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HRA 05/14/1992 - 6370HOUSING AND REDEVELOPMENT AUTHORITY THURSDAY, MAY 14, 1992 7:30 P.M. 11iii.im BURNS EXECUTIVE DIRECTQR CITY OF FRIDLEY A G E N D A HOUSING & REDEVELOPMENT AUTHORITY MEETING THURSDAY, MAY 14, 1992, 7:30 P.M. Location: Council Chambers Fridley Municipal Center 6431 University Avenue N.E. CALL TO ORDER ROLL CALL APPROVAL OF MINUTES: April 9, 1992 ACTION ITEMS: CONSIDER APPROVAL OF SATISFACTION OF MORTGAGE, ERNEST AND KATHLEEN BERGSTROM . . . . . . ... . 1 - lA CLAIMS AND EXPENSES . . . . . 2 - 2D • Innovative Irrigation (Lake Pointe - Estimate. #1) • Innovative Irrigation (Lake Pointe) • Expenditure Approval List dated May 8, 1992 • Billing for Operating Expenses for April 1992 and April 1992 Administrative Expenses INFORMATION ITEMS: RICE PLAZA UPDATE . . . . . . . . . . . . . . . . . . . . 3 q✓)-.� STATUS OF ONAN PROJECT . . . . . . . . . . . . . . . . . . 4 STATUS OF BOB SCHROER'S PROJECT . . . . . . . . . . . . . 5 CONSIDER AMENDMENT TO DEVELOPMENT CONTRACT, WAL -MART, INC.. . . . . . . . . . . 6 - 6C UPDATE ON REDEVELOPMENT AT 250 OS BORNE ROAD . . . . . . . . . . . . . . . . . . . . . 7 FINAL VERSION OF TIF POLICIES . . . . . . . . . . . . . . 8 - 8D CONSIDERATION OF NORTH METRO MAYOR'S ASSOCIATION INDUSTRIAL RETENTION PROGRAM. . . . . . . . . 9 OTHER BUSINESS CITY OF FRIDLEY JOINT CITY COUNCIL /HOUSING & REDEVELOPMENT AUTHORITY MEETING APRIL 9, 1992 CALL TO ORDER: Chairperson Commers called the April 9, 1992, joint City Council/ Housing & Redevelopment Authority meeting to order at 7:39 p.m. ROLL CALL: Members Present: Virginia Schnabel, Duane Prairie, John Meyer, Jim McFarland Members Absent: Larry Commers Others Present: William Burns, Executive Director of HRA Barbara Dacy, Community Development Director Mayor Bill Nee Councilmember Dennis Schneider Councilmember Nancy J. Jorgenson Councilmember Steve Billings Rick Pribyl, Finance Director Paul Hansen, Accountant Jim Casserly, Consultant APPROVAL OF MARCH 12 1992, HOUSING & REDEVELOPMENT AUTHORITY MINUTES• MOTION by Mr. Meyer, seconded by Mr. McFarland, to approve the March 12, 1992, Housing & Redevelopment Authority Commission minutes as written. UPON A VOICE VOTE, ALL VOTING AYE, VICE - CHAIRPERSON SCHNABEL DECLARED THE MOTION CARRIED UNANIMOUSLY. 1. DISCUSS TIF POLICIES Mr. Burns stated the objective is to develop a set of guidelines that will guide staff and the HRA in their dealings with various economic prospects. Prior to preparing the guidelines, staff (Barbara Dacy, Jim Casserly, and he) prepared a set of definitions to help understand the guidelines. Mr. Burns reviewed the Definitions and General Guidelines. Mr. Burns stated staff has already deleted item B from the General Guidelines, because it is practically the same as item J. HOUSING & REDEVELOPMENT AUTHORITY MTG., APRIL 9, 1992 PAGE 2 Ms. Schnabel stated that Item D in the General Guidelines states: "The City should not suffer as a result of HRA funding a project." She stated she is not comfortable with the word "suffer ". Mr. Burns stated staff will come up with some new wording for that item. Councilmember Billings stated he would get a little concerned that 3 -4 years from now, someone could look at item D and take it to mean that the City as a whole should not be negatively impacted. Councilmember Schneider stated.he also wanted to comment on item D. If they find something that is a high priority goal, maybe they will decide it is worth it to accomplish that goal. Councilmember Billings stated item D is just too broad.,, Ms. Schnabel stated she felt that the tone of that statement infers that the HRA would have a real liability on a development that somebody potentially would see it as a negative to the City, and it made her uncomfortable. Mr. Casserly stated that what this is really all about is an economic loss to the City because of HRA activities. He believed what they are trying to say is that the City will not have a net economic loss as a result of the HRA funding a project. They are trying to avoid an HRA action that would cause the City to incur losses. Mr. Burns stated staff would be willing to delete item D. Ms. Schnabel stated it is her opinion that items E, I, and K could be grouped together because they deal with developers as opposed to other things that go more with the City. She also thought maybe items C and H should be combined. Mr. Burns agreed that it seemed reasonable to group items E, I, and K together. Councilmember Billings stated that in item D, aren't they really trying to say that wherever possible, the HRA should consider the impact of their projects on state revenues? or should they address anything at all? Councilmember Schneider stated he is in favor of guidelines as a way to analyze things with some level of consistency, or to recognize that they are going to be inconsistent by choice. Up until now, they have not had anything written down. He also gets HOUSING & REDEVELOPMENT AUTHORITY MTG., APRIL 9, 1992 PAGE 3 concerned when they get more tax increment financing districts (item G). It gives them a benchmark. Mr. Meyer agreed with Councilmember Schneider that they are looking at the guidelines specifically as a benchmark. Mayor Nee stated it seems easier to just delete item D, but it is good language. The HRA members agreed to add the following wording to item D: Wherever possible,. the HRA will consider the economic impact of projects on the City's financial condition. Mr. Casserly stated that as the HRA struggles with its redevelopment activities, they may well exceed the 15% captured tax capacity (item G). The fact that they exceed 15% may be a sign that the HRA is successful, because it may mean that the HRA is being more active in taking on the tough redevelopment projects. The 15% is there as a "tickler ", but they should eliminate any negative connotation. Mr. Casserly stated the amount of assistance suggested in these guidelines is very conservative. It forces them to provide the reasons for why they want to exceed the 15 %, and that is a good exercise. Mr. Burns referred to the chart entitled "Maximum Amounts of Developer /User Subsidy. Staff is suggesting that this chart apply to subsidy. They are not setting any percentage guidelines. They are saying that once they have provided property at market rate, these guidelines apply to additional money the HRA gives the project. The projects have been divided into Economic Development projects and Redevelopment projects, with subcategories of Industrial, Commercial /Office, and Housing in each category. What is being suggested is in keeping with past tradition. Mayor Nee stated that what has bothered him for the last couple of years is on economic development. Does everyone who asks for assistance have a right to claim 5 %, or is there some test? Mr. Burns stated one of the major criteria is the financial credibility of the company. They want to give the subsidy to a company that has a cash flow that is going to support the debt service for the project. Mayor Nee stated that if the company does not need the money, don't give it to them. Mr. Meyer stated these things don't come down to whether a company needs the money. It is a matter of business as to which HOUSING & REDEVELOPMENT AUTHORITY M' community will give the company the competition between communities. Mr. Prairie stated he believed that Mr. McFarland stated it is probably needs, rather than what the company rG., APRIL 9, 1992 PAGE 4 best deal. There is is one of the tests. driven more by what the City needs. Mr. Burns stated he believed the main test is whether or not a project meets the City's goals, what value is it bringing to the community, and does the company have the experience and the financial wherewithal to do what it says it will do? Ms. Schnabel stated that for the last two years, she has been concerned about housing and that they are not putting money into housing. They have not been able to come up with the right project, but she would like to see the HRA find a way to get a program going. MOTION by Mr. Meyer, seconded by Mr. Prairie, to adopt the General Guidelines as amended: A. TIF policies are not law, but are guidelines only. They are subject to change based.on annual review of redevelopment priorities and projects. The guidelines may have to be exceeded based on the project's contribution toward community needs as determined by the HRA and the City Council. B. Every district should be self- supporting; however, in certain areas the HRA's redevelopment costs may greatly exceed the value of tax increment revenues generated in projects that fulfill redevelopment goals (i.e. housing rehabilitation projects or redevelopment from commercial to residential). Pooling of TIF revenues is desirable as a means of accomplishing difficult redevelopment goals (i.e., housing rehab). C. Wherever possible, the HRA will consider the economic impact of projects on the City's financial condition. D. Any developer /user must justify the requested assistance ( "But -For Test "). Wherever possible, the amount of TIF assistance for a project should be limited through the use of alternative financial incentives e.g. SBA 504 financing, industrial revenue bonds, or economic recovery fund grants. Developers and users should demonstrate the financial feasibility of the project. E. Whenever possible, the HRA should recapture its subsidy from the project. HOUSING & REDEVELOPMENT AUTHORITY MTG. , APRIL 9 1992 PAGE 5 F. The captured tax capacity shall not exceed 15% of the total tax capacity. G. The amount of TIF given to any project must be related to the contribution of the project to the City's redevelopment goals including creation and retention of jobs, enhancing the tax base, preserving the decline of tax values, eliminating blight and deteriorated properties, or meeting affordable housing /other housing objectives: UPON A VOICE VOTE, ALL VOTING AYE, VICE - CHAIRPERSON SCHNABEL DECLARED THE MOTION CARRIED UNANIMOUSLY. 2. DISCUSS HOUSING GOALS: Ms. Dacy stated that last year the HRA sponsored the Maxfield Housing Study. Over the last year, the City Council has made several comments about investigating other housing programs and what other communities are doing. Ms. Dacy stated the first goal for this meeting is for the HRA and the Council to provide staff with some general direction regarding their feelings and values about housing in general. The second goal is for the HRA and City Council to give staff some direction on a planning process. Ms. Dacy stated she has developed some group discussion exercises to help the HRA and Council accomplish goal #1, so her role is to give the HRA and Council information and to act as a facilitator. 'Ms. Dacy reviewed the current status of the housing market. Ms. Dacy stated that when they try to analyze an issue, it is always helpful to start with who is involved. As a brainstorming exercise, she asked the HRA and Council members to list who they think the stakeholders are in the housing issue. The members came up with the following list: seniors taxpayers businesses /employers school systems City.- Fire Dept., Police Dept., Housing Insp., Code Enforcement property owners County social services multi- residential owners absentee landlords social service system churches HOUSING & REDEVELOPMENT AUTHORITY MTG., APRIL 9, 1992 PAGE 6 financial community contractors realtors demolition companies repair people renters residents medical community families - single, single parent families, one - person households emptynesters people moving up City Council HRA Ms. Dacy stated that because of the "housing" cycle, focusing on one particular stakeholder may affect other stakeholders. Ms. Dacy reviewed a chart entitled, "Relationship Between Stake- holders and Lifecycle Housing ". Ms. Dacy stated that knowing what the current trends are, how do these things interrelate? If the City Council and the HRA choose to do nothing, what would the City of Fridley look like three years from now? The Councilmembers and HRA put together the following list: • less secure • rundown • downtown Minneapolis • selective pockets of deteriorated housing • not much change in 3 years - may not-be North Minneapolis yet • increase in absentee landlords • more fear of cultural diversity • more color • more people on assistance • more need for social services • decline in housing stock will result in lower prices for homes; lower income owners may not be able to keep up the appearance of the home, resulting in further decline in housing stock • may not be able to maintain housing stock • neighborhoods "on edge of trouble" • decline in tax base > education > service delivery • crime increase • need to do something now Mayor Nee stated he sees neighborhoods on the edge of trouble, but not yet in trouble. He can visualize the tax base declining which affects education and City and County services; and there HOUSING & REDEVELOPMENT AUTHORITY MTG., APRIL 9, 1992 PAGE 7 is the prospect of having more difficulty in delivering services that people need. He stated a kind of limited goal is to offset the decline in value of tax base by: • encouraging rehab • trust /community spirit • relying more on affirmative actions by HRA and City than on police power • helping people improve housing (multiples) • tapping existing pride Ms. Dacy stated that she has prepared an exercise to help the Council and HRA identify how well they agreed with the general recommendations of the Maxfield Housing Study. The Council and HRA completed this exercise. Ms. Dacy stated that staff has formed an interdepartmental team to make recommendations on initial programming and strategies to investigate for the long term. She stated she hoped that staff would have recommendations by July or August. The HRA members and City Council members concurred with this approach. 3. CLAIMS AND EXPENSES: MOTION by Mr. Prairie, seconded by Mr. Meyer, to approve the Expenditure Approval List dated April 3, 1992, check numbers 2208 -2211. UPON A VOICE VOTE, ALL VOTING AYE, VICE - CHAIRPERSON SCHNABEL DECLARED THE MOTION CARRIED UNANIMOUSLY. 4. CONSIDERATION OF FUTURE ADVERTISING EFFORTS: Ms. Dacy stated that in 1991, the HRA budgeted $11,000 for advertising, but decided not to pursue any advertising in 1991. In 1992, they have done three ads to date, two of which are in Corporate Report. The basic theme of the ad has been as a testimonial to some of the successful project that have already occurred in Fridley. After the first two ads, staff thought the HRA might want to take a different approach to try to focus on some positive aspects of Fridley, outside of the successful developments. Staff has prepared a third ad which will focus on the transportation aspects of Fridley and will be much more focused. Instead of a full page approach, they have decided to go to a half -page approach. Ms. Dacy stated that because of a half -page approach, if they wanted to feature a company like Medtronic or Onan, the ad could say "Home to...."; or another aspect of the half -page approach is HOUSING & REDEVELOPMENT AUTHORITY MTG., APRIL 9, 1992 PAGE 8 they could mirror it in a postcard if they want to market a specific redevelopment site. The postcard could be mailed to a targeted audience. Ms. Dacy stated the action needed by the HRA is whether or not they want to pursue a fourth ad in 1992. If they do, they will be about $4,000 over budget. The fourth ad would be featured in the fall issue of Minnesota Ventures. Minnesota Ventures will be doing a special focus section on the north metro area. Mr. Meyer stated he believed it is important for the HRA to keep its presence known in the field. Councilmember Schneider asked if other cities' HRAs run ads. Ms. Dacy stated, yes, they do. A number of the other member - cities in the North Metro Mayors' Association ran ads in the same Corporate Report issue and do so on a regular basis. It is a very competitive market. Ms. Schnabel asked staff if they feel there is a real benefit from these ads and to continue advertising. Ms. Dacy stated that one advantage for the ads for the future is that it seems to be a good vehicle to focus on a site if the HRA wants to market a particular site. She believed the postcard approach is very good. When they focus their advertising efforts, their effectiveness is going to be a lot better. She also liked the "Home to...." feature. It is a good way to improve Fridley's reputation and image and create better feelings about Fridley. Mr. Burns stated the HRA did not advertise last year largely because they believed they were far from resolving the Lake Pointe problems and because the economy was rather bleak. The economy has not completely recovered, but there are some signs that recovery is on its way. Mr. Burns stated that even though they have not had any specific responses to these ads, he believes the ads keep Fridley's name and image in front of the people who are making development decisions. He believed the Minnesota Ventures magazine is geared toward the smaller corporation and contains a lot of "how to" articles. They have not advertised in that magazine before, and he believed it is appropriate to try that particular market. MOTION by Mr. Meyer, seconded by Mr. Prairie, to authorize staff to put a fourth ad in the Minnesota Ventures magazine in 1992. UPON A VOICE VOTE, ALL VOTING AYE, VICE - CHAIRPERSON SCHNABEL DECLARED THE MOTION CARRIED UNANIMOUSLY. HOUSING &_REDEVELOPMENT AUTHORITY MTG., APRIL 9, 1992 PAGE 9 5. SAM'S CLUB EXPANSION: Ms. Dacy stated this is an information item updating the HRA on Wal- Mart's plan to add a 30,000 sq. ft. addition to Sam's Club. 6. REAPPOINTMENT OF JIM McFARLAND: Ms. Dacy stated Jim McFarland has been reappointed to the HRA. His term of office will expire on June 9, 1997. 7. BOB'S PRODUCE UPDATE: Ms. Dacy stated Bob and Mike Schroer are proposing a revised plan for the redevelopment of their site. Instead of constructing a brand new produce building, they will maintain the existing building and add a 9,300 sq. ft. addition on to the rear for Lyndale Garden Center. The HRA may consider this project at the next meeting. 8. RICE PLAZA UPDATE: This was an informational item. ADJOURNMENT: MOTION by Mr. Meyer, seconded by Mr. Prairie, to adjourn the meeting. Upon a voice vote, all voting aye, Vice - Chairperson Schnabel declared the motion carried and the April 9, 1992, Housing & Redevelopment Authority meeting adjourned at 10:15 p.m. Res ectfully sub itted, Lyii#6 Saba Recording Secretary I Community Development Department HOUSING AND REDEVEwPrwNT AUTHORITY E City of Fridley DATE: May 6, 1992 TO: William Burns, Executive Director of HRA A )_ A. FROM: Barbara Dacy, Community Development Director SUBJECT: Consideration of Approval of Mortgage Satisfaction for Ernest and Kathleen Bergstrom Ernest and Kathleen Bergstrom have contacted me to request that the HRA record the attached Mortgage Satisfaction document regarding the second mortgage on their property at 5760 - 3rd Street N.E. The Bergstroms were one of seven participants in the Large Family Home Ownership Program. If approved, the HRA will have approved four out of the seven mortgage satisfactions. As you recall, the program was designed to encourage homeowners to live in newly constructed homes for at least ten years. If the owner lived at the property for ten years, the second mortgage amount was forgiven. In the case of the Bergstrom mortgage, it was dated May 29, 1981, and was in the amount of $10,350. Recommendation Staff recommends that the HRA approve the recording of the attached Mortgage Satisfaction Agreement. BD:ls M -92 -307 1 I -A Satisfaction of Mortgage By Corporation KNOW ALL MEN BY THESE PRESENTS, That a certain Indenture of Mortgage, now owned by the undersigned, a Public Corporation, existing under the laws of the State of Minnesota, bearing the 29th day of May, 1981, made and executed by Ernest and Kathleen Bergstrom, husband and wife, as Mortgagors, to the Fridley Housing and Redevelopment Authority, a Minnesota Public Corporation as Mortgagee, and recorded in the Office of the County Recorder in and for the County of Anoka and State of Minnesota on the 6th day of June as Document 116633, is, with the indebtedness thereby secured, fully paid and satisfied upon the record thereof, according to the statute in such case provided. IN TESTIMONY WHEREOF, The said Corporation has caused these presents to be executed in its corporate name by its Executive Director this day of , 1992. FRIDLEY HOUSING AND REDEVELOPMENT AUTHORITY BY: William W. Burns Its Executive Director STATE OF MINNESOTA COUNTY OF ANOKA The foregoing was acknowledged before me this day of , 1992, by William W. Burns, the Executive Director of the Fridley Housing and Redevelopment Authority, a Public Corporation under the laws of Minnesota, on behalf of the Public Corporation. THIS INSTRUMENT WAS DRAFTED BY: CITY OF FRIDLEY 6431 University Avenue Northeast Fridley, MN 55432 (612) 572 -3590 CITY OF FRIDLEY PUBLIC WORKS DEPARTMENT 6431 UNIVERSITY AVENUE N.E. FRIDLEY, MINNESOTA 55432 FROM: City of Fridley Engineering Division TO: Honorable Mayor and City Council City of Fridley 6431 University Avenue N. E. Fridley, Minnesota 55432 DATE: MAY 15, 1992 LAKE POINTE DEVELOPMENT MAINTENANCE PROJECT #226 101 - 0664 - 435 -4340 -6366 STATEMENT O WORK RE: Estimate No 1 Period 4 -15 -92 to 5 -15 -92 FOR: INNOVATIVE IRRIGATION 10006 UNIVERSITY AVE.N.W. COON RAPIDS MN. 5543 2 CONTRACT ITEM ESTIMATED QUANTITY UNIT PRICE UNIT QUANTITY THIS ESTIMATE TOTAL TOTAL AMOUNT Maintenance Services 1.00 $25,945.00 LUMP SUM 0.143 0.143 3,706.43 TOTAL $3,706.43 CERTIFICATE OF THE CONTRACTOR I hereby certify that the work performed and the materials supplied to date under the terms of the contract for this project, and all authorized changes thereto, have an actual value under the contract of the amounts shown on this estimate (and the final quantities on the final estimate are correct), and that this estimate is just and correct and no part of the "Amou a Thh'' 3 stimate" has been received. By �/ Date `�� -72 Z— Contractor's Authorized Rep senta 've (Title) CERTIFICATE OF THE ENGINEER 1 hereby certify that I have prepared or examined this estimate, and that the contractor is entitled to payment of this estimate under the contract for reference project. CITY OF FRIDLEY, INSPECTOR B- Checked By �1. Date V ` Respectfully Submitted, fta—Joh G. Flora,P.E. Pubic Works Director 2A SUMMARY: Original Contract Amount $25,945.00 Contract Additions $0.00 Contract Deductions $0.00 Revised Contract Amount $25,945.00 Value Completed To Date $3,706.43 Amount Retained To Date (5%) $185.32 Less Amount Paid Previously $0.00 AMOUNT DUE THIS ESTIMATE 1 $3,521.11 CERTIFICATE OF THE CONTRACTOR I hereby certify that the work performed and the materials supplied to date under the terms of the contract for this project, and all authorized changes thereto, have an actual value under the contract of the amounts shown on this estimate (and the final quantities on the final estimate are correct), and that this estimate is just and correct and no part of the "Amou a Thh'' 3 stimate" has been received. By �/ Date `�� -72 Z— Contractor's Authorized Rep senta 've (Title) CERTIFICATE OF THE ENGINEER 1 hereby certify that I have prepared or examined this estimate, and that the contractor is entitled to payment of this estimate under the contract for reference project. CITY OF FRIDLEY, INSPECTOR B- Checked By �1. Date V ` Respectfully Submitted, fta—Joh G. Flora,P.E. Pubic Works Director " 2� .rte' t a -� v<- �a^•�y5� frcavl 1 nvoice Ii� �,eu.c� �j,•� /SS�i3� No. Date Your Order No. Sold To Shipped to 3l oed F h sz Our Order No. Salesman Terms F.O.B. Date Shipped Shipped VIA r Quantity Quantity Stock Number /Descri tion Ordered Shipped P Unit Price Unit Amount 7�797 S-q WilsonJones Carbonfess ©paghaP /Invoice 98 t. r Cd I i ih I F i n1I r-1 O-n v0N L3 \ i z t M1G1`�tt7Cdf•SOC•S P- i' I O 1 'O O. OD '0 0 fr A 0 0 v0 E 1 I bir- 40CDi- MTQ' 1` WA I 4CI I W•67aNCd>37MMM W CLa 1 M C P v 1 �N�+ rSi.�t 10 CL i i t 1 F t I z i I W I I E t I tft i 1 iL I � 1 i ira i i W i i H 1 i A { I i I 1 " I 1 a7 W L U c w WWWW> CL HmUW1MW A f i F X X X W W W J z Q I z i ZCC<JJ(LOO H i o i WFFFccWzW a 00 mix W ' L �LJ�JjJL� L U t YX¢ ( =3U iL-j i W i <WWWCCWHL i A i �+ •�-� •+ -+ E E .+ J Q G i i r i i 1 i R i i z i I Ci i i t i A i 1 O i t H ( { X i Yft MQ•n10r -0Ol0 W i UW i I �i'iai'iV4 -iN iw1 NNNNNNNNN tT}t i UZ l i U 1 I W t t z { I 1 i CL I I \ i i C I i 1 ! i 1 1 W A 1 1 z F i i D J i i H t i Erect! I 1 ULaaW i H > > > L W i { zco WWL0 i xwwwtliW- -LILLL t i ECLf�tYWLDOD I i UFFFaLO } }} } i W I F F F F} H H H xi M Z Z Z N J U U O a O i z i LUUUUJ }' F- i of Zccc cwj JJ M =) i pi w y Y x z W A A A O ¢ I z 1 HDODCL W H H H I W i J z z z c c a x x A Fz i > i UGCiCMUisL L W i i � i I N CL 0, O I i \ J I t O O > I i Ld AMA i E W I i A U a 1 i N N N N N N N N N WEU' ! 1 O.0 OlO•PO. to, O%a. WCtz i YW i \ \ \". \\\\\ Clam i OF i VT V Q'CPPVIt iLUW i W¢ 1 .+aa.i.a.+ 4+ i W D = i = A i \ \ \ \ \ \ \ \ \ CLCCLT J U i C Q�atCQ�tCV 2-C ALMA TO: FRIDLEY H.R.A. FROM: CITY OF FRIDLEY RE: BILLING FOR OPERATING EXPENSES FOR APRIL, 1992 AND APRIL 1992 ADMINISTRATIVE EXPENSES ADMINISTRATIVE BILLING: APRIL ADMINISTRATIVE PERSONAL SERVICES 13,631.00 APRIL ADMINISTRATIVE OVERHEAD 252.25 TOTAL ADMINISTRATIVE BILLING 13,883.25 APRIL OPERATING EXPENSES: SHEET PROTECTORS FOR HRA GUIDEBOOK 11.13 BINDERS 5.66 POSTAGE 24.87 HRA GUIDEBOOK - DIVIDERS /COVER/SIDE PANAL 403.19 COMMERCIAL REAL ESTATE MEETING 10.00 DELIVERY SERVICE 8.18 TOTAL OPERATING EXPENSES FOR APRIL 462.98 TOTAL EXPENDITURES 14,346.23 3 01- May -92 RICE PLAZA 1992 RENT :.:.........:....:. N.. 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CHILDREN CHARM 250.00 100.00 388.39 738.39 HONG KONG KITCHEN 877.02 791.83 789.84 800.90 3,259.59 MY SISTER'S CLOSET 672.30 672.30 600.00 600.00 2,544.60 CINNAMON SKIN TAN 5,600.00 900.00 900.00 900.00 8,300.00 BARGAINS BARGAINS 0.00 0.00 0.00 710.00 710.00 RAPIT PRINTING 1,076.00 1,076.00 1,076.00 2,152.00 5,380.00 TOTAL 8,225-321 3,690.13 3,465.84 5,551.291 20,932.58 YEAR TO DATE 8,225.32 11,915.45 15,381.29 120,932.58 1 20,932.58 DAIRY QUEEN 1,500.00 1,500.00 Community Development Department D HousnvG arm REnEwLOpMErrr AuzaoxrrY City of Fridley DATE: May 7, 1992 TO: William Burns, Executive Director of HRA 46, FROM: Barbara Dacy, Community Development Director SUBJECT: Status of Onan Project At Thursday's meeting, staff will be prepared to update the HRA regarding the Onan expansion project. Jim Casserly will also be in attendance. BD:ls 8 4 FRIDLEY MUNICIPAL CENTER . 6431 UNIVERSITY AVE. N.E. FRIDLEY. MN 55432 • (612) 571 -3450 . FAX (612) 571 -1287 May 6, 1992 Bob Schroer Mike Schroer Bob's Produce 7620 University Avenue N.E. Fridley, MN 55432 Dear Bob and Mike: This is to let you know that the original $2,500 that you deposited last fall for reviewing your tax increment financing application has. been expended. If you wish to pursue the tax increment financing application, please forward a check in the amount of $2,500. If there is any remainder after we are completed, we will reimburse you the remaining amount. I also understand from Michelle that because of other circum- stances, we are scheduling the final approvals by the City Council on your development applications for June 1, 1992. Should you have any questions, please feel free to contact me. Sincerely, Barbara Dacy Community Development Director BD: Is cc: William Burns, City Manager C -92 -147 G - r � Community Development Department PLANNING DIVISION City of Fridley DATE: May 8, 1992 TO: William Burns, City Manager, FROM: Barbara Dacy, Community Development Director SUBJECT: 1986 Agreement with Vantage Properties Because of the change in development plans at Sam's Club, it is necessary to amend the original agreements with the current -property owner, Wal-Mart Inc. The City and the HRA executed agreements with Vantage Properties in 1986. The revised agreement would acknowledge the revisions in the redevelopment plan and reiterate key concerns by the City and the HRA. Background The premise of the original agreements was to require a minimum amount of value and building square footage in exchange for soil correction assistance for both construction phases. As a result of the construction of Sam's Club (Phase I), Vantage Properties received $100,000. For Phase II construction, which was to be at least 60,000 square feet and $3,000,000 in value, the property owner could receive up to $50,000 in soil correction assistance. Proposed Agreement Jim Casserly and I have reviewed the agreements and recommend that as a condition of plat approval, the property owner agree to enter into a revised agreement and record it against the title of both the vacant property and the development property. Wal -Mart Inc. has advised us that they do not require any additional soil correction assistance. While they have not completed extensive soil borings on the remaining vacant property in the northeast part of the site, they are confident that additional financial assistance would not be requested from the HRA. Wal -Mart is attempting to market the remaining property and has already received interest from large sit -down restaurants and single retailer uses. A large sit -down restaurant would approximate 9,000 - 10,000 square feet and would require a 2 6-A 1986 Agreement with Vantage Properties May 8, 1992 Page 2 significant amount of parking. A retailer use may have a larger building square footage, but may not need as much parking area. With the creation of the pond to the north of Sam's Club, the proposed layout of the property has significantly changed since 1986. The vacant lot is now located in the northeast part of the site which eliminates any efficiency of adding onto the existing building. Given these site design concerns, we do not recommend that a minimum square footage or value be required in a revised agreement. We recommend that the City's main concerns remain with the appearance or "quality" of the development, willingness to contribute toward installation of the traffic light at 83rd Avenue, and that the use is appropriate for Fridley. The revised City agreement would contain the following: 1. Stipulate that the property may not be used for automobile related uses as originally stipulated in Section 4.4 of the 1986 agreement. 2. Stipulate that the property owner must contribute financially to the installation of the traffic signal at 83rd Avenue, or other improvements necessary to accommodate traffic from the area at 81st and 83rd Avenues. 3. Reestablish the "quality" development language to apply to the exterior of the building, landscaping, and other features of the development. The original HRA agreement adopted by reference provisions of the City agreement. The HRA agreement was necessary in order to provide soil correction assistance. Based on our recommendation, the former agreement would become void and there would be no necessity to execute a new HRA agreement. Recommendation Unless otherwise directed, staff will prepare an agreement to be approved by the City in conjunction with the approval of the final plat of Sam's Addition at the June 1, 1992 City Council meeting. Also, the HRA will discuss this item at the May 14, 1992 meeting. BD /dn M -92 -301 cc: Jim Casserly - Lb AVMHSIH HNn?i1 AVIS „,,,,, „—,,. 3nN3AV 4kUS?13AINn P.S. #92 -02 BRW Inc. for Wal -Mart — L- — — — — — — — —_- Existing lot Line 1 it -oN t° lardis 17— =--- - - - - -- ---- - - =-F• --- --- -__--R----- l SITE PLAN L a Tjldpffilled 1 �It U n 1 1 y.. 1 1 .,t 1 C4 I i 1 1 ar. 1 1 d I s 1 I � I I I I I P.S. #92 -02 BRW Inc. for Wal -Mart — L- — — — — — — — —_- Existing lot Line 1 it -oN t° lardis 17— =--- - - - - -- ---- - - =-F• --- --- -__--R----- l SITE PLAN L J Community Development Department PLANNING DIVISION City of Fridley DATE: May 8, 1992 TO: William Burns, Executive Director of HRA FROM: Barbara Dacy, Community Development Director SUBJECT: Status of Wal -Mart Project Wal -Mart Inc. contacted me earlier this week to notify me that they will be entering into a purchase agreement with property owners at the southwest corner of 85th and University Avenues for development of a Wal -Mart store at that location. Wal -Mart has already submitted an application to the Army Corps of Engineers to meet"the wetland mitigation requirements. I anticipate receiving the development applications (rezoning, plat, and special use permit) by the end of May. Construction could begin by mid - summer. I will keep you up to date about the project as it progresses. BD /dn M -92 -317 7 I _ Community Development Department HOUSING AND REDEVELOPMENT AUTHORITY City of Fridley DATE: May 8, 1992 TO: William Burns, Executive Director of HRA' . FROM: Barbara.Dacy, Community Development Director SUBJECT: Approval of Certificate of Completion for Redevelopment of Cub Foods Property The redeveloper has-completed all the stipulations and requirements to redevelop the former Cub Foods building at 250 Osborne Road. The building is now fully leased. The City Assessor has placed a value of $1,080,000 on the property which is about $50,000 more than we had anticipated. The HRA will begin to make payments to the redeveloper in August 1993 as required in the Development Contract. We have not had any problems since last summer about the parking of trailers on the property. The redeveloper has cooperated with City staff. BD:ls M -92 -314 LI � E::7 Community Development Department D HoUSnvc nm REnEVEroPMErrr Aumoxw City of Fridley DATE: May 7, 1992 TO: William Burns, Executive Director of HRA AfJi•� FROM: �f • Barbara Dacy, Community Development Director SUBJECT: Final Version of TIF Policies Attached are the amended TIF policies agreed to by the HRA and City Council at the joint meeting on April 9, 1992. The HRA members may want to file these in an easily retrievable location when TIF applications are submitted for their approval. BD:ls M -92 -311 I. g-A S e land► DEFINITION a subsidy needed to acQuovements• Cost versus t of money ublic imp p„ amoun struct p vel °per 1 • Cost the site' °r conof assistaire the site below prepare the �°O'�nt er to a0v A subsidy is the develop 2 ' that allows iaryet value • Development and / or its ent versus Economic refers to improved Redevel °pm usually r refers to unimproped B• RedeyelopTnen ernes - 1• blighted pr °p usually ref e c development on°Tni . 2• properties• Subd• 2) 3( Testa ' M 469 ,17 5 . .S a at e C • „But -For a does it come from • as follows.. n the °p ei ion 1 • Wher Testa isredeyelop onablY be eV ithin „But -For went or uld of real . tment the 2 • Tile r u h priuture and thnccessarY . u e m icip th oug f deemed to the ble fore seeable. financing is deem the use of tax increm ibis Expenses ce, clearan on D• Elig Lan acquisition demolit on oftfil1, ofr °base 1• La including compacts costs Site wor bacK_f illinn / includehalt 2• grading/ d pav i ying of asp an con traction UP to rooK-uP 3. Utility ontrol lights /signs Traffic c 4• s Relocation c right-of -waY li9htic 5• ndscaping on p�li costs includsidewalKs� d 6• ht- of-waY cons► curbs. 7 • Public a /r driveway ap per' of eligible boulevards ° le ards ring constructi °n p Interes t cost du a' expenses DEFINITIONS - PAGE 2 9. Administrative costs including supervision, contractors fees, inspection fees, and overhead 10. Consultant's fees including architectural /design, engineering, financial consulting, and legal /bond counsel 11. City assessments, including sanitary sewer, storm sewer, streets, and any costs listed above that are assessable 12. Contingency 13. Interest rate buy -down for housing only E. Project Costs are the cost of land, building, and equipment that are incurred within the first year from the start of project construction. f� II. GENERAL GUIDELINES A. TIF policies are not law, but are guidelines only. They are subject to change based on annual review of redevelopment priorities and projects. The guidelines may have to be exceeded based on the project's contribution toward community needs as determined by the HRA and the City Council. B. Every district should be self - supporting; however, in certain areas the HRA's redevelopment costs may greatly exceed the value of tax increment revenues generated in projects that fulfill redevelopment goals (i.e. housing rehabilitation projects or redevelopment from commercial to residential). Pooling of TIF revenues is desirable as a means of accomplishing difficult redevelopment goals (i.e., housing rehab). C. Wherever possible, the HRA will consider the economic impact of projects on the City's financial condition. D. Any developer /user must justify the requested assistance ( "But -For Test "). Wherever possible, the amount of TIF assistance for a project should be limited through the use of alternative financial incentives e.g. SBA 504 financing, industrial revenue bonds, or economic recovery fund grants. Developers and users should demonstrate the financial feasibility of the project. E. Whenever possible, the HRA should recapture its subsidy from the project. F. The captured tax capacity shall not exceed 150 of the total tax capacity. G. The amount of TIF given to any project must be related to the contribution of the project to the City's redevelopment goals including creation and retention of jobs, enhancing the tax base, preserving the decline of tax values, eliminating blight and deteriorated properties, or meeting affordable housing /other housing objectives. z _ , 43 a m �+ a A o � b a� a a W a w a A P4 0 w O 4) a 0 a� N A U A O H � H O H U W 0 ON I -r1 0 N to 0 4 4J N ?1 O A LO tc) LO O N H x I b a -rq a, k -V aP aP aP w LO to in pO H Ao 0 u b 4J ap as aP Ln in in H 9 -H a° U) in in O x IN. a� id U .H "A M W oM oM oM O in in in _ H O U H b a-1 ova oM cko in in in H zs O H 0 ON I 0 N to 0 4 4J N ?1 O A Q b cd to N O I b a 4J N U 43 U W -n O k a 0 4J P4 P4 b N O ON Cd 4J A O U O a H H W H O z h MEMORANDUM Municipal Center ri6431 University Avenue N.E. Fridley, MN 55432 CCIYOF '(612).571-3450 FRIDLEY Office of the City Manager William W. Burns TO: Barbara Dacy, Community Development Director FROM: William W. Bums, City Manager -/ DATE: May 1, 1992 SUBJECT: NMMA's Industrial Retention Program Barbara: This morning I attended a meeting with Joseph Strauss and representatives from Brooklyn Park, Brooklyn Center, and Blaine. They are considering the attached industrial retention program directed by a Joseph Strauss organization (Community Resource Partnership, Inc.) We need to respond by June 1, 1992. The cost to participate with the other three cities is $30,000 per year. I am suggesting that we put this on the HRA agenda for the meeting on May 14, 1992. We may want to evaluate other options in preparation for the meeting. Thank you. WWB:rsc 0 Multi- Community Business Retention .II Local Market Expansion Project Community Resource Partnership, Inc. May 1992 r 1992 Work Plan 1 Membership Benefits 2 Proposal 3 Survey (Parts I & IIl 4 Local Survev 5 Community Resource Partnerships, Inc. (CRP) "Multi- Community Business Retention and Local Market Expansion Project" 1992 WORK PLAN June 1992 - (4 -6 weeks) 1. Business list compilation effort - all participating cities 2. Segmenting data into SIC Code categories and create database July 1992 - (3 -6 weeks) 1. Design and customize respective local business questionnaire 2. Introduce the pilot program to North Metro chambers of commerce, and community and technical colleges. 3. CRP Recruitment and Training Sessions (1 -3 weeks) a. Recruit volunteers from North Metro chambers of commerce and community and technical colleges. b. Train CRP employees and volunteers on how to conduct survey interviews and present each respective cities' development strategies. Each city's community /economic development personnel will be invited to participate in all training sessions and are encouraged to use CRP materials as their make' their own business contacts c. Test survey model (2 -3 weeks) Twenty -five businesses will be selected and contacted for initial test survey effort. Critique sessions will follow before full -scale survey program will be executed (adjustments to either the survey or survey methodology will be made as appropriate). August through December 1992 1. Four city survey effort to begin CRP Project Manager will coordinate and begin scheduling on -site, interviews with targeted businesses. Department of Trade and Economic Development (DTED) survey, Part I, will be mailed out with letter from city official (Mayor, or appropriate staff member) and CRP announcing program and asking for cooperation as well as sharing projected benefits of program Four two - person teams compromised of a CRP employee and a city employee or community volunteer (i.e., chamber, community or technical college representative) will begin interviews on -site using DTED Part II survey form along with local questionnaire. 2. All data will be collected and entered into CRP data base - All "red flag" items will be noticed to appropriate. city coordinator for .handling - December 1992 1. Data collected to date will be analyzed to determine whether key objectives of pilot project are being achieved. This report will be produced for participating communities and DTED. MAN ANT . , N - My All sf Olt .. 'J .: - a . Ott.. d . w. r lit t oil 5 } r� Zito S h't f r 4 x , Business Retention/Market Expansion Project Community Benefits - Protect and expand commercial and industrial tax base. - Job creation opportunities. Detailed data on businesses operating in' community. Identification of locally -owned businesses having the potential to expand and create new jobs. Communication of pro - business message to business community. On -site communication of city's development strategies and plans. Identification of "red flag" issues raised by business community and opportunity to address said concerns and/or needs effectively and efficiently. - Opportunity to create network of available resources in community to assist and promote business retention and expansion. Business Retention/Market Expansion Project Chambers of Commerce Benefits - Program for members to promote their local communities. - Volunteer activity that provides networking opportunity. - Opportunity to recruit new Chamber members. - Opportunity to get feedback on Chamber activities and organizational effectiveness. - Detailed information on businesses operating in Chamber area. Business Retention/Market Expansion Project Community and Technical Colleges Benefits - Opportunity to connect with businesses needing job training programs. - Opportunity for students to participate in a live -field project. - Opportunity to expose educational resources to business community. - Detailed information on businesses operating in North Metro area. r '. �. i.. �r u w n s� • S! z. �t r � " r� iC • d L !L 1 a� d i 4 C Community Resource Partnership, Inc. " Multi- Community Business Retention And Focal Market Expansion Project Proposal ". April 1992 The initial objective of the Multi- Community Business Retention and Local Market Expansion Project is to collect basic business operational data and financial information for participating communities which includes: a) the number and types of businesses located in the community, b) the products and services available, c) key employment data, d) identification of business needs and problems, e) where local dollars are deposited and spent, whether local financial institutions support the local economy. A second set of collateral objectives will be to identify means of: a) stabilizing locally generated income, b) achieving business retention objectives, c) promoting locally owned businesses, .. d) matching resident employment and business skills with local needs, e) importing goods and services into the local economy through marketing strategies, f) finding ways to identify the informal local entrepreneur and encourage their development and growth, g) improving the quality of economic life in participating communities through marketing and promotional=- strategies designed to develop community based enterprises, h) designing and promoting local programs that streamline joint purchasing opportunities and co- ordinate cost saving service delivery systems, i) promoting local ownership, j) to promote local reinvestment of dollars generated in the local economy, k) creating an environment where business is encouraged to grow, be successful and become a partner in the local community, 1) securing public and private infrastructure expenditures that will enhance the local economy, and m) mobilizing local political power to help achieve these overall objectives. The Multi- Community Business Retention and Local Economic Expansion Project will be implemented by Community Resource Partnership, Inc. (CRP) on a contract basis. CRP will act as an independent contractor, and will execute the "Work Plan" described herein on behalf of participating communities. The "CRP Work Plan" will require that participating communities be committed over a period of time before the full work plan can be fully implemented. The "CRP Work Plan" will be divided into four specific phases: 1) Data Collection 2) Data Analysis 3) Strategic Recommendations 4) Marketing and Promotional Programs 1. Data Collection A local business census will be compiled. Each participating community will have its survey effort designed to fit its current promotional and/or marketing effort. CRP management and survey personnel will be trained to implement the survey effort consistent with each particular cities' marketing and promotional needs and goals. Data will be collected through surveys completed through the mail and by telephone. Hot - Line telephone numbers will be referenced in all mailed survey materials in order for recipients to easily access designated city personnel and CRP staff. This will allow for "red flag" type issues to be addressed. Data will be collected from businesses located in participating communities. The initial survey will .-focus on manufacturing, distribution, warehousing and related type businesses. All other businesses located in participating communities will also be surveyed. One survey document has been prepared by the Minnesota Department of Trade and Economic Development (DTED). In conjunction with the DTED document, a local questionnaire will be designed around local community questions and issues.. The data collected from both surveys will be compiled and converted into a data base which will be available to participating cities. Issues of confidentiality will be protected where necessary. All items identified through the survey process requiring an immediate response from a community will be "red flagged" and forwarded to the appropriate individual coordinating these issues (i.e., job training needs, city service problems, plant expansion needs, etc). The information developed from this survey effort will be shared with community or technical college personnel where there is a specific business retention or training need identified. Implementation: Depending on the number of participating communities this phase of the work plan will be executed over a 12 to 18 month period. Six to eight part-time people and ten to twelve volunteers will be designated to carry out this portion of the work plan. All survey personnel will be trained and supervised on a regular basis. Their work will be turned in regularly and a computer specialist will convert all local survey work into CRP's data base. Quarterly reports will be submitted to each participating community summarizing all. data collected and associated with their respective community. 2. Data Analysis Every six months a summary report will be produced for each participating community based on information in CRP's data base as of that tune. Using the data available through these diverse sources, a detailed analysis will be prepared which will identify: a) general business conditions, b) business retention opportunities, c) business skill levels available in the community, d) products and services that could be produced or sold by local businesses, e) products or services that could be imported into the local economy, g) business opportunities that can be matched with community job training resources, h) non - traditional patterns of economic activity that could be promoted and developed into new locally owned businesses, i) strategies that aggressively market local businesses, j) ways to encourage local reinvestment, and k) community resources that can be leveraged to maximize investment in the local economy. All analytical work and recommendations (" participated in the survey. Round -table communicate findings and recommendations. Chambers of Commerce. will be shared with business owners who business conferences will be scheduled to Data will also be shared with participating This portion of the " "Work Plan"" will begin within six to nine months of the initial survey work and will continue throughout the term of the project. It will be an on going process of updating information and identifying opportunities as data is collected and processed. 3. Strategic Recommendations This portion of the "Work Plan" will be conducted by a team of professionals who have experience in evaluating the kind of information collected. The team may include people with backgrounds in business management, development, strategic planning, economics, finance, educators with experience in business retention programs, marketing and public relations, and other disciplines where needed The information produced in. this phase of the "Work - Plan ", will identify specific action steps that local communities can take to assist locally owned businesses to expand and market their base business and improve their opportunity to broaden their market penetration, be it in terms of products and/or services. Specific business opportunity targets will be identified and will be communicated to participating communities. The general approach will be to build on local economic strengths while seeking economic diversification and market expansion for locally owned businesses. The following business opportunities will be identified: a) expanded product and service identification programs and creation of local business networking systems b) local marketing strategies and opportunities to keep local economy healthy c) linkage between local businesses and untapped markets These targets will be approached in the following manner: a) short term strategies (3 -5 years) b) long term strategies (5 years plus) 4. Marketing and Promotional Programs The objective here will be to give local communities the opportunity to communicate their findings to a broader market and attract other companies that are currently producing or marketing same or similar products or services. CRP will work with participating communities to prepare specific marketing and promotional programs designed: a) to help local businesses succeed and prosper, b) to increase the total amount of business that is generated within the local economy, c) to carefully create linkages between local businesses and new customers in expanded market areas. d) to act as a delivery system between the local community and community based - businesses, and the ultimate consumer located outside the local area. In addition, certain special events could be organized by CRP including, industry round table conferences, business retentionCob creation seminars in conjunction with the area community and technical colleges, and appreciation events in conjunction with local area chambers of commerce. MINNESOTA DEPARTMENT OF TRADE AND ECONOMIC DEVELOPMENT BUSINESS RETENTION AND EXPANSION SURVEY { PART ONE CEO or Manager's Name Title Business Name Address /City Telephone Interviewer Name Date Interviewed Office Use Only (To be completed by Local Coordinator) Survey Number City Legislative District Region County ZIP Code BUSINESS HISTORY 1. Location: Year business established Year present ownership /management assumed control Is this location the company headquarters? ............... If no, what is the location of the company headquarters? City State List additional company locations and their function: Location Function Yes No 10/91 1 BREFORM 2. Legal entity type: (Circle Only One) Corporation ......................... 1 r Partnership ......................... 2 t Sole Proprietor ....................... 3 Nonprofit Corporation ................... 4 Cooperative ......................... 5 Other............................ 6 3. Special Category: (Circle Only One) Minority Owned ...................... I - Disadvantaged ....................... 2 Female Owned ....................... 3 Not applicable ........................ 4 BUSINESS OPERATIONS 4. Primary Business Type: (Circle Only One) Agricultux e/Forestry/Fishing ................ 1 Mining 2 Construction........................ 3 Manufacturing 4 Transportation/Utilities ................... 5 Wholesale Trade ...................... 6 Retail Trade .......................... 7 l Finance/Insurance/Real Estate ............... 8 Services ........................... 9 , 5. SIC Codes or Major Commodities, Products or Services (Be as ,speci& as possible) SIC 1 SIC 2 SIC 3 6. Principal Market Area: (Enter this as a percentage of sales for each of the following categories.) Local............................ % Rest of State ......................... % National ........................... % International ......................... % Total should= 100% 7. Product Distribution (Circle One for Each) Original equipment or component manufacturer ....... Yes No Retail ............................ Yes No Distributor/Wholesale ................... Yes No Direct ........... ............... Yes No BREFORM 2 10/91 8. s Gross Sales Volume: (Circle Only One) Less than $100.000 1 $100,000 - $500.000 .................... 2 $500,000 - $1,000,000 ................... 3 $1,000.000 - $5,000,000 .................. 4 $5,000.000 - $15,000,000 .................. 5 More than $15,000,000 ................... 6 9. Production Scale: (This concerns the quantity of items produced.) (Circle Only One) Small (Prototype, one or two items) ............ 1 Medium........................... 2 Large (Long run - repetitive. high volume production) .. 3 , 10. Specialty and Expertise. (Provide a brief description of your company.) 11. Major Equipment: (List your major pieces of equipment.) 12. Major Customers: (Industry. rather than customer name) 13. Major Suppliers: (Raw materials or components) 14. Certifications: (Military Spec Production. supplier certifications) Location of Major Customers (Circle for Each Response) Local Rest of State National International 1 2 3 4 1 2 3 4 1 2 3 4 Location of Major Suppliers (Circle for Each Response) Local Rest of State National International 1 2 3 4 1 2 3 4. 1 2 3 4 10/91 3 BREFORM Questions 15 -19 are for manufacturing firms only. If not a manufacturer, skip to question 20. 15. Basic Industry: (Circle All That Apply) Sell as a Need to 1 service to Can do purchase from other firms internally other firms 1. Molding ......................... 1 2 3 2. Casting .......................... 1 2 3 3. Metal Stamping ..................... . 1 2 3 4. Machining ........................ 1 2 3 5. Fabrication ........................ 1 2 3 6. Assembly ......................... 1 2 3 7. Finishing ......................... 1 2 3 8. Manufacturing Services ................. 1 2 3 9. Process Industry ..................... 1 2 3 10. Other (please Vecify) 1 2 3 16. Do you use the following raw materials? (Circle For Each Response) _ Metals: 1. Stainless Steel ...................... Yes No 2. Cast Irons ......................... Yes No 3. Low Carbon Steel ............. ... ..... Yes No 4. High Alloy Content ................... Yes No 5. Aluminum, Brass, Bronze, etc . ............. Yes No / ` 6. Zinc ............................ Yes No 7. Copper .......................... Yes No 8. Mercury, Lead. Beryllium. etc . ............. Yes No 9. Other (please specify) Yes No Non - metallic: 1. Composites ........................ Yes No 2. Wood ........................... Yes No 3. Ceramic. Stone, Clay, Glass ............... Yes No 4. Polymers, Plastic, Elastomets .............. Yes No 5. Textiles ..... ...... .............. Yes No 6. Food Products ...................... Yes No 7. Other (please specify) Yes No BREFORM 4 10/91 • 17. Raw material forms: (That manufacturer uses in production) (Circle For Each Response) 1. Rods. Wires ....................... Yes No - 2. Filaments, Rovings .................... Yes No 3. Ingots, Scrap ....................... Yes No 4. Tubing, Pipe ....................... Yes No 5. Bars. Flats, Plate ..................... Yes No 6. Sheets, Coils ....................... Yes No 7. Rolled Shapes ...................... Yes No 8. Castings, Molded Parts .................. Yes No 9. Forgings ......................... Yes No 10. Extrusions ........................ Yes No 11. Granules. Powders, Resins ............... Yes No 12. Other (please specify) Yes No 18. Basic Shapes Produced: (Circle For Each Response) 1. Prismatic ....................... Yes No 2. Rotational ......................... Yes No 3. Columnar ......................... Yes No 4. Sheet ........................... Yes No 5. Wire Forms ........................ Yes No 6. Other (please specify) Yes No 19. Advanced Technology (Regarding technology that you currently have, or have future plans to acquire): (Circle All That Apply) Fully Implemented In and Process of Need Not Producing Implementing Information Interested 1. CAD - Computer Assisted Design ............ 1 2 3 4 2. CAM - Computer Assisted MAnufacturing ........ 1 2 3 4 3. MRP, MRP 11, etc .................. 1 2 3 4 4. Scheduling, Production Management Control Systems 1 2 3 4 5. Office Automation - Office Computerization ...... 1 2 3 4 6. SPC- Statistical Process Control ............. 1 2 3 4 7. SQC- Statistical Quality Control ............. 1 2 3 4 8. SPS- Statistical Problem Solving, Using Charts/Graphs. Taquchi Methods ..................... 1 2 3 4 9. Local Area Networks- Computer LANS ......... 1 2 3 4 10. Automated Inspection - Computerized Inspection Control 1 2 3 4 11. AMH - Automated Materials Handling ........ 1 2 3 4 12. Robotics - Manufacturing Robotics .......... 1 2 3 4 13. FMS - Flexible Manufacturing Systems ........ 1 2 3 4 14. JTT - Just In Time .................... 1 2 3 4 10/91 5 BREFORM EMPLOYMENT 20. Estimate the number of employees working: ! Full Time Part Time Seasonal Peak How many employees one year ago? 21. How many of your employees (full time equivalent) are in each of the following categories and what is - the average annual salary? Average Wage Number of per Employee Employees per Year 1. Scientists and Engineers ..................... 2. Other Professionals ....................... 3. Managerial ............................ 4. Commercial and Technical Sales ................ 5. Retail and Non - technical Sales ................. 6. Clerical ................................ 7. Services .............................. 8. Technical/Skilled Labor ..................... 9. Handler/Laborer ......................... 22. Have you had djfficulty recruiting or retaining employeesin the following skills categories? (Circle the appropriate code number and only answer for those occupations answered above. Answer for both recruiting and retaining categories.) (Circle for Each Response) Recruiting Retaining Easy .. Difficult Easy Difficult 1. Scientists and Engineers .............. 1 2 3 4 1 2 3 4 2. Other Professional ................. 1 2 3 4 1 2 3 4 3. Managerial .... . ................. 1 2 3 4 1 2 3 4 4. Commercial and Technical Sales ......... 1 2 3 4 1 2 3 4 5. Retail and Non - technical Sales .......... 1 2 3 4 1 2 3 4 6. Clerical ....................... 1 2 3 4 1 2 3 4 7. Services ....................... 1 2 3 4 1 2 3 4 8. Technical/Skilled Labor .............. 1 2 3 4 1 2 3 4 9. Handier/Laborer .................. 1 2 3 4 1 2 3 4 BREFORM 6 10/91 d 23. If it is difficult to recruit or retain employees, how important are the following reasons: 6. Employee Health Benefits ............. 1 2 3 4 7. Lack of Day Care ................. 1 2 3 4 8. Other ........................ 1 2 3 4 ` 24. Indicate any changes in staffing you plan in the next five years. 1. No changes planned ................... 2. Management ...................... . 3. Professional/Scientists/Engineers ........... . 4. Technical/Skilled .................... . 5. Clerical ......................... . 6. Unskilled ........................ . Retaining Not Very Important Important 9 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 (Circle One for Each Response) Significantly Decrease Recruiting Significantly Increase Not Very Important Important 1. No problem ..................... 9 1 2 2. Cost of Labor .................... 1 2 3 4 3. Lack of Skills .................... 1 2 3 4 4. Labor Shortage ................... 1 2 3 4 5. Personal Taxes ................... 1 2 3 4 6. Employee Health Benefits ............. 1 2 3 4 7. Lack of Day Care ................. 1 2 3 4 8. Other ........................ 1 2 3 4 ` 24. Indicate any changes in staffing you plan in the next five years. 1. No changes planned ................... 2. Management ...................... . 3. Professional/Scientists/Engineers ........... . 4. Technical/Skilled .................... . 5. Clerical ......................... . 6. Unskilled ........................ . Retaining Not Very Important Important 9 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 (Circle One for Each Response) Significantly Decrease (Circle Appropriate Numbers for Each Response) Significantly Increase 9 In Five Years 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 25. How important are the following personnel issues to your company and employees now attd how important do you eicpect them to be in five years? (Circle Appropriate Numbers for Each Response) Currently In Five Years Not Very Not Very Important Important Important Important 1. Lack of Appropriate Skills ............. 1 2 3 4 1 2 3 4 2. Rising Labor Costs ................. 1 2 3 4 1 2 3 4 3. Declining Labor Skills .............. 1 2 3 4 1 2 3 4 4. Labor Training ................... 1 2 3 4 1 2 3 4 5. Employee Health Benefits ............. 1 2 3 4 1 2 3 4 6. Retirement/Pension ................ 1 2 3 4 1 2 3 4 7. Flexible Work Schedules ............. 1 2 3 4 1 2 3 4 8. Day Care ...................... 1 2 3 4 1 2 3 4 9. Work Force Diversity ............... 1 2 3 4 1 2 3 4 10. Employee Parking/Commuting .......... 1 2 3 4 1 2 3 4 11. Organized Labor Issues ............... 1 2 3 4 1 2 3 4 12. Drug/AIDS Testing . ............... 1 2 3 4 1 2 3 4 13. Labor Management Relations .......... 1 2 3 4 1 2 3 4 14. Other (please specify): 1 2 3 4 1 2 3 4 10/91 7 BREFORM -r 26. What benefits do you offer your employees? (Circle for Each Response) 1. Single Health Cane ................... Yes No 2. Family Health Care ................... Yes No I Dental Insurance .................... Yes No 4. Retirement Plan ..................... Yes No How many vacation d= after one year employment? How many sick iI= after one year employment? BREFORM 8 10/91 a BUSINESS RETENTION AND EXPANSION SURVEY PART TWO LOCATION FACTORS 27. What factors do you currently regard as most advantageous or favorable to remaining, expanding or relocating within this community? (Specify up to four factors. Be as specific as possible.) 28. What factors currently discourage you from expanding or remaining in this community? (Specify up to four factors. Be as specific as possible.) 29. What importance do you give the following factors in considering remaining, expanding or relocating? FACTORS (Circle One For Each Response) Not Very Important Important 1. Labor Skill .............................. 1 2 3 4 2. Labor Availability ........ ................ 1 2 3 4 3. Roads (highways, local roads) .................... 1 2 3 4 4. Other Transportation (rail, air, water) ................ 1 2 3 4 5. Land/Facility Space (cost. availability. location) .......... 1 2 3 4 6. Permit Processes (zoning, building, environmental) ........ 1 2 3 4 7. Public Services (water, sewer, police) ................ 1 2 3 4 8. Utilities (electric. natural gas) .................... 1 2 3 4 9. Finance (equity, debt, venture, stocks) ................ 1 2 3 4 10. Government Programs (assistance, incentives, job training .... 1 2 3 4 11. Business Services (legal, financial, etc.) .............. 1 2 3 4 12. Market Access (local, regional, international) ........... 1 2 3 4 13. Supply Access (raw materials. components) ............ 1 2 3 4 14. Quality of Life (environment, recreation, culture) ......... 1 2 3 4 15. State Income/Sales Taxes ...................... 1 2 3 4 16. Other Imposed State Costs (workers compensation. unemployment insurance) ........ ........... 1 2 3 4 17. Property Taxes ........................... 1 2 3 4 18. Local Education (K -12) ....................... 1 2 3 4 19. Higher Education (universities, technical colleges) ........ 1 2 3 4 20. Other (please specify ) 1 2 3 4 10/91 9 BREFORM SERVICES 30. Are the services and the facilities within our community, as listed below, adequate for your current or future business needs? (Please circle the appropriate number below.) (Circle One For Each Response) Very Very Unsatisfactory Satisfactory 1. Roads ... ............................... 1 2 3 4 2. Sewers .. ............................... 1 2 3 4 3. Water ... ............................... 1 2 3 4 4. Police Protection ............................ 1 2 3 4 S. Fire Protection ............................. 1 2 3 4 ' 6. Solid Waste Disposal ......................... 1 2 3 4 7. Emergency Adical Services ..................... 1 2 3 4 8. Electdc/Natural Gras Services ..................... 1 2 3 4 9. School System ............................. 1 2 3 4 10. Facility Space Availability ...................... 1 2 3 4 11. Land Availability ........................... 1 2 3 4 12. Rail Service .............................. 1 2 3 4 13. Air Service .............................. 1 2 3 4 14. Local Economic Development Effort ................ 1 2 3 4 15. Local Capital Services/Banks . . . . . . . . . : . . . . . . . . . . 1 2 3 4 31. If you indicated that one or more of the community services were inadequate. have you contacted the city/county about the problem? ............................. Yes No 32. Did officials make a satisfactory effort to solve the problem? ............. Yes No 33. Was the problem solved? . ............................... Yes No BREFORM 10 10/91 BUSINESS CHANGES 34. At the facility in this community in the past three years have you: (l 1. Changed your mix of goods and services? .............. . 2. Added production lines? ....................... . 3. Modernized production technology? ................ . 4. Made other capital improvements to equipment or buildings? ... . 5. Expanded research and development spending? ........... . :ircle One For Each Response) Yes No Yes No Yes No Yes No Yes No 6. Increased employment? ........................ Yes No 7. Decreased employment? ........................ Yes No 8. Expanded labor /skill training? ..................... Yes No 9. Expanded elsewhere? Yes No 35. Which of the following changes do you plan for the next two years? (t 1. Changed your mix of goods and services? .............. . 2. Added production lines? ....................... . 3. Modernized production technology? ................ . 4, Made other capital improvements to equipment or buildings? ... . 5. Expanded research and development spending? ........... . :ircle One For Each Response) Yes No Yes No Yes No Yes No Yes No 6. Increased employment? ........................ Yes No 7. Decreased employment? ........................ Yes No 8. Expanded labor /skill training? ..................... Yes No 9. Expanded elsewhere? Yes No 36. If you indicated plans to relocate, where would you move? (Circle Only One) 1. Within this city ............................. 1 2. Within this county ........................... 2 3. Within Minnesota ........................... 3 4. Other (Where: ) 4 37. When would you relocate? (Circle Only One) 1. Within six months ........... 1 2. Six months to one year ......................... 2 3. One to three years ........................... 3 4. More than three years ......................... 4 10/91 11 BREFORM 38. What are your principal reasons for relocating or expanding outside of the City? (1 1. Labor supply/labor cost ....................... . 2. City services ............................. . 3. Inadequacy of land/facilities ..................... . 4. Incentives from other cities /states .................. . S. Minnesota business climate ..................... . -ircle One For Each Response) Yes No Yes No Yes No Yes No Yes No 6. Insufficient local capital ........................ Yes No 7. Other ... ............................... Yes No .39. Do you have current needs for or want additional information on: (A 1. Business plan /managementhnarketing information ......... . 2. Financing assistance ......................... . 3. High technology manufacturing ................... . 4. Job training assistance ........................ . S. Government procurement ...................... . ircle One For Each Response) Yes No Yes No Yes No Yes No Yes No 6. Exporting information ......................... Yes No 7. Permits and Licenses .......................... Yes No 8. Environmental regulations ....................... Yes No 9. City ordinances, zoning. etc ...................... Yes No 10. Employee Benefit Systems ...................... Yes No 11. Other information (please specify: ) .... Yes No If you answered "yes" to any of the questions above, please provide as much detail as possible so as to ensure an accurate referral. . BREFORM 12 10/91 LOCAL QUESTIONS Are there any businesses or services lacking in our community which would be of benefit to your business? � Have you had any difficulty working with a specific City or county department? What was the problem and with what department? Would you like to speak to a city/county representative in order to work on a solution to the problem you have encountered with government? What is the single most important project that could be undertaken to make our community a better place to operate a business? Additional Local Questions. I ocal Coordinator. Detach beforesubitiftfing to DTED, 10/91 13 BREFORM e; 44 OT: tz C" F7 3 k^ , r _ 4 5 fill A eL rr v a_. +n - iv •y pf _� -_ •,. � - _ - .ems:. AT AAA i MULTI - COAMUNTIY BUSNESS SURVEY IDES M_CATION Date: BusinessName: Address: City: State: zip- Owner/Contact Telephone: PROELE Products/Service: Year Established: Member of Chamber of Commerce? Employees: In This Location Since: YES NO TYPE FULL TIME PART TIME TOTAL Management Skilled/Technical Semi/Unskilled TOTAL Market Area: City Region County State Multi -State National International Other, Have you had any difficulty working with a specific city department? { City Services Building Codes Electric Fire Protection What was the specific problem? Local Issues Medical Real Estate Taxes Other areas of concern: NEEDS Garbage Collection Parking Parks/Recreation State Issues State Taxes Income Taxes (Ind. & Corp.) Unemployment Compensation Workmen's Compensation Product Uability Energy Availability Sewer/Water Streets Zoning Regulations Are there other business or services lacking in our community which would be of benefit to your business? Accounting Financing Advertising Labor Availability Business Location Marketing Business Management Assistance Raw Materials Employee Training Transportation (Air, Rail, Truck) COMMENTS: PLANS General Business Outlook: Excellent Good Fair Poor Business Plans: Rehab/Renovation Expansion Contraction Relocation, where? Are you satisfied with your current location? YES NO COMMENTS: CLOSE & FOLLOW-UP What is the single most important project that could be undertaken to make our community a better place to operate a business? t, Business Assistance Needed? If not a member, interest in joining Chamber of Commerce?, Follow -up Appointments? EVALUA770N Business Call Team 1. 2. 3. 4. Comments: 5. 6. ALL MFOJ? MATION WILL BE TREATED ONA CONF� BASIS Community Resource Partnership, Inc. 1992 O TH Whether they're buying, building or leasing, these Minnesota entrepreneurs think the time is right for real estate deals." BY DAVID SUSSMAN hree weeks after war in the Persian Gulf erupted, business owner Robert Bozich was able to see clearly through the murky economic outlook. While other executives were hesitating about decisions, Bozich was busy making plans to buy a new building, making the owners of a facility he covet- ed an offer they couldn't refuse. "We were heading towards recession, and no one knew how long the war would last, so each month that went by, [real-es- tate] sellers became more nervous," recalls Bozich, . , president and CEO of Malton Equipment Co., headquartered in Virginia, Minn. He made a cash deposit on his $750,000 offer and walked away from the deal with an ample 23,000 - square -foot facility on four acres of land in Fridley. Real- estate experts . _:�.. �.. have told rift kil f f !8t f 1 t! 1 i! Bozich he made a deal that would inspire jealousy in the most penny -wise business owners. But Bozich is also the first to offer a word of caution, saying that even the best - looking real- estate deals must be carefully scrutinized for weak links. The perfect space at the perfect price can quickly become golden shackles if proper precautions are nottaken. Therein lies probably the most - important and unfortunately, sometimes the most -often ignored —piece of advice for business owners considering a move for their companies: Whether your business is leasing, buying or building additional space, the age - old business axiom "caveat emptor" (let the buyer beware) is as appropriate as ever. Minnesota Ventures talked with three business owners who have recently relocated their companies. One purchased a build- : ing; one leased new space; and one chose to build the perfect fa- cility. Each offers insight on the process, some warnings about things to watch out for and advice on how to proceed. IMeal estate consultants, such as Greg Miller, senior vice- president of Towle Real Estate Co. in Minneapolis, say above all, business owners need to know what they expect from a move be- fore they look for new space. While an attractive space at an af- fordable price might seem a perfect match, business owners need to consider the future in making decisions today. "You don't want to buy a space and outgrow it in a year," Miller says. t MARCH / APRIL 1992 MuvwEsam VerrruREs 35 However, with that in mind, signs are that now is the time to make a move if your company is outgrowing its home. "If ever there was a buyer's market, that's what we're seeing," says Kim Culp, president of The Shelard Group, a real- estate consulting firm that also leases and manages more than 7 million square feet of space in the Twin Cities. Many of the real - estate projects that sprang up in the tremendous optimism of the 1980s have ended up back in the lender's hands, Culp says. And the not- so -eager lenders turned property owners are willing to make deals that favor the buyer or tenant, Culp adds. Last year, vacancy rates for office space reached 19.5 percent nationwide, while the Twin Cities had a 20 percent vacancy rate. Couple that with a slow marketplace, and buyers and renters might find themselves with the upper hand in space negotiations. The recession is causing many compa- nies to shed space at bargain- basement prices. There are even local rumors of leases that offer taxes and overhead in- cluded, with the property owner not prof- iting a cent from the arrangement. However, snatching up land or proper- ty just because the price is right is a little like going to a blow -out sale and buying a closet full of clothes that don't fit, Culp warns. "When you look at real estate, you have to find something that makes sense "If ever there was a buyer's market that's what we're seeing," says Kim Culp. for you." That's exactly what Superior Tool Company in Maple Grove did. The man- ufacturer of precision machinery moved into a specially built 22,600 - square -foot building on almost two acres of land just a couple of miles from its original facility last September. According to president and cofounder Dick Clifford, Superior Tool was quickly outgrowing its old 13,500- square -foot space. "It just wasn't the right layout and we were getting cramped," Clifford says. Part of the problem was the lack of separate, tailored space for the different steps required in the tool -and -die busi- ness, he says. While the company did consider either buying or leasing a bigger space, the spe- cific needs of the business and a healthy cash flow made construction the best so- lution for Superior Tool. Says Clifford: "We were big enough that we could justi- fy having our own building." The compa- ny also has the option to refinance down the road. In the past 11 years, the privately owned company has metamorphosed from just one employee with first -year sales of $600,000 to a staff of 31 employ- ees with sales of $3 million last year. The company was able to parlay its Robert Bozich of Mallon Equipment Co. says his rule of thumb is to buy enough land to double a company s sae m the MWO. 36 MwNiEsorA VENTURES MARCH / APRIL 1992 earning power into funding by using a loan from a local bank to cover construc- tion costs. The price tag for both the land and the new facility came to $900,000. Clifford says that any company that considers building its own facility should expect to see change in its original plans. The trick is to stay flexible. Also, Clif- ford says,-"You have to have an absolute- ly trustworthy relationship with your builder." Clifford worked with his long -time neighboring business, the YR Sharp Construction _firm, in constructing his new facility. "He wanted to stay in this location since he had been here for quite a few years," says Dennis Sharp, president of YR Sharp. "He told me roughly how many square feet he needed, and we put together some numbers for him." Sharp's firm, then hired the architect and subcontractors to finish the task. By asking a builder to draw up the plans fast, instead of an architect, Clifford feels he saved money. "Of course I'm a builder, but my opinion is, rather than go to an ar- chitect, go to a builder, it keeps costs down," Sharp says. With the amount of changes needed before the project is ready, it simply makes more sense, he ex- plains: "Once you have things laid out pretty good, it's, just a matter of having a draftsman lay it out" Plymouth -based National Design- wear also had a need for a different space, but it opted to lease rather than build or buy. The 20- year -old company makes sports clothes emblazoned with a variety of designs. Sales in 1990 were in the $30 million range, but slipped from there dur-` ing 1991's tough retail economy. National Designwear filed for Chapter 11 bankruptcy protection in late January, citing sluggish sales and some operational difficulties related to its recent acqusition by a group of investors who hope to bring the company back to profitability. Chair- man Mark Sheffert led that group of in- vestors in acquiring the company a little over a year and a half ago. Sheffert says the reason behind the need for a new space for the company was strategic "downsizing," designed to help the com- pany become more competitive and re- duce overhead. "We had six printing locations throughout the United States with almost A healthy cash situation helped Dick Clifford decide to build a new facility for Superior Tool. 300 employees, and we shut down those plants and consolidated in Minnesota," Sheffert says. The company now employs about 130 people. Deciding to lease a space is a decision Says MEN: "We were big enough that we could justify having our own building." that requires careful scrutiny, agree busi- ness and real- estate executives. "There are a lot of issues in making a decision regarding leasing," says Culp of the She- lard Group. "On the one hand, a compa- ny would be well served to sign a long- term lease because the rates are so low, but that reduces flexibility if you out- grow the space or your business needs change. There is a real balancing act in determining what the appropriate terms and rates are." Russell Nelson, president of real- estate consulting firm Bramen & Nelson, had these words of advice for any business that is considering leasing: "Plan early, minimally 18 to 24 months before your lease expires. Second, determine your needs and criteria first. Third, make sure you involve your internal resources, as well as any outside team you assemble, early on in the project. All deals today are taking a lot longer to complete. Every- thing from environmental approvals to Masai / Amu. 1992 MmESOra VEN nuts 39 0 lack of financing can lengthen the pro- cess. The difference between the `bid and the ask' in net -office rents is often enor- mous. There is no such thing as a 'typical deal.' It is like saying, 'What is the price of common stock ?' It is all over the charts." While National Designwear's new space offers 78,000 square feet compared to the 50,000 in Eden Prairie, nationally, the company filled as much as 200,000 square feet. Leasing the space simply made the most sense, Sheffert says: "The new building was pretty well set up for us, we didn't have to do a lot of reconfiguring." By leasing the property instead of buy- ing, Sheffert is also able to stay flexible in a rapidly changing market, according to Sheffert's broker, Phil Simonet of the Shelard Group. Also, small companies "All deals today are Nog a lot louller to complew, " says Russell Nelson. that lease in today's renter -hungry market can structure very attractive deals, Si- monet says. "In some cases, you would have a difficult time buying and paying less than you would leasing." Simonet worked with National Design ' wear for a number of years, establishing a long -term business relationship that was critical to the deal's success. "Phil [Si- monet] made our life easy," Sheffert says, "He helped us map out criteria, and we met with production people and em- ployees to find out what they wanted." Location was the most important re- quirement. The new building had to be in a nonmetro area to attract employment from outside the Twin Cities. Simonet found a site in Plymouth, and Sheffert liked what he saw. "We had bus lines right up the street and good access to the freeway system," Sheffert says. (The company also helped conserve cash by eliminating moving costs, doing much of the actual move themselves in compa- ny -owned trucks.) MARCH / APRII. 1992 MmNEsarA VEwuRo 41 Sheffert says the most important task in choosing a new space is getting every- one in the company involved in both the decision- making process and in organiz- ing the new space. He also stressed the need for a solid rapport between CE6 and broker. "If I were an owner, I would do a five - year lease," says broker Simonet. "Chances are that in two to three years, the market will be a lot different and will be more of a landlord's market." The ideal contract is a three -year lease with a renew- , al option for another two years. That way the company can stay or go according to their own needs and not the pressure of the property owner, Simonet explains. obert Bozich, the business owner who struck his real- estate gold during the height of the Gulf War tension, realized his company would need to move as long ago as 1988. It was then that Bozich, president and CEO of Mallon Equipment Co., realized his rapidly expanding com- 42 MINNESOTA VEM IZES MARCH /APRIL 1992 pany would need more space than the 12,000 - square-foot headquarters in Vir- ginia, Minn., could provide. Sales are brisk for the 42-year-old manu- facturer of "pad -mount switch gear." And Malton's product may well be the wave of the future. "Instead of having transformers, fttses and switches hanging off poles, our "if I were an owner, I would do a tive-year lease," says hroker Phil Simonet. equipment is used in putting power sys- tems underground," Bozich says. The company, which has 60 employ- ees, posted sales of more than $10 million last year, a growth of 17 percent more than the previous fiscal year. Malton's switch gear is distributed to states nation- wide, including Alaska and Hawaii. Initially, the cramped company almost acquired a competitor to give it both more market share and more room. How- ever, that decision would have forced Mallon to move outside of Minnesota, probably to Iowa or Texas, and company executives had difficulty warming up to that plan. In the late summer of 1990, company officials decided to keep Malton in Min- nesota. A friend of Bozich offered to sell the company a Vadnais Heights building he was vacating not far from Malton's of- fice. "That was almost a cut deal, but he ran into difficulty financing his new facility," Bozich recalls. Bozich reviewed his options. He was wary of leasing a new facility. "A well - established property owner will enter into a market like this with very low rents and attract you into a facility with a lease that almost entraps the tenant. When the mar- ket recovers, the property owner will tell you the good deal was in the past and he needs to get back in line with the value of his property." That puts the tenant between a rock and a hard place, Bozich says. For a short time, Bozich considered building a new facility Iin his same neigh- borhood However, he discovered the fi nancing waters were far friendlier for € buyers than builders. "I was told my eq- uity position would be substantially high- er [if I bought] because [lenders] would finance the market, not construction costs," Bozich says. Undaunted, Bozich still mulled over the idea of building but a keen - sighted at- torney pointed out a potentially big prob- lem to his client: "Our attorney men- tioned that our plans were too restrictive because we were trying to keep costs down," Bozich says. "We were restricting our own growth potential. We realized we were underestimating our needs." Malton executives "stepped -up their horizons" as Bozich put it They decided to purchase rather than build or lease, and they increased their size require- ments. A short time later, they found a facility in Fridley with the space the company needed It also fit the other cri- teria: It was on the north side of the city and east of the river. RUN discosered the f a Ng waters wepe far frleadller top buyers thso hultders. The former storage facility almost per- fectly met Malton's needs.., After $250,000 worth of additions and minor alterations,-the site was ready for Bozich and companyto move Bozich says he learned valuable lessons in the search for a new home. One particularly poignant lesson came from his banker as he finalized plans to purchase the new facility. "My banker asked me who I would sell the building to, and I thought to myself, `I haven't even bought the building yet, and he's talking about selling itl'" Bozich says. But the point was well taken Compa nies in transition and growth tend to enter into expansion activities, and a few years down the road, they find the space no longer suits their needs. Planning ahead saves numerous headaches and prevents a new space from becoming a potential concrete albatross. "[I realized] not only should I be damned careful of what I buy, but that made me even more cautious of buying sufficient land," Bozich says. His rule of thumb? Get enough land to double the size of your space should you want to later. Also, the owner of a growing business must also learn to use outside help: "Somebody that owns and runs a busi- ness has to learn to use consultants as a normal part of your operating style," Bozich says. p The Hot. SpoIt.,fortongmTerm Development in the Twin Cities Area South Saint Paul Inver Grove Heights For more information on how you can take advantage of development opportunities in Mpls. /St. Paul's Hot Spot, call L.0 1001 ROGRESS A DEVELOPMENT INITIATIVE Don Holbrook at (612) 451 -2266 Sponsored by South St. Pa u I FUTURE Inc. Inver Grove Heights Development Corp. Krech, O'Brien, Mueller & Wass, Inc. • Kassan V Properties Metzen Realty • Cameron Liquors 44 NIINNFSMA VENTURES MARCH /Amn. IW2