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EDA 08/26/02· , .. ~ OFFICIAL FILE COPY CITY OF NEW HOPE EDA MEETING City Hall, 4401 Xylon Avenue North August 26, 2002 President W. Peter Enck Commissioner Sharon Cassen Commissioner Don Collier Commissioner Mary Gwin-Lenth Commissioner Pat LaVine Norby 1. Call to Order 2. Roll Call 3. Approval of Regular Meeting Minutes of August 12, 2002 4. Discussion Regarding Request by the Egan Companies, 7100 Medicine Lake Road, for Financial Assistance to Relocate and Expand Facility in City of New Hope 5. Adjournment CITY OF NEW HOPE 4401 XYLON AVENUE NORTH NEW HOPE, MINNESOTA 55428 Approved EDA Minutes Regular Meeting August 12, 2002 City Hall CALL TO ORDER ROLL CALL APPROVE MINUTES IMP. PROJECT 727 Item 4 President Enck called the meeting of the Economic Development Authority to order at 7:46 p.m. Present: W. Peter Enck, President Sharon Cassen, Commissioner Don Collier, Commissioner Mary Gwin-Lenth, Commissioner Absent: Pat LaVine Norby, Commissioner Motion was made by Commissioner Collier, seconded by Commissioner Gwin- Lenth, to approve the Regular Meeting Minutes of July 22, 2002. Voting in favor: Enck, Cassen, Collier, Gwin-Lenth; Voting Against: None; Absent: Norby; Abstained: None. Motion carried. President Enck introduced for discussion Item 4, Discussion Regarding Creation of Tax Increment Financing District and City Assistance for Navarre Corporation Expansion and Ahrens Tracking Relocation; Discuss Terms of Agreement and Direct Staff to Proceed with Preparation of Development Agreement (Improvement Project No. 727). Mr. Kirk McDonald, Director of Community Development, stated at the June 10, 2002, New Hope EDA meeting, staff presented a request from Navarre Corporation to relocate Ahrens Tracking from its current location to the city-owned property at 9200 49~ Avenue to facilitate a large expansion at the Navarre site. The EDA directed staff to coordinate with all parties to determine if the plan was financially feasible. Navarre requested city financial assistance in the form of a land write-down gap funding assistance for the Ahrens project and utility relocation at the Navarre site. The EDA saw this initially as a "win-win" for all parties, as Ahreus Tracking would be relocated and retained in the City, Navarre Corporation would undertake a major expansion, and the city property would be developed and regional storm water improvements. Over the past two months, staff has been coordinating with Krass Monroe and Navarre Corporation on details regarding how this project might work and Krass Monroe has prepared the documents outlining the scope and financial parameters of the project. If the EDA is agreeable to the terms of the agreement, staff recommends that the EDA direct staff to continue to coordinate with all parties on the preparation of a development agreement. Mr. Jim Casserly, Krass Monroe, P.A., was recognized. He reviewed the financial and legal analysis for the project. He stated the proposal includes the City providing Navarre with the required amount of city property needed for the Ahreus relocation and the EDA issuing a Revenue Note to Navarre Corporation in the amount of $200,000 plus the cost of relocating the utilities on the redevelopment property in an New Hope EDA Page 1 August 12, 2002 MOTION/AUTHORIZE PROCEEDING Item 4 amount not to exceed $250,000 for a total principal amount of the Revenue Note not to exceed $450,000. The Revenue Note shall be paid from tax increment generated by the minimum improvements on the redevelopment property. Mr. Casserly pointed out that Navarre will construct the Ahrens building at Navarre's expense. If for some reason Navarre fails to construct its own expansion, then the City is not obligated to reimburse Navarre for the Ahren's building. He stated after eight years, the Navarre properly will have generated over $200,000 in new taxes and the Ahrens Ixucking property will have generated approximately $10,000 in taxes. Therefore, the initial costs will be recouped in eight years and each year thereafter the City will receive $210,000 in new taxes. Commissioner Collier pointed out that the City spent approximately $200,000 to purchase the land. Mr. Casserly stated after payment of the revenue note, approximately $300,000 will be remaining for the EDA's project expenses. President Enck thanked Mr. Casserly for his analySis. The following persons were recognized: Robert Glasgow, President of Glasgow Advisor Services, Inc.; John Turner, Senior Vice President of Navarre Corporation; and Brett & Don Ahrens of Ahrens Tracking. President Enck thanked Navarre for being a good corporate citizen. He inquired regarding the existing problems with the driveway and parking at the Navarre site. Mr. Glasgow stated they need to upgrade the parking area and have requested postponing this until the expansion. Mr. Mark Montgomery, 7307 62na Avenue North, questioned the average salary for the new jobs that will be created. Mr. John Turner indicated the range will be $11-13 per hour. The rate of a new employee is $8.50 per hour. The expansion will also allow on-site office accommodations for positions such as IT, marketing, and finance. Commissioner Cassen questioned the proposed timeline for the project. Mr. McDonald stated the public hearing (Council agenda item 8.4) will set the public hearing on September 9. The construction will begin as soon as possible. President Enck noted the owner will be required to maintain the landscaping. He thanked Ahrens Trucking and Navarre for their cooperation with city staff and accomplishing the objectives outlined by staff and Mr. Casserly. Motion was made by Commissioner Cassen, seconded by Commissioner Gwin- Lenth, authorizing staff to proceed with preparation of a development agreement (Improvement Project No. 727). Voting in favor: Enck, Cassen, Collier, Gwin-Lenth; Voting Against: None; Absent: Norby; Abstained: None. Motion carried. New Hope EDA Page 2 August 12, 2002 ADJOURNMENT Motion was made by Commissioner Collier, seconded by Commissioner Cassen, to adjourn the meeting. Voting in favor: Enck, Cassen, Collier, Gwin-Lenth; Voting Against: None; Absent: Norby. Motion camed. The New Hope EDA adjourned at 8:22 p.m. Respectfully submitted, Valerie Leone City Clerk New Hope EDA Page 3 August 12, 2002 · . , EDA REQUEST FOR ACTION Originating Department Approved for Agenda Agenda Section Community Development 8-26-02 EDA Item No. By: Kirk McDonald By: 4 DISCUSSION REGARDING REQUEST BY THE EGAN COMPANIES, 7100 MEDICINE LAKE ROAD, FOR FINANCIAL ASSISTANCE TO RELOCATE AND EXPAND FACILITY IN CITY REQUESTED ACTION Staff requests that the Economic Development Authority discuss the attached request by Egan Companies for financial assistance to relocate and expand its facility in New Hope and provide direction to staff as to how to 3roceed. Staff recommends authorization for staff to meet with Egan officials and the financial consultant to conduct a preliminary analysis of the financial implications of the project. POLICY/PAST PRACTICE When city staff receives requests for financial assistance from local companies, they are submitted to the EDA for consideration. In the past, the City has assisted a number of businesses with expansion projects using a variety of financing tools. BACKGROUND Staff has been conducting discussions with The Egan Companies over the past six months on an informal basis regarding its desire to expand its facilities. Egan has submitted the attached correspondence, which includes the following background data and request: · The Egan Companies ("EGAN") requests the City of New Hope Council, staff and financial consultant to work with EGAN to determine what alternatives the City of New Hope has to provide Tax Increment Financing, tax rebates or other financial assistance to facilitate EGAN redeveloping 8801 Science Center Drive, or similar facility, in New Hope. · EGAN moved its headquarters to New Hope in 1964 and prefers to stay in New Hope. EGAN has been in business for 57 years (founded in 1945) providing commercial construction services to the greater metropolitan Twin Cities area. EGAN is an employee owned business with over 130 million dollars in annual revenue. · EGAN has over 750 employees designing and constructing Electrical, Mechanical, Building Automation, Insulation, Glass and Curtain-wall systems. The staff includes approximately 175 full-time office personnel, 100 full-time manufacturing people and over 475 craftspeople working on iob sites. EGAN employs a MOTION BY r~ SECOND BY Request for Action Page 2 8-26-02 diverse group of people including highly skilled craftspeople from five different trade unions, designers, engineers, project managers, accountants, and computer programmers. The Egan Companies is recognized as one of Minnesota's fastest growing firms and one of the nation's largest specialty contracting firms. EGAN's safety conscious "Zero Injury" culture has resulted in EGAN having a safety record in the top 10 of the safest construction companies to work for in the nation. EGAN engaged CRESA Partners to assist in a thorough evaluation of our future real estate needs and we have decided to consolidate all the company's operations into a single facility. EGAN currently occupies six facilities in four different communities in the Northwest suburbs of the Twin Cities. Each of its current locations is too small to accommodate the consolidated operations of EGAN. This consolidation would result in bringing 50 to 100 new jobs to the City of New Hope. EGAN is considering the building at 8801 Science Center Drive. The building would need considerable improvements to accommodate EGAN's needs. We have enclosed sketches of proposed improvements to the 8801 Science Center Drive building. We are asking the City of New Hope to consider providing $800,000 to $1,000,000 of assistance to redevelop this location. EGAN has invested considerable time and expense in evaluating all its options to consolidate operations into a new facility and would like to lock-in on a site to relocate to before the end of August 2002, for a move-in date in late 2003. We ask the City of New Hope to indicate the approximate level of financial assistance the City may be able to offer EGAN for the redevelopment of the 8801 Science Center Drive or a similar facility located in New Hope, Minnesota. The Community Development Department believes that this is an excellent proposal and recommends that the EDA pursue this request. FUNDING Funding for the analysis could be paid for with EDA funds or incorporated into project costs, if the development proceeds. Staff recommends that if the EDA is interested in pursuing this request, the applicant provide a deposit to assist with consultant costs. ATTACHMENTS · 8/19 Egan Correspondence Plans · Maps · Building Official Memo · Egan Companies' Report The E an Companies Building Integrated Solutions'" 7100 Medicine Lake Road New Hope. MN 55427-3671 763.544.4131 Main 763.595.4380 Fax August 19, 2002 Mr. Kirk McDonald Director of Community Development City of New Hope 4401 Xylon Ave N New Hope, MN 55428 RE: The Egan Companies Dear Kirk: Thank you for taking time last week to discuss how the City of New Hope may be able to assist The Egan Companies in expanding their operations in New Hope, Minnesota. The Egan Companies ("EGAN") requests the City of New Hope Council, staff and financial consultant work with EGAN to determine what alternatives the City of New Hope has to provide Tax Increment Financing, tax rebates or other financial assistance to facilitate EGAN redeveloping 8801 Science Center Drive, or similar facility, in New Hope. EGAN moved its headquarters to New Hope in 1964 and prefers to stay in New Hope. EGAN has been in business for 57 years (founded in 1945) providing commercial construction services to the greater metropolitan Twin Cities area. EGAN is an employee owned business with over $130 million dollars in annual revenue. EGAN h~s over seven-hundred-fifty (750) employees designing and constructing Electrical, Mechanical, Building Automation, Insulation, Glass and Curtain-wall systems. Egan also manufactures components of the ventilation, electrical and glazing systems they install. The staff includes approximately 175 full time office personnel, 100 full time manufacturing people and over 475 crafts-people working on job sites. EGAN employs a diverse group of people ineludi.n, g highly skilled erattspeople from five (5) different trade unions, designers, engineers, project managers, aceoumants, and computer programmers. The Egan Companies is recognized as one of Minnesota's fastest growing firms and one of the nation's largest specialty contracting firms. EGAN's safety conscious "Zero Injury" culture has resulted in EGAN having a safety record in the top 10% of the safest construction companies to work for in the nation. EGAN engaged CRESA Partners to assist in a thorough evaluation of our future real estate needs and we have decided to consolidate all the company's operations into a single facility. EGAN currently occupies six (6) facilities in four (4) different communities in the Northwest suburbs of the Twin Cities. Each of its current locations is too small to accommodate the consolidated operations of EGAN. This consolidation would result in bringing 50 to 100 new jobs the City of New Hope. THE EGAN COMPANIES Egan Mechamcal Contractors, Inc. · Egaa-McKay Electrical Contractors, Inc. E & S Insulation Co. · Egan Automation, Inc. · InterClad, Inc. · Egan Service An Aj~rmati~e Action/Equal Opportunity Employer EGAN is considering the building at 8801 Science Center Drive. The building would need considerable improvements to accommodate EGAN's needs. We have enclosed sketches of proposed improvements to the 8801 Science Center Drive building. We are asking the City of New Hope to consider prodding $800,000 to $1,000,000 of assistance to redevelop this location. EGAN has invested considerable time and expense in evaluating all its options to consolidate operations into a new facility and would like to lock-in on a site to relocate to before the end of August 2002, for a move-in date in late 2003. We ask the City of New Hope to indicate the approximate level of financial assistance the City may be able to offer EGAN for the redevelopment of the 8801 Science Center Drive or a similar facility located in New Hope, Minnesota. Please call if you have any questions, comments, or to confirm that City staff will request the City Council consider our request for financial assistance during their meeting August 26, 2002. Sincerely, The Egan Companies Chief Executive Officer CC: Mark Houge, CRESA Parmers · I I1~ AVE N t ~ AVE N !l~I!!!I, ,I,,IiI,,,llll ¢IE'WCREST LA 2751 IIlIIIlIIIlII IIII /ST AVE N - 7101 2919 29OO 2731 2721 .,~ 2730 2720 .~001 2OOl 284~ 2711 ~~ ::~! 2701 ~ 7100 --"1 ~ 27TH AVE N 5621 5650 56~2 Thru 56OO VI CTR RD WEST 9210 3E CENTER DR 9401 PARK 8748 ,5,55O CENTER 8801 PUBLIC WORKS GARAGE 9101 542O 9OOO 5410 9101 87OO 5501 5425 5417 5401 8801 56TH AVE NORTH $500 MENTS 543O NORTH RIDGE CARE CENTER 93,O0 --1z 5100 5010 9210-~~~ 5101 -~ 9211 NI Memo TO: Kirk McDonald FROM: Doug Sandstad DATE: August 20, 2002 RE: New Egan Industrial Concept- 8801 Science Center Rd. I have reviewed the Egan Companies CEO letter, dated August 19, 2002, and the two- sheet conceptual plans, dated July 16, 2002, for an industrial expansion at 8801 Science Center Drive. a. Local company for 38 years is retained by purchasing a larger site in New Hope and moving / expanding their operation. b. Existing site at 7100 Medicine Lake Road is opened up for a new user, who may well invest in functional and aesthetic improvements. c. Major expansion and architectural upgrade [ approx. 22,000 sf] to their new headquarters will replace the "dated" 1960-vintage plain block warehouse look. The new pedestrian-friendly look reverses the old industrial model. d. Nonconforming fi'ont loading dock doors on Boone Avenue are eliminated and replaced with a very attractive glazed front and a prominent new entrance. e. Generous property is sized to allow additional future expansion beyond this concept for Egan, should that become necessary. From a practical standpoint, the building expansion does not require Site Plan Review before the Planning Commission and Council, as it is less than 25% of the building area, per Zoning Code 4.353. The outdoor storage yard by the railroad tracks would require a CUP if it exceeds 20% of the building area and can be easily secured and screened from the Boone Avenue frontage. The proposed driveway connection to Boone Avenue is allowed by code and routine, but may be shifted to the north for safety and grade reasons after detailed design and analysis by staff and our engineer. Without sounding too encouraging, I recommend that you tell them to apply for a building permit ASAP !