042291 EDAOFFICIAL FILE COPY
Agenda #4
CZTY om~ NEW HOPE
EDA AGENDA
EDA Regular Neeting #4
President Edward J. Erickson
Commissioner W. Peter Enck
Commissioner Gary L'Nerault
Commissioner Gerald Otten
Commissioner Markx Williamson
April 22, 1991
City Hall
2.
3.
4.
Call to Order
Roll Call
Approval of Minutes of April 8, 1991
Consideration of Request by Foremost, Inc. for City to Share Cost of
Drilling Test Wells to Determine Status of Contamination on Property
Other Business
6. Adjournment
Approved EDA Minutes
Meeting #3
CITY OF NEW HOPE
~4401Xylon Avenue North
Hennepin County, Minnesota 55428
April 8, 1991
CALL TO ORDER
ROLL CALL
APPROVE MINUTES
FEBRUARY 25, 1991
FOREMOST, INC.
Item 4
President Erickson called the meeting of the Economic
Development Authority to order at 8:50 p.m.
Present: Erickson, Otten, Williamson
Absent: L'Herault, Enck
Motion was made by Commissioner Otten, seconded by
Commissioner Williamson to approve the EDA minutes of
February 25, 1991. All present voted in favor.
President Erickson introduced for discussion Item 4,
Consideration of Request by Foremost, Inc., for Economic
Development Grant Program/Economic Recovery Fund
Application.
Mr. Donahue stated Foremost, Inc., 7825 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.
President Erickson stated the negotiations should be based
upon what the value of the building is on the regular
market with the existing problems. He recommended having
an appraisal conducted indicating the value of the
property if there was no contamination and what it is
worth with the contamination.
Mr. Donahue noted that Foremost, Inc. has filed a suit
against Electronic Industries for loss of property value.
He stated through the state's Economic Grant Program the
City may receive between $250,000 to $500,000 to
administer in the form of a grant or a loan to Foremost
for relocation. He stated the City is not committing to
anything at this time.
President Erickson stated applying for the grant appears
to be the first step and he is in favor of it.
New Hope EDA
Page 1
April 8, 1991
MOTION
ADJOURNMENT
Motion was made by Commissioner Williamson, seconded by
Commissioner Otten, directing staff to proceed with the
grant application. All present voted in favor. Motion
carried.
Motion made by President Erickson, seconded by
Commissioner Williamson 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
8:55 p.m.
Sincerely, ~_
Valerie Leone
City Clerk
New Hope EDA
Page 2
April 8, 1991
} REQUEST FOR ACTION
Orig~g Departme~ Approved ~rAgenda AgendaSe~ion
City Manager 4-22-91 EDA
Kirk McDonald Rem No.
By: Management Assistant By: 4
CONSIDERATION OF REQUEST BY FOREMOST, INC. FOR CITY TO SHARE COST
OF DRILLING TEST WELLS TO DETERMINE STATUS OF CONTAMINATION ON
PROPERTY
At the April 8th EDA meeting, the EDA supported the City pursuing
an Economic Recovery Fund application through the State Economic
Development Grant Program to assist Foremost, Inc. in relocating
and expanding their sheet metal fabrication business. They have
encountered problems marketing their property due to the ground-
water contamination problems generated by Electronic Industries and
have requested economic development assistance from the City. A
long-term goal for the City might be to assist in the relocation,
acquire the 3 industrial sites on 42nd Avenue, accelerate the
contamination cleanup, and redevelop the properties in conjunction
with the 42nd Avenue Redevelopment Plan.
Staff has met again with Foremost and they are agreeable to sharing
the cost of the grant application, but are requesting that the City
share in the cost of drilling test wells to determine if there is
contamination on their property. This information is essential
before the property could be acquired and marketed by the City and
is one of the items identified in the Planning Consultants report
that must be investigated if the City is interested in exploring
redevelopment. Foremost has obtained a plan and cost estimates for
the drilling from Delta Environmental in the amount of $22,000.
Mr. Allen Fredendall, President of Foremost, Inc. will be present
at the EDA meeting to present a formal request.
APR 19 '91 15:47 FRANK R BERMAN %612 340 1040
WILLIAM R. SKOLNICK, P.A.
ATTORNEYS AT LAW
720 NATIONAL CITY BANK BUILDING
75 SOUTH FIFTH STREET
MINNILAPOLIS, MINNI~SOTA $$402.! 109
(612)
FAX (612)
WILLIAM R. SKOLNICK
LUANN M. PI!TRICKA
April 19, 1991
BY FACSIMILE & U~8, NAI~:
Mr. Daniel J. Donahue
City Manager
City of New Hope
4401 Xylon Avenue North
New Hope, MN 55428
Rs: Foremost, Inc.
Dear Mr. Donahus:
This office represents Allen Fredendall and Foremost, Inc. Mr.
Fredendall owns ~he real proper~y in New Hope where his corporation
has been located for the past 18 years. His business employs over 35
people. Due ~o the environmental problems existing at the Electronic
Industries property next door, Foremos~ and Mr. Fredendall have
suffered certain financial hardships. One example is the
unwillingness of lending institutions to refinance the real property
(see letter attached).
We have had certain dis=useless with the City regarding the possible
alternatives including the City acquiring ~he property for
redevelopment and having ~he business moved to a new site within New
Hope. Further, you are aware a lawsuit has been commenced against
Electronic Industries for ~he damage caused by ~heir environmental
problems.
In order to move forward with our discussions it is necessary ~o have
testing of the water and soil conditions on the Foremost property.
am enclosing an estimate and sketch of the work to be performed by
Delta Environmental ConsUltants, Inc., a firm that are experts in this
area. The estimate to do the testing and prepare the findings is
$22,314.00.
Mr. Fredenda11 and Foremost respectfully request ~ha~ ~he city of New
Hope assist in paying for the testing work. Your recommendation is
that the City would pay for 2/3 (67%) of the cost. Mr. F~edenda11 and
Foremost would agree that this assistance by the City would be
reimbursed out of the ~roceeds of tbs lawsuit and/or any grant funds
tha~ would be forthcomang. Fore~ost will be willing to share equally
with the City the oosts associated with the grant application.
APR 19 '91 15:47 FRANK R BERMAN %612 340 1040 P.3
Page 2
Daniel J. Donahue
April 19, 19~1
we will be pleased to appear at the council meeting scheduled ~or
Monday, April 22, at ?:00 p.m. to answer any questions or be of any
other assistance.
William R. Skolnick
Enclosures
cc: Allen Fredendall
WRS: j rn
FORE\L0419.91D
340 1040
21, :~91 to our ~ank, ~e ~preclate the o~ortun~t~ to vlsl~
~r~:.e~m o~ l'o~r ~:anC l~c~e~ in ~ew ~o~e. 2'm ~ the
exist f~r the c~st
2~r cre~!t request until this issue has ~een res~!ve~ toth·
~a~ks ~at!sf~ctl~. ~f ~'o c~n ~e of ~n¥ further hel~
sJ[~.csrely,
v~.cs ~'resiEe~t
APR 19 '91 15:48 FRANK R BERMAN ~61£ 340 1040
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PROPOSED
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, · APR 19 '91 15:48 FRAMK R BERMAM ~61£ 340 1040
COST
RL-'¥'ISI'~ SIT~ ASSF, gSM:EL%"Z WO~ PLAN
,~ L"W ROPE~ M.L~NF..$OTA
SI.~TOTAL TASK I
$ 120,~
2.1 Soil Bo~ing~,,~fanItoring Wells
De!'m St~t't T~me
?homionLt. afi~n De~e,c~or
Soil go,~.~.s ~,1)
Monitoring WeIls {2)
S~'c)' Monitoring ',veils
2 ¢~.,s ~ $130iday
7 ~-el!s
SUBTOTA.L TASK 2,1 S 8,023.0o
APR
19 ~91 15:49 FRANK R BERMAN
2~
Monitoring Well ~ampl;n~
Dchm St~ff Time
_TA~gK :3 ,pR O.[=ECT .a.\'~i~Tl CAL CO.$T_~~-
SUBTOT.4.1. T~,~K 2.2
SL'~TO?~L T.-t~K 2.{
St~TOT.~L T.45K 2
S :~00,~
S I10. DO
$I--BTOT~L T45K 3 $ ],{
APR 19 '91 15:49 FRAMK R BERMAM ~612 340 1040
I~Ita ~taff Time
Senior
?roi~t i:'ro,"~istonal
Staff
Clcrkal
SUBTOTAL TA. SK 4
SUBTOT..~ PI~OSECT COST
1~ CONTINGENCY
ESTIM~,T£D PRO,IEC'T COST
5
$ L0~0.00
S
S ~20,00
P.8
,N'd!e:
jmr.,417
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
EconomicDevelopment 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, l 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:
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
Nor we ssoci Consultants, Inc.
U R 8 I~ L N G · l) N · 14 A R K E T R E S E A R C 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 Fredendat!,
President of Foremost, Inc.; James Lushine, Minnesota Departmen%
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 lim£ted size ef
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 £s
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
~or the damage to his land and building value.
4601 Excelsior Blvd.- Suite 41,0.Minngapolis, 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 follow£ng
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 of their property with
income to invest in its relocation site.
The three sites are located in the 42nd Avenue TIF District.
such, two revenue sources may be available for the project.
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. Th~s
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
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.
Testing be done to identify limits of contamination.
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 he~p
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 new tax laws, the
following implications would occur:
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
2. 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
4