EDSR MEMORANDUM 02-12-1996 ELK RIVER ECONOMIC DEVELOPMENT AUTHORITY
i
MEMORANDUM
TO: Economic Development Authority
FROM: William Rubin, Executive Directs\
\11/1,_
DATE: February 12, 1996 (/
SUBJECT: Agenda Memo for February 12, 1996,
EDA Meeting
7. District 728 Maintenance Facility
At its meeting of June 12, 1995, the Elk River EDA authorized a
Contract for Private Development by and between the EDA and
Independent School District 728. The Agreement was entered into the
27th day of October, 1995. A copy of the Agreement is included in the
agenda packet and more thoroughly outlines the terms and conditions
irp of the project.
Section 3 of the Agreement addresses the topic of default. District 728
is required to obtain a Certificate of Occupancy on or before March 1,
1996. It is also required to provide a minimum investment of
$750,000. While general site development activities occurred last fall,
higher than expected construction bids delayed this project. `As a
result, it appears as though the District will phase-in this project. For
example, the project's first phase will likely contain approximately
12,900 square feet. Construction will begin this spring and should be
completed by October. The anticipated investment required for this
project is $900,000. A second phase, with an investment of
approximately $300,000, will result in the construction of an
additional 7,800 square feet. This space may not be constructed for
three to five years.
As a result of these issues, Dr. Ron Bratlie has agreed to attend the
EDA meeting and answer any questions or address any areas of
concern. In order that the integrity of the Agreement be retained, it
would be in order to move forward with, say, a first amendment which
addresses the project's revisions.
•
P.O. Box 490 • 13065 Orono Parkway • Elk River,MN 55330-1743 • (612) 441-7420 • Fax: (612) 441-7425
Equal Opportunity Housing and Equal Opportunity Employment
EDA Agenda Memo Page 2
February 12, 1996
• Action Requested
The EDA is asked to authorize the preparation of a first amendment to
the Contract for Private Development with Independent School
District No. 728.
8. Rich Duggan: Upcoming Marketech Expansion
Rich Duggan is the president of Marketech, Inc., 16864 Highway 10.
Although the company has only been incorporated since March of 1990,
it is about to begin an expansion into its first permanent facility space.
This information was first presented to EDA Commissioners and
interested parties in the January Prospect Status Report. Previously,
Mr. Duggan attended an EDA meeting when another company was
pursuing expansion opportunities in Elk River.
Mr.Duggan requested a spot on the EDA agenda to present
preliminary information. He will likely mention that he has had a
difficult time securing a site for this project. A preferred site is
currently under option with no clear sense if the option will be
exercised or left to expire.
Retaining quality companies like Marketech should always be a high
priority for any city. In Marketech's short life, it has created numerous
jobs and more will be created as a result of this project.
The specifics of the expansion will be detailed by Mr. Duggan at
Monday's meeting.
9. Business Incubator
An opportunity was recently extended to attend an open house and
tour of what appears to be a successful business incubator in Columbia
Heights, Minnesota. Previously, the Elk River EDA explored the
concept of a business incubator in the early 1990's. By definition, an
incubator is intended to provide low-cost space for newly-formed or
emerging companies. Companies obtain discounted office and
production space, and often times, they are able to obtain clerical
services, business counseling services, and tooling and machining
space in the same facility. As companies complete their R & D phase,
they are expected to leave the incubator and relocate into space that is
more market rate. Another option, however, is for the company to
remain in the incubator, but to begin paying market rate for its space.
EDA Agenda Memo Page 3
February 12, 1996
ip The Columbia Heights incubator is actually the brain child of a quasi-
public, non-profit group known as the Anoka County Economic
Development Partnership. However, it has no ownership interest in
the space. Instead, it has collaborated with a Twin Cities investor who
is able to bring new or emerging companies to the space from his many
business networks. A third component of the Anoka County model is
an equity capital fund that was capitalized by county commissioners
(i.e. public funds), banks, and an electric utility company. The capital
fund is not a loan or a grant program, but rather,the fund allows the
county's ED Partnership to take an equity position in new and
emerging companies. Because the fund shares the risk, investments
are structured so that the fund will share in the profits that may
result.
With respect to the business incubator, new or emerging companies
barter/trade their stock for discounted rent. A small company receives
some capitalization from the county's fund which in turn helps the
company preserve scarce capital for other purposes.
A publicly-owned incubator is not being advocated here. This is better
served as a private sector initiative. However, an opportunity exists
for the public sector to assist in a collaborative effort to ensure that
new jobs are created and existing ones are retained. In the case of the.
privately run incubator in Columbia Heights, the following elements
help make it successful:
• Privately owned space
• Distressed space (discounts already offered)
• A networked business person
• A county-initiated capital fund
The Executive Director of the Anoka County ED Partnership has
indicated that its capital fund may be used to help new and emerging
companies in Sherburne County. This was done because at least one of
the fund's initial investors was a lender that has ties to both Anoka
and Sherburne County. A future opportunity may be that of a second
incubator located somewhere in Sherburne County. This incubator
would likely be owned/developed by the Twin Cities investor.
In order to help reinforce the notion of the Anoka County business
incubator and its respective players, a video presentation will be aired
at the EDA meeting. It is a round table discussion that includes a
jek moderator, Anoka Partnership's Executive Director, the business
MIF investor, and a company that has benefited from an equity investment.
EDA Agenda Memo Page 4
February 12, 1996
10. Resignation of Executive Director
The resignation will be distributed at the meeting of February 12,
1996.
Action Requested
The EDA is asked to accept the resignation of William Rubin as its
Executive Director.
As a follow-up to this item, it is appropriate for the EDA to appoint a
replacement, interim or otherwise. The logical appointment is City
Administrator Pat Klaers.
eda/meetings:agmm