. ry,:- ' ' nes 1 1 , .. .. „,, ,. 0 ,.„: i . .3v ,_, ..., ..„ .,.., N,,,.. , 411:, , . ,<1”, *.'""','*:,.,pw'm"2 .1•%,"Pr."7:74,.'''', yam::. a rr Senator LeRoy Stumpf(DFL-Thief River Falls)talks with Jim Richter,East Grand Governor Tire Pawlenty address attendees dur- Forhs Chamber of Commerce. ing the Business Day at the Capitol luncheon. •