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6.0. EDSR 08-11-2003 ITEM # 6. City of Elk -�-1 River MEMORANDUM TO: Economic Development Authority FROM: Heidi Hall, Economic Development Assistant Or DATE: August I I, 2003 SUBJECT: Strategic Industrial Marketing Activities Update Attachments • MN Community Capital Fund flyers • Letter with enclosures from MN Community Capital Fund CEO • Technical Assistance & Operations Consulting Program Criteria&Application • Technical Assistance& Operations Consulting Program Press Release,July 24,2003 • • Event Flyer, "Responding to Foreign Competition", Manufacturers Alliance Web Site, August 2003 I. Product Offering Strategy The Marketing Committee discussed the industrial land issue at their May 6,June 3, and July 22 meetings. Staff and Sid Inman of Ehlers &Associates met with four of the five property owners to discuss a competitive marketing strategy for industrial development in the City of Elk River. The Director of Economic Development has provided a separate report regarding this issue. I I. Competitive Strategy The City of Princeton has developed a new 38 acre industrial park in the city's southwest corner, owned by the Princeton Economic Development Authority. Incentives being offered by the City of Princeton Economic Development Authority are tax increment financing,land write downs,industrial revenue bonds, economic development loan program, assistance in financial packaging,revolving loan funds from the Initiative Foundation and East Central Regional Development Commission. Staff believes the new industrial park in Princeton may impact Elk River's competitiveness for industrial development. I I I. Key Account/Lead Generation Strategy Staff continues to work with key account MN Technology on the partnership project mentioned below under the Public Relations Strategy section. Strategic Industrial Marketing Activities Update August 11,2003 Page 2 of 3 • On August 14th, staff will be attending an event on sponsored by the Manufacturers Affiance and MN Technology entitled"Responding to Foreign Competition" (see attached flyer). Staff is meeting with local banks to provide information on the MN Community Capital Fund (see attached flyers, etc.) and the City's new partnership program with MN Technology. IV. Promotions &Advertising Strategy Inquiries The Director of Economic Development has provided a separate report regarding the 2003 Semi-Annual Inquiry Prospect Report. V. Public Relations Strategy MN Technology Partnership Program The partnership program between the City of Elk River and MN Technology,Inc. (MTI),is being termed the Technical Assistance and Operations Consulting Program (see attached program criteria and application). The program is designed to recruit and retain strong manufacturing companies within the City of Elk River by providing them with technical training services. The attached press release was distributed late last month and received much attention from of Economic Development conducted the following the media. The Director p two radio interviews: • 1. KCCO (950 AM) Minneapolis Live Interview Aired Monday,July 28th at 4:25pm 2. WMNN News Radio/1330 MN News Network-Minneapolis Taped Interview Aired Monday,July 28th Also, the Director of Economic Development received positive feedback from a colleague at Norwood Young America, a real estate broker from Madison Marquette Realty Services,and Elk River Rotary Club members, all of whom heard the radio interviews. Staff also received an inquiry from Monte Hanson, the editor of Finance & Commerce Newspaper out of Minneapolis. Staff will continue to monitor the newspaper's Web site for an article on the program. A direct mail announcement is anticipated to be sent in August to a targeted list put together by staff and MTI. Energy City Staff and the ACE Marketing Committee/Special Events Task Force have begun planning • an event tentatively scheduled for mid-October to recognize the new high performance Rogers High School. Strategic Industrial Marketing Activities Update August 11,2003 Page 3 of 3 • Additional updates and changes are being made to the Energy City brochures and Web site. VI. Strategic Partnership Strategy Downtown Revitalization Project July Activities • On July 14th the City Council approved a Letter of Understanding between the City of Elk River and MetroPlains for the future sale of the city-owned Jackson Block property. The City Council also approved adoption of Resolution 03-42 in support of a proposal by MetroPlains to construct housing rental units in the City of Elk River and an application to MN Housing Finance Agency. • At the July 28th HRA and City Council meetings, downtown owners and tenants presented their issues and concerns regarding the project. At the August 25th HRA meeting, city staff will report the status of their research regarding the follow-up issues requested by the HRA and members of the public. The August edition of the Downtown Revitalization Q&A Newsletter will be distributed on August 20th as an insert to the Elk River Star News. VII. Business Retention Strategy Business Retention Program Staff, EDA President Gongoll, and Commissioner Tveite attended a Business Retention and Expansion (BRE) visit with Ed Cunnington of Tescom in late July. EDA Commissioners • attending BRE visits are asked to provide a brief verbal report of issues that were discussed during the visits. • MCCF July 2, 2003 MINNESOTA COMMUNITY • CAPITAL FUND Ms. Cathy Mehelich Director of Economic Development City of Elk River 13065 Orono Pkwy. PO Box 490 Elk River, MN 55330 Dear Cathy: I am very pleased to report that the Minnesota Community Capital Fund (MCCF) is off to an excellent start. Since our organizational meeting in February, we have approved 6 loans and are currently reviewing another 15 loan applications for business expansion projects located in communities served by our 60 members. Our competitive loan pricing and customer-friendly application review & approval process has earned high marks from our members, local bankers, and most importantly, from our borrowers. Although the MCCF deal flow is well ahead of our first year projections, we still have the operational capacity to originate more loans and the national capital markets continue to have a very strong appetite for the kind of gap-financing loans we are making throughout Minnesota. In order to support your local marketing efforts, the MCCF Board recently approved the 1111 production and distribution of the enclosed brochures for use by all MCCF members. This brochure is designed to inform both local bankers and prospective borrowers about the basic features and availability of MCCF loans in the area you serve. Please note the special die cut in the inside of each brochure for your business card. I strongly encourage you to call upon every bank and commercial lender in your community to tell them about the benefits of participating with your organization and the MCCF whenever they are looking for a financing partner that is flexible and responsive to both their needs and those of the borrower. You might also ask them if they would be willing to distribute MCCF brochures to their customers. Please call us if you would like more copies of the brochure. Finally, we have enclosed a reprint of a recent editorial from the Star Tribune that features the Minnesota Community Capital Fund. Please share this with your colleagues, elected officials, board members, local bankers, and anyone else who supports economic development in your community. I look forward to seeing you at our first annual meeting in St. Cloud on Wednesday, August 20, 2003. In the meantime, please don't hesitate to call me with any questions or suggestions about the MCCF. Sincerely, Scott M rtin • CEO Activating Capital for your Community Enclosures 13911 Ridgedale Drive I Suite 260 I Minneapolis,MN 55305 phone:952 541-9674 I fax:952 541-9684 I website:www.mncommunitycapitalfund.org C m.NNESOTA COMMUNITY CAPITAL FUND EXHIBIT B: LOAN CRITERIA FINANCING POLICIES CREDIT CRITERIA Loan Amounts: Equity or Cash Requirements: ■ $50,000 minimum • Loan applicants must demonstrate an acceptable level • $2,500,000 maximum of project equity, with a minimum of 10% equity provided by the borrower. Subordinated debt within Eligible Projects: the same project financing may be considered as additional equity,subject to an intercreditor agreement. • Funded project must be within a member's area of All other criteria will apply,including subordinate debt, operations. when calculating debt coverage. • Borrower may be a for-profit business entity,non-profit entity,cooperative,or local unit of government. Collateral Requirements: • A financial institution must be a participant in the project financing. • Loan collateral coverage must be at least 100%of the MCCF loan amount on appraised value of assets, less Allowable Use of Proceeds: all senior debt. • MCCF will consider the following collateral positions: • MCCF financing assistance may include, but is not first security interest, shared first security interest, limited to: fixed assets, including land and building subordinated security interest and shared subordinated purchase, building construction, leasehold security interest. improvements and renovations;acquisition,renovation or moving machinery and equipment; and working Debt to Worth: capital loans secured by fixed assets with fixed • repayment schedules(not lines of credit). • MCCF will consider financing projects that have a • Loans may not be used to refinance existing debt. tangible net worth ratio on an actual and proforma basis of no greater than 10 to 1 (10% project equity or Ineligible Use of Proceeds: greater). Each project shall be analyzed on its own merits and its ability to service both existing and new ■ Speculative real estate developments. debt. • Purchase of equity positions in business enterprises. • MCCF borrowers (real estate holding companies excluded)should have a tangible net worth of 5 to 1 or Interest Rates: less,based upon their most recent financial statements and,on a proforma basis, reflecting the new proposed • Adjustable and fixed rate loans are available,with rates debt. determined by the MCCF member originating the loan. Personal Guarantees: Loan Term Length: • Personal guarantees will be required for all owners with • The term of each loan will be determined on a case-by- 20%or greater ownership in closely held businesses. case basis,with the primary factor being the collateral offered.Loans secured by real estate will generally not Management Experience&Company Performance: exceed 20 years, and loans secured by machinery and equipment will generally support a loan term of up to • The MCCF will require that the project have capable, 10 years,not to exceed the depreciated life of the asset skilled management through experience or expertise in being financed. When possible, the MCCF loan will the applicant's industry, either through previous coincide with the term of the participating bank loan, successful business ownership or through appropriate including any balloon maturity provisions. managerial support services. Borrowers having erratic or undocumented earnings, or borrowers having new Fees and Charges: and unproven management,will require more loan risk sharing by the MCCF member originating the loan. • A 1.75% loan origination fee will be charged to all MCCF borrowers. This fee will be assessed only for Repayment Ability: approved loans, but must be paid at or prior to loan closing. • Applicants must demonstrate adequate historical cash • A 0.5% loan underwriting fee shall be paid by the flow showing trends that support debt service coverage • borrower at loan closing. of at least 1.1 to 1. Proforma financial cash flows must ■ Borrowers are responsible for paying all legal and other also support debt service coverage of at least one to loan closing costs incurred by MCCF. one. PAGE A20•STAR TRIBUNE* THURSDAY,JUNE 26.2003 t rTri n S a bu e Editorial www.startribune.com/opinion e-mail:opinion@startribune.com Our perspective New rural tool Pooling resources for growth Who would have expected it: loans for business or housing pro- City leaders in Lake Crystal are jects. Loan amounts are limited putting their town's tax money only by the size of a member's into an economic development contribution to the pool;members pool that might put a new busi- can originate loans of up to 10 ness farther west on Hwy. 60, in times the amount they put in. archrival Madelia. To qualify, a project must have More such cooperation among a local lender participating in the longtime competitors is happen- financing, and the loan must be ing in Kasson and Mantorville,Lu- salable in the secondary market. verne and Worthington, Moose That's it. Unlike some govern- Lake and Cloquet — in fact, all ment-funded loan and grant pro- over outstate Minnesota. It's hap- grams,there are no job-creation or. • pening because a new tool to gen- wage requirements on the enter- erate capital for economic devel- prise being funded,and no restric- opment has come along, one that tion on whether a loan can apply offers a promise to participating to fixed assets or,with proper col- communities that if they combine lateral, working capital. There is resources,everybody can win. no lengthy,politics-laden applica- The tool is the Minnesota Corn- tion process. Loan approvals can munity Capital Fund, a nonprofit be made within two to four weeks. spinoff of the Northland Institute, This takes Minnesota's tradi- which in turn is a subsidiary of the tion of building economic activity McKnight Initiative Fund's North- through public-private partner- land Foundation. ships in a positive new direction, What it offers that previous eco- at a propitious time. Capital for nomic-development stimulus pro- business investment has been grams did not is ready access to hard to come by in small Minneso- the national secondary lending to towns. Most of the revolving market, through the Minneapolis- loan funds established 20 years based nonprofit Community Rein- ago around the state are too small vestment Fund. (It's the same to offer entrepreneurs much bundler and reseller of communi- meaningful help. State govern- ty development loans that is ment's Minnesota Investment bringing new sources of capital to Fund was drained to the dregs by entrepreneurs in St. Paul, through the 2003 Legislature. the city's new Small Business Ex- The Minnesota Community pansion Program, and Minneapo- Capital Fund has only been opera- lis,through the Minneapolis Corn- tonal for a few months, and it has munity Development Associa- already approved six loans in five tion.) cities, and has 15 others pending. With the Community Reinvest- CEO Scott Martin, who is also the ment Fund involved, the Minne- Northland Institute president, sota Community Capital Fund can predicts that his fund is on to offer its members—outstate cities something big. Here's hoping he's and counties, and their subdivi- right. sions and consortiums — a The fund is reachable on the chance to issue an unlimited num- Internet at www.mncommunity- ber of qualifying gap-financing capitalfund.org. • City \bIll' of M Elk ........th.,,, ,,, . ..........„ Kit. ver • The Light Industrial Hub of the Northwest Metro Economic Development Technical Assistance & Operations Consulting Program Criteria & Application July 2003 City of Elk River Economic Development Authority 13065 Orono Parkway 0 Elk River,MN 55330 (763) 635-1000 • ELK RIVER ECONOMIC DEVELOPMENT TECHNICAL ASSISTANCE & OPERATIONS CONSULTING PROGRAM CRITERIA July 2003 I. PURPOSE The Economic Development Authority for the City of Elk River (EDA) recognizes the need and importance to retain and recruit industrial companies within the City of Elk River. The purpose of the Technical Assistance & Operations Consulting Program is to provide a technical assistance incentive to qualifying existing and prospective Elk River manufacturers to encourage company efficiency and productivity. II. CRITERIA The following criteria will be used to determine the eligibility of applicants for the Technical Assistance &Operations Consulting Program: A. Retail/service and start up businesses will not be considered. B. Companies must be involved in product manufacturing/assembly or be high technology-service related. S C. Companies demonstrate growth potential. D. Companies must report the following impact(s) resulting from the Technical Assistance &Operations Consulting Program: • Sales increase • Inventory cost savings • Labor cost savings • Material cost savings • Other cost savings • Capital investments • Other investments • Number of jobs created • Number of jobs retained E. Companies must commit to relocating and/or expanding in the City of Elk River via quality job creation/retention, new equipment purchase and/or new construction. F. Companies must pay 25% of the total cost of technical services provided through the Technical Assistance &Operations Consulting Program. G. No more than $2,000 in technical services will be provided to a company 5 through the Technical Assistance& Operations Consulting Program. III. APPLICATION PROCESS The Economic Development staff will review applications for admittance into the Technical Assistance &Operations Consulting Program. • ELK RIVER ECONOMIC DEVELOPMENT TECHNICAL ASSISTANCE PROGRAM APPLICATION FORM Name of Business: Name of Principal: Address: Phone: Fax: E-mail: Business is primarily involved in: Research and Development ❑ Product Manufacturing/Assembly ❑ Other ❑ Principal product(s): Number of Years in Operation: Current Number of Employees: IIIMost Recent Annual Sales: Technical Assistance & Operations Consulting Program Service Requested (see attached Minnesota Technology, Inc. list of services): Objective: Commitment for Growth in Elk River Expected Jobs Created and/or Retained: Expected Equipment Purchase: New Construction/Remodel/or Expansion Time Frame: Other: Signature: Printed name: • Company name: Date: 501 West College Drive Minnesota Technology Inc. 3 Brainerd,MN 56401 PHONE(218)855-8243 FAX(218)855-8141 •WWW.MIN N ESO TATE C H N OLOGY.ORG Minnesota Technology, Inc, has as its mission to assist industry in their preparation to apply, develop and commercialize technology. Our efforts to assist companies reside primarily in the following areas. Technology Assistance: > Technology Review > Technology Solution > Product Development Planning > Product Development Readiness Assessment Business Management Systems ❖ Strategy Development > Benchmarking ➢ Strategic Planning Assessment ❖ Marketing Systems > Industrial Marketing Assessment > Top Prospects • > Company Profiles > Customer Mini-profile ❖ Finance Systems ➢ Financial Statement Assessment > Financial Management Training > Financial Management and Budget Assistance > Business Valuation Training Lean Manufacturing Initiatives > Lean - 101 Principles of Lean Manufacturing > Value Stream Mapping > Production/operations Assessment > Software Assessment and Selections > Supplier Qualification Systems e-Business > Internet Opportunity Assistance > Internet Readiness Assessment > Internet Strategy Development ➢ Website Assessments > Internet Vendor Mediation Updated: February 3, 2003-J.A. Vreeland a NIST Network MEP Affiliate M ❑ ❑ R H E A D • REDWOOD FALLS • ROCHESTER • ST . CLOUD • TWIN CITIES • VIRGINIA 410 PRN# 1131293 Contacts: Mike Porter, APR MCPorter Marketing Communications, Inc. 952.881.3426 mcp@mcporter.com Lynn Buschman Minnesota Technology, Inc. 612.373.2945 lbuschman@mntech.org Unique New Funding Program for Businesses Relocating to Elk River Now Available Elk River Economic Development/MTI team up to offer Technical Assistance & Operations Consulting Program designed to help city's new industrial and manufacturing community members • Elk River, Minnesota (July 24, 2003) -- Businesses interested in relocating and/or expanding in Elk River may now apply for technical assistance funding thanks to a new program offered through the Initiative Foundation and the City of Elk River. Businesses that commit to a move into one of Elk River's business or industrial parks may receive up to $2000 for use toward consulting services offered by Minnesota Technology, Inc. This offer aims to support the city's goal of recruiting and retaining strong, viable companies that will improve their operations and business practices to become more profitable, and grow with the area's industrial parks. "We see this as an investment for everyone in the community," says Cathy Mehelich, Director of the Elk River EDA. "Welcoming business to our area is one thing, but we are making an effort to nurture businesses to grow here." The one page application for assistance asks business owners to project their expected benefits and resulting growth from participation in the program. "The main focus of the program is on new members of the business community, but we will also be soliciting applications from existing Elk River companies. Insight from an organization so committed to improving business through technology can be of value to all our local manufacturers." "MTI is the only organization that works directly with Greater Minnesota manufacturers and technology companies," MTI Director of Corporate Services, Don Hayward said. "Manufacturing and technology form the bedrock of many Minnesota communities, • offering high-wage, high-skill jobs that create economic opportunity and stability for the present and the future. We're pleased to offer our expertise to companies in Elk River." About MTI Through a number of business services, Minnesota Technology, Inc. helps companies create more effective manufacturing processes, improve communications, increase efficiency, expand market opportunities and develop corporate growth strategies. Business and engineering specialists located throughout the state provide one-on-one consulting to small- and mid-sized companies in five areas: Strategic Management Services, Product Development/Tech Transfer, Internet Technology/E-business, Lean Enterprise, and Tech Training. The organization also links Minnesota companies with federal laboratories and researchers at higher-education institutions. About Elk River Conveniently located between St. Cloud and the Twin Cities,Elk River offers industrial land and business parks at prices competitive with area communities. In addition TIF, abatement and sub-prime loans make the city a cost-effective option. • The East Business Park, located on Highway 169, contains approximately 70 developable acres. The West Business Park, located on Highway 10, boasts nearly 100 acres for industrial and office development. Cascade Industrial Park adds an additional 46 acres to the total available land. These parks attract businesses from both ends of the corridor because of their convenience and accessibility. For more information about the program, the City of Elk River, and a Location Site Guide, contact Heidi Hall at 763.635.1042 or visit the city Web site at www.ci.elk- river.mn.us, which includes an interactive map with detailed information about available industrial sites. i Manufacturers Alliance . ww. 3T7.T! • 747.777,77,7 SharingEducation&Resources Peer-to-Peer EDUCATIONAL Responding to Foreign Competition What are companies doing to face stiff competition? Our children, our country and our incomes are being impacted by what is Cosponsored by happening today as manufacturing is outsourced to other countries. We Minnesota know it is being driven by the desire to lower costs in a global economy. However, what are U.S. manufacturing companies doing about it? How are Technology, Inc. we fighting back? There are ways to lower costs, like adopting lean practices throughout the supply chain and intensifying marketing efforts and new product sales. Date&Time: Likewise, quitting, selling out, moving overseas, partnering with or buying the competition are all options. Let's learn something from our presenters Thurs.,Aug. 14, 2003 who are in the battle now and surviving. 7:30-9:30 a.m. Location: Presented by 9700NormanFdale Ave.S.Community College Reell Precision Manufacturing France Ave.S.-Aud. Bloomington,MN Steve Wikstrom, Co-CEO (For directions check our web site at www.mfrall.com) Reservations: Meier Tool & Engineering, Inc. Online:www.mfrall.com, Richard Meier, President email:ma@mfrall.com,or call 763-533-8239 by Tuesday,August 12,2003 with Cummins Power Generation name(s),company&phone#. Wayne Ripberger, Executive Director, PGA Operations Cost: $30atthedoorfor Moderator: Jonathan Fernands, non-MA members. FREE to MA members Industry Analyst, Minnesota Technology, Inc. (Up to four w/company membership, additional$30 each) Beverages&rolls provided. Reward employees for a job well done- send them to a Manufacturers Alliance educational program. Reserve Visit: www.mfrall.com IP Today! Call: 763.533.8239 Email: ma@mfrall.com 6233 Fernbrook Lane North • Maple Grove • MN • 55311