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IDC Agenda 06-22-1989 . AGENDA MONTICELLO INDUSTRIAL DE ELOPMENT COMMITTEE Thursday, June 22, 1 89 - 7:00AM City Hal MEMBERS: Chairperson Shelly J Ron Hoglund, Dennis Linda Mielke, Rick W Dale Lungwitz, Jay M Pogatchnik and Ollie CITY STAFF: Jeff O'Neill 1. Call to Order. hnson, Don Smith, Lowell Schrupp, aylor, Arve Grimsmo, Jim Kruger, lfsteller, Ken Maus, Harvey Kendall, rrell, Dave Peterson, Dale Koropchak. 2. Approval of the May 18, 19 9 IDC Minutes. 3. Consideration to Review Ta ulation Results from the Joint Governmental Units Meeting 4. Prospect Reports: Genereu Manteq NSP Titan R Bondhus J. Mori Bridgew 6,000 s 135,000 Food pr Broadwa . creational Products Corporation rty ter Telephone Company ft office complex sq ft mfg/warehouse/office cessing Sqaure Project 5. Consideration of Extended rea Services Update. 6. Consideration of nquet: date, speaker, and program. 7. Consideration to Review Ma teq International, Inc. Letter of Intent. 8. Other Business. 9. Adjournment. . . MINUTE MONTICELLO INDUSTRIAL DE ELOPMENT COMMITTEE Thursday, May 18, 1 89 - 7:00 AM City H 11 . MEMBERS PRESENT: Chairperson Shelly Johnson, Don Smith, Lowell Schrupp, Ron Hoglund, Dennis Taylor, Arve Grimsmo, Jim Kruger, inda Mielke, Rick Wolfsteller, Ken Maus, Hrvey Kendall, and Ollie Koropchak. CITY STAFF PRESENT: MEMBERS ABSENT: Dale Lungwi Dale Pogatc 1. CALL TO ORDER. Morrell, Dave Peterson, and The IDC meeting was calle to order by Chairperson Shelly Johnson at 7:02 AM. 2. APPROVAL OF THE APRIL 20, 1989 IDC MINUTES. Ron Hoglund made a motion to approve the April 20, 1989 IDC minutes, seconded by rve Grimsmo, without any corrections or additions, the minutes stand approved as written. . 3. PROSPECTS: UNDISCLOSED C MPANY - after the financial proposal was drafted b BDS, Inc. and delivered by the Economic Deve opment Director, I have been in contact with r. Tapper who is very interested in our propos 1 and has had his accountant speak with Pa Pelstring. In the last conversation r. Tapper indicated a low in sales and is omewhat apprehensive of a relocation t this time however no final decision has een made. MANTEQ - Mr. at Pelstring, Jim Boyle, A.J. Renner, Conrad Larson, and myself met at BDS, Inc. to discuss Mante 's facility needs and financial needs. Manteq is 100 ing at a 30,000 square foot office/ lab work area for lease, employment of 50. Mr. Pelstring will contact the principal owners, Norm Strand a d Stuart Wilson; draft a preliminary financial pro osal; and draft a letter of intent. Mr. Boyle will obtain a contractor and draft a lease propos 1 using Tax Increment Finance write down as a direct reduction of the lease rate. NSP - Mr. Je ry Zimmer, Bob Clark, Gary Anderson, an NSP archi ect, and myself met to review building, site, and la dscaping plans for the projected NSP 5,544 sq ft maintenance facility in the Oakwood Indu trial Park. Increased employment of three and business retention. NSP staff advised us t at the project had been out for bids . IDC Minutes - 5/18/89 . 3. CONTINUED. twice and in oth cases bids received were over budget. However. NSP was still anticipating a June 1 cons ruction start. EXISTING UNDI the IDC that Enterprise Fu presently lea is purchase t 5,000 sq ft. Present emp10 of 10. Koropchak adv brochure and which leaves need. Harvey Kendal expansion wi1 of the projec . The IDC brief Buffalo recru which will em approximate 6 was asked if City of Monti CLOSED COMPANY - Koropchak informed he has received a Greater Monticello d application from an existing company ing in the industrial park who's goal e existing facility, expansion of nd interior rehabilitation. ment 10 with an additional projection sed the IDC of ABK, Inc. marketing f its successful 13% return rate he company with a working capital reported the NSP Training Center double their size and completion is expected the end of November. y acknowledged the recently announced ted Von Ruden Manufacturing Company 10y 70 people and construct an ,000 sq ft building. Koropchak he company ever contacted the ello, the reply was no. 4. CONSIDERATION OF THE AREA EXTENDED SERVICE UPDATE. The IDC briefly discussed area extended service. T collecting of needed sign as the City Council suppo effect on Monticello resi Koropchak is to call Dian Buffalo's denial. the denial of Buffalo's request for e general consensus was to proceed tures for Monticello's petition ted the issue and for a positive ential and busineess development. Wells for more information on 5. CONSIDERATION OF THE JOIN GOVERNMENTAL UNITS MEETINGS. MONDAY, JUNE 5. 1989. Chairperson Johnson reminded the IDC of the joint meeting to be held June 5 at the new Fire Hall. Starting time is set for 7:00PM,goal is to esta lish/continue a cooperative working relationship between the different city government units thereby eliminating fragmentation. Jeff O'Neill informed the IDC of the me ting agenda strategy of dividing into 5-6 small groups by different city service areas 'and lead by staffomembers. Groups will brainstorm for ideas within each service rea to aid city council and city staff in planning and deci ion-making. The agenda will be mailed out early. . IDC MINUTES - 5/18/89 . 6. CONSIDERATION OF AIRPORT U DATE. Mr. O'Neill updated the ID stating he had written a letter to Mr. Ron Lloyd to determ'ne the potential of expanding the airport facility at the pr sent location, the process and cost associated with such an ex ansion, and requested an outline of state/ federal financial programs to be utilized in such an expansion. 7. CONSIDERATION OF INDUSTRIA PARK ROADS UPDATE. A public hearing will be h ld at City Council Monday night to get input from pr perty owners. Bids will be opened Monday morning prio to Council. Bids are expected to come in low for Chelsea Road, Dundas Road, and Thomas Park Park Road. This does not "nc1ude Fallon Avenue which needs major reconstruction. Two property owners said the additional assessments would create h rdship for selling property and since M & P Transports are the only major heavy truck traffic, they suggested not posting axle limits in the spring. City staffs input was if roads are not overlayed and not posted results could b a million dollar project and if project were delayed on year this could result in a 25% project cost increas. A question was posed on the percentage of lots sol in the industrial park. The IDC summarized the ove -lay project in the industrial park as long term cost effective to present property owners. an elimination of spring posting, and as a marketing strategy. IDC members are - invited to attend"- the public- hearing. . 8. CONSIDERATION OF AN EDA OGANIZATIONAL MEETING UPDATE. The EDA met on May 16 and reviewed the ordinance amendment, the Joint Powers Agreement, and the Greater Monticello Enterprise Fund Guidelines. The Board needs to hold a second organizational meeting to continue wit~ drafting bylaws and to elect officers. 9. OTHER BUSINESS. Sunny Fresh will be disco will concentrate on the at the Monticello facilit Fresh with the potential old creamery. tinuing the egg shell operations and iquid egg research and processing Koropchak is to contact Sunny se of TIF for demolition of the Ken Maus reminded IDC mem ers of the Senior Citizen Ethnic Day at the Monticello Sen"or Lounge and of the grand opening for noon lunches t the Monte Club. These events scheduled for today. Chairperson Shelly Johnso informed the IDC that the ~epartment of Revenue is propos"ng certain rule changes governing the valuation and assessment f electric companies, gas distrubution and pipeline companies wi hout a public hearing. If the Department receives at Ie st 25 letters requesting a public . . 9. CONTINUED. IDC Minutes - 5/18/89 hearing, the rule- changeC - cropOs"a:1 -6an be .:slt'"Cippea-,' The efi"e't-i:t on Monticello could be a reduction or distribution change~bf .lQ.c.al valuations. ._, The local school district and the city have written letters requ sting a public hearing, Mr. Johnson encouraged other organiza ions to support the cause by mailing a letter to Mr. C ok. 10. ADJOURNMENT. The IDC adjourned at 8:00 ~ ~O\.O ~ Ollie Koropchak IDC Executive Secretary . . . . . . FROM LRRKIN HOFFMRN RNOKA -:" ~ ..f. 6. lZ.I'~:3'i' 15:~)'3 P. :2 L!TTER OF INTENT , " ...0:. . ,~. , June :1~, 1989 Mr. Norman Strand, president Manteq International, Inc. 5103 Eastman Road Suite 140 Midland, MI REs 48640 ~6-~~\ MONtICELLO ~C DEVELOPM Letter of Intent to Provide Manteq International, Inc. NT COMMITTEE ssistance to Dear Mr. Strand: 1 Y\ c:\" <;.-\.. \'<:&'" t The Monticello ig~~6mic Developrne t Committee is pleased to have an opportunity to review you plans for the growth of your company and the potential fo locating your firm in our community. The Monticello Econom'c Development committee has had an opportunity to meet and pr pare this Letter of Intent which .serves as evidence of our c mmitment to seek direct assistance to facilitate your exp nsion to Monticello. As a basis for this Letter of lnt our understanding of your propose potential and its growth plans. recognize that this Letter of lnt from the Monticello E~ic assistance as outlined within thi Committee is directly linked to t it does not have the ability to assistance. Direct City assistan review and approval with the appr we are proposing ~o seek assistan statewide and federal programs. of funding and feel confident tha obtainable, however, we cannot co of these agencies. ."., nt, it is important to review project, the company's t is also important to nt represents a commitment ant committee to seek letter. Although the e various local agencies, rant final approval for e will be subject to final priate bodies. In addition, e through various regional, e have reviewed the likelihood- our proposal is reasonable and it the funds on behalf of any ......:.,.. . . . . FROM LRRKIN HOFFMRN RNOKR Mr. No~man Strand page 2 It is our understanding that Man company founded by yourself and company provides engineering, an services through employee leasin research. The company has also and is initiating production of 6.12.1';>:39 15: 113 P. 3 eq International, Inc. is a r. Gerald Clark in 19B5. The technical and management and contracted project ecently acquired a new company roprietary products. The company's expansion into Min esota will require an estimated 30,000 square feet, broken down as follows: 6,000 square feet office space 12,000 square feet engineering an laboratory space 12,000 square feet production and warehouse space In addition, the company is also asking assistance to fund an estimated $750,000 for equipment cquisition and will have initial operating capital require ants of an estimated $250,000. The Monticello ~ic Developme assistance designed to meet the d are propOSing the use of various financing programs which will pro priced financing. We anticipate minimum of $100,000 equity and th personal guarantees. FACILITY NEEDS The Monticello Ec~ic Developme developer who will construct a bu AttaChed for your review is a pro developer's anticipated lease rat The City, through the USe of Tax to negotiate a lease "write downn the third year, equal to $1.00 pe will directly reduce your lease r t Committee proposes to provide rect needs of the company. We ocal, federal and statewide ide long-term, attractively hat the company will provide a appropriate corporate and t Committee has identified a Iding suited to Manteq's needs. osal which identifies the ncrement Financing, will agree for eight years, beginning in square foot. This write down te. We anticipate providing an estimated $30,000 per year, for eight years, totalling $240,000 of dire t write-down assistance. . '. FROM LRRKIN HOFFMRN RNOKR 6.12.19:39 15:43 F'. 3 . Mr. Norman Strand page 3 EQUIPMENT AND OPERATING CAPITAL The Monticello E~ic Deve10pme t Committee proposes to fund the company's anticipated $1,000,000 equipment and operating capital package as follows: Equipment Financinq Bank Financing (first secured posi ien) $ 300,000 SBA 504 Loan (second secured position) 300,000 Central Minnesota Initiative Fund (third) 75,000 Monticello ~evolvin9 Loan Fund 75,000 TOTAL EQUIPMENT FINANCING $ 750,000 O~erating Capital. Minnesota Small Cities Economic . Recovery Grant (secured by compa y receivables) $ 150,000 Owner's Equity 100,000 OPERATING CAPITAL 250,000 TOTAL EQUIPMENT AND OPERATING CAP! AL Sl,OOO,OOO An oV8rview of the financing progr ms proposed is as follows: SBA 504 LOAN PROGRAM A local development company (LDC) \hich has been certified by the Small Bus iness Administration (S8l\) can aid in the financing of small business expansions and Btar~ ups. The LDC, in conjunction with private lenders, Can provide ong-term, low interest, fixed rate financing (See attached description). CENTRAL MINNESOTA I~ITIATIVE FUND . . The Central Minnesota Initiative Fund is a private nonprofit rural development corporation committed to providing financial assistance to programs which promot and strengthen central Minnesota. The fund is one of six in Minnesota seeking to address the needs of rural resident. throughout the state. . . . . FROM LARKIN HOFFMAN ANOKA Mr. Norman Strand Page 4 The fund is largely supported by p~ovides financing to businesses Benton, Cass, Chisago, Crow Wing, Morrison, Pine, Sherburne, Stearn toan Criteria 6.12.1989 15= 44 P. 4 he McKnight Foundation and ocated in the counties of: Isanti, Kanabec, Mille Lacs, , Todd, Wadena, and Wright. o Loans are made to "for-profit" firms only, in order to promote economic development and job c eatian and to enlarge the tax base. o Loans are made to small businesses, those with less than $4 million in gross annual sales and with 50 or fewer employees. o There are no restrictions regarding type of business--retail, wholesale, franchise, on or off farm, manufacturing--except that enterprises with political, religious or pornographic purposes will be ineligible. - ...-/ ,.- No loans are made where reasona Ie alternative financing is ,/ possible. ./ ,/,/ o A business is eligible at any s age--start up, existing, or expanding. o o The enterprise must be located the Owners must reside in this ith the l4-county area, and rea. o Loans can be made for working c pital, machinery and equip- ment, real estate, and research and development. o Rates and terms are negotiable etween the business and CMIF. MINNESOTA SMALL CITIES ECONOMIC RE OVERY GRANT The Minnesota Small Cities Develop address critical economic developm of Minnesota. Currently, the prog Minnesota Department of Trade and are awarded to communities and tow economic development needs by prov planning expansions. For purposes of the Minnesota Smal Cities Development program, economic development is defined as a stimulation of private investment in order to expand, mai tain, or start a business. The desired result of the program 's the creation of new jobs or the retention of "endangered" ones. ant program is designed to nt needs throughout the State am is administered by the new conomic Development. Grants ships to help them meet local ding loans to businesses '. . . . . FROM L~RKIN HOFFM~N ANOKA Mr. Norman Strand Page 5 6.12.1'~8'? 15:-15 This program is designed to assis in providing the necessary incentives to stimulate private investment, thereby creating and keeping jobs in Minnesota. It is not intended as a substitute for conventional financing, nor sh uld it be used in place of other specialized programs that ma exist in state or federal agencies. Instead, grants from this program are intended to be used in situations in which a f nding "gap" exists and alternative sources of public and rivate financing are not adequate. It is important to keep in mind th t this process will involve a grant to the City of Monticello wh , in turn, will provide a loan to your company to supplement prim ry financing. MONTICELLO REVOLVING LOAN FUND The Monticello~ DeveIopmen approval throu~;nticello Ec ( E DA ) f or a $ 7 5 , 000 work1 n g cap i ~ International. The Man ~ce 0 Eco would propose that the funds be Ie five-year time period. Committee will seek the nomic Development Authority loan to assist Mant~_,n~,~ omic Development ~e~~ t to the company over a All payments would be deferred for a period of six months after the initial funding and interest 0 1y would be required during the second six-month time period. The loan would be fully amortized over the balance of the four years at an interest rate of 10 percent. OTHER PROGRAMS Minnesota EInar ent Develooment Pro ram (MEED) The local Private Industry Council State of Minnesota's M~EO program. encourage the creation of new perma people without other job prospects. employers up to $4.00 per hour in w for fringe benefits. dministers funding under the This program is designed to ent jobs for unemployed The program reimburses gas and up to $1.00 per hour P. 5 h-c t.Q(.~ ~-r--~ . . j'r:.'.I,i L.H~.r.,.~r1 ri'.IJ'i-i'lhli r'1111.Jr-,rl Mr. Norman Strand Page 6 r;. . ! .:... l'~ j:, ::' 1:1: -+ j I". !,"", These programs represent funding which We can seek immediate assistance and receive reasonabl assurance within a relatively short time period of the availability of funding. The Monticello~ Development Committee's offer of assistance goes beyond the direct funding. For instance, in the case of the Minnesota Small Citie Economic Recovery Grant, SBA 504 Loan and Central Minnesota Initiative Funding, technical assistance will be provided by th City's consultants, Business Development Services, to facilita e the applications for these programs. It is anticipated that this will greatly enhance the likelihood of the receipt of appr val for these programs. MONTICELLO E ONO C DEVELOPMENT REPRESENTATIONS The Monticello ~c Developme Monticello firmly believe in thei financial assistance programs out The negotiations will be initiate ~~ic Development Committee an nowever, can be construed as a bi Monticello .~101111g..::> Development C assist in the preparation of the effort will be initiated at consi City's part. A~D COMPANY t Committee and the City of ability to perform on the ined in this Letter of Intent. directly by the Monticello the City. Nothing herein, ding commitment. The mmittee and the City agree to ppropriate applications. This arable time and expense on the The company, upon acceptance of this proposal, ~ill agree as follows: 1. Manteq International, Inc. wil execute a lease on the propose This lease may be subject to 0 financing from the various fin 2. Manteq International, Inc. wil financial information to the M ~..CO.lull';'L.L.~e within two weeks. 3. Manteq International, Inc. wil principal operations into the 30 days after receipt of fundi . . 4. Manteq International, Inc.. wil days it will not seek alternat This agreement shall expire Se mutually extended by all parti ,..',.... complete negotiations and facility by August 1, 1989. taining commitments for ncing sources. provide the appropriate ntice110 Economic Development agree to relocate its acility in Monticello within g. agree that for a period of 90 location for the project. tember 3 1989, unless . . . . FROM LRRKIN HOFFMRN RNOKR Mr. Norman Stra;[1d Page 7 It is the purpose of this Letter for which a firm project financi confirmed. Your consideration 0 appreciated and the Monticello and the City of Monticello stand 6.12.198'~ 15:46 P. 7 of Intent to provide a framework q and facility package can be this information is greatly c Development Committee ready to move forward with you. MONTICELLO~ DEVELOPMENT OMMITTEE Dated MONTICELLO ECONOMIC DEVELOPMENT A HORITY Accepted By: MANTEQ INTERNATIONAL, INC. Norman Strand, President Oated Oated Dated .....