5.2. SR 04-21-2008
REQUEST FOR ACTION
To Item Number
Mayor & City Council 6.2.
Agenda Section Meeting Date Prepared by
Community Development April 21, 2008 Catherine Mehelich, Director of
Economic Development
Item Description Reviewed by
Resolutions in connection with MN Investment Fund Grant Lori Johnson, City Administrator
Application for Sportech, Inc. Expansion II Project Reviewed by
- Public Hearing
Action Requested
After conducting the public hearing on the MN Dept of Employment & Economic Development
(DEED) grant application, and after discussion of the city's housing and community development needs,
the City Council is asked to adopt the following resolutions:
· Resolution Adopting a Residential Anti-Displacement, Relocation Assistance and Displacement
Minimization Plan
· Resolution Adopting Economic Development Program
Background/Discussion
The MN Investment Fund is a grant that is awarded to cities in order to provide loans to assist
expanding businesses. As the loan is paid back to the city over the specified loan term the community is
able to retain the full $500,000 to be used as a revolving loan fund for economic development purposes.
At its March 10, 2008 meeting, the Elk River City Council authorized the submission of an application
in the amount of $500,000 to DEED under its MN Investment Fund Program on behalf of Sportech,
Inc. If awarded, the DEED grant funds will be used by the City to supplement other sources of public
and private financing in support of an 80,000 square foot light industrial facility proposed by Sportech,
Inc. to be located at 17464 Tyler Street NW, Elk River.
A requirement of DEED is that a public hearing on the matter be held prior to submission of the
application. The public hearing is an opportunity for citizens to discuss the following items:
· Housing and Community Development Needs and Strategies
· Details of the funding request to DEED
Staff will be present at the City Council meeting to discuss details of the proposed MN Investment
Fund grant application. In addition, Chris Carlson, CEO of Sportech, Inc., may be present at the
Council meeting to answer any questions about the project.
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Housing and Community Development Needs and Strategies
Citizens should be given the opportunity to discuss the housing and community development needs, as
well as possible ways to meet the needs listed below:
· Public facilities (i.e., streets, water, sewer, etc.)
· Public services (i.e., fire protection, library, etc.)
· Housing (i.e., owner and renter, etc.)
. Economic Development
It should be noted that citizens, through the city's update of its Comprehensive Plan, have discussed the
listed needs.
Details of Proposed Proiect and Funding Request to DEED
Local manufacturer, Sportech, Inc., designs, manufactures and markets high-quality plastic accessories
for the powersports industry, including motorcycles, snowmobiles, ATV's, PWC and utility vehicles.
Founded in 1993, the company has grown in its current location from 1 O,OOO-sf and 2 employees to
60,000-sf and 60 employees. Sportech, Inc. wishes to complete its fifth expansion in Elk River with the
construction of an 80,000-square foot new headquarters and state-of-the-art manufacturing facility to be
located in the EDA's Northstar Business Park located at 17464 Tyler Street. In addition, Sportech, Inc.
wishes to purchase machinery and equipment necessary to its expansion of operations.
The company wishes to begin construction of the new facility in early May, with anticipated occupancy
in October of this year. The purchase of equipment will be timed as appropriate to the availability of
the new space.
The project includes the following estimated costs and proposed financing:
ESTIMATED COSTS
Land
Building construction
Equipment
Soft costs:
Total
$ 809,345
$4,700,000
$ 745,000
$ 105.000
$6,359,345
PROPOSED FINANCING
Bank financing
Owner Equity
Tax Abatement (City & County)
EDA Micro Loan
MN Investment Fund
Total
$3,450,000
$1,500,000
$ 809,345
$ 100,000
$ 500.000
$6,359,345
In accordance with the EDA's Micro Loan Fund terms, staff recommends the City Council consider
establishing the following MN Investment Fund loan terms to Sportech, Inc.:
Loan Amount:
Loan Purpose:
Term:
Security:
$500,000
Equipment Financing
10-year amortization at a fixed interest rate of 2-points below prime
1 st lien position on the new equipment
Sportech, Inc. currently employs 66 full-time positions. The company anticipates hiring, within 2-years
of official building occupancy, up to 25 new full-time employees at a base wage of not less than
$12.00jhour. In order to meet the federal objectives for the grant funds, Sportech, Inc. will be required
to have a minimum of 51 % of the new positions be taken by persons of low-to-moderate income.
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Anti-Displacement Relocation Assistance and Displacement Minimization Plan
Although the displacement of residents and/or businesses is not anticipated with the proposed
Sportech, Inc. project, the City Council is requested to adopt a Residential Anti-Displacement,
Relocation Assistance and Displacement Minimization Plan in order to meet the federal grant
objectives. The attached drafted plan for Residential Anti-Displacement, Relocation Assistance and
Displacement Minimization is provided for City Council review.
Local Government Resolution and Compliance Certification
The Local Government Resolution formally authorizes the Mayor and Director of Economic
Development to submit the application to MN DEED and to execute agreements as necessary to
implement the project on behalf of the city. The resolution also certifies that the City of Elk River will
comply with all applicable laws and regulations as described in the Compliance Certification, which is
attached to the resolution.
It is anticipated that the DEED grant application be submitted on approximately April 28'h. Formal
notification from DEED is expected within two weeks.
Financial Impact
The DEED grant application leverages the city's public financing investment in the project by securing
$500,000 of federal economic development program funds. As the loan is paid back the city is able to
retain the full $500,000 plus interest to be used as a revolving loan fund for economic development
purposes.
Attachments
· Resolution Adopting a Residential Anti-Displacement, Relocation Assistance and Displacement
Minimization Plan
· Local Government Resolution Economic Development Program
Action
Motion by _
Second by _
Vote
Follow Up
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RESOLUTION #08-_
RESOLUTION ADOPTING A RESIDENTIAL ANTI-DISPLACEMENT,
RELOCATION ASSISTANCE AND DISPLACEMENT MINIMIZATION
PLAN FOR THE CITY OF ELK RIVER
WHEREAS, temporary or permanent displacement or persons, families or businesses may
occur in the City of Elk River as a result of certain housing, redevelopment, or
economic development projects; and,
WHEREAS, as a result of these projects, the temporary or permanent displacement of
persons, families or businesses should be mitigated with the adoption of a Residential
Anti-displacement and Relocation Assistance and Displacement Minimization Plan.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Elk River
hereby adopts the Residential Anti-Displacement, Relocation Assistance and
Displacement Minimization Plan for the City of Elk River.
Passed and adopted by the City Council of the City of Elk River this 21 st day of April, 2008.
Stephanie Klinzing, Mayor
ATTEST:
Tina Allard, City Clerk
CITY OF ELK RIVER
RESIDENTIAL ANTI-DISPLACEMENT, RELOCATION ASSISTANCE
AND DISPLACEMENT MINIMIZATION PLAN
This plan requires the following:
A. The City will replace all occupied and vacant livable low/moderate income dwelling
units demolished or converted to a use other than as low/moderate income housing
in connection with an activity with funds provided under the Housing and
Community Development Act of 1974, as amended.
All replacement housing will be provided within three years after the commencement of the
demolition or conversion. Before entering into a contract committing the City to provide
funds for an activity that will directly result in such demolition or conversion, the City will
make public and submit to the Minnesota Department of Employment and Economic
Development, Business and Community Development Division the following information
in writing:
1. A description of the proposed assisted activity;
2. The location on a map and number of dwelling units by size (number of
bedrooms) that will be demolished or converted to a use other than as
low/moderate income dwelling units as a direct result of the assisted
activities;
3. A time schedule for the commencement and completion of the demolition or
converstons;
4. The location on a map and the number of dwelling units by size (number of
bedrooms) that will be provided as replacement dwelling units. If such data
are not available at the time of the general submission, the City will identify
the general location on an area map and the approximate number of dwelling
units by size and provide information identifying the specific location and
number of dwelling units by size as soon as it is available;
5. The source of funding and a time schedule for the provision of replacement
dwelling units;
6. The basis for concluding that each replacement dwelling unit will remain a
low/moderate income dwelling unit for at least 10 years fro the date of initial
occupancy;
7. Information demonstrating that any proposed replacement of dwelling units
with smaller dwelling units (e.g., a 2-bedroom unit with two 1-bedroom
units) is consistent with the housing needs of low- and moderate-income
households in the jurisdiction.
The City may request the Minnesota Department of Employment and Economic
Development to recommend that the U.S. Department of Housing and Urban Development
approve an exception to required replacement housing if there is an adequate local supply of
vacant low/moderate income dwelling units in standard condition. Exceptions will be
reviewed on a case-by-case basis.
B. The City will provide relocation assistance to any lower income person displaced by
demolition of any dwelling unit or the conversion of a low/moderate income dwelling
unit to another use in connection with an assisted activity.
C. Consistent with the goals and objectives of activities assisted under the Act, the City
will take the following steps to minimize the displacement of persons from their
homes.
1. Planning utility shut offs at times most convenient to residents and business
owners.
2. Providing information and referral services to individuals who must temporarily
leave their homes or businesses.
3. Schedule public facility construction and equipment storage to be completed as
quickly as possible and at times most convenient to residents and business
owners.
D. Definitions for the purposes of this plan are as follows:
A Low/moderate income dwelling unit is a unit with a market rent, including utility
costs, that does not exceed the applicable fair market rent for existing housing and
moderate rehabilitation, as established under the Section 8 existing housing program.
A Vacant livable dwelling unit is a unit that is in standard condition or has been raised
to a standard condition, suitable for rehabilitation; or in dilapidated condition and
occupied less than a year from the date of the grantee agreement.
A Livable dwelling unit is a unit that is in standard condition or has been raised to a
standard from a substandard condition, suitable for rehabilitation.
A Standard livable dwelling unit is a well-built unit with adequate space for persons
living there. There are no major defects in the structure and only minor maintenance
is required. Such dwelling will have the following characteristics: reliable roofs; sound
wells and foundations; adequate and stable floors, walls and ceilings; surfaces and
woodwork that are not seriously damaged nor have paint deterioration; sound
windows and doors; adequate heating, plumbing, and electrical systems which do not
present safety hazards; adequate insulation for local climatic conditions; and is in
compliance with local building and housing codes.
A Substandard conditions dwelling unit, suitable for rehabilitation: will show a lot of
deferred maintenance with permanent damage to structural items. Conditions
contributing to substandard dwelling, include but are not limited to sagging, cracked,
rotting or leaking roofs, walls, foundations, ceilings, floors, doors, and windows;
deteriorated surfaces and woodwork; unreliable heating, plumbing, or electrical
systems which present safety hazards or inadequate insulation. The cost of
rehabilitation of the unit should be determined as economically feasible.
RESOLUTION #08-_
RESOLUTION OF THE CITY OF ELK RIVER ADOPTING ECONOMIC
DEVELOPMENT PROGRAM
WHEREAS, the City of Elk River act as the legal sponsor for project contained in the
Business and Community Development Application to be submitted on approximately April
28, 2008 and that Mayor and Director of Economic Development are hereby authorized to
apply to the Department of Employment and Economic Development for funding of this
project on behalf of Sportech, Inc.; and
WHEREAS, the City of Elk River has the legal authority to apply for financial assistance,
and the institutional, managerial, and financial capability to ensure adequate construction,
operation, maintenance and replacement of the proposed project for its design life; and
WHEREAS, the City of Elk River has not incurred any costs and has not entered into any
written agreements to purchase property; and
WHEREAS, the City of Elk River has not violated any Federal, State, or local laws
pertaining to fraud, bribery, kickbacks, collusion, conflict of interest or other unlawful or
corrupt practice; and
WHEREAS, upon approval of its application by the state, the City of Elk River, may enter
into an agreement with the State of Minnesota for the above-referenced project, and that the
City of Elk River certifies that it will comply with all applicable laws and regulations as stated
in all contract agreements and described on the Compliance Certification of the Business
and Community Development Application; and
WHEREAS, that the City of Elk River has obtained credit reports and credit information
from Sportech, Inc. and Christopher and Debra Carlson. Upon review by the City of Elk
River and Gray, Plant Mooty, no adverse findings or concerns regarding, but not limited to,
tax liens, judgments, court actions, and filings with state, federal and other regulatory
agencies were identified. Failure to disclose any such adverse information could result in
revocation or other legal action.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Elk River
by the Director of Economic Development, or their successors in office, are hereby
authorized to execute such agreements, and amendments thereto, as are necessary to
implement the project on behalf of the applicant.
Passed and adopted by the City Council of the City of Elk River this 21 st day of April, 2008.
ATTEST:
Stephanie Klinzing, Mayor
Tina Allard, City Clerk
Compliance Certification (page 1)
1. Single Audit Act Amendment of 1996 (p.L. 104-156, Chapter 75 of title 31, USe), which
establishes audit requirements for state and local governments receiving federal funds.
2. OMB Circular A-87 - Establishes Principles for Detennining Costs Applicable to Grants and
Contracts with State Local and Federally recognized Indian Tribal Governments.
3. Section 504 of the Federal Rehabilitation Act of 1973; the Americans with Disabilities Act
(ADA), MN Statutes 1990, Chapter 363, Chapter 363 MN Human Rights Act - Require that all
public facilities and programs be designed and constructed to be accessible to the physically
handicapped.
4. The Uniform Administrative Requirements for Grants and Cooperative Agreements to State and
Local Governments, the AUAR, (Federal Register March 11, 1988, Volume 53, Number 48) B
Establishes requirements for procurement and financial management.
5. Title VI of the Civil Rights Act of 1964 (p.L. 88-352) and subsequent regulations - It ensures
access to facilities or programs regardless of race, color, national origin or sex.
6. Executive Order 11246, as amended by Executive Orders 11375 and 12086 and subsequent
regulations - prohibit employment discrimination on the basis or race, color, religion, sex or
national origin.
7. Title II of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970
as amended and subsequent regulations, the Uniform Act - Identifies procedures for the
acquisition of property and the relocation of persons and businesses.
8. Executive Orders 11988 and 12148, Flood Plain Management - Requires action to minimize the
impact of floods on assisted projects.
9. Executive Orders 11625 and 12138 - Encourage recipients to award construction, supply and
professional service contracts to minority and women's business enterprises.
10. The Flood Insurance Purchase Requirements of Section 102a of the flood Disaster Protection
Act of 1973, (p.L. 93-234) - Requires the purchase of flood insurance in communities where such
insurance is available for construction or acquisition projects in any area having special flood
hazards.
11. The National Environmental Policy Act, NEPA of 1969 (42 USC, Section 4321 et. seq.) and
other related acts related to the environment - Requires an analysis of projects, environmental
impact and a description of efforts to mitigate the impact. Other related acts refer to
environmental quality.
12. Section 40lf of the Lead-Based Poisoning Prevention Act, as amended (42 USC, Section 4831b)
requires the removal and prohibits the use of lead-based paint.
13. Federal Fair Labor Standards Act (29 USC, Section 201 et. seq.) - Requires that employees be
paid at least minimum wage and that they be paid one and one-half times their basic wage for all
hours worked in excess of the prescribed work week.
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14. State Laws, the Davis Bacon Act (40USC, Section 276a - 276a5), Copeland
(Anti-kickback Act, 40 USC 276c) and the Contract Work Hours and Safety
Standards Act of 1962 (40USC, Section 327-333) - Requires payment of wages,
at hourly rates, as established by the Department of Labor.
15. Section 3 of the Housing and Urban Development Act of 1968, as amended-
Encourages the employment and training of lower-income people and awarding
of contracts to businesses located with the community receiving assistance.
16. Tide VIII of Civil Rights Act of 1968, as amended and executive order 12259 -
Requires equal opportunity in housing and non-discrimination in the sale or
rental of housing and actions to affirmatively further fair housing.
17. Requirements specified in the Housing and Community Development Act of
1974, as amended - establishes the Small Cities Development Grant program.
18. Act Discrimination Act of 1975 - Prohibits discrimination on the basis of age.
19. Minnesota Statutes Sections 176.181 - 176.182 - Requires recipients and
subcontractors to have workers compensation insurance coverage.
20. Clean Water Act and Executive Order 11288 - Requires protection of surface
and ground water resources.
21. Minnesota Statutes Sections 471.87 and 471.88 - Forbids public officials from
engaging in activities, which are, or have the appearance of being, in conflict of
interest.
22. The Minnesota Government Practices Act - Protects the privacy of individuals
who participate in Community Development-assisted programs by prohibiting
the public disclosure of participant's income and other personal information.
23. Antitrust or unfair trade practices laws - Regulates and controls the sale of
goods and services and prohibits deceptive and unfair competition between
businesses.
24. 43 U.S.c. Section 18.100, entided Limitation on use of appropriated funds to
influence certain federal contracting and financial transactions. Requires a
certification that no federal funds have been utilized to lobby or gain undue
influence.
25. Executive Order 12549, Debarment and Suspension (43 CAR, Part 12 and
Section 12.510) - Requires a certification regarding Federal debarment,
suspension and other responsibility matters.
26. Executive Order 91 - 3, Wedands - Requires grant and loan recipients to apply
the principles of no-net-Ioss of Wetlands during the conduct of their project.
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27. The Drug Free Workplace Act (p.L. 100-690, Title V, Subtitle D) - Requires
that grantees certify that they will provide a drug free workplace.
28. Section 519 of Public Law 101-144 (1990 HUD Appropriations Act and Section
104(1) of HAD Act) - Requires that each local unit of government adopt,
enforce a policy prohibiting the use of excessive force by law enforcement
agencies within its jurisdiction against any individuals engaged in nonviolent
civil rights demonstrations.
29. Section 1352, Title 31, U.S. Code- Requires that language of certification
regarding lobbing for contracts, loans and agreements be included in award
documents for all sub awards at all tiers. Section 319 of Department of Interior
and Related Agencies Appropriations Act, known as the Byrd Amendment
prohibits the use of federally appropriated funds for influencing any Executive
or Legislative Branch personnel in the awarding Federal contracts, grants, or
loans. It also requires, where appropriate, the completion of Disclosure Form
SF-LIL.
30. Subpart C of 24 CFR Part 12 - Provides for Disclosure/Update from
applicants / recipients of HUD assistance relating to the amount of assistance
received, sources and uses of funds, and interested parties, and requires the
completion of HUD Form 2880.
31. M.S. 290.9705 - Requires that 8 percent of each payment paid to out-of-state
contractors for work in Minnesota must be withheld on any contracts that
exceeds or could reasonable be expected to exceed $100,000, unless the
requirement is waived.
The City of Elk River will comply with the Compliance Certification, and as so stated in the
accompanying Local Government Resolution.
Mayor
Date
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