6.1. SR 03-11-1996ity of
MEMORANDUM
iver
FROM:
DATE:
Mayor & City Council
Pat Klaers, City Admini~r
March 11, 1996
SUBJECT: Marketech TIF Request
ITEM 6.1.
Introduction
At the March 11, 1996, meeting, the City Council will be asked to schedule a
public hearing to consider a Tax Increment Financing (TIF) Plan for the
creation of a new TIF District. A public hearing to consider the TIF Plan is
requested for either April 8 or April 11, 1996.
Background
This request is discussed in detail in the attached EDA material that will be
considered earlier in the evening on March 11, 1996. I see no need to repeat
that narrative in this memo, especially considering that Councilmember
Dietz is the only Councilmember that is not on the EDA. Accordingly, the
discussion on this topic at the EDA meeting should provide sufficient
background on this proposal.
Below is a proposed City Council timetable to complete the Marketech, Inc.
request for TIF assistance.
March 11 -
City Council establishes public hearing date to consider TIF
Plan; City Council adopts resolution in support of the CMIF
loan request.
Mid March - TIF Plan is sent to School District and County Board for review
and comment.
March 26 - SchoolBoard meeting.
Planning Commission reviews TIF Plan.
March 27 - EDA and City Council -TIF public hearing notices published in
Star News.
13065 Orono Parkway · P.O. Box 490 · Elk River, MN 55330 · (612) 441-7420 · Fax: (612) 441-7425
April 2 - County Board meeting.
April 8 - EDA conducts public hearing and adopts TIF Plan.
April 8 or 11 - City Council conducts public hearing on TIF Plan.
Action Requested
The City Council is asked to schedule a public hearing for either April 8
(special meeting) or April 11, 1996 (a special meeting is already scheduled) to
consider a Tax Increment Financing Plan for Tax Increment Financing
District No. 13 for Marketech, Inc.
s:\council\tifmark.doc
APPLICATION FOR TAX INCREMENT FINANCING
CITY OF ELK RIVER, MINNESOTA
APPLICANT
Business Name:
Address:
Telephone:
Officers:
MARKETECH, INC.
16864 HWY 10 NW
441-8664 fax: 441-8692
JUDITH A. DUGGAN
PRESIDENT AND CEO
CONTROLLER
ContactPerson: RICHARD R. DUGGAN
Title~ PRESIDENT AND CEO
Business Form (Corporation, Partnership, Etc.):
Years In Operation:
Sales/Revenues: $
SUB-S CORPORATION
6 years 1990 to 1996
$1;000,000.00 1995 sales
Brief Description of Business, Principal Products, etc:
Marketech, Inc. produces test fixtur_~s and
used to test asse[[~.Dled printed circuit ooards.
also proauce the com;?ub~r syata,,~s £or t~e ±mpa}{
Has applicant ever filed for bankruptcy? Yes __ No x
If yes, provide details on separate page(s).
Has applicant ever defaulted on any bond or mortgage
commitme{t? Yes No X
If yes, provide details on separate page(s).
Does apphcant have commitments for conventional financing for
the project? Yes No__ IN PROCESS
Please list three financing references:
(Name/Address/Contact/Phone)
TOM MCNAIR FIRST NATIONAL BANK
~V~
sofcw'are
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index system.
OF ELK RIVER 441-2200
HARDiE CENTRAL MINNESOTA
Nameand Addressofapplicant'slegalcounselandaccountant:
DAVE BARTLETT CPA 635-0172
PROPOSED PROJECT
Describe Project: PnRC~A~F, T,A~n A~D BUILDING FOR
EXPANSION. TO ACCOMMODATE SALES GRONTH.
MANUFACTING
Location: nOTS 6 and 7 OF MCCHESNEY PARK,
Site Plan Attached: Yes
No ×
Type of Project:
Commercial
New Construction
Industrial x Residential
Expansion Rehab
JOB CREATION
Current Number of Employees: 22
Current Payroll: $475: On~ ~nn.a 1 1 v
Number of Jobs Created: 5 -96, 4-97 ~ 4-98
Number of Jobs Retained: all
Revised Payroll: $ 585,000.00 - q (~
PROJECT COSTS
* SEE ATTACHED SHEET 1
Land Acquisition:
Site Development:
Construction:
Machinery & Equipment:
Architectural and
Engineering Fees
Legal Fees
Interest During Const.
Debt Service Reserve
Contingencies
$
$
$
$
$
$
$
$
$
TOTAL
SOURCE OF FINANCING
*SEE ATTACHED SHEET 1
Conventional Loan
Equity
-~Loan CMI F
Revenue Bond
Tax Increment Financing
Grant(s)
Other
$ 183,921.25
$.
$. 100,000.00
$.
$ 50,103.75
$.
$.
TOTAL
CONSTRUCTION AND DESIGN
Name and address of architect, en~neer and contractor Ur project:
STRUCTURAL BUILDINGS
WEST HWY 10 BECKER MN 261-4150 1-800-535-9722
MR AL STEWART
Target Dates:
Start of Construction: APRIL 15 · 1995
Construction Completed: JUNE 30, 1996
Finished Market Value of Project: $ 335,000.00
STATEMENT OF PUBLIC PURPOSE
Describe why the proposed development or redevelopment would not
reasonably be expected to occur solely through private investment
within the foreseeable future and therefore the use of Tax Increment
Financing is deemed necessary:
MARKETECH INC IS A FAST GROWING SMA[,[, COMPANY WIT~
LIMITED RESOURCES WHICH NEEDS TO EXPAND IF THEY CAN
TO CAPTURE EXISTING BUSINESS POTENTIAL AS WELL AS
A NEW ~U~INE~ PROJECT. MARKETECH NEEDS TO USE THE
AVAILABLE CAPITAL FOR COVERING THE NORMAL BUSINESS
EXPANSION NEEDS iE. MATERIALS AND LABOR BU'i: HAS
T TUTr~DI~ ~DA~'~D A~,T~ ~VDAI%T~T/~/%T ~/DTi/~L~ r'rt~-% L~TT r THE
REOUIREMENTS OF THIS RAPID GROWTH. BANI4 AND ~_MTF WTLL
HELP WITH TIFF TO COMPLETE THIS PROJECT.
The undersigned, (a) (the)
of applicant, hereby represents an~ warrants to the City that~ ~ has
carefully reviewed this application, and that the statements and information
contained herein and submitted herewith are accurate and complete to the
best of the undersigned's knowledge and belief.
..................................... , INC.
Applicant
RICHARD R. DUGGAN~
ItsPRESIDENT AND CEO t)~)
The City reserves the right to require additional information and supporting
data from the applicant after the filing of this Application.
Sheet1
ITEMS
BUILDING BID
SAC CHARGES
WAC CHARGES
PERMIT/PLAN/ST
MECHANICAL
ELECTRIC
GAS
PLUMBING
TIF FEE
MOVING COSTS *
LANDSCAPE *
MACHINE HOOK UP *
UTILITIES: *
WATER *
SEWER *
POWER COMPANY *
NATURAL GAS *
CABINATES *
RACKS ETC. *
TOTAL BLDG COSTS
LAND COST
TOTAL PROJECT
MARKETECH, INC. NEW BUILDING PROPOSAL
SOURCES OF INCOME
$ 242,000.00
2,600.00
2,000.00
2,795.00
200.00
300.00
30.00
100.00
5,000.00
5,000.00
5,000.00
2,000.00
100.00
100.00
100.00
100.00
100.00
1,500.00
2,000.00
TIF $ 50,418.75
ClMF 100,000.00
FNB ER 185,706.25
TOTAL $ 336,125.00
ALLOWANCES included in building cost
SHOP FLOOR $ 5,000.00
OFFICE FLOOR $ 3,000.00
EXCAVATING $ 8,000.00
BLACK TOPPING $ 20,000.00
$ 271,025.00
*ESTIMATED COSTS
$ 65,100.00
$ 336,125.00
Page 1
MARKETECH, INC. was started in March of 1990 and has grown to over $1,000,000.00
in sales as of 1995 year end. Currently Marketech services over 60 accounts through out
the US, Canada and some overseas accounts. Marketech still services the same markets
and services that were identified in the 1990 start up business plan with some expansion
into additional services to the ATE "Automatic Test Equipment" market. The annual sales
has been increasing at an average of 25% per year with a 36% growth in the most recent
year of 1995. 1996 brings continued growth of an expected 25% along with the addition
of a new project to assemble Pakon Impak Index Systems. The new Index Systems were
projected to be at 500/yr but recent market showings have caused Pakon to increase their
forecast to 200/month by this June (96). This will have an additional impact of 25 to 30%
additional growth to total sales. Total sales for 1996 are estimated to be 1.4 to 1.6M.
Employment is expected to increase from 20 at 1995 year end to 27 by end of 1996.
The annual growth of 25% normal is expected over the next 3 years and should be
attainable due to the new project which has an estimated 5 year market life.
To attain this growth Marketech is in need of both increased line of credit for additional
working capital as well as manufacturing space. Marketech currently occupies 4350 sq. fi.
of manufacturing and office for the core business and has a temporary lease on an
additional 1500 sq. fi. in a nearby industrial building. As the current business was already
causing a space problem the additional space added for the Pakon project will not
keep pace for both needs. Other suitable space for lease in the Elk River area is not
available so the decision was made to pursue a new facility to consolidate the two
operations. The new facility is planned to be 9250 sq. fi. fully air-conditioned and finished
for offices and electro-mechanical type assembly. The land chosen has 2.2 acres and
allows an expansion to over 30,000 sq. fi. allowing continued expansion for many years.
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