3.0. EDSR 03-25-1996 'k? ITEM 3.
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Irj, of � MEMORANDUM
11R River TO: Economic Development Authority
FROM: Pat Klaers, Executive 're or
DATE: March 25, 1996
SUBJECT: Business Incubator Program
Per direction of the EDA, the Business Incubator Committee met with
Harlan Jacobs, president of Genesis Business Centers, Ltd., on Wednesday,
March 13, 1996. Attached for your review is a draft copy of the contract with
Mr. Jacobs that the Committee approved on behalf of the EDA. At some
point during this EDA worksession, this contract and expenditure should be
formally approved by the EDA. The funding for this contract should come out
of the EDA fund balance reserve as this is a non-budgeted expenditure.
The main focus of this worksession is to review the services that Mr. Jacobs
will provide the EDA and to begin the discussion on how the city moves
• forward in developing a business incubator program.
The City Council and County Board met on Tuesday, March 19, 1996. Pat
Dwyer and Jeff Gongoll were present for the discussion on the business
incubator program. Of all the Commissioners, Commissioner Engstrom was
the most supportive of the proposal to use the County Administration
building as an incubator site. It appears that if the county is adequately
compensated, they would be willing to work on a business incubator project
at the administration building site, but this will take commitments from both
the county and the city.
Mr. Jacobs will be in attendance at this 3/22 meeting to help lead the
discussion on the County Administration building and a business incubator
program. In my phone conversations with Harlan (through voice mail), he
described the 3/25 meeting as a "roll up the sleeves working session".
s:\eda\meetings\bsnsinbt.doc
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13065 Orono Parkway • P.O. Box 490 • Elk River, MN 55330 • (612) 441-7420 • Fax: (612) 441-7425
03-11-1996 02:50PM 6127E29579 P.01
Genesis Business Centers, Ltd.
3989 .Central Ave. N.E., Suite 620
Columbia Heights, MN., 55421
Tel 612 782 8576
' Fax 612 782 8578
email: TEDatGENESIS@eWorld.c.om
11 March 1996
Mr. Pat Klaers
EDA Office
Citykof Elk River, Minnesota;
Re: 'Retainer Agreement
Dear Mr. Klaers:
Genesis Business Centers, Ltd. ( Genesis ) is pleased to offer the services of its
principal, Mr. Harlan iJacobs, for the purpose of providing certain economic
development services ( as described below) to the Municipality Of Elk River, Minnesota
( the "Municipality"). Genesis holds itself as being experienced in the field of economic
development services as this phrase pertains to recruiting certain existing and new
businesses to a new:location:as further described below.
The Municipality is interested in receiving certain professional consulting
services from Genesis to assist the Municipality towards the simultaneous attainment
of each of the following three goals and objectives:
-Securing an operating businesses that would move to Elk River. Minnesota
provide quality ( `;living wage') jobs paying wages or salaries at prevailing
rates for the community. The type of company to be:recruited to the community:
shall be comparable to Precision Industrial Power, a new'business established
by Mr. Ery Walvatne: (Note: Mr. Walvatne is scheduled to'introduce his company
to the Elk River EDA'task force on 13 March 1996.) This company would move
its operations to Elk River as quickly as possible but not later than three months;
afterhaving signed an Agreement to move to Elk River. The Municipality hereby
expressly agrees-and acknowledges that any prospective company that would
agree to move to River would require a negotiated package of economic
incentives including but not limited to providing working capital ( whether in the
form of debt or e9uity funds), attractive lease rates for suitable space, training
programs, and the like. It is anticipated that the Anoka County Capital Fund
and/or the Central Minnesota Initiative Fund, SotaTech, Blandin Foundation,
et al. would be encouraged to participate in making equity and debt capital
• ; available to these new businesses.
i
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03-11-1996 02:51PM 6127828578 P.02
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•Securing a high-tech business that would agree to either move its entire
• operations to Elk River or to move a substantial number of its production jobs to
Elk River after the company has been successfully incubated in the twin cities.
The type of company to be recruited to the community shall be comparable to
SurVivaLink Corporation. This company would likely require incubation in the
twin cities for six to twelve months prior to the company being ready to move as
described above.
•Participating in a comprehensive effort to establish:a local incubator facility in
Elk River in order to bring the high -tech, start-ups straight to Elk River upon
their identifications rather than having to wait for a period of time prior to the
'transplantation' from a twin cities incubator facility.
Gergesis shall meet with the Elk River EDA for the purpose of formulating the
paralmeters for the search process for each of these three above goals and objectives.
The;Municipality acknowledges that this will require an attractive economic incentive
package for the company and that said package will likely require a substantial
commitment of venture capital to the company for its use during its period of
incubation.
The services of fir. Jacobs shall be billed against a retainer at the rate of $ 125
per hour including all travel time. Mileage at the rate of $ .30 per mile shall be paid for
whatever travel is necessary whether in the twin cities or between the twin cities and
Elk River ( but only for mileage incurred in the strict performance of the tasks described
aboi'e). Genesis shall be reimbursed by the Municipality for all reasonable out of
pocket costs that may be incurred provided however that any expenditure over $100
will require the advance'approval of the Municipality. The retainer shall be $5,000 and
will be provided to Genesis upon the signing of this Agreement.
When the billings for time, and expenses shall have first exceeded the $ 5,000
retainer, such excess will be due and payable within ten days of presentation of the
invoice to the Municipality. Thereafter, billings for time and expenses in any given
month will be submittediwithin ten days following the close of each month. The terms
for each invoice will be net 10.
The Municipality shall have the right to terminate this consulting service contract
at any time provided that all billings for services and expenses incurred prior to thb
date of the receipt of the notice shall be paid in full immediately. However, the initial
retainer shall not be subject to recovery in any event.
This Agreement :shall be construed according to the laws of the State of
Minnesota. The parties;hereby agree to binding arbitration for the resolution of ariy
disputes. The parties hetebagree to be bound by the terms and conditions described
above.
i
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03-11-1996 02:51PM 6127926576 P.03
• The parties affix their signatures below to attest to their agreement to be bound by the
terms and conditions described above.
For t icipality of 51 er, Mi nesota
(signature f dUly a thdi ed date
(printed na e an Me di aft official)
jI
For Genesis
Harlan Ti Jacobs, President date
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/( A(
I 10 City of V
ElkRi•
ver
March 22, 1996
Mr. Scott Abernethy
The Keewaydin Group, Inc.
1922 IDS Center
Minneapolis, Minnesota 55402
Dear Mr. Abernethy:
As a follow up to my March 8, 1996, letter to you and as a follow up to our
most recent phone conversations regarding your client, I would like to
respectfully offer the following comments.
•
The Mayor, Utilities President, and I have had a meeting with the Anoka
Electric Cooperative General Manager Rick Newland, and Manager
Customer Services Division Mike Rajala. As a result of this meeting,.Elk
- River is prepared to offer the identical electrical package that was offered by
Anoka Electric Cooperative (AEC). This is consistent with the comment in
my March 8 letter whereby the City and Elk River Municipal Utilities
(ERMU) believed that it could match the AEC rates identified in its rate book
provided that you locate at County Road 30 and Waco Street. As I
understand the situation, the rates being offered by AEC which ERMU can
match are 4.2G on a straight buy and 4.07 on a five year contract offer. The
attempt to offer identical rates for the high quality power in this area is being
done in order to help ensure that, if the best site for your client is not in the
AEC district, then it is in the City of Elk River regardless of the electrical
power rates.
Regarding the IRB and DTED loan program mentioned in my 3/8/96 letter,
the Finance Director has contacted the state regarding these programs.
Unfortunately I have to advise you that all of the Department of Trade and
Economic Development loan funds have been spoken for and allocated.
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13065. Orono Parkway • P.O. Box 490 • Elk River, MN 55330 • (612) 441-7420 • Fax: (612) 441-7425
Mr Abernethy
Page 2
March 22, 1996
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Additionally, all of the State allotment of IRB funds have been dispersed and
there are no more funds available for 1996.
Regarding other fees that you inquired about in our phone conversations, I
would.like to advise you that the City follows the Metropolitan Waste Control
Commission (MWCC) standards for sewer availability units and water
availability units. The city sewer availability charge (SAC) is $1,300 per
unit. The ERMU water availability charge (WAC), some of which is collected
at the time of hook up and some of which is collected at the time of building
permit issuance, is $1,000 per unit. Using the formula from the MWCC, the
150,000 square foot warehouse, assembly, and office facility would be charged
33.75 units. Using a more liberal interpretation of the facility, which means
that we would not strictly follow the formula but would follow an outline for
the building according to its planned uses, we arrive at 26.9 units. In your
case in Elk River, we would favor a more liberal and flexible approach in
determining SAC and WAC units.
Other charges that come to mind regarding this project include the surface
• water management fee of$741.60 per acre. This is for the trunk storm water
system and does not include the on-site ponding or water retention
requirements. The trunk sanitary sewer and trunk water expenses are
estimated to be $3,800 per acre and this does not include the lateral lines
into the building site. There is no estimate being offered for street costs as
this facility is assumed to locate along a County Road or a local street that
can handle the traffic volumes for this company. Any other streets would be
internal to the property.
Until we know more about your client and your proposal, the above
mentioned expenses are the ones that immediately come to mind. If the
project moves forward in the very near future, the City has put together a
timetable that ensures that municipal utilities will be available before the
end of the year. This is provided that an application for utilities for the
public improvements takes place in the near future and that there are no
public hearings for assessments involved in this request for sewer and water.
The details of the public improvement project still need to be worked out.
Additionally, I have received verbal assurances from ERMU that electrical
power would be available provided that adequate notice of the construction of
the building is offered.
Mr Abernethy
Page 3
March 22, 1996
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Thank you for your continued consideration of Elk River as a location for
your client. I hope to have the opportunity to further discuss our community
with you.
Very truly yours,
/P/(Pa- •
Patrick D. Klaers
City Administrator
PDK:akh
cc: Mayor Henry Duitsman
Utilities President James Tralle
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