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5.0. EDSR 06-14-2004 ITEM #5. • ( "It i/ City of ' Elk -�-� River MEMORANDUM TO: Economic Development Authority FROM: Heidi Steinmetz, Assistant Director of Economic Development j5 DATE: June 14, 2004 SUBJECT: Strategic Industrial Marketing Activities Update I. Product Offering Strategy Industrial Land Issue Staff and Ehlers &Associates have received responses from the landowners of Elk River Business Park and Elk Path Business Center regarding terms of a master development • agreement. They have indicated interest in participating in a master development agreement with the EDA for the development of their industrial/business park property. The attached draft Contract for Initial Sale and Development has been prepared by Briggs &Morgan attorneys with assistance from staff and Ehlers. Staff requests the EDA's feedback on any concerns with the agreement prior to distributing to the landowners for consideration. II. Competitive Strategy There is no new information to report. III. Key Account/Lead Generation Strategy Staff continues to work with several sizable prospects that have contacted staff for siting proposals in the past two months. The companies include metal fabrication and precision machining. The companies range in size from requiring 20,000 to 50,000 square foot light industrial buildings. Staff met with Riverside Community Bank to discuss financing tools and sites for their business clients. I V. Promotions & Advertising Strategy Staff met with ad designer Tammy Weidenbach of Tammy Miller Design to discuss advertising plans for next year. • Strategic Industrial Marketing Activities Update June 14,2004 Page 2 of 3 V. Public Relations Strategy Staff met with public relations consultant Murray Wolf of Wolf Marketing&Media to discuss public relations plans for next year. Case Studies Mr. Wolf has developed the attached draft case studies of SoftPac Industries and Orluck Industries as a promotional tool to include in one or all of the following: • Economic Development marketing packets • Economic Development page of the City's Website • Economic Development newsletter VI. Strategic Partnership Strategy Downtown Revitalization Project Recent MetroPlains activities include the following items: • Have secured a purchase agreement for the Richard Hinrichs property • Have authorized architects to begin design documents • Have completed a survey and obtaining title commitments for the Bluff Block properties • Have started a Phase I Environmental Survey of the Bluff Block area • Have held several discussions with potential lenders for the project • Have identified project partners including a market analyst and broker for the Bluff Block for-sale housing units • Continuing discussion of purchase agreements for the remaining 2 parcels on Bluff Block VII. Business Retention Strategy Business Retention&Expansion (BRE) Visits Staff and Commissioner Tveite attended a BRE visit with Mike Finely and Rick Lancaster of Great River Energy last month. The following issues were discussed at the meeting: • Company is landlocked and needs to expand o looking for a heavy industrial site o need to expand to accommodate the transmission component of their business o need additional employee parking o timeline is 1-2 yrs. • May be interested in expansion financing • Traffic flow within the city • Company would like to be kept up-do-date on future developments within the city • Would like the city to be flexible on zoning/planning issues Staff will contact EDA commissioners individually to schedule future BRE visits. • Strategic Industrial Marketing Activities Update June 14,2004 Page 3 of 3 • Marketech Staff has learned that Marketech will be relocating to the Circuit Check offices in Maple Grove. Circuit Check recently purchased Marketech. Rich Duggan of Marketech needs new tenants for his building located at 18940 York Street. The building is just under 10,000 square feet (main office 42'X 42'). Marketech employs approximately 30 people in Elk River. MN Fabrication&Machine Last month, staff learned that MN Fabrication&Machine's building is for sale. The company plans to lease the building from a new owner. Attachments • Draft Contract for Initial Sale and Development • Draft Case Studies of SoftPac Industries and Orluck Industries • • CONTRACT FOR INITIAL OR A FT SALE AND DEVELOPMENT THIS AGREEMENT is made and entered into as of the day of , 2004, by and between Elk River Business Park, LLC, a Minnesota limited liability company ("Owner") and the Economic Development Authority of the City of Elk River, Minnesota, a public body corporate and politic under the laws of the State of Minnesota("EDA"). WHEREAS, Owner is the fee owner of property located in Sherburne County, Minnesota as described on Exhibit A attached hereto (the "Property"). WHEREAS, Owner and the EDA wish to set forth the terms under which the Owner will market and sell or lease the Property, or portions thereof, to third parties and the terms and conditions under which the EDA will consider offering assistance to developments on the Property. NOW THEREFORE, in consideration of the mutual covenants and agreements contained herein, it is hereby agreed by and between the parties as follows: 1. Representations by Owner. Owner represents and warrants to the EDA as to the following: (a) There are no parties or other entities in possession of the Property or who hold any right, title or interest in the Property except for the Owner. • (b) The Property has not been used for generating, transporting, storing, treating or disposing of hazardous substances (as that term is defined in 42 U.S.C. Sections 6903, 6921 or in Minnesota Statutes Section 115B.02); the Property has not been used for disposal of waste or hazardous substances; and no underground storage tanks, wells, or septic systems are presently or have been located on the Property. Sellers shall be responsible for all costs incurred in removing any such hazardous substances on the Property. (c) Conveyance of the Property by Owner does not violate any agreement, ordinance or law to which Owner or the Property are subject. 2. Representations by EDA. The EDA represents and warrants to the Owner as to the following: (a) The execution, delivery and performance of this Agreement by the EDA does not and consummation of the transactions contemplated hereby and the fulfillment of the terms hereof will not, conflict with any legislative act, constitution or other proceeding establishing or relating to the establishment of the EDA or its officers or its resolutions. (b) The EDA, in its sole discretion, will consider the use all reasonable procedures within its power, including but not limited to, tax increment financing, tax abatement and low interest loan programs, to assist eligible buyers in developing the 410 Property. 1643057v3 • 3. Owner's Obligations. II AFS' (a) Owner hereby agrees to furnish to the EDA a commitment ("Title Commitment") for an ALTA Form B 1970 Owner's Policy for Title Insurance insuring title to the Property, deleting standard exceptions, including such endorsements as are reasonably required by the EDA and subject only to such additional exceptions as are approved by the EDA in the amount of the value of the Property. (b) Owner shall promptly furnish the EDA with complete information concerning any persons who during the period of this Agreement make inquiries to Owner regarding the sale, exchange or lease of the Property. (c) Owner hereby agrees to furnish to the EDA a boundary survey of the Property (the "Survey") and a conceptual preliminary plat of the Property attached hereto as Exhibit D. (d) Owner shall make available to the EDA any soil tests on the Property in Owner's possession. (e) Owner agrees, at its sole cost and expense, to install such street and lateral utilities as are mutually agreed between Owner and EDA to be necessary for the development of the Property as an office/industrial park. (f) Owner agrees to sell the Property to any buyer according to the terms of the purchase agreement attached hereto as Exhibit B (the "Purchase Agreement") and any changes to the Purchase Agreement shall be subject to the consent of the EDA. The purchase price of the Property shall be as shown on the price schedule attached hereto as Exhibit C (the "Price Schedule), if the Buyer is to be considered for any Assistance (as defined in Section 5(a)), or such other price as may be agreed upon between the Owner and the purchasers. Owner agrees to execute the Purchase Agreement within ten (10) days after written request by the EDA. The Owner agrees to thereafter comply with the terms of the Purchase Agreement. (g) Owner agrees to sell the Property only to buyer whose proposed use for the parcel will comply with zoning and other restrictions for the Property; moreover, only manufacturing facilities will be considered for Assistance (as defined in Section 5(a)). 4. EDA Obligations. (a) The EDA shall review the ordinances applicable to the Property and determine the most expeditious way to proceed to facilitate the development of the Property. The EDA shall recommend to the City Council of the City of Elk River changes to the ordinances which w ill facilitate the d evelopment o f t he Property. T he EDA w ill further cooperate with the City and other agencies in the development of the Property. 1643057v3 2 1 DRAFT • (b) The EDA shall review and approve all building and development plans with respect to the Property and shall use reasonable efforts to facilitate approval of the plans by the City of Elk River. 5. Assistance Considerations. (a) "Assistance" means any tax increment or tax abatement assistance, if any, provided by the City or the EDA to Owner or any Buyer of any parcel of the Property, including but not limited to any upfront contribution of land cost, development fees or other expenses and any pay-as-you-go financing. (i) The City or the EDA will consider offering up to 90% of any tax increment or tax abatement to be generated by the parcel; (ii) Any Assistance will be subject to a "look back" provision such that if the return actually generated by the Project is greater than the return estimated in determining the Gap in Section 5(c)(ii)(3) below, the Assistance (to the extent it is based on the Gap) may be discontinued by the City or the EDA, as applicable, or may be subject to repayment in whole or in part upon any future sale of the parcel; (iii) Assistance may be provided in the form of public improvements to be financed by the issuance of bonds by the City or the EDA; (iv) If the City issues improvement bonds pursuant to Minnesota Statutes, Chapters 429 to be paid by special assessments or tax increment or tax abatement bonds for any public improvements for any project, then any tax increments or tax abatements generated by the parcel would be pledged first to payment of principal and interest due on such bonds and second to any assistance to be paid to the Owner or the Buyer; (v) Any Assistance will be subject to a development agreement for each Project and such additional terms as set forth therein. (b) To be eligible for Assistance for any parcel of the Property the Developer shall: (i) sell the parcel in accordance with Section 3(f); (ii) provide an estimate of the square footage and type of the facility to be constructed(the "Project"); (iii) provide an estimate of the assessor's market value for the facility to be constructed; (iv) provide an estimated construction schedule for the facility. • (c) In determining the amount, if any, of Assistance to be provided, the EDA will consider the following factors: 1643057v3 3 DR 41, (i) The EDA and its fiscal consultants will determine the Owner's cost of carrying the Property and determine the price per square foot set forth in the Price Schedule attached as Exhibit C based on: (1) the purchase price of the parcel paid by the Owner including any special assessments paid by Owner as part of the purchase price; (2) the amount of special assessments paid by Owner for public improvements installed after payment of the purchase price of the Property by the Owner and prior to the date hereof and the amount of pending future assessments to be paid by the Owner and not as part of the purchase price to be paid by any Buyer; (3) park dedication and surface water management fees per acre of the parcel not paid as part of the purchase price; (ii) The EDA and its fiscal consultants will determine the Buyer's need for assistance based on: (1) the Price Schedule; (2) comparable industrial property in the northwest metropolitan area; and (3) the difference between a reasonable commercial return per square foot for an investment comparable to the investment to be made by the Buyer in the Project and the expected return per square foot to be generated by the Project after factoring in the difference between(1) and(2) above (the "Gap"); (iii) At least jobs must be created by the Buyer in connection with the Project. If the Buyer agrees to create additional jobs the City may, but is not obligated to, consider granting Assistance in excess of the Gap. (iv) The City may, but is not obligated to, consider granting Assistance in excess of the Gap if the City determines the quality, purpose or size of the facility merits additional Assistance. 6. Brokers. (a) Owner and EDA represent and warrant that no broker brought about this Agreement. Owner and EDA agree that should any claim be made for commissions, finder's fees or similar charges as a result of the acts of Owner with respect to this Agreement or any Purchase Agreement, Owner will indemnify, defend and hold the EDA free and harmless from any and all liabilities and expenses in connection therewith. 1643057v3 4 DRAFT 1111) (b) If a buyer of any part of the Property is represented by a broker, Owner shall pay any fee charged by buyer's broker up to a maximum of four percent (4%) of the purchase price. 7. Termination. This Agreement shall terminate upon the earlier of , 20_ or the date all of the Property shall have been sold by the Owner. 8. Parties' Rights Upon Termination. Upon termination of this Agreement neither party shall be liable for damages hereunder to the other and each party shall be responsible for its own debts and obligations. 9. Additional Provisions. (a) Assignment. Neither party may assign its rights under this Agreement without the prior written consent of the other. (b) Governing Law. This Agreement and any other document related hereto shall be interpreted and enforced in accordance with the laws of the State of Minnesota. (c) Joint Venture. Nothing herein shall be construed to create a partnership or joint venture between or among the Owner and the EDA, nor shall anything herein be construed to create a fiduciary relationship b etween the p arties as to any activity described herein. S (d) Indemnification. Each party hereto (the "Indemnitor") shall indemnify and save the other party(the "Indemnitee") its agents, officers and employees, harmless from and against all liabilities, losses, damages, costs, expenses, including reasonable attorneys' fees) causes of action, suites, claims, demands, and judgment of any nature, because of bodily injuries to, or death of any person and because of damages to property of the Indemnitee or others, including loss of use from any cause whatsoever, arising out o f; incidental to, or in connections with the use, non-use, ownership, condition, or occupancy of the Property, or with any improvements thereto, due to any acts of omission or commission, including negligence of the Indemnitor, or any contractor or their employees or agents; provided, however, that the Indemnitor's obligations shall not extent to any cause of action arising out of or relating to any act of omission or commission of the Indemnitee, its officers, employees, or agents. The Indemnitor's liability hereunder shall not be limited to the extent of insurance carried by or provided by the Indemnitor or subject to any exclusions from coverage in any insurance policy. • 1643057v3 5 AEFT IN WITNESS WHEREOF, Owner and the EDA have caused this Agreement to be executed as of the day and year first written above. ELK RIVER BUSINESS PARK, LLC By Name: Title: STATE OF MINNESOTA ) )ss. COUNTY OF SHERBURNE ) The foregoing instrument was acknowledged before me this day of 2004, by , the of Elk River Business Park, LLC, a Minnesota limited liability company, on behalf of the company. Notary Public S I 1643057v3 6 • ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF ELK RIVER, MINNESOTA By Name: Title: STATE OF MINNESOTA ) ) ss. COUNTY OF SHERBURNE ) The foregoing instrument was acknowledged before me this day of 2004, by , the of the Economic Development Authority of the City of Elk River, Minnesota, a body corporate and politic on behalf of the entity. Notary Public S This instrument drafted by: Briggs and Morgan,P.A. 2200 First National Bank Building 332 Minnesota Street Saint Paul, Minnesota 55101 Telephone: (651) 808-6600 Fax: (651) 808-6450 41110 • 1643057v3 7 DRAFT EXHIBIT A to Contract for Initial Sale and Development Legal Description of Property • • 1643057v3 A-1 NA [ • EXHIBIT B to Contract for Initial Sale and Development Purchase Agreement [See attached] • I 1643057v3 B-1 COMMERCIAL-INDUSTRIAL DRAFT PURCHASE AGREEMENT 41101 ,MN, ,20 RECEIVED OF the sum of ($ ) DOLLARS as earnest money and in part payment for the purchase of property at situated in the County of State of Minnesota,and legally described as follows: together with following personal property: all of which property the undersigned has this day sold to the Buyer for the sum of: ($ )DOLLARS,which the Buyer agrees to pay in the following manner: Earnest money herein paid$ and$ cash,on the date of closing and the balance of$ by financing as shown on the attached addendum. 1. DEED/MARKETABLE TITLE: Subject to performance by the Buyer, the Seller agrees to execute and deliver a Warranty Deed conveying marketable title to said premises subject only to the following exceptions: (a)Building and zoning laws, ordinances, State and Federal regulations. (b) Restrictions relating to use or improvement of the premises without effective forfeiture provision. (c) Reservation of any minerals or mineral rights t o the State o f Minnesota. (d) Utility and drainage easements which d o not interfere with p resent improvements. (e) Rights of tenants as follows: 2. REAL ESTATE TAXES. Real estate taxes due and payable in the year of closing shall be prorated between Seller and • Buyer on a calendar year basis to the actual date of closing unless otherwise provided in this Agreement. Real estate taxes payable in the years prior to closing shall be paid by Seller. Real estate taxes payable in the years subsequent to closing shall be paid by Buyer. 3. SPECIAL ASSESSMENTS. [Strike out one] BUYER AND SELLER SHALL PRORATE AS OF THE DATE OF CLOSING/SELLER SHALL PAY on the date of closing all installments of special assessments certified for payment with the real estate taxes due and payable in the year of closing. [Strike out one] BUYER SHALL ASSUME / SELLER SHALL PAY ON DATE OF CLOSING all other special assessments levied as of the date of this Agreement. [Strike out one] BUYER SHALL ASSUME / SELLER SHALL PROVIDE FOR PAYMENT OF special assessments pending as of the date of this Agreement for improvements that have been ordered by the City Council or other governmental assessing authorities. (Seller's provision for payment shall be by payment into escrow of 11/2 times the estimated amount of the assessments.) If a special assessment becomes pending after the date of this Agreement and before the date of closing, Buyer may, at Buyer's option: (a) Assume payment of the pending special assessment without adjustment to the purchase price; or (b) Require Seller to pay the pending special assessment (or escrow for payment of same a sum equal to 1'/2 times the projected pending assessment) and Buyer shall pay a commensurate increase in the purchase price of the property, which increase shall be the same as the estimated amount of the assessment; or(c) Declare this Agreement null and void by notice to Seller, and earnest money shall be refunded to Buyer. Seller shall pay on the date of closing any deferred real estate taxes or special assessments payments which is required as a result of the closing of this sale. 4. PRORATIONS. A 11 items customarily prorated and a djusted i n connection with the closing oft he s ale oft he property herein including but not limited to rents, operating expenses, interest on any debt assumed by Buyer, shall be prorated as of the date of closing. It shall be assumed that the Buyer will own the property for the entire date of the closing. 5. DAMAGES TO REAL PROPERTY. If there is any loss or damage to the property between the date hereof and the date of closing,for any reason,the risk of loss shall be on the Seller. If the property is destroyed or substantially damaged before the closing, this Purchase Agreement shall become null and void, at Buyer's option. Buyer shall have the right to terminate this Purchase Agreement within 30 days after Seller notifies Buyer of such damage. Upon said termination, the earnest money shall be refunded to Buyer and Buyer and Seller agree to sign a cancellation of purchase agreement. EXAMINATION OF TITLE. Within a reasonable time after acceptance of this Agreement, Seller shall furnish Buyer with an Abstract of Title or a Registered Property Abstract certified to date including proper searches covering bankruptcies and State and Federal judgments, liens, and levied and pending special assessments. Buyer shall have 10 business days after receipt of the Abstract of Title or Registered Property Abstract either to have Buyer's attorneys examine the title and provide 1643057v3 AIT D G� Seller with written objections or, at Buyer's own expense,to make an application for a title insurance policy and notify Seller of the application. Buyer shall have 10 business days after receipt of the commitment for title insurance to provide Seller IP/ with a copy of the commitment and written objections. Buyer shall be deemed to have waived any title objections not made within the applicable 10 day period set forth above, except that this s hall not operate as a waiver of S eller's covenant to deliver a Warranty Deed, unless a Warranty Deed is not specified above. If any objection is so made, Seller shall have 10 business days from receipt of Buyer's written title objections to notify Buyer of Seller's intention to make title marketable within 120 days from Seller's receipt of such written objection. If notice is given, payments hereunder required shall be postponed pending correction of title,but upon correction of title and within 10 days after written notice to Buyer the parties shall perform this Purchase Agreement according to its terms. If no such notice is given or if notice is given but title is not corrected within the time provided for,this Purchase Agreement shall be null and void,at option of Buyer;neither party shall be liable for damages hereunder to the other and earnest money shall be refunded to Buyer; Buyer and Seller agree to sign cancellation of Purchase Agreement. If title to the property be found marketable or be so made within said time, and Buyer shall default in any of the agreements and continue in default for a period of 10 days, then and in that case the Seller may terminate this contract and on such termination all the payments made upon this contract shall be retained by Seller as liquidated damages, time being of the essence. This provision shall not deprive either party of the right to enforce the specific p erformance o f t his c ontract provided t his c ontract has not b een terminated and provided a ction t o enforce such specific performance shall be commenced within six months after such right of action shall arise. 7. POSSESSION. Seller shall deliver possession of the property on the date of closing. 8. REPRESENTATIONS AND WARRANTIES. See attached addendum. 9. TIME IS OF THE ESSENCE FOR ALL PROVISIONS OF THIS CONTRACT. 10. WELL DISCLOSURE STATEMENT. Buyer has received the well disclosure statement required by Minnesota Statutes Sec. 103I.235. BUYER AND SELLER INITIAL: Buyer(s) Seller(s) 11. ADDENDA. Attached are(number) addenda which are made a part of this Agreement. 12. MISCELLANEOUS PROVISIONS. (a) Survival. All of the warranties, representations, and covenants of this Agreement shall survive and be enforceable after the closing. • (b) Entire Agreement; Modification. This Agreement constitutes the complete agreement between the parties and supersedes any prior oral or written agreements between the parties regarding the property. There are no verbal agreements that change this Agreement and no waiver of any of its terms will be effective unless in a writing executed by the parties. (c) Successors and Assigns. If this Agreement is assigned, all provisions of this Agreement shall be binding on successors and assigns. 13. ACCEPTANCE DEADLINE. This offer to purchase, unless accepted sooner, shall be null and void at 11:59 P.M., , and in such event all earnest money shall be refunded to Buyer. Represents Buyer Agent Company Name Represents Seller Agent Company Name THIS IS A LEGALLY BINDING CONTRACT. IF NOT UNDERSTOOD,SEEK COMPETENT ADVICE. Dated: Dated: SELLER BUYER SELLER BUYER • SELLING AGENT 1643057v3 2 A Frr EXHIBIT C 1 :/ L Ll to Contract for Initial Sale and Development Price Schedule , 2004 1. The purchase price to the Buyer of the Property shall be $ per square foot, which price includes all special assessments previously paid or to be paid by Owner for improvements installed prior to the date hereof. 2. The purchase price of the Property shall be increased in an amount equal to the amount of real estate taxes paid by Owner for the Property after the date hereof and during the term of the attached Contract for Initial Sale and Development. 3. The purchase price of the Property shall be increased by the amount of special assessments paid by Owner for public improvements installed after the date hereof. 4. The purchase price of the Property shall be increased by the amount of any broker fee paid in accordance with Section 6 of the attached Contract for Initial Sale and Development. 5. The purchase price of the Property shall be adjusted annually on each anniversary of the date hereof for inflation by multiplying the amount in Section 1 by a fraction, the numerator which is a most current consumer price index as of the 1st day of the month next preceding such anniversary date and the denominator of which is the most current consumer price index as of the date hereof. "Consumer Price Index" means the consumer price index for all urban consumers, Minneapolis-St. Paul, Minnesota— Wisconsin prepared by the Bureau of Labor Statistics of the United States Department of Labor. If that index is discontinued, consumer price index shall mean a comparable index prepared by governmental agency or by a responsible financial periodical of recognized authority, as selected by the EDA. I 1643057v3 C-1 EXHIBIT D to OR A FT Contract for Initial Sale and Development Conceptual Preliminary Plat • 1643057v3 D-1 Success was right in their own backyard HOME TOWN ENTREPRENEURS FOUND THE IDEAL SITE IN ELK RIVER When Bob Jones was looking for a larger facility for the growing packaging business he and his wife had founded,he considered existing buildings and greenfield sites as far away as Hudson,Wis. Ironically,however,the ideal site turned out to be right in his own backyard. The Elk River entrepreneur ended up building a spanking new, $12 million light manufacturing plant in the growing west side of his own home town. "My wife and I live in Elk River,"Mr.Jones expX� „ • _ e IA tens to add that the community offers 'm'�' , 4t th. m•i Ri„s advantages,he insists, much more than just a short commute.Elk River��.�.� 1� � o �. an appealing lifestyle and including a convenient location for national distribution,a a • i j r r , pP g i g city officials who are committed to economic development. Today, SoftPac Industries Inc. does private label blending and packaging for major national clients including Target Corp. and SuperValu Inc., and is one of the nation's largest manufacturers of stand-up pouches.The Elk River plant boasts two of the fastest juice pouch production lines in the world,with plans for a third, and the firm expects to produce more than 100 million juice pouches this year. Needs changed as firm evolved • The SoftPac story began in 1992,when Mr.Jones and his wife,Patricia,founded a firm that was then known as Advanced Nutritionals Corp. (ANC).Their vision was to produce and market a line of sports drinks. By the mid-1990s,however,the Joneses recognized that the bigger business opportunity was in the packaging it had developed for the drinks rather than the beverages they contained. ANC was becoming a leader in the emerging specialty of flexible pouch packaging,which had been pioneered in the early 1980s by Kraft Inc. with its Capri Sun juice brand. In early 2000,investor and now majority owner and Chairman David Koch repositioned the firm,making packaging its primary business.Mr. Koh,is airman Emeritus of Graco Inc., a Minneapolis-based manufacturer of systems and equipmes 4 •,# t , vf` e,dispense,control and apply fluid materials. � 1.1 . 3 ir The revamped firm acquired the rights to use advanced technology developed by German-based Hensen Packaging Concepts GmbH that allows for the continuous filling of stand-up pouches nearly three faster than before. As the business transformation was taking place,the firm began making plans to relocate its manufacturing operations from a small,leased space in Maple Grove. To find a facility that could accommodate the new high-speed,fully integrated,fully automated stand-up juice pouch production lines,the firm hired commercial real estate broker Scott Kummel,who had experience with food distribution facilities.Mr.Kummel,who is now with Northstar Partners, a member i of the Cushman&Wakefield Alliance,also had an existing relationship with design-build firm Opus Northwest LLC. 411, "So,that was a perfect marriage,"Mr. Kummel recalls. Elk River was`pro-business' Craig Patterson,Director of Real Estate Development for Opus Northwest, says several sites were considered. The Joneses' local ties naturally led to discussions with the City of Elk River. But,the receptivity of city officials is what made the community a front-runner for the project,Mr. Patterson says. "Elk River was extremely pro-growth and pro-business,"he recalls. By spring 2000,the ANC team was working with Elk River city staff on plans for a new,build-to-suit facility.They identified the so-called Emmerich site,a 14-acre parcel in the city's West Business Park. The city had a joint marketing agreement with the private landowner. "That really streamlined the process for us,"says Catherine Mehelich,Elk River's Director of Economic Development. Under the plan, Opus Northwest would be the ow a er/developer of a facility of about 75,000 square feet and ANC would have a long-term lease with a p s 'on—an option it later exercised. D City staff proposed that Elk River establish a tax increme % . 1 i 11'istrict to assist in financing the development of the property by writing down the cost of the land. Th! ity would reimburse Opus • Northwest on a"pay-as-you-go"basis for land acquisition costs in the amount of$700,000,plus 8 percent interest. The project was expected to generate enough tax revenue to reimburse the city for land costs within several years. At first,the plan drew some neighborhood opposition.But,through a public hearing process,citizens came to realize that the modern,efficient facility would have a minimal impact on their quality of life. "It's a clean work environment, and that means a lot to us,"Ms. Mehelich says. The project also required a conditional-use permit to accommodate its large water tanks and,as the plans were moving through the approval process,the firm's name was changed to SoftPac. But,those proved to be minor complications.The plan was approved by the Elk River City Council in August 2000 and construction of the new SoftPac facility began the next month. "The city had the vision. They stuck to their guns,"Mr. Patterson says. "They could see the long-term benefits of having a corporate citizen like SoftPac." Site offered many advantages Mr.Jones,who retains a minority ownership interest and is now Vice President of Sales and Marketing for SoftPac, says far more than financing contributed to the decision to locate in Elk River. The site offered easy access to U.S. Highways 10 and 169,Interstate 94,and Minnesota Highway 101 - 0 an important consideration for a firm that distributes its products nationwide. As a resident,Mr. Jones was also pre-sold on the quality of life in Elk River. "It's a great environment to be in,"he says. "It's a nice place to go to work." In addition, SoftPac officials are pleased by the close proximity of a skilled workforce. "(Elk River)gives us access to hard-working people"who can earn major metro wages in a rural setting, Mr. Jones says. "We've never advertised for a job and not had more interest than opportunity." SoftPac also has room to grow. "We built the plant with the intention of expansion,"both internal and external,Mr. Jones says. So far, the existing facility has accommodated the increased volume and staffing. But,the building could be roughly tripled in size at the current site. "We never want to box anyone in,"Ms. Mehelich notes. In addition,all the needed infrastructure wa ' glace at the site,including Business Center Drive and all utilities. /-":? For a firm that blends beverages, one utility wasp. 4 s��I i . ater.Water quality and costs were both key considerations for SoftPac. Fortunately,Elk River exceeded SoftPac's expectations in both areas. Mr.Jones,who makes it his business to know about such things, says Elk River's water comes from the high-quality Mt. Simon- • Hinckley Aquifer. "This is great water,"he says. The city also agreed give SoftPac a discount on its water bills. "The city was excellent to work with,"Mr. Jones says. "Cathy(Mehelich)was just fabulous to work with,"Mr. Kummel adds. He says Elk River officials made it"easy to get a deal done." "They did a nice job,"agrees Mr. Patterson of Opus Northwest. Project also benefits the city While SoftPac has clearly thrived in Elk River,city officials say the relationship has been just as fruitful for the community. They welcomed the SoftPac project because it was a step toward meeting their economic development goals. The project also enhanced and diversified the city's industrial base. While some other businesses struggled during the most recent recession, SoftPac didn't miss a beat. "They have been flourishing through the tough times,"Ms. Mehelich says. Additionally,city officials saw the project as an opportunity to increase Elk River's employment base. • SoftPac initially anticipated that the plant would provide 60 to 80 jobs with wages of$13 per hour to$18 per hour,plus benefits. Mr.Jones and Ms. Mehelich agree that the firm has met that goal. The SoftPac project was also a perfect fit for a city that stakes a claim to the title of"The Light Industrial Hub of the Northwest Metro."Elk River officials consider the SoftPac facility to be a"showcase light industrial project,"Ms. Mehelich says. Their expectation was that the project would encourage additional private development in the area. That's exactly what seems to be happening, ,mow that the economy is picking up.Elk River recently approved plans for a new$1.41 mil ��II M,‘P s• e •oflight manufacturing facility for Orluck Industries Inc. on 2.79 acres near the Soft' +�t ��� �as recently fielded several other inquiries from growth-minded businesses, according to Heil inm r,Assistant Director of Economic Development. No regrets SoftPac's Elk River plant began production in May 2002 and,by all appearances,the business continues to prosper in its founders' home town. "It was a good experience working with the city,"Mr.Jones concludes, "and I don't think there's anyone who regrets locating here." ❑ 4 i r Patience pays off for Elk River venture ECONOMIC REBOUND REVIVES ORLUCK INDUSTRIES PROJECT In mid-2001,with a booming business and dwindling space in his leased facility in Dayton, Minn.,Mark Orluck was getting serious about relocation. His goal was to build a new facility 1 somewhere in the northwest Twin Cities metro area. But,those plans got sidetracked when 9/11 and a declining economy slowed the growth of his high-precision manufacturing firm. Fortunately,times have changed. Orluck Industries Inc. recently received final city and county approval for a new$1.41 million, 23,000 si .-, - of manufacturing facility on 2.79 acres in Elk River. it'V Q "Manufacturing has really picked up for us. It's gradually_ m b er,"Mr. Orluck says. "So, it's just a good time to do it." But,even with an improving economy,Orluck Industries probably wouldn't have been able to relocate to a new facility without the enthusiastic, ongoing support of the City of Elk River. City staff remained in close touch with Mr. Orluck even during the economic downturn. So,when he put the project back on the front burner early this year,they were fully prepared to move ahead. The Elk River Economic Development Department crafted an aggressive package of financial • assistance, and city staff shepherded the project through a fast-paced approval process this spring. "We've stuck with them through the long haul,"says Catherine Mehelich,Director of Economic Development. "Elk River has shown continued confidence in Orluck Industries and its potential." "I did talk to other cities,too,"including Big Lake,Mr. Orluck admits. But, in the end,he says he made the right choice by selecting Elk River. "Anybody I've dealt with there has been really positive and really aggressive in trying to make a deal that would work,"he says. The lot was a key component Orluck Industries produces light,precision c i1 •. ,! ,srl . -,.. i etal components for the medical,computer, semiconductor and telecommumc, o . •_'•'+r tri s.Mehelich says she first visited the firm's Dayton facility about two years ago and,eve(then,it was obvious that it had outgrown its leased space. "That was a telltale sign they were certainly ready for some elbow room and some expansion," she says. At the time, the firm leased about 4,800 square feet. It has since expanded to about 6,000 square feet,Mr. Orluck says. But, it's still not enough. • Orluck Industries plans to occupy about 13,000 square feet in its new Elk River facility,with the • remaining roughly 10,000 square feet leased to business park district eligible tenants. The city's highly competitive financing package starts with the site. It's a choice parcel at the southwest corner of Joplin Street and Business Center Drive,one of Elk River's most desirable new business addresses. But,the way the site is being financed—by writing down the land costs to$1 —is what is making the entire financial package viable. The property was owned by the City of Elk River, which had purchased it from Sherburne County upon tax forfeiture in 2001. City staff first proposed an Orluck Industries project for the site in 2002. But,plans stalled as the recession took hold. Elk River was "very cooperative" Fortunately,the city's patience paid off.When the project got back on track early this year,city staff proposed that tax abatement financicould enable the city to sell the lot to Orluck Industries for$1.The"instant equity"t 4j) ,led by becoming the owner of the lot, along with another$50,000 in owner equity, • •re, . • 4 fy a$1.256 million loan from The Bank of Elk River to cover the costs of construe 3 "It gets them in for very little money down,"Ms. Mehelich says. The city and county agreed to evenly split the$201,520 cost of the land. That required the • approval of the Elk River Economic Development Authority,the Elk River City Council,the Sherburne County Economic Development Alliance and the Sherburne County Board of Commissioners. The city also needed to amend the underlying land use to Light Industrial from Community Commercial.Ultimately, all of the needed approvals were granted. "The City of Elk River has been very, very cooperative, aggressive and easy to work with,"Mr. Orluck says. "Very professional." In addition to the financing package,Mr. Orluck says he was attracted to Elk River by its convenient location,close to his customers and employees.From a personal standpoint,he says he and many of his employees also prefer the area's less urban lifestyle. "We just like the area,"Mr. Orluck says. "We like the city of Elk River." The city will benefit,too For Elk River, which bills itself as"The Light Industrial Hub of the Northwest Metro,"the clean, high-precision nature of Orluck Industries' business was a good fit with the city's economic development goals. "Those are definitely companies we like to see in Elk River,"Ms. Mehelich says. Although Orluck Industries is a relatively small business, she says, "It's the small to medium-sized companies that keep our economy healthy." • At the time the city was first considering the revived proposal,Orluck Industries had 13 full-time 1111 employees and two part-time workers. The firm has a history of low staff turnover,with jobs that pay about$15 per hour to$22 per hour—good wages by local standards. Although Mr. Orluck didn't commit to creating any new jobs as part of the project,Ms.Mehelich says it was a good sign that the firm a.`rk pit ull-time positions just while the proposal was going through the approval process. T Mrt•4 f I....0 ;employment to 16, and Mr. Orluck says he might add four to six more posi • , o!e. s. • I The Orluck Industries project passed its last major hurdle in May when the tax abatement financing plan was approved by the Sherburne County Board. Construction will begin in mid- Summer and Mr. Orluck hopes to move in by late Fall. U For information about leasing space in Orluck Industries new Elk River facility,please contact Mark Orluck at(763)428-3175. • • TechTrends e-Newsletter I May 2004 Page 1 of 7 MinnesotaN- Print Close0 (-7- INFORMATION TECHa publication of l ittesota cF1 1I : ..Cne, ... Volume 5, Issue 5 May 2004 Cover Story This issue of Tech Trends is sponsored by RMC Project Management. 0101 KIM i • RMC Project Management is a Minnesota-based company that has been training project managers for 12 years. Our courses were developed by Rita Mulcahy, PMP, the author of PMP Exam Prep. We offer a combo-class in Minneapolis, which • includes the Project Management Tricks of the Trade (3-day) and PMP Exam Prep (2-day) courses. These are fast-paced intensive courses that guarantee you will pass the PMP exam. With the class you get Rita's RMC PMP Exam Prep system—PMP Exam Prep, PM FASTrack exam simulation software, and Hot Topics flashcards. Register today at www.rmcproject.com and use promo code EMMTMA4 to get $100 off tuition. Sign up for RMC e-mails with future classes, products and free project management tips at www.rmcproject.com. q I Mapping Your Way Down the Value Stream Small manufacturers should go with the flow. Set aside industrial management jargon for a moment. Simply put, a value stream map (VSM) takes the concept of lean manufacturing back to the drawing board— literally. Your company is the value stream, and the map is the pencil sketch that o charts the flow of materials and information down that stream. Small manufacturers o hoping to reap the benefits of lean get a solid start with this exhaustive yet easy-to- use tool. According to the Manufacturers' Resource Center, Pennsylvania's Manufacturing Extension Partnership affiliate, well-executed value stream mapping can allow facilities to shorten lead times by 95 percent, reduce work in progress by 90 percent, and improve product quality between 50 and 90 percent. Research indicates that the mapping process leads to considerable gains in space use, employee skills, and productivity, as well. http://www.minnesotatechnology.org/publications/techtrends/2004/May/printVersion.asp 5/17/2004 TechTrends e-Newsletter I May 2004 Page 2 of 7 INFORMATION The secret to the VSM's power is its comprehensiveness; managers and floor leaders don't always see how their unit's best practices affect the value-added—or • wasteful—processes of another unit. The map visually represents process or information bottlenecks that ultimately cut into value-added time (i.e., time that translates into money from the customer). For example, new efficiencies on the factory floor may reduce a machine part's cycle time to 30 seconds, leading to a pile-up of inventory in the warehouse. A value stream map helps everyone see that improved profitability doesn't necessarily lie in getting from Point A to B faster, but in shortening the overall time it takes to turn raw materials into cash. It can also help you identify what industry-standard practices work for your business, and which of them don't. For these reasons, the VSM is the essential starting point for any manufacturer looking for opportunities to apply lean concepts. Industry Week reports that only 5 percent of U.S. manufacturers are truly lean, due in part to a lack of comprehensive understanding of how precious resources—ideas, time, materials—are distributed, start to finish. At the same time, lean principles have never been easier to adopt, thanks to rigorous training programs and consulting services that emphasize the value of the VSM to your company's growth goals. To learn more about value stream mapping and lean principles, read the "Lean Dreams" feature in the Fall/Winter 2003 issue of Minnesota Technology , or contact MTI's team of Lean Enterprise consultants at www.minnesotatechnology.org/business/lean.asp , or call 612-373-2900, or 800- 325-3073. • y [Tech Notes Technology business news from around Minnesota. The Minnesota Agricultural and Economic Development Board (MAEDB) wants to remind Minnesota businesses of the Small Business Development Loan Program , which will offer bond-backed small-business loans to Minnesota companies. Ranging from $1 million to $5 million, the loans will fund the acquisition of land, buildings, and equipment, as well as construction and renovation for manufacturing and industrial businesses with fewer than 500 employees. The fixed market-rate loans are made possible through the issuance of industrial development bonds backed by a state-funded reserve. Applications are accepted year-round. For more information, contact the Minnesota Department of Employment and Economic Development's (DEED's) Office of Business Finance at 651-297- 1391, or 800-657-3858. Fairmont's Nortech Systems , a communications equipment manufacturer, is building 4,000 intercom systems for upgraded Humvees that the U.S. Army will send to its troops in Iraq. The systems will replace traditional radio units with headsets designed to facilitate communications between vehicles. The Nortech intercom kits will be included in the "up-armored" Humvees, which also feature improved steel reinforcements and bullet-proof glass. According to the company, Nortech received the order for the kits in March. It is working as a subcontractor to Northrop Grumman ; the deal is expected to generate around $4 million in • revenue for Nortech. In 2003, exports of Minnesota's manufactured goods rose 9.8 percent to a http://www.minnesotatechnology.org/publications/techtrends/2004/May/printVersion.asp 5/17/2004 TechTrends e-Newsletter I May 2004 Page 3 of 7 INFORMATION g record $10.5 billion . The state's exports grew faster than the national rate, which • was up 3.7 percent in 2003. DEED predicts that the increase in manufacturing • 0 exports may lead to new jobs for the state. The Minnesota Dislocated Worker Program recently announced that it will 0 dedicate $1.6 million to retrain laid-off job seekers. As part of DEED , the state- and locally funded program will support eight retraining projects at locations throughout the state. 0 Duluth Mayor Gary Doty has announced that the city will purchase the former �_ Universal Atlas Cement Plant from Pittsburgh, Pa.-based U.S. Steel Corp. After 10 years of negotiations, the City of Duluth will acquire the 65-acre site—vacant since 1976—for $232,000. The deal is expected to close in January 2005, according to KDLH-TV. 1 Brainerd -based Nature Vision Inc. , and Photo Control Corp. of Minneapolis • have announced that they will merge. Publicly held since 1959, Photo Control designs, manufactures, and sells photographic and video conferencing equipment. Nature Vision develops and sells video imaging systems for outdoor recreational use. The merger is subject to approval by the shareholders of both companies. According to Photo Control representatives, the acquisition is scheduled for completion by the end of the second quarter of this fiscal year. Nature Vision operations will continue in Brainerd, reports the company. Hancock-Wood Electric Cooperative of North Baltimore, Ohio , will install Hunt Technologies' power line automatic meter readers across its service area. • Pequot Lakes -based Hunt Technologies Inc. manufactures and sells information and control systems for the utilities industry. Osseo-based WSI Industries Inc. has announced plans to relocate to a new 49,000-square-foot manufacturing facility in Monticello later this month. According A( to WSI president and CEO Michael J. Pudil , increased sales have prompted the • move. WSI Industries manufactures high-precision parts for a range of industries, employing 45 people. Entrepreneur and University of Minnesota Duluth marketing instructor Rob West has been named CEO of the Area Partnership for Economic Expansion (APEX) , a Duluth-based regional economic development initiative. Chosen from a field of 100 candidates, West founded and sold Westerlund Products Corp. , a Minneapolis-based closet storage product wholesaler. He has experience in the advertising, high-tech, manufacturing, aerospace, and consumer products industries, among others. As a result of recent fundraising efforts, APEX is scheduled to receive more than $400,000 per year in private-sector contributions y over the next three years, the organization reports. • Total Card Inc. , a Sioux Falls, S.D. -based credit card management firm, has announced plans to expand its business operations to Luverne, Minn. , 30 minutes away. The company's headquarters and current 150 employees will remain in Sioux Falls. According to Total Card, the expansion to a new facility may bring as many as 200 new jobs to Luverne. The decision to expand was due in part to the tax benefits included in Minnesota Governor Tim Pawlenty's Job Opportunity Building • Zones (JOBZ) program, according to Total Card President Greg Ticknor . Westmorelandflint , a Duluth -based advertising, marketing, and public relations http://www.minnesotatechnology.org/publications/techtrends/2004/May/printVersion.asp 5/17/2004 TechTrends e-Newsletter I May 2004 Page 4 of 7 l , 7T '"R ATION firm, has purchased the Interactive division of Duluth's CP Internet , confirmed CP Internet President Chad Braafladt. Under the arrangement, CP Internet will become • a wholly owned subsidiary of Westmorelandflint, newly named Flint Interactive Together, the two companies plan to offer Web site development services. Lincoln, Neb.-based telecommunications equipment provider EFJ Inc. will move its Waseca -based subsidiary, EFJohnson , to Irving, Texas , by March 2005. According to the company, most of its 200 employees in Waseca will be laid off. EFJ Inc. manufactures mobile radios and radio signal repeaters for public safety agencies, homeland security operations, and the U.S. military. • [Cale •ndar �.•:.: .�.' � ,••., ,•3..,. � ..... 'ice� ,>% �,`�` � � i r, :, Ihtie""rk, Cotiffh4 bittriut .,/ 1 _: w...r a#sfiO!ii/'. ...:... .. ,.....aim-.- /N.✓C.o -:wr..v ,..,�f'i, Special Announcement Seminar Alert: Unleashing the Power of Your Intellectual Property—Tools for Maximizing Your IP Dollars �3 On Tuesday, June , 2004, Patterson, Thuente, Skaar & Christensen and • Minnesota Technology, Inc. will present a special seminar that will show how companies can put their intellectual property to work and create tangible business value. The seminar will cover key legal and accounting issues, provide strategies for unleashing the value-generating potential of your portfolio, and reveal the secrets for looking attractive to the venture capital community. For more information, see the calendar listing below. • Seminar: Unleashing the Power of Your Intellectual Property Sponsored by Patterson, Thuente, Skaar& Christensen, P.A. Date: 6/15/04 Time: 8 a.m.-3 p.m. Cost: $150 (includes continental breakfast and lunch) Location: Windows on Minnesota, IDS Center, Minneapolis Registration contact: Click Here to Register • Featured Speakers: is • Patrick Sullivan, author of Value-Driven Intellectual Capital • Paul Saeveride, Cargill • Chad Huston, Conley Rose • William Hogan, The Hogan Company • • Mark Sellner and Bob Buetow, LarsonAllen • Jim Patterson, Patterson, Thuente, Skaar & Christensen, P.A. http://www.minnesotatechnology.org/publications/techtrends/2004/May/printVersion.asp 5/17/2004 TechTrends e-Newsletter I May 2004 Page 5 of 7 1 FC MATO MTI Technology Awareness Forum: Effective Techniques for Customer Relationship Management • Date: 6/2/04 Time: 8:30 a.m.-2:30 p.m. Location: TBD Cost: $149 Registration Contact: Click Here To Register MTI Technology Awareness Forum: Strategic Sales for Management: Leadership's Role in Growing Sales Date: 6/9/04 Time: 7:30 a.m.-12:00 p.m. Location: TBD Cost: $149 Registration Contact: Click Here To Register Successful Strategies for Competing in a Low-Cost World© Date: 6/10/04 114 Time: 7:30 am - 1:30 pm Location: The Northland Inn 7025 Northland Drive Brooklyn Park, Minnesota Cost: $129 before June 3; after June 3, $149 Registration Contact: Register by calling tollfree 1-800-298-3009, or online at www.minneapolischamber.org and click on Chamber Calendar. MTI Technology Awareness Forum: Radio Frequency Identification (RFID) Date: 7/14/04 Registration Contact: Click Here To Register MTI Technology Awareness Forum: Food Security Date: 8/11/04 Registration Contact: Click Here To Register MTI Technology Awareness Forum: Business Growth—Performance Date: 9/8/04 Registration Contact: Click Here To Register MTI Technology Awareness Forum: Marketing Technology Date: 10/13/04 Registration Contact: Click Here To Register MTI Technology Awareness Forum: Strategic Vendor Selection Date: 11/10/04 Registration Contact: Click Here To Register MTI Technology Awareness Forum: NASA Technology Transfer http://www.minnesotatechnology.org/publications/techtrends/2004/May/printVersion.asp 5/17/2004 TechTrends e-Newsletter I May 2004 Page 6 of 7 Date: 12/8 tr ' 'R MATIN Registration Contact: Click Here To Register ar 1111 Perspective Take the E-train After years of hype and mediocre returns, e-learning is finally delivering true benefits. How can you benefit? Four or five years ago, e-learning—programs that deliver e ducation via the Internet, a network, or standalone computer—were a powerful lure for businesses looking to maximize their training dollars. Unfortunately, like a lot of promises made during the tech bubble frenzy, not all e-learning offerings delivered on their potential. It now appears that e-learning is back on the growth track, however. By some estimates, the e-learning market could reach $50 billion by the end of this decade. How can you make it work for your company? One crucial step is to make sure that your provider presents the training lessons properly. One typical complaint in the past was that"e-learning" offerings sometimes consisted of little more than PowerPoint presentations designed with little regard for a client's individual training needs. The industry certainly appears to have matured since then. One big change: Increases in bandwidth, which are allowing providers to harness the power of the Web and thus offer training that is truly interactive and engaging. At the same time, • many providers have realized that they need to offer customized courses that measure results and identify areas that employees need to address for future improvement. Another new approach is a technique often referred to as "blended learning," which combines computer-based training with live classroom sessions and follow-up electronic activities. A final word: Advances in training aside, the onus is also on the client to define what they want to gain from the e-learning process. As with any endeavor, you need to define your goals and set overall training objectives. Want to learn more about e-learning and its potential benefits and challenges? Check out these four Web sites as a starting point: • http://www.e-learningguru.com • http://www.elearnmag.org/ • http://www.e-learningsite.com • http://www.ocic.org/community/topics/elearning/basics/default.htm a N tsT Network M EP Aft Ihate Home I Contact Us I Site Map I Privacy Policy I Terms of Use http://www.minnesotatechnology.org/publications/techtrends/2004/May/printVersion.asp 5/17/2004 TechTrends e-Newsletter I May 2004 Page 7 of 7 © 1994-2004, Minnesota Technology, Inc., All rights reserved webmaster(@mntech.org • PHONE: 612-373-2900 FAX: 612-373-2901 s http://www.minnesotatechnology.org/publications/techtrends/2004/May/printVersion.asp 5/17/2004