040891 EDAOFFICAL
FILE COPY
Agenda #3
CTTY OF NEW HOPE
EDA AGENDA
EDA Regular Meeting #3
President Edward J. Erickson
Commissioner W. Peter Enck
Commissioner Gary L'Herault
Commissioner Gerald Otten
Commissioner Marky Williamson
April 8, lggl
City Hall
2.
3.
4.
Call to Order
Roll Call
Approval of Minutes of February 25, 1991
Consideration of Request by Foremost, Incorporated, for Economic
Development Grant Program/Economic Recovery Fund Application
Other Business
6. Adjournment
Approved EDA Minutes
Meeting #2
CITY OF NEW HOPE
4401Xylon Avenue North
Hennepin County, Minnesota 55428
February 25, 1991
CALL TO ORDER
ROLL CALL
APPROVE MINUTES
FEBRUARY 11, 1991
SALE OF PROPERTY
7675 42ND AVE. N.
Item 4
MOTION
EDA RES. #91-2
Item 4
President Erickson called the meeting of the Economic
Development Authority to order at 8:45 p.m.
Present: Erickson, L'Herault, Otten, Enck, Williamson
Motion by Commissioner Williamson, seconded by
Commissioner Otten to approve the EDA minutes of February
11, 1991. All present voted in favor.
President Erickson introduced for discussion Item 4,
Resolution Authorizing Sale of Property at 7675 42nd
Avenue to Autohaus of Minneapolis, Inc. (Project #467).
Mr. Donahue stated this public hearing is scheduled
regarding the sale of the Herman property to Autohaus.
The property would be acquired by direct purchase, the
existing structure would be razed, and the property would
be incorporated with the Autohaus property in conjunction
with expansion plans. Autohaus has agreed to purchase the
property from he EDA in the amount of $140,000.
The Council inquired of the closing date. City Attorney,
Steve Sondrall, stated he does not believe a closing date
has been scheduled.
Mr. Tom Oestreich, representing Autohaus was recognized
and stated there was an issue regarding possible soil
contamination. Soil tests were taken and the test results
came back favorable. The closing date is set for Tuesday,
March 5, 1991.
Motion was made by Commissioner Enck, seconded by
Commissioner Williamson, to close the public hearing on
consideration of the sale of the property at 7675 42nd
Avenue North to Autohaus. All present voted in favor.
Motion carried.
Commissioner Enck introduced the following resolution and
moved its adoption: "RESOLUTION AUTHORIZING SALE OF
PROPERTY AT 7675 42ND AVENUE NORTH TO AUTOHAUS OF
MINNEAPOLIS, INC." The motion for the adoption of the
New Hope EDA
Page 1
February 25, 1991
ADJOURNMENT
foregoing resolution was seconded by Commissioner Otten,
and upon vote being taken thereon; the following voted in
favor thereof: L'Herault, Otten, Erickson, Enck,
Williamson; and the following voted against the same:
None; Absent: None; whereupon the resolution was declared
duly passed and adopted, signed by the president which was
attested to by the executive director.
Motion made by Commissioner Otten, seconded by
Commissioner L'Herault to adjourn the EDA meeting as there
was no further business to come before the Council. All
present voted in favor. The New Hope EDA adjourned at
8:50 p.m.
Sincerely,
Valerie Leone
City Clerk
New Hope EDA
Page 2
February 25, 1991
EDA
REQUF T FOR ACTION
Orig~g Departme~ Approved Mr Agenda Agenda Section
City Manager EDA
4-8-91
Kirk McDonald /~ Item No.
By: Management Assistant By:~ 4
CONSIDERATION OF REQUEST BY FOREMOST, INCORPORATED, FOR ECONOMIC
DEVELOPMENT GRANT PROGRAM/ECONOMIC RECOVERY FUND APPLICATION
Foremost, Incorporated, 7528 42nd Avenue North, is interested in
relocating and expanding their sheet metal fabrication business.
They have encountered problems marketing their property due to the
groundwater contamination problems generated by Electronic
Industries and have requested economic development assistance from
the City. Foremost has made three specific requests, one of which
involves an Economic Development Grant Application through the
Economic Recovery Fund. Staff would like to discuss the requests
with the EDA.
Renew: Admlnis~n: Finance:
RFA-O01 ~
CITY OF NEW HOPE
MEMORANDUM
DATE:
TO:
FROM:
SUBJECT:
April 5, 1991
Dan Donahue, City Manager
Kirk McDonald, Management Assistant/Community Development
Coordinator
Consideration of Request by Foremost, Incorporated, for
Economic Development Grant/Economic Recovery Fund Appl.
Foremost, Inc., a sheet metal fabricator located at 7428 42nd Avenue North,
desires to relocate its present operation for expansion purposes. The firm
employs 30-40 employees, wants to remain in New Hope, and is interested in a
site at the 49th Avenue Industrial Park developed by Brad Hoyt. The existing
building is 23,000 square feet in size and they rent an additional 6,000
square feet of building off-site. The expansion plans are to construct a
40,000 square foot building on a two-acre site. The estimated cost of the
new building is $625,000 (including almost $300,000 in special electrical and
shop needs) and the estimated cost of the land is $190,000, or a total cost
of $815,000 for a new building at a new site.
Due to the soil and ground water contamination at the Electric Industries
site next door, Foremost has been unable to sell the property or retain
financing to develop a new site. Foremost has filed suit against Electronic
Industries.
Foremost has requested assistance from the city and staff has met with
representatives of the Minnesota Department of Trade and Economic Development
to analyze various programs available. The staff would like to assist
Foremost in their relocation to retain this industry in New Hope. The long-
term goal would be to acquire all three sites (Foremost, Electronic
Industries, and Ardel) on 42nd Avenue, accelerate the contamination cleanup
on the properties, and redevelop the property in conjunction with the 42nd
Avenue Redevelopment Plan.
The State has recommended that the City submit an application for an Economic
Development Grant available under the Economic Recovery Fund. The grant
amounts range from $250,000-$500,000 and are specifically targeted towards
the creation of new jobs or the retention of endangered jobs. The grant
could be used for acquisition of the Foremost site or for a low interest loan
to the business. Loan paybacks can be retained by the City as part of a
revolving loan fund for economic development. Due to the soil contamination
issue, the State feels the City would have a good chance of being funded.
The funds become available in July and will be expended by the end of August.
Foremost would then work with the State on a "504 Plan", which is a loan
package for small businesses through the Small Business Administration. The
504 loan, which would be utilized for the new site/building, would consist of
50% conventional loan, 40% SBS loan, and 10% business equity investment.
-2-
The City's Planning Consultant has identified six issues which need to be
investigated if the City is interested in exploring redevelopment of the
site, several of which include identifying the limits of contamination, hold
harmless agreements and identifying the land value of the property in light
of the contamination.
Foremost has made three specific requests of the City:
1. Share in the cost of an appraisal of the property,
Share in the cost of drilling several test holes to determine if
the Foremost property is contaminated, and
City submit application to State for Economic Development Grant.
The staff recommends as follows:
me
If the City does receive the grant to purchase the property, an
independent appraisal will need to be completed, therefore we would
recommend declining the request to share appraisal costs at this
time.
Before the City could even consider the purchase of the property,
it needs to be determined if the Electronic Industries
contamination is present on the Foremost site (the PCA feels there
is a good chance that Foremost property has not been contaminated
due to the directional flow of the groundwater). The City could
share in the cost of the test drilling if Foremost is willing to
seek quotes/bids and accept the low bid.
The Planning Consultant has estimated that the cost to complete the
grant application would be a maximum of $5,000. Staff supports the
submittal of a grant application, but feels that Foremost should
submit a deposit/ escrow to the City for 50% of the cost to
complete the grant application. If the grant were successful the
deposit could be refunded.
The City has indicated it is not in the business of land speculation and
another piece of the puzzle involves securing a developer commitment to
redevelop the 42nd Avenue site. Brad Hoyt has indicated an interest, but has
not committed doe to the number of unknown variables.
The staff feels it would be in the City's best interest to initiate some type
of action to assist with the business relocation and redevelopment of this
site, however, we need to keep expenditures to a minimum until the project
looks feasible. The grant application would initiate that action at a
minimum cost to the City if Foremost would share in the cost.
Attachments:
Foremost Building/Land Costs
March 27th Planner's Report
March 14th Planner's Report
February 21st Planner's Report
Excerpts - Grant Program
INCORPORATED
III I I I II II I I
7528-42nd AVENUE NORTH · MINNEAPOLIS, MINNESOTA 55427
TELEPHONE: (612) 533.-0793
FAX: (612) 533-rt08 ~'
April 1, 1991
Moving (price good for 30 days)
Electrical
Overhead Crane Cost
Office Shops
Welding & Dressing Segregation
Building
$ 17,900.00
146,000.00
53,000.00
22,000.00
14,300.0C~c~
625,000.00
Land 190,000.00
PRECISION SHEET METAL · S'I'AMPINGS · SILl,{ SCREENING
we sso Consultants, Inc.
PL NG · · MARKET R ES E A RC H
MEMORANDUM
TO:
FROM:
DATE:
RE:
FILE NO:
Kirk McDonald
Allan Hunting/Alan Brixius
27 March 1991
New Hope - Quebec/42nd Avenue
131.00 - 91.05
On 14 March 1991, a meeting was held to discuss the redevelopment
options for Foremost, Inc. and for the 42nd Avenue and Quebec
block. Attending the meeting were: Mr. Allen Fredendal!,
President of Foremost, Inc.; James Lushine, Minnesota Department
of Trade and Economic Development; Kirk McDonald, Dan Donahue,
City of New Hope; Alan Brixius, Northwest Associated Consultants,
Inc.
Foremost, Inc. is looking to expand and relocate its present
operation. Relocation is necessary due to the limited size of
their parcel and the soil and ground water contamination of their
land, which prevents expansion on site. The existing building is
approximately 23,000 square feet in size, plus the Company has an
off-site building of 6,000 square feet. Foremost, Inc.'s
expansion plans call for a parcel approximately two acres in size
and a building about 40,000 square feet designed for future
expansion. Foremost, Inc. plans to remain in New Hope and is
interested in a site in the 49th Avenue Industrial Park.
Due to the soil and ground water contamination at the Electronic
Industries site, Mr. Fredendall has been unable to sell the
property nor is able to get financing to help develop a new site.
Foremost, Inc. has filed a lawsuit against Electronic Industries
for the damage to his land and building value.
4601 Excelsior Blvd..Suite 410-Minneapolis, MN 55416.(612) 925-9420. Fax 925-2721
Due to these financial encumbrances, Mr. Fredendall has requested
assistance from the City to help him relocate. The following
options, discussed at the 14 March meeting, are available:
Acquisition of 42nd Avenue and Quebec Properties
To resolve a larger problem than just Foremost Inc.'s relocation
needs, the City may wish to consider the redevelopment of the
three industrial sites abutting 42nd Avenue between Quebec Avenue
and the railroad tracks. The City could consider the acquisition
of Foremost Inc., Electronic Industries, and Ardel Engineering
and redevelop these three sites as one property.
Foremost would benefit from the sale
income to invest in its relocation site.
of their property with
The three sites are located in the 42nd Avenue TIF District.
such, two revenue sources may be available for the project.
As
1. On-Site Tax Increments
Currently, the three industries are generating a frozen tax
base that would make on-site TIF ineffective. To improve
the TIF effectiveness the City could request that the County
Assessor reappraise the industrial properties with the full
understanding of the ground water contamination and the
blighted building on Electronic Industries site. This
reappraisal may lower the frozen base to allow a greater tax
increment generation.
2. Off-Site Tax'Increments
The City has existing surplus TIF revenue from the 42nd
Avenue TIF District that could be available to assist in
the redevelopment of the site.
If the City is interested in exploring redevelopment,
following should be investigated or required:
the
The City receive hold harmless agreements from Foremost,
Inc., Electronic Industries and Ardel Engineering for clean
up of contamination on the site.
2. Testing be done to identify limits of contamination.
o
Foremost continue its pursuit of its lawsuit against
Electronic Industries for depreciation of their land value.
If Foremost, Inc. is successful in their lawsuit, the City's
acquisition costs should be reflective of compensation
received through the lawsuit.
2
If the lawsuit does show depreciation in value, then the
County Assessor should reflect this in the property
assessment, as this may affect tax increment generation.
5. If the City acquires land, Foremost,
their relocation benefits.
Inc. should waive
6. The City should have interested developers on hand who
would redevelop and promote the site.
504 Proqram
To assist in land acquisition, building construction and
building infrastructure investment, James Lushine, of the
Minnesota Department of Trade and Economic Development,
identified the 504 Plan which is available to small businesses.
The 504 loan consists of 50 percent conventional loan, 40 percent
SBA loan and 10 percent private business investment for equity.
To apply for the 504 Plan, Mr. Fredendall will have to file an
application on his company's behalf for the low interest loan
through the Small Business Administration. The 504 application
must be pursued by Foremost, Inc. and will require a monetary and
time investment by Foremost, Inc. to complete the application
properly. If Mr. Fredendall is in need of assistance to help
fill out the application, professional services should be sought.
Economic Recovery Fund
This grant is available to the City of New Hope through the
community development grant application. The grant amount can
range from $250,000 to $500,000 and consist of Federal and State
funds. The grant applications are processed through the
Minnesota Department of Trade and Economic Development. The
grants are awarded to the applicant City who in turn offers the
funds as low interest loans to local businesses. Loan paybacks
are retained by the City as part of a revolving loan fund for
economic development.
A New Tax Increment District
Another means of providing financial assistance to Foremost would
be establishing an economic development TIF district over the new
relocation site. New construction will generate taxes which will
help underwrite land acquisition and site improvements.
It is important to note that under the
following implications would occur:
new tax laws, the
The City would be subject to a State
currently amounts to approximately
increment generated by the district.
aid reduction. This
one-third of the tax
The City would have to arrange some type of developer
compensation for the loss of State aid funds.
The general impact of these tax laws would be a reduction in the
tax increment benefits to approximately 66 percent of total TIF
revenues.
cc: Dan Donahue
U R B A P L NG N M AR K E T R S E
Inc.
ARCH
MEMORANDUM - Revised
TO:
FROM:
DATE:
RE:
FILE NO:
Kirk McDonald
Robert Kirmis/Alan Brixius
14 March 1991
New Hope - Quebec/42nd Avenue
131.00 - 91.05
BACKGROUND
Per your request, I have modified the estimates of land
acquisition and demolition costs for the Quebec/42nd Avenue
redevelopment project as we discussed on 13 March. It should be
noted that the following text is basically a reiteration of
information contained within a 21 February 1991 memorandum with
simple cost estimate modifications.
ISSUES AND ANALYSIS
Land Acquisition. Redevelopment of the
require land acquisition, the following
based on the County Assessor's estimated
ten percent.
Property
Estimated
Market Value
(Plus 10%)
subject parcels will
acquisition costs are
market valuation plus
Foremost
(7528 42nd Ave. N.)
Electronic Industries
(7516 42nd Ave. N.)
Ardel Engineering
(7500 42nd Ave. N.)
$ 543,400
$ 299,640
$ 344,960
TOTAL ACQUISITION COST
$1,188,000
4601 Excelsior Blvd.. Suite 410.Minneapolis, MN 55416.(612) 925-9420. Fax 925-2721
The City should investigate flexibility that may be available in
negotiating land acquisition. Any acquisition negotiations
should recognize the Foremost, Inc. has a vital need to relocate
and the Electronic Industries contains a building that is
structurally substandard. Site acquisition offers should reflect
these conditions.
Due to the ground water and soil problems associated with the
Electronic Industries and spreading to impact surrounding lots,
the City must be cautious in any land acquisition efforts. The
first concern would be the City entering a chain of title and
becoming responsible for the site clean-up. If the City pursues
land acquisition, it must receive indemnification from the site
clean-up responsibility and costs.
It should be noted that due to identified ground water pollution
concerns associated with site, the Hennepin County Assessor has
been asked to re-evaluate the market value of the said property.
It is assumed that the pollution concern will lower the
property's land value and subsequently decrease City land
acquisition costs. To date, investigation into this matter is
pending.
The soil and ground water problems must be corrected to allow for
future conveyance of the property to a private developer.
Without a clean site,
obtain.
private financing will be difficult to
Relocation. Public land
entitles the private to
benefits. Specifically, owners or tenants may be
basis of actual reasonable moving costs and related
under certain circumstances, a fixed payment.
acquisition of
property owners
for redevelopment,
receive relocation
paid on the
expenses or,
Actual Reasonable Moving Expenses:
Actual reasonable moving expenses may be paid when the move
is performed by a professional mover or by the owner/tenant.
Related expenses such as personal property losses, re-
establishment costs, and expenses in finding a replacement
site also may be reimbursable.
In calculating relocation costs, two scenarios are offered.
Scenario A anticipates that relocation costs for the Foremost
facility will be incurred, while Scenario B omits relocation
costs for the said business. The relocation cost omission
follows an indication from Foremost property owners that this
element of a potential redevelopment project is considered
negotiable and may be waived.
Scenario A:
Structure
Relocation Costs
Foremost
Electronic Industries
Ardel Engineering
Reger Grinding
$50,00'0
NA
$30,000
$15,000
TOTAL
$95,0.00
Scenario B:
Structure
Relocation Costs
Foremost
Electronic Industries
Ardel Engineering
Reger Grinding
NA
NA
$30,000
$15,000
TOTAL $45,000
As shown above, relocation costs for the subject redevelopment
project could range from $45,000 to $95,000 depending upon
whether costs for the Foremost business are waived.
Demolition Costs. Based upon bids reviewed by the City Building
Official, demolition of the three industrial buildings under
study can be expected to cost approximately $95,000. The stated
cost would include the removal of buildings, asphalt and all
concrete curbing..
Sunhmary of Costs. For ease of reference, tables summarizing
project acquisition, relocation and demolition costs have been
prepared. It should be noted that Scenario A includes relocation
costs for the Foremost business while Scenario B waives the said
costs.
Scenario
Property Acquisition Relocation Demolition Total
TOTAL COST $1,188,000
$ 95,000 $ 95,000
$1,378,000
Scenario B~
Property
TOTAL COST
Acquisition
$1,188,000
Relocation
$ 45,000
Demolition
$ 95,000
Total
$1,328,000
As shown above, redevelopment costs for the three parcels of land
located north of 42nd Avenue between Quebec Avenue and the Soo
Line Railroad may be expected to range between $1,328,000 and
$1,378,000, depending upon whether the Foremost facility is
subject to relocation payment. It should be noted that the
aforementioned estimates of cost should be construed as
generalized figures which attempt to provide an idea as to
expectant costs. The said figures should in no way be considered
finalized or fixed and should be subject to more detailed
investigation upon redevelopment action.
Groundwater Contamination. The costs summary also does not
include any estimate of cost for the groundwater cleanup. We are
attempting to determine the extent of cleanup and time frame that
the PCA is requiring. To date, we have not been able to identify
all the conditions influencing the site groundwater cleanup.
This issue affects the potential
following manner:
redevelopment
project in the
Without indemnification of the City for cleanup costs, the
City may become responsible for a portion of the cleanup if
it acquires the property.
Total cleanup will be necessary to
potential developer.
sell the property to a
COSTS/REVENUES ANALYSIS
Total Project Costs
Revenues: Land Sale
Existing Cumulative TIF #8
Surplus
Remaining Project Costs
Capitalized (8% @ 2.5 years)
Bond Discount (2%)
Administration/Bond Sale/Bond Counsel
Bond Amount
Annual Payment at 15 Year Term at
8% Interest Rate
$1,328,000
316,000
500,000
512,000
137,000
13,700
22,300
$ 685,000
$ 86,670
U R B A P L N G · D E S N M A R K E T R E S E A R C I.~
MEMORANDUM
TO:
FROM:
DATE:
RE:
FILE NO:
Kirk McDonald
Alan Brixius
21 February 1991
New Hope - Quebec/42nd Avenue
131.00 - 91.05
The redevelopment of three industrial sites in the corner of
Quebec and 42nd Avenue of the City offer t.he opportunity to
accomplish the following objectives:
Promote economic development through the relocation and
expansion of Foremost Industries in another part of New
Hope.
Promote the redevelopment of a highly visible site that is
characterized by nonconforming over-utilized industrial
sites and a building that has structurally deteriorated.
Promotion of commercial redevelopment along 42nd avenue
that promotes a cohesive and defined shopping environment in
New Hope.
o
Clean up of contaminated soils and ground water that has
impacted surrounding properties.
?he aforementioned objectives provide the emphasis for pursuing
this redevelopment project. Investigation of the various
elements of the project raises a number of concerns that require
attention.
4601 Excelsior Blvd.. Suite 410.Minneapolis, MN 55416.(612) 925-9420- Fax 925-2721
Land of
require land acquisition. The following
based on the County Assessor's estimated
fifteen percent.
Acquisition.
Property
Redevelopment
the subject parcels will
acquisition costs are
market valuation plus
Estimated
Market Value
(Plus 10%)
Foremost (7528 42nd Avenue No.) $ 568,100
Electronic Industries (7516 42nd Ave No.) $ 301,300
Ardel Engineering (7500 42nd Ave No.) $ 346,840
TOTAL ACQUISITION COST
$1,216,240
The City should investigate flexibility that may be available in
negotiating land acquisition. Any acquisition negotiations
should recognize that Foremost, Inc. has a vital need to relocate
and the Electronic Industries contains a building that is
structurally substandard. Site acquisition offers should reflect
these conditions.
Due to the ground water and soil problems associated with the
Electronic Industries and spreading to impact surrounding lots,
the City must be cautious in any land acquisition efforts. The
first concern would be the City entering a chain of title and
becoming responsible for the site clean-up. If the City pursues
land acquisition, it must receive indemnification from the site
clean-up responsibility and costs.
The soil and ground water problems must be corrected to allow for
future conveyance of the property to a private developer.
Without a clean site, private financing will be difficult to
obtain.
Relocation. Public acquisition of land for redevelopment,
entitles the private property owners to receive relocation
benefits. Specifically, owners or tenants may be paid on the
basis of actual reasonable moving costs and related expenses or,
under certain circumstances, a fixed payment.
Actual Reasonable Moving Expenses:
Actual reasonable moving expenses may be paid when the move
is performed by a professional mover or by the owner/tenant.
Related expenses such as personal property losses, re-
establishment costs, and expenses in finding a replacement
site also may be reimbursable.
Specifically, actual reasonable moving costs include:
Personal property losses.
Expenses in finding a replacement site
to $1,000.
Re-establishment expenses up to $10,000.
or building up
Fixed Payment:
The owner/tenant may be eligible to receive a fixed payment
from $1,000 to $20,000. This payment is based on the annual
net earnings of the business, not to exceed $20,000. To
qualify for a fixed payment, certain conditions must be met.
In calculating relocation costs, sensitivity toward business type
and facility machinery must be taken under consideration.
Foremost Metal Specialties is a business which conducts metal
stamping and precision tooling. This industry is characterized
by heavy equipment and building infrastructure unique to this
type of industry. Consequently these characteristics will
increase relocation costs. Taking these considerations into
account, relocation costs could reach $50¥000 or more. We note
that this only represents a conservative estimate for the purpose
of this preliminary study. Actual relocation costs can only be
identified through a more detailed inspection of each industry.
It should be noted that the Foremost property owners have
approached the City in pursuing the redevelopment of their site.
They have requested assistance through land acquisition and
relocation. The City may be in the position to negotiate having
Foremost waive their relocation benefits.
The Electronic Industries structure, which lies east of the
Foremost building, currently lies vacant and has been subject to
condemnation. Consequently, the property is not considered
eligible for relocation expenses.
The Ardel Engineering building, which lies adjacent to the Soo
Line Railroad, currently houses two industrial type businesses,
the Ardel machine shop operation and Reger Grinding. The Ardel
facility, while smaller in scale than the Foremost business, may
also require the relocation of heavy machinery. For the purpose
of this feasibility study, we have allocated a relocation expense
of $30,000.
The Reger Grinding facility is relatively small in scale and we
have allocated approximately $15,000 for relocation.
These costs offer only a conservative estimate for the purpose of
this study. More detailed relocation costs may only be available
upon an inspection of the premises.
In calculating relocation costs, two scenarios are offered.
Scenario A anticipates that relocation costs for the Foremost
facility will be incurred, while Scenario B omits relocation
costs for the said business. The relocation cost omission
follows an indication from Foremost property owners that this
element of a potential redevelopment project is considered
negotiable and may be waived.
Scenario A:
Structure
Relocation Costs
Foremost
Electronic Industries
Ardel Engineering
Reger Grinding
$50,000
NA
$30,000
$15,000
TOTAL
$95,000
Scenario B:
Structure
Foremost
Electronic Industries
Ardel Engineering
Reger Grinding
Relocation Costs
NA
NA
$30,000
$15,000
TOTAL $45,000
As shown above, relocation costs for the subject redevelopment
project could range from $45,000 to $95,000 depending upon
whether costs for the Foremost business are waived.
Demolition Costs. According to a qualified demolition service
estimator, demolition costs for 1960s type industrial buildings,
such as that under study, can be expected to cost approximately
25 cents per cubic foot. Utilizing this standard, the following
demolition costs may be anticipated.
4
Structure
Cubic Feet
Foremost
518,400
(21,600 SF x 24')
Electronic Ind.
Ardel Engineering/
Reger Grinding
230,400
(9,600 SF x 24')
196,000
(14,000 SF x 14')
TOTAL DEMOLITION COSTS
Unit
Cost
.25/CF
.25/CF
.25/CF
Total Cost
$ 129,600
$ 57,600
49,000
236,200
NOTE:
Cubic foot allotments are not to be considered exacting
or precise measurements and may be subject to change.
As shown above, demolition of the Foremost, Electronic Industries
and Ardel building can be expected to cost approximately
$236,200.
Summary of Costs. For ease of reference, tables summarizing
project acquisition, relocation and demolition costs have been
prepared. It should be noted that Scenario A includes relocation
costs for the Foremost business while Scenario B waives the said
costs.
Scenario A:
Property Acquisition Relocation Demolition Total
Foremost $ 568,100 $ 50,000 $ 129,600 $ 747,700
Electronic
Industries $ 301,300 NA $ 57,600 $ 358,900
Ardel Eng./
Reger $ 346,840 $ 45,000 $ 49,000 $ 440,840
TOTAL
PROJECT
COST $1,216,240 $ 95,000
$ 236,200
$1,547,440
Scenario B~
Property
Foremost
Electronic
industries
Ardel Eng./
Reger
Acquisition Relocation
$ 568,100 NA
Demolition Total
$ 129,600 $ 697,700
$ 301,300 NA $ 57,600 $ 358,900
$ 346,840 $ 45,000 $ 49,000 $ 440,840
TOTAL
PROJECT
COST $1,216,240 $ 45,000
$ 236,200
$1,497,440
As shown above, redevelopment costs for the three parcels of land
located north of 42nd Avenue between Quebec Avenue and the Soo
Line Railroad may be expected to range between $1,497,440 and
$1,547,440, depending upon whether the Foremost facility is
subject to relocation payment. It should be noted that the
aforementioned estimates of cost should be construed as
generalized figures which attempt to provide an idea as to
expectant costs. The said figures should in no way be considered
finalized or fixed and should be subject to more detailed
investigation upon redevelopment action.
Groundwater Contamination. The costs summary also does not
include any estimate of cost for the groundwater cleanup. We are
attempting to determine the extent of cleanup and time frame that
the PCA is requiring. Todate, we have not been able to identify
all the conditions influencing the site groundwater cleanup.
This issue affects
following manner:
the potential redevelopment project in the
Without indemnification of the City for cleanup costs, the
City may become responsible for a portion of the cleanup if
it acquires the property.
Total cleanup will be
potential developer.
necessary to sell the property to a
Revenues
Land Sale. The City involvement in the redevelopment of this
site will be contingent on having a developer for the site. This
will allow for the City t generate some of the revenue through
the sale of the land and guarantee new construction. The total
redevelopment site is approximately 2.4 acres in size. If the
City can sell the land at $3.00 per square foot, the site will
generate $316,000 in proposed revenue.
The City may investigate the vacation and sale of the 20 foot
alley abutting the site on the north side of the site. The area
of the alley amounts to 6,600 square feet. This could generate
another $19,800 if the alley right-of-way is sold with the
balance of the redevelopment site.
Tax Increment Financinq. The redevelopment of the three
industrial sites will support a retail shopping center of
approximately 15,250 square feet. Using the following
assumption, the new shopping center would generate approximately
$41,180 annually in taxes.
Shopping Center Size:
Construction Value:
Shell Construction
Tenant Improvement
$15 00 ft
15,250 sq.ft.
Total Construction Cost
Tax Capacity
New Hope Tax Rate
$50.00/sq.ft.
$762,500.00
36,902.00
111.594
Estimated Tax Generation
Estimated Tax Generation Per Sq. Ft.
$ 41,180.00
$ 2.70
The three industrial sites are currently generating an
accumulative tax total of approximately $47,250. This frozen
base generates more revenues than the projected taxes. In this
case, redevelopment must rely on funds other than TIF funds
generated from the project. The site is located in New Hope's
Tax Increment District #8. As such, surplus TIF revenue could be
used to finance the project and cover the deficit in the tax
generation.
TOTAL PROJECT COSTS
REVENUES
Land Sale
Existing Cumulative TIF #8 Surplus
TOTAL PROJECT COST TO BE BONDED
TOTAL BOND AMOUNT
Project Cost
Capitalized Interest (8% @ 2.5 years)
$1,550,000
316,000
500,000
734,000
1,020,000
734,000
203,900
Bond Discount
Administration/Bond Counsel
Bond Sale
20,400
61,700
$1,020,000
ANNUAL PAYMENT AT 15 YEAR TERM,
8% INTEREST RATE
$ 129,052
PROGRAM PURPOSE
The purpose of the Economic Development Program is to assist communities in
addressing critical economic development needs. For purposes of this program,
economic development is defined as the stimulation of private investment in order
to expand, maintain or start a business. The desired result of economic
development grants is the creation of new jobs or the retention of endangered jobs
for low and moderate income (LMI) people. The program is not intended to
substitute for conventional business financing or to be used in place of other
specialized state, federal or local programs that may be better suited to the specific
project needs. Instead, grants from this program are intended to be used in
situations in which a funding "gap" exists, and alternative sources of public and
private financing are inadequate or are unavailable.
PROGRAM FUNDING
The Economic Development Program finances projects using state and federal
dollars.
Source of State Funds
Through the Economic Recovery Fund appropriated by the Minnesota State
Legislature.
Source of Federal Funds
Through a Community Development Block Grant (CDBG) appropriated by
Congress. A total of 15 percent of this appropriation is made available for funding
the Economic Development Program. The remaining 85 percent of the CDBG,
used to assist other types of community needs, is administered by the Community
Development Division as the Small Cities Development Program (SCDP).
NOTE: The decision to use state or federal funds to make grant awards will be
made by the Community Development Division and will be determined by
availability of funds and eligibility of the applicant to receive federal dollars.
THE ECONOMIC DEVELOPMENT PROGRAM
ELIGIBLE PROJECTS
Economic Development Funds can be used by communities to make a business
loan(s) for start-up or expansion purposes. The business may use the financing for
building construction or renovation, purchase of equipment or working capital.
Loan terms must be agreed upon by all parties involved. Terms for working capital
should not exceed five years; machinery and equipment should not exceed 10 years;
real estate should not exceed 20 years.Terms should generally match the terms of
other financing for the proposed project. (The applicant is encouraged to get a
personal guarantee fi.om the owner[s] of the business.)
Loan repayments received by the community must be used to establish a revolving
loan fund (RLF). The RLF must be used to further economic development in that
community by making additional business loans,thereby creating additional jobs for
low- and moderate-income people. If the grant is composed of state funds, the
community may keep the first $100,000 of principal repayment from the business
including all accrued interest repaid to that point. The remaining principal and
interest must be returned to the Community Development Division to make grants
to other communities. If the grant is composed of federal funds, the community
may keep all repayments by the business, including interest, for its RLE
Economic Development Grants may be made to communities for public facilities
projects necessary to support new or expanding businesses.
ELIGIBLE ACTIVITIES
Eligible activities for Economic Development grants include, but are not limited to,
the following:
* Property acquisition
· Site improvements
· Building construction
* Building renovation
- Purchase and repair of machinery and equipment
· Working capital (inventory and receivables)
· Professional fees
· Infrastructure improvements necessary to support new or expanding businesses
· Professional fees
· Administrative costs of applicants
THE ECONOMIC DEVELOPMENT PROGRAM
STATE AND FEDERAL OBJECTIVES
Eligible projects for Economic Development Grants must meet two of the following
state, objectives and one federal objective.
State Objectives
1. Creation or Retention of Permanent Private Sector Jobs
2. Leverage of Private Investment
3. Increase of the Local Tax Base
1. Creation or Retention of Permanent Private Sector Jobs
At least one job must be created or retained for each $20,000 of economic
development grant funds.
Created Jobs - Only those jobs created within the two years following grant
award will be considered. Secondary jobs created in the market place will not be
counted for this objective.
Retained Jobs - Acceptable documentation must be provided by the business to
demonstrate that it will reduce operations in the community or discontinue
operations in Minnesota within the next 12 months if state economic
development assistance is not made available. The number of jobs to be retained
must also be documented.
2. Leverage of Private Investment
At least one dollar of private funds must be leveraged for each dollar of economic
development grant funds. Private investment must be from sources other than
state, local or federal government appropriations. A Challenge Grant Loan,
administered through the Rural Development Board, may be used to provide up to
50 percent of the private investment required to qualify for a grant from the
Economic Development Program.
· Leveraged private investment must be in the form of new commitments,
specifically for the proposed project, that have not yet been expended and are not
contingent upon events other than approval of an economic development grant.
· A bank line-of-credit is not considered as private investment for purposes of this
objective.
4
THE ECONOMIC DEVELOPMENT PROGRAM
3. Increase of the Local Tax Base
At least a 50 percent increase in the value of the parcels of land that will be
directly assisted by the proposed project. Only those increases to the local tax base
directly resulting from the business being assisted will be considered. Acceptable
documentation from the local assessor of the current value and the projected
increase in value is required.
Federal ObjectiVes
1. Benefit to Low- and Moderate-Income Persons
2. Prevention or Elimination of Slums and Blight
3. Alleviation of Urgent Community Development Needs
Economic development projects are intended to create or retain jobs that benefit
low- and moderate-income (LMI) persons. Created jobs must be made available
and taken by LMI persons, and retained jobs must employ LMI persons. At least 51
percent of all jobs must be filled by LMI persons.
To make jobs available to LMI persons, the jobs created should not require
specialized training other than that which will be provided by the employer. Also,
advertising, recruitment and other outreach efforts must be made to contact and
involve LMI persons.
THE APPLICATION PROCESS
Applications can be submitted by eligible applicants on a year-round basis through
the Community Development Application process.
NOTE: The application process is described in detail in the Community
Development Application manual. Read this document carefully for complete
information on the community development application process.
THE REVIEW PROCESS
Economic Development Program staff will review and rate complete applications.
Applicants will be contacted for missing or incomplete information; this may delay
the processing of their application. At the discretion of the Community
Development Division, other technical and professional Community Development
staff may participate in the review and rating.
PROJECT RATING
Section I
Community Development m An Integrated Approach
Introduction to the Community Development Application
innesota's communities are made up of people with various individual and
collective needs. They are partnerships of institutions, both public and private,
working together to obtain common goals -- addressing the public needs of their communities.
These needs are diverse and often include parks and recreational facilities, adequate and
dependable water supply systems, safe sewage treatment facilities, commercial/industrial
development and expansion, renovated residential and downtown areas and other general
development projects. As a member of this partnership, the Community Development Division of
DTED administers a number of varied community assistance programs. And to make the goals of
communities easier to obtain, the Community Development Division has developed a single,
integrated application process -- the Community Development Application. Our goal is to help
you enhance your community -- making it a better place to live, work and play.
The Community Development Application
The Community Development Application, or the single application as it is more commonly
called, enables applicants to apply for financial assistance for up to six projects at a single time on
one application form. The two-part process of the Community Development Application enables
our professional staff to become involved with your project proposal(s) at an early development
stage, providing you with customized assistance and guidance to help make your projeci(s)
fundable or more competitive. The single application e~ables you to complete several common
project requirements at one time. It's been designed to be user friendly, and you'll receive
personalized direction for completing the application process. The Community Development
Application offers many advantages; we've designed it to better serve you and your community.
Section III of this manual will provide you with a general overview of the type of programs
administered by Community Development. Please review this section carefully before you submit
an application.
Additional copies of the Community Development Application manual can be requested from the
Community Development Office. They also are available at the following offices:
Section II
The Community Development Application Process
Tommunity Development Application provides a unique opportunity for applicants to
y for and receive Community Development aSsistance in a ne~v and innovative way. With
this application, the initial expression of a community's interest need not be expensive or time-
consuming. And it makes specialized technical assistance available throughout the entire process.
The Process
Complete the application forms in this manual and return it to the Community Development
Office. Based on the information (Part I) you provide, a project review team will determine
which Community Development program, or combination of programs, can best meet your
needs.
2. You will be advised how to make your projects eligible or competitive.
You will be provided a program manual(s) and a forms pa. ckage (Part II) composed of pro!ect-
specific supporting materials, that you will need to complete and return to continue the
processing of your application.
4. Or, you will receive information on other types of funding sources (such as federal, etc.) that
may better assist your project(s).
THIS IS NOT A GUARANTEE OF FUNDING.
However, you will know up front:
· which Community Development program(s) can best assist your overall needs;
· if your project(s) are eligible or how to make them eligible;
· the competitive nature of your project(s) and how to improve it;
· other sources of financing available to you if your project(s) cannot qualify or compete for
funding.
Section III
Available Assistance
C
ommunity Development programs administered by the Community Development
Division include:
· Agriculture Resources Program
· Capital Access Program
· Challenge Grant Program (through Minnesota Initiative Funds)*
· Economic Development Grant Program
· Energy Conservation Investment Loan Program
· Opportunities Minnesota, Inc. (OMNI)*
· Outdoor Recreation Grants Program
· Small Business Development Loan Program
· SmallCities Development Program
· State Independent Grants Program
· Tourism Loan Program
· Water Pollution Control Revolving Loan Fund
These programs provide diverse types of assistance to address overall community needs.
Applications may be made for grants and long-term, low-interest loans to assist:
1. Improving housing and commercial sectors to provide quality living and working conditions
for community residents and commercial activities.
2. Adequate and safe water, sewer and treatment facilities to support residential and business
needs.
Agricultural and economic development projects to encourage healthier local economies and
tax bases, and to strengthen and diversify the economic profiles of communities statewide.
Acquiring and developing parks and open spaces to enhance Minnesota's rich heritage of
natural resources.
5. Local and regional revolving loan funds for business startups and expansions to stimulate job
creation, private investment and economic growth.
6. Upgrading and development of tourism-related businesses to aid Minnesota's hospitality
industry.
Through our community-based approach to development, we can continue to help make
Minnesota's communities truly desirable places to make our homes, raise our families and conduct
our businesses.
* Projects referred for funding under these programs, through the single application process, will
receive and be required to submit a separate application.