5.0. 6.0. 7.0. 8.0. EDSR 09-13-1999 ELK RIVER ECONOMIC DEVELOPMENT AUTHORITY
MEMORANDUM
TO: Economic Development Authority
FROM: Paul T. Steinman, Director of Economic
Development
DATE: September 8, 1999
SUBJECT: Agenda Memo for September 13, 1999,
EDA Meeting
5. Public Hearing- Consider Modifications to the EDA Micro Loan
Program
See attached memo from Assistant ED Director Marc Nevinski:
io 6. Consider Draft Action Plan for Strategic Plan Modification
Attached is a draft action plan as prepared by staff based upon
identification of the major issues prioritized by the Strategic Plan
Modification Committee EDA, Council, HRA. The issue for
discussion at this meeting is to review the draft action plan and
discuss additions/deletions or other modifications to the plan. It is
important that the EDA discuss these suggested action plan items and
provide comments and suggestions, because this action plan will, upon
approval as part of the modified Strategic Plan,become the Economic
Development department's guiding work plan for the next
approximately 2-3 years.
Background
The Strategic Plan Modification Committee consisted of the EDA,
Council, and HRA. The Committee's responsibility was to modify and
update the Economic Development Strategic Plan which was first
completed in 1996. This process amounted to a reprioritization of the
major issues of the old Strategic Plan. The Strategic Plan modification
process included a reprioritization as follows:
• Develop stronger industrial base 61 votes
• Promote business retention and growth 40 votes
13065 Orono Parkway • P. 0. Box 490 • Elk River, MN 55330-1743 • (612) 441-7420 • Fax (612) 441-7425
Equal Opportunity Housing and Equal Opportunity Employment
EDA Agenda Memo
September 13, 1999,Meeting
Page 2
10 • Develop West Business Park 37 votes
• Develop external marketing strategy 26 votes
• Redevelop east Highway 10 corridor 21 votes
• Coordinate transportation options 16 votes
• Redevelop downtown 15 votes
Staff worked this prioritized list into the following Strategic Plan
format:
• Issue No. 1 Grow Industrial Base
Goal: Develop West Business Park
• Issue No. 2 Business Retention and Growth
Goal: Retain and grow existing industrial firms
• Issue No. 3 Marketing Strategy
Goal: Develop a marketing strategy
• Issue No. 4 Develop/Redevelop East Highway 10 and the
CBD Area
Goal: Undertake activities to facilitate development and
redevelopment on east Highway 10 and in the CBD
As you can see, staff took some liberties to construct a format which
touched as many of the priority issues as possible. The one exception
to this was the 6th priority as addressed by the Strategic Plan
Modification Committee, which received 16 votes, which was higher
than the next priority of redeveloping downtown. Staff was unsure
how to incorporated the priority of"coordinate transportation options"
within the context of the four major issues. Staff requests additional
information from the EDA regarding the issue of transportation
options.
The future process involves staff bringing the action plan before the
EDA for final approval in October, and then continuing work on
implementation of the plan.
Recommendation
Staff recommends the EDA make suggestions and modifications to the
proposed draft action plan, and ask staff to bring the modified
Strategic Plan back to the EDA at its meeting in October for final
approval.
EDA Agenda Memo
September 13, 1999,Meeting
Page 3
• 7. Present Results of Business Retention and Expansion Survey
Program
Please see the attached memo and information from Assistant ED
Director Marc Nevinski.
8. Consider Proposal to Purchase Eull Property
This issue is on the EDA agenda at the request of the Eulls as part of
the negotiated arbitration agreement between the city and the Eulls.
City Attorney Peter Beck will be at the EDA meeting to present this
issue for discussion. See the attached information regarding the Eull
arbitration
•
ITEM 5
ELK RIVER ECONOMIC DEVELOPMENT AUTHORITY
III MEMORANDUM
TO: City Council& Economic Development
Authority
FROM: Marc Nevinski,Assistant Director of
Economic Development
DATE: September 13, 1999
SUBJECT: Micro Loan Fund Public Hearing
Issue
Revisions to the Economic Development Micro Loan Fund polices are now
complete. However, state law mandates that a public hearing be held on the
policies before they are adopted. The City Council and EDA are asked at this
time to consider any comments the public may have before adopting the
revised policies.
• Overview
Two issues prompted modifications to the fund's policies. First, the need to
state clear guidelines for different loan fund uses (i.e. gap financing,
incentives, & redevelopment) required that various provisions of the policies
be restructured. Second, last minute passage of the Business Subsidy Law by
the state legislature placed restrictions on fund dollars and implemented
reporting requirements. The law also requires that each potential loan
grantor (i.e. City Council, EDA, HRA) hold a public hearing before adopting
its own set of policies.
Recommendations
Staff recommends that the Council and EDA consider any input provided at
the public hearing and then adopt the revised loan polices.
Attachments
• Notice of Public Hearing—Revisions to Micro Loan Fund polices
• Revised Micro Loan Fund Policies
• Business Subsidy Policy
•
13065 Orono Parkway • P. O. Box 490 •Elk River, MN 55330-1743 • (612) 441-7420 • Fax (612) 441-7425
Equal Opportunity Housing and Equal Opportunity Employment
•ity of
ElkRi•
ver
For publication on September 8, 1999.
Please contact Marc Nevinski with any questions at 241-5526.
CITY OF ELK RIVER
NOTICE OF PUBLIC HEARING
The Elk River Economic Development Authority will conduct a public
hearing on Monday, September 13, 1999 at 6:00pm at Elk River City Hall,
13065 Orono Parkway, In accordance with Minnesota Statutes, Section
116J.993 through 116J.995 to consider revisions to its Economic
Development Micro Loan Fund policies.
• The Elk River City Council will also conduct a public hearing to
consider the same matter on Monday, September 13, 1999 at 6:30pm at Elk
River City Hall.
The Elk River Housing and Redevelopment Authority will also conduct
a public hearing to consider the same matter on Monday, September 27, 1999
at Elk River City Hall at 5:00pm.
All interested persons are invited to attend the public hearing to
express their questions and/or comments. Hearing impaired persons
planning to attend who need an interpreter or other persons with disabilities
who require auxiliary aids should contact Sandy Peine, City Clerk, at 441-
4906 by September 8, 1999. If you would like information regarding the
above-described public hearing notice, please contact Elk River City Hall at
241-5526.
Marc Nevinski
Assistant Director of
Economic Development
•
13065 Orono Parkway • P.O. Box 490 • Elk River, MN 55330 • TDD &Phone: (612) 441-7420 • Fax: (612)441-7425
IPBusiness Subsidy Policy
This Policy is adopted for purposes of the business subsidies act (the "Act"), which is
Minnesota Statutes, Sections 116J.993 through 116J.995. Terms used in this Policy are intended to
have the same meanings as used in the Act,and this Policy shall apply only with respect to subsidies
granted under the Act if and to the extend required thereby.
While it is recognized that the creation of good paying jobs is a desirable goal which benefits
the community, it must also be recognized that not all projects assisted with subsidies derive their
public purposes and importance solely by virtue of job creation. In addition,the imposition of high
job creation requirements and high wage levels may be unrealistic and counter-productive in the face
of larger economic forces and the financial and competitive circumstances of an individual business.
With respect to subsidies,the determination of the number of jobs to be created and the wage
levels thereof shall be guided by the following principles and criteria:
• Each project shall be evaluated on a case by case basis, recognizing its importance
and benefit to the community from all perspectives, including created or retained
employment positions.
• • If a particular project does not involve the creation of jobs,but is nonetheless found
to be worthy of support and subsidy,it may be approved without any specific job or
wage goals, as may be permitted by applicable law.
• In cases where the objective is the retention of existing jobs, the recipient of the
subsidy shall be required to provide reasonably demonstrable evidence that the loss
of those jobs is imminent.
• The setting of wage and job goals must be sensitive to prevailing wage rates, local
economic conditions,external economic forces over which neither the grantor nor the
recipient of the subsidy has control,the individual financial resources of the recipient
and the competitive environment in which the recipient's business exists.
• Because it is not possible to anticipate every type of project which may in its context
and time present desirable community building or preservation goals and objectives,
the governing body must retain the right in its discretion to approve projects and
subsidies which may vary from the principles and criteria of this Policy.
Adopted by:
Date of adoption:
• Date of public hearing:
1070590.1
• REVISED
ELK RIVER ECONOMIC DEVELOPMENT
MICRO LOAN FUND POLICIES & GUIDELINES
City of Elk River Economic Development Authority
13065 Orono Parkway, P.O. Box 490
Elk River, MN 55330
(612) 441-7420
PURPOSE
The Economic Development Authority for the City of Elk River (EDA)
recognizes the need to stimulate private sector investment into
manufacturing facilities and equipment in order to create new jobs,
boost productivity and retain existing jobs for local residents.
Additionally, the need exists to encourage investment in the expansion
and/or rehabilitation of commercial and retail buildings in order to
maintain the economic viability of Elk River's central business
districts. Subsequently, the purpose of this program is to provide low
interest, long term (i.e. greater than one year.) loans as incentives for
industrial development within the City of Elk River and to encourage
commercial and retail business owners in the central business district
IP
to rehabilitate their existing buildings.
II. LOAN PROGRAMS
In order to meet the economic and community development objectives
of the EDA, three distinct loan programs exist within the Micro Loan
Fund to promote business growth in Elk River.
Supplemental Financing Program
Purpose: The Supplemental Financing Program is designed
industrial firms who have maximized their conventional
financing and equity resources and subsequently would be
unable to complete a project without EDA assistance.
Amount: Up to $50,000
Equity: Must match EDA loan with 1:1 ratio. Total loans not to
exceed 90% of project value.
Rate: Fixed; 1 point below the lowest prime rate published in
the Wall Street Journal the day the loan is closed.
• Term: Financing up to 3 years. Loans may be amortized up to 15
years with a balloon payment.
Micro Loan Fund Policy Guidelines Page 2
Refinancing:The loan may be refinanced up to 2 additional years at a •
market rate of interest.
Criteria: 1. Borrower must create one new full time job for each
$20,000 loaned within two years. Said jobs must pay a
minimum average wage of$8 per hour plus benefits.
2. Borrower must be an industrial firm and comply with
the provisions of the city's industrial and business park
zoning ordinances.
Redevelopment Financing Program
Purpose: The Redevelopment Financing Program is available to
business and property owners in the central business
district (CBD) for the rehabilitation and restoration of their
buildings.
Amount: Up to $50,000
Equity: Must match EDA loan with 1:1 ratio. Total loans not to
exceed 90% of project value.
•
Rate: Fixed; 2 points below the lowestprime rate published in
the Wall Street Journal the day the loan is closed.
Term: Financing up to 3 years. Loans may be amortized up to 15
years with a balloon payment.
Refinancing:The loan may be refinanced up to 2 additional years at a
market rate of interest.
Criteria: 1. At a minimum 20% of Micro Loan dollars must be used
for the rehabilitation of the building's facade.
2. Borrower must be located in the Central Business
District (see attached map).
Industrial Incentive Program
Purpose: The purpose of the Industrial Incentive Program is to
encourage industrial development that supports the tax
base and brings quality jobs to the city.
Amount: Up to $100,000
1111
Equity: Must match EDA loan with a 3:1 ratio. Total loans not to
2
Micro Loan Fund Policy Guidelines Page 3
• exceed 90% of project value.
Rate: Fixed; 4 points below the lowest prime rate published in
the Wall Street Journal the day the loan is closed.
Term: Financing up to 5 years. Loans may be amortized up to 15
years with a balloon payment.
Refinancing:The loan may be refinanced up to 2 additional years at a
market rate of interest.
Criteria: 1. Borrower must be an industrial firm and create one new
full time job for each $20,000 loaned within 2 years. Said
jobs must pay a minimum average wage of$10 per hour
plus benefits.
2. Borrower must locate in the West Business Park and
comply with the provisions of the city's industrial and
business park zoning ordinances.
III. USES
• 1. Permitted Fund Uses:
a. Building construction
b. Land acquisition
c. Machinery
d. Furniture, fixtures, and equipment (FF&E)
e. Renovation and modernization of buildings
f. Exterior renovation of retail, commercial and industrial
buildings
g. Public infrastructure needed for economic development
expansions
2. Ineligible Fund Uses:
a. Expenditures for the construction and/or renovation of
residential units
b. Working capital
c. Refinancing of existing debt
d. Inventory
IV. BUSINESSES ELIGIBILITY
Any project meeting the above criteria, and located or proposed to be
located within the city limits of Elk River, may be eligible for an
• Economic Development Micro Loan.
3
Micro Loan Fund Policy Guidelines Page 4
• Business must be a for-profit corporation, partnership, or sole
proprietorship.
• Business must be a small business as defined by the Small
Business Administration (SBA).
• Business must have a positive net worth.
• Religious, political, and pornographic enterprises are not
eligible to use the Economic Development Micro Loan Fund.
V. MICRO LOAN FUND TERMS & CONDITIONS
1. Loan Structure
All EDA Micro Loans will be structured as participation loans and will
be serviced by the project's primary lending institution. Such an
arrangement allows for the central distribution and collection of funds
and simplifies the financing process for all parties involved. A
participation agreement will be signed by the borrower, primary lender
and the EDA.
2. Simultaneous Micro Loans
The simultaneous use of different Micro Loan Fund Programs by any
one borrower or for any one project is prohibited.
3. Call of Loan •
A loan shall become due and payable in full if a business relocates
outside of the city of Elk River prior to the maturity date of the EDA
loan.
VI. REGULATION FOR NEW CONSTRUCTION AND IMPROVEMENTS
All buildings within which public funds will be used for construction or
renovation are to be brought into conformance with city codes and
policies. Repairs may include the following systems and portions or
real property:
a. Mechanical heating, plumbing, and electrical
b. Structural; including the facade of the structure and energy related
improvements.
VII. LOAN SECURITY AND GUARANTEES
Applicant must be able to secure the loan by providing the EDA with a
minimum of a subordinate mortgage upon the building and/or assets or
other approved collateral.
411
4
Micro Loan Fund Policy Guidelines Page 5
• Applicant must demonstrate the financial means to repay the loans, as
determined by the Economic Development Authority.
VIII. TINIING OF PROJECT EXPENSES
No project should commence until the Elk River Economic
Development Authority has approved the loan application. Any costs
incurred prior to the approval of the loan application are generally not
eligible expenditures.
No building construction should commence until the required City
permits are secured.
The applicant will be responsible for all legal, recording, and other fees
required for protection of a security interest in the loan.
IX. PROCEDURAL GUIDELINES FOR APPLICATION AND APPROVAL
1. All applicants shall first contact a primary lending institution
to determine if additional equity is needed, and if so, how much.
2. The applicant and the primary lender shall then meet with City
Staff to obtain information about the micro loan program, discuss
the project, and obtain application forms.
3. The applicant shall complete and submit an application form to the
City, along with a processing fee of 1% of the loan request. (The fee
is used to cover processing expenses and will be returned if
application is denied.) The applicant must provide evidence of their
ability to meet the equity requirements or provide a letter of
commitment for conventional financing from the primary lending
institution.
4. The application will be reviewed by the City staff to determine if it
conforms to all City policies and ordinances and to consider the
following:
a. The availability and applicability of other governmental
grants and/or loan programs.
b. Whether the proposed project will result in conformance with
• building and zoning codes.
5
Micro Loan Fund Policy Guidelines Page 6
c. Whether it is desirous and in the best interests of the public •
to provide funding for the project.
5. The EDA Finance Committee and EDA Commissioners will review
each application in terms of its consistency with the goals of the
Growth Management, Strategic, and Economic Development Plans
and in relation to the project's overall impact on the community's
economy. Redevelopment Loan applications will also be reviewed
by an HRA member in conjunction with the EDA Finance
Committee.
They will also evaluate the project application in terms of the
following:
a. Project design - Evaluation of project design will include
review of proposed activities, time lines and a capacity to
implement.
b. Financial Feasibility - Availability of funds, private
involvement, financial packaging and cost effectiveness.
• Appropriate ratio of private funds to Micro Loan funds. •
• Sufficient cash flow to cover proposed debt service as
demonstrated by financial statements and projections.
• Business must show a positive net worth.
• Letter of Commitment from applicant pledging to
complete the project during proposed project duration,
if the loan application is approved.
• Letter of Commitment from other financing sources
stating terms and conditions of their participation in
the project if applicable.
• Sufficient collateral.
c. All other information as required in the application and/or
additional information as may be requested by the Economic
Development Authority.
d. Project compliance with all city codes and policies. •
6
Micro Loan Fund Policy Guidelines Page 7
• e. Program Objectives - In addition to job and wage
requirements, the applicant must meet all Micro Loan Fund
criteria and demonstrate how the proposed activities will
meet at least one of the following objectives:
• The project contributes to the fulfillment of the city's
approved and adopted economic development and/or
redevelopment plans.
• The project prevents or eliminates slums and blight.
• The project increases the local tax base.
• The project brings a structure into compliance with an
existing building code violation.
6. The EDA Finance Committee will recommend the approval, denial,
or request a resubmission. A recommendation from the Finance
Committee will be forwarded to the EDA for final action.
X. LOAN POLICY REVIEW
• The above criteria will be reviewed on an annual basis to ensure that
the policies reflected in this document are consistent with the economic
development goals set forth by the City.
XI. COMPLIANCE WITH STATE STATUTES
Each company receiving assistance in excess of$25,000 from the EDA
Micro Loan Fund shall be subject to the provisions and requirements
set forth by state statute 116J.993 and summarized below.
Progress Reports
The borrower shall file a report annually for two years after the closing
of the loan or until all goals set forth in the application have been
meet, which ever is latter. Reports shall be completed using the format
drafted by the State of Minnesota and shall be filed with the City no
later than March 1 of each year for the previous year. Businesses
fulfilling job creation requirements must file a report with the city no
later than 30 days after the deadline.
Maintain Facility
The borrower agrees to maintain and operate its facility at the site
where the loan is used for a period of five years after the date the loan
• is closed.
7
Micro Loan Fund Policy Guidelines Page 8
Goal Attainment •
In addition to attaining or exceeding the jobs and wages goals set forth
in section IV of the application, the borrower agrees to achieve at least
one of the goals for community development set forth in section IX, part
5, subdivision (e) (see page 6) of the Micro Loan Fund policy.
Redevelopment loans in the central business district are exempt from job
creation and wage goals stated in section IX, part 5, subdivision (e)
provided the loan amount does not exceed fifty percent of the project
cost.
Failure to Comply
Businesses failing to comply with the above provisions will be subject
to fines, repay requirements, and be deemed ineligible by the State to
receive any loans or grants from public entities for a period of five
years.
XII. RIGHT OF REFUSAL
The Elk River Economic Development Authority may deny any project
which it deems inappropriate according to the guidelines established in
this document.
•
•
8
APPLICATION
ECONOMIC DEVELOPMENT MICRO LOAN FUND
• ELK RIVER, MINNESOTA
I. CONTACT INFORMATION
Company:
Address:
City/State /Zip
Contact Person(s)
Business Phone Fax
Home Phone Email
Check One: Proprietor Corporation Partnership
Social Security No.
Federal ID # State ID #
• II. NATURE OF LOAN REQUEST
Which Micro-Loan Program are you applying for?
Supplemental Financing Program
Redevelopment Financing Program
Industrial Incentive Program
Amount Requested: $ Total Project Cost: $
Type of project:
New construction for a start up business.
New construction for an existing business.
On site expansion
Equipment purchase
Remodeling: (circle one) Commercial/Retail/Industrial
Other
Please give a brief summary of your business and its products or service:
•
Please give a brief summary of the project:
•
Please describe how this loan will impact your project:
III. FINANCING
Project Costs
Land $
Site improvements $ •
Buildings (attach plans & costs) $
Equipment/Machinery/Fixtures
(attach list and estimated costs) $
Remodeling $
Industrial Inventory/Working Capital $
Other (attach description) $
Total Costs $
Comments:
•
Proposed Sources of Financing
SOURCE NAME TERMS AMOUNT
Bank Loan $
Bank Loan $
Other Private Funds $
Applicant Contribution $
Other $
Fed Grant/Loan $
State Grant/Loan $
EDA Micro Loan $
Total Financing $
Comments:
•
Collateral Assignments
Lien
Description Position
To Bank 1
To Bank 2
To Private Sources
To Other Sources
To Federal Govt
To State
To EDA Micro Loan
• Comments:
Value of Collateral
Existing
Book Value Cost Liens
•
Land $ $
Buildings $ $ $
Machinery & Equip. $ $ $
Other $ $ $
Other $ $ $
Comments:
IV. JOB & WAGE GOALS
Present # of Employees Total Payroll
Jobs To Be Created*
Please provide the following information on jobs you expect to create.
Average Are the Jobs Expected •
Number Hourly Annual Permanent or Hiring
Job Title of Jobs Wage Salary Temporary? Date
*If loan is for job retention only, please explain in Business Plan.
Job Creation Timetable
Please indicate on the table below when individual jobs will be added to the firm.
Number Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr.
Job Title of Jobs 1 2 3 4 5 6 7 8
Comments:
IV. PROJECT CONTACTS
• Attorney
Name
Address
Phone
Accountant
Name
Address
Phone
Financing Sources (lenders, partners, etc...)
Name
Address
Phone
Name
Address
Phone
Name
Address
• Phone
Name
Address
Phone
Name
Address
Phone
Parent Company
Name
Address
Phone
Others
Name
Address
Phone
Name
• Address
Phone
V. ATTACHMENTS CHECK LIST
Please attach the following:
ID
A) Written Business Plan:
1. Description of Business
2. Ownership
3. Management
4. Date Established
5. Products/Services
6. Future Plans
B) Financial Statements for Past Two Years
C) Financial Projections for Two Years
D) Resume of Owner/Management
E) Personal Financial Statements of Proprietor, Partners,
Guarantors
F) Letter of Commitment from Applicant Pledging to Complete
During the Proposed Project Duration
G) Letter of Commitment from the Other Sources of Financing,
Stating Terms and Conditions of their Participation in
Project
H) Other
I) Other
J) Fee (1% of amount of loan request)
•
AGREEMENT
I/We certify that all information provided in this application is true and
correct to the best of my/our knowledge. I/We authorize the City of Elk
River and the Finance Committee to check credit references and verify
financial and other information. I/We agree to provide any additional
information as may be requested by the City and the Finance Committee.
DATE
APPLICANT NAME
BY
BY
•
•
ITEM 6
• 1999 Economic Development
Strategic Plan Action Plan
DRAFT
ISSUES
1. Grow Industrial Base
Goal: Develop West Business Park
2. Business Retention and Growth
Goal: Retain and grow existing industrial firms
3. Marketing Strategy
Goal: Develop a marketing strategy.
4. Develop/Redevelop East Highway 10 and the CBD Area
Goal : Undertake activities that facilitate development/redevelopment on
East Hwy 10 and in the CBD.
• TACTICS
1. GROW INDUSTRIAL BASE
Goal: Develop West Business Park
• Maintain current joint development agreement (JDA) with Tony Emmerich.
• Ensure Brown property remains available for industrial development.
• Establish JDA with Gonya and Wilson
• Develop well focused target marketing tactics:
> Market to brokers and others with connections to industry, such
as MN Technology.
> Target an industry cluster, such as the energy industry (Energy
City).
> Work with local industries to market Elk River to their
suppliers and customers.
• EDA to research construction of a spec building and locate a tenant.
• > Establish bank partnerships
> Establish developer partnership
> Identify funding sources (ie franchise fee revenue)
s:\eda\stratpin\1999p!an\tactics.doc 9/7/99
• • Complete construction of Business Center Drive.
• Explore marketing methods employed by developers and builders.
• Examine appeal of West Business Park to specific types of industries. (Target
marketing, Industry cluster)
• Develop specific marketing material for West Business Park.
• Maintain and build networks with banks, brokers, chamber, existing
businesses, media, and others.
2. BUSINESS RETENTION AND GROWTH
Goal: Retain and grow existing industries
• Complete BRE Survey and distribute final results to council, EDA, Industries
and Chamber of Commerce.
• Publish periodic (quarterly or bi-annual) newsletter highlighting economic
• development activities, practices and issues.
• Create local industrial business publicity program - have quarterly feature
stories written on industrial firms.
• Utilize business round table approach to gauge business's attitude toward
developing policies and projects.
• Distribute marketing materials to local industry and promote incentive
programs.
• Ads — Continue to feature local firms in City Business, Ventures, etc... and
explore local advertising opportunities.
• Utilize DTED's Manufacturer's Week to showcase existing firms.
• Create opportunities for interaction between business owners and
elected/appointed officials.
• Involve local industries in a major marketing event.
• • Maintain database of industrial businesses.
• Continue EDA Commitment to the Business Incubator Project.
s:\eda\stratpin\1999p1an\tactics.doc 9/9/99
• 3. MARKETING STRATEGY
Goal: Develop an industrial marketing strategy to develop business parks.
• Establish a marketing plan committee comprised 5-7 of business & civic
leaders.
• Hire a consultant to help facilitate the formation and implement a marketing
plan.
• Update and maintain marketing materials.
• Complete construction of economic development website.
• Utilize Energy City designation as a marketing tool.
4. DEVELOP/REDEVELOP EAST HIGHWAY 10 AND THE CENTRAL
BUSINESS DISTRICT
Goal: Undertake activities that facilitate development/redevelopment
on E. Hwy. 10 and in the CBD.
• Highway 10
• Develop criteria for designating redevelopment areas.
• Identify redevelopment areas.
• Develop database of E. Hwy 10 properties.
• Locate another site for an Elk River monument/entry sign.
• Examine use of Redevelopment Financing Program along E. Hwy 10.
Central Business District (Downtown)
• Develop criteria for designating redevelopment areas.
• Identify redevelopment areas.
• Hire a consultant to design a redevelopment plan for downtown.
• Develop design guidelines for redevelopment in the CBD.
Ill
• Issue Request For Proposals for redevelopment in CBD.
• Further explore the concept of a facade grant.
s:\eda\stratpin\1999p1an\tactics.doc 9/7/99
•
• Continue work on CBD action plan.
➢ Construct database of downtown businesses
➢ Complete Market Analysis
OTHER TACTICS/ISSUES
• Modify TIF policy to comply with changes in State law.
• Continue professional development of staff through conferences, formal training
programs, etc....
• Utilize GIS to manage data of industrial and commercial real estate.
• Explore the development of a rail spur
• Inventory all available commercial/industrial land and buildings.
• Utilize existing tools to encourage development : TIF, Micro Loan, Tax Abatement,
411/
SCBDF, State, Initiative Foundation.
•
s:\eda\stratpin\1999p1an\tactics.doc 9/7/99
ITEM 7
ELK RIVER ECONOMIC DEVELOPMENT AUTHORITY
II MEMORANDUM
TO: Economic Development Authority
FROM: Marc Nevinski, Assistant Director of
Economic Development
DATE: September 13, 1999
SUBJECT: Business Retention & Expansion Survey
Issue
The business retention and expansion survey conducted this summer has been
completed and a final report of the survey is attached to this memo. Staff will
summarize the report and answer questions at the EDA meeting.
Overview
In June of this year staff began the process of interviewing Elk River's industrial
business owners and mangers to learn about their experiences in this strong
economy with a tight labor market. Additionally, input into Elk River's business
development policies and each company's future business plans was sought.
Some of the more interesting facts of the survey are summarized below.
• Twenty six of approximately thirty businesses were interviewed over a
three month period.
• Average hourly wage paid by Elk River industrial firms: $11.54
• Average number of employees at Elk River industrial firms: 40
• Primary Elk River asset: Proximity to metro
• Overall, Elk River's industrial businesses are in a slow and steady growth
mode, with about one-third planning to expand in the next five years.
• Nearly all have been affected in some way by the tight labor market,but
several have found innovative ways of mitigating their problems.
• Unskilled workers are the most difficult group to recruit and train.
• Business owners were generally in favor of increased industrial
development but encouraged the city to foster growth among its existing
firms.
Attachments
1999 Business Retention and Expansion Report
•
13065 Orono Parkway • P. O.Box 490 • Elk River, MN 55330-1743 • (612) 441-7420 • Fax (612) 441-7425
Equal Opportunity Housing and Equal Opportunity Employment
•
CITY OF ELK RIVER
1999 BUSINESS RETENTION & EXPANSION SURVEY
SUMMARY & REPORT
Marc Nevinski
Assistant Director
of Economic Development
September 1999
•
• Table of Contents
Introduction 3
Methodology 3
Findings 3
Market Data 3
Labor Markets 5
Business Climate 6
Recommendations 7
Appendix A- Survey form 8
•
•
2
• INTRODUCTION
An important strategy in growing and developing a community's industrial base is to
promote the retention and encourage the growth of its existing industries. Growing
already established businesses is more cost effective than attracting new firms to the
community and it creates a pro-business environment that attracts additional investment
to the area. A business retention and expansion survey (BRE) can help a community to
better understand its local economy and guide it in developing policies and strategies that
promote both private and public investment.
METHODOLOGY
From June through August staff conducted on-site interviews with twenty six of
approximately thirty of Elk River's local industrial business owners and officers.
Interviews were often supplemented by a tour of the facility.
To provide relatively consistent data throughout the survey, interviews were conducted
using a questionnaire. Although the survey attempted to generate quantitative data, the
diverse nature of the city's industrial companies requires that much of the information be
gathered in a qualitative format. With a baseline survey established, perhaps a more
quantitative approach can be developed for future surveys.
Three primary types of information were sought in the survey. First, the survey
• requested information on industry trends and experiences of customers and suppliers in
the marketplace. Such information provides insight into the various industries and may
provide indicators of future struggles or growth.
Secondly, several questions were asked regarding the company's employment levels and
its experiences in the tight labor market. The low unemployment rate is a relatively new
phenomenon to the private and public sectors, and understanding how it impacts Elk
River's local economy is a critical component to economic development.
Finally, respondents were asked to comment on the impact of the city's policies, assets,
and location on business development in the area. Such insight should help the city
better identify its strengths and weaknesses with regard to community development.
FINDINGS
I. MARKET DATA
Industries and Products
One half of the companies surveyed manufacture products to their customers
specifications. Primary examples include the machining of components for medical or
industrial equipment or the formation of molds or dies.
•
3
• The remaining surveyed companies manufacture products specifically for sale to
consumers or other businesses, which then assemble a value added product. Examples
include valves, motors, and building materials.
Several companies manufacture both a product line and provide custom or job shop type
services to their customers. These are generally, but not exclusively, larger firms. In some
cases, a company only manufactures a product line to custom specifications, thus
obscuring the distinction between a job shop and a manufacturer.
Five of Elk River's industrial firms are associated with the plastics industry, including
the manufacturing of molds and the production of plastic items. Three of the companies
surveyed are associated with the concrete industry, and either provide the raw materials
or manufacture construction materials. Two companies are associated with high-tech
industries and manufacture products for the computer industry or scientific pursuits.
Although many companies either have machining capabilities or provide machined
products to a specific customer, five companies provide general machining services for an
array of applications. These tend to be smaller companies who have either not defined a
specific market niche or who have chosen to diversify their customer base.
Elk River is home to three companies who manufacture or distribute the tools used by
• machine shops and mold makers. These firms are especially notable for their ability to
gauge the strength of the economy. Unfortunately, only one of these companies was able
to be formally surveyed.
The remaining nine companies surveyed manufacture product lines for a variety of
applications, most of which are used by other businesses in production or sales
applications.
Markets
The majority of companies received their supplies from the Minneapolis — St. Paul area,
with the next main source of supplies being Chicago. Nearly all respondents had a
national customer base and competed nationally with other similar firms. Three
companies had other U.S. facilities.
Machine shops as a group tended to have a more state or regional focus. Several business
owners noted that Minnesota is a "hot bed" for machinists and plastic molders. One
machine shop owner estimated that he had over one hundred competitors in Minnesota
alone.
Several companies had overseas customers, suppliers, and competition. The general
consensus was that overseas production costs were less but the quality of the work was
• not as good. One company stated that it had established facilities in both Europe and
Asia.
4
• Trends
When asked about the most significant trends facing their industries in the next five
years, the majority of respondents cited market demands as their primary concern.
Issues such as improved customer service, changes in market focus, increased production
efficiency, and diversification of capabilities topped the list.
Advancements in technology were also cited as important trends that local businesses
will face in the near future. For example, the ability to machine pieces with increasingly
tighter tolerances with new technologies will require more capital investments by
machine shops. As another example, plastics are being used in increasingly broader
applications, subsequently expanding the markets for plastic molders and mold makers.
Finally, economic factors, such as increased mergers, more international competition, and
an economic downturn were trends businesses owners expected to see in the next five
years.
II. LABOR MARKET
Employment in Elk River
➢ Elk River industrial firms employ 40 people on average, with a range of 3 to 220
employees.
• ➢ The average hourly wage of an Elk River industrial employee is $11.54. Nearly all
such employees are provided a health insurance and retirement package. Tuition
reimbursement for work related training is also common.
➢ Employment levels have generally remained stable over the past twelve months.
Employee Recruitment and Retention
As expected, finding good employees is a difficult task for most business owners and
managers. Locating unskilled workers is the most difficult, followed closely by skilled
workers, such as draftsman and technicians (see figure 1). Many companies are willing to
train workers but finding trainable people is the primary challenge. It was not
uncommon for employers to hire five or even ten people to find one trainable employee.
Employee Recruitment: Figure 1
20
15 Easy
10 — ■Mod.
5 — 0 Difficult
0 11 i
Prof Sales Skilled Unskilled
• Salespersons were relatively easy to find and not usually a concern to most business
owners. Professionals, such as engineers, however, were more difficult to find.
5
• Retaining employees was considerably easier for most businesses than recruiting them,
although retaining both skilled and unskilled workers in general was still rated as
difficult (see figure 2). Perks such as flex-time, company picnics, profit sharing, training
programs, and strong benefits packages helped to encouraged existing employees to stay.
Employee Retention: Figure 2
10
Easy
5 ▪Mod.
O Difficult
0
Prof Sales Skilled Unskilled
III. BUSINESS CLIMATE
Community Assets
Access to the metro area was cited as the primary asset Elk River provides to industrial
business. Highways 10, 169, and 101 allow businesses to reach customers, vendors and
other suppliers easily. However, many other communities provide good, if not better,
S access to the metro area, so why not locate someplace closer? Other assets cited included
access to labor pool from both the metro and out state areas, lower rent costs, and access
to materials. Finally, several business owners cited relationships with local lenders and
other business owners as the key reason for coming to or staying in Elk River.
Conversely, Elk river lacks certain assets that make doing business in the community
more difficult. A lack of local suppliers was citied as a primary complaint, followed
closely by a poor local transportation network. Specifically noted was the accessibility to
industrial areas with springtime road restrictions as well as driving through town.
Finally, one respondent cited a lack of affordable housing as limiting the available
workforce.
Five Year Plans
Questions about future expansion plans elicited a variety of responses. Approximately
five business owners intended to sell their business either to a family members or another
party. Eight businesses indicated plans for expansion, but only three stated they were
committed to staying in Elk River. The remaining businesses had plans for slow, steady
growth and either did not see needing to expand in the next five years or had recently
completed an expansion.
•
6
• Issues For Elk River To Address
The final question of the survey asked businesses to identify one issue that the city
should address to improve its business environment. The responses are grouped by issue
and the number of responses for each issue are highlighted in parentheses.
> The city must incorporate the expansion of local businesses into its strategy for
industrial growth. (8)
> The City should continue to work towards further development of an industrial base.
> Better access to main roads from industrial areas is needed.(3)
> The city is doing a good job of promoting business development and should continue
on its present track. (2)
➢ Lower taxes.(2)
> Address issues surrounding the tight labor market—housing, training, etc... (2)
> Growth increases taxes and creates competition for existing employees. (1)
> The City should develop a clear consensus for community development. (1)
➢ The community must be more welcoming of newcomers. (1)
> City should not compete with the private sector in the marketplace. (1)
> No comment. (5)
RECOMMENDATIONS
• Interestingly enough, business owners identified many of the same strengths and
weakness that were identified by the EDA in its recent strategic planning session.
Perhaps the primary example is the agreement between the private and public sector
that more attention should be paid to the city's existing industries. As spokespersons for
Elk River to other industries, their growth and satisfaction should be a primary concern
of the community. This issue has been incorporated into the Economic Development
Strategic Plan and implementation of various action steps has already begun.
Several business owners discussed in their interviews the importance of providing areas
zoned light industrial where smaller firms would be able to establish themselves in less
expensive metal structures. This is a point that is not lost on the EDA or staff and which
should be discussed among and between the cities various commissions.
A third issue of great concern to both business and government is the shortage of
available labor. A limited workforce restricts both business, and subsequently,
community growth. Because this issue is not only a factor of a strong economy, but also a
factor of demographics, it is likely to be a problem for many years, even in the event of an
economic downturn. Moreover, no magic bullet exists to solve the problem and both the
public and private sectors will have to work together to develop solutions. Education,
training, housing, and transportation are areas where portions of an overall solution
might lie.
•
7
i
APPENDIX A
Survey Form
•
•
8
CITY OF ELK RIVER
1999 BUSINESS RETENTION AND EXPANSION SURVEY
III Date of Interview
Name of Business
Name of Person Interviewed
Title
Address
Phone Fax
Interviewer(s)
All information in this survey is confidential and will not be published
in its raw form.
1. Please give a brief description of your company's products and/or services.
What is unique or special about your products and/or services relative to other
companies within the industry?
•
2. Do you have a sister facility (or facilities) producing the same or similar
products?
3. Where are your suppliers located? What changes or trends are they
experiencing in their industries?
•
4. Generally, who are your top customers and where are they located?
5. Who are your competitors (or potential competitors)? Where are they located?
6. What are the most significant trends influencing your industry over the next
• five years? How will they impact your company?
7. Estimate the number of employees working:
Full Time:
Part Time:
Seasonal Peak:
Number of employees one year ago:
Current Average Wage:
Benefits: (circle all that apply) Health
Retirement
Life Insurance
Tuition Reimbursement
Others (specify):
•
9. What has been your experience recruiting or retaining the following
employees?
• Recruiting Retaining
Easy Difficult Easy Difficult
Professionals 1 2 3 1 2 3 N/A
Sales 1 2 3 1 2 3 N/A
Skilled Labor 1 2 3 1 2 3 N/A
Unskilled Labor 1 2 3 1 2 3 N/A
Comments:
10. Assuming an infinite labor pool, how many employees would you WANT to hire
in the next 12 months?
How many do you ACTUALLY EXPECT to hire in the next 12 months?
11. To what degree are the local secondary and post secondary schools preparing
students for work? (circle one)
Poorly Adequately Well
•
12. What value or assets does the Elk River area provide your business?
13. What assets or services are NOT available to your business in Elk River?
14. In the next five years, do you believe your/the business will (circle one):
Expand Move Close Remain in current facility
If moving, would the company stay in Elk River (circle one)?
Yes Not Sure No
110
15. Have other cities, counties, or states solicited your company to move or
expand?
16. What ONE issue must Elk River address to promote new and existing
business growth?
•
•
FROM GRAY PLANT MOOTY MOOTY & BENNETT (#3) (THU) 9. 9' 99 14:31/ST. 14:30/NO. 4261218206 P 4
ITEM 8
STATE OF MINNESOTA DISTRICT COURT
COUNTY OF SHERBURNE . TENTH JUDICIAL DISTRICT
CIVIL DIVISION
Roger N.Eull and Jean 1�Eull,
Plain' COURT FILE NO.C1A&2118
vs. MEDIATION SETTLEMENT
AGREEMENT
City of Elk Riva,
Defimdant
The above-les rwcad mailer was Heard in Mediation on the 12th day of August, 1999,by
mediator, Jeffrey A. Carson, Esq.; the Plaintiffs were present and represented by James A.
Bumgardner,Esq.;the Detbodant was present and represented by Howard A.Roston,Esq.;sad
• Following the Mediation session, the parties have agreed lo a settlement of this case as
follows:
1. The City of Elk River agrees to pass a Resolution supporting the continued Green
Acres tutus for Plaintiffs'propatyy iso long as Plaintiffs'property quaffed for Green Acres. The
City ape=to provide a first draft of said Resolution fir review by Plaintiffs'counsel.
4t-c c
2. A formal request arfthq City that it purchase all or a portion of Plaintiffs'property
will be made to the City. Plaiatifb will be notified of the date that such a request will be
considered.
3. Upon completion of the above, both parties agree to execute a Stipulation for
Dismissal With Prejudice of this ase,without ons or disbursements to either party.
-1-
FROM GRAY PLANT MOOTY MOOTY & BENNETT (#31 (THU) 9. 9' 99 14:31/ST. 14:30/N0. 4261218206 P 5
• The parties hereto intend this Agreement made as s result of Mediation to be bind€
Dated this day of Aum 1999.
Roger N.Boll,Pla ntifi7Appelleat
Jan M.Eul.Plaintiff/Appellant
TERPSTRA,BLACK,BRANDELL&JENSEN
James A.Bumga deer(#256997)
Atomme y tar Plsinoffa/Appolants Euil
913 Mala Sonat
Elk River,MN 553304508 --
(612)441-7040
CITY OP ELY RIVER
• Dated this day of August,1999. By:
Its:
MASLON,EDEd.MAN,BORMAN&BRAND
Howard A.Roston 0260460)
Atoomey thr Defhodioulitespondent City
3300 Norwest Caster
90 South Seventh Street
MancepoIis,1.N 55402-4140
(612)6724375 •
MEDIATOR:
Dated this`..day of August,1999.
Jeffrey A.Canon
S
2-
TOTAL P.04