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05-22-12
City of Lakeville Economic Development Commission Regular Meeting Agenda Tuesday, May 22, 2012, p.m. City Hall, 20195 Holyoke Avenue Lakeville, MN Call meeting to order 2. Approve April 24, 2012 meeting minutes 3. Election of Officers 4. Discussion on Proposed "Open to Business" Program 5. Update on Business Marketing Strategy Implementation Project 6. Director's Report 7. Adjourn Attachments: April 2012 Building Permit Report April 2012 Foreclosure Report "April: 3,100 fewer jobs in Minnesota ", StarTribune May 17, 2012 "MN manufacturers make a big comeback ", Mpls / St. Paul Business Journal May 11, 2012 "More manufacturing growth," StarTribune May 1, 2012 "Just Sold: 3 buildings in play as package makers come and go," Finance and Commerce May 2, 2012 "As home sales rise, builders smile," StarTribune April 30, 2012 "City loan underwrites Southdale Center overhaul," Finance and Commerce April 26, 2012 "New suburban flight: Apartments take off," StarTribune April 26, 2012 Item No. City of Lakeville Economic Development Commission Meeting Minutes - April 24, 2012 Marion Conference Room, City Hall Members Present: Comms. Tushie, Smith, Brantly, Schubert, Emond, Longie, Starfield, Vlasak, Ex- officio member Mayor Mark Bellows, Ex- officio member Lakeville Area Chamber Executive Director Todd Bornhauser, - Ex- officio member City Administrator Steve Mielke. Members Absent: Comm. Matasosky, Starfield. Others Present: David Olson, Community & ,Economic Development Director; Adam Kienberger, Economic Development Specialist,, Steve Michaud, Parks & Recreation Director; Dan Licht, Planning Consultant, TPC.' , 1. Call Meeting to Order Vice Chair Tushie called the meeting to order at 4:30 p.m. in the Marion Conference Room of City Hall, 20195 Holyoke Avenue, _Lakeville, Minnesota. 2. Approve March 27, 2012.Meeting Minutes - Motion 06.12 Comms. Emond /Schubert moved to approve the minutes of the .March 27, 2012 meeting as presented. Motion carried -Unanimously. 3. Election of Officers The EDC discussed voting: in new officers for 2012 and decided to allow additional time to consider who would be Willing to fill the elected positions. Motion 07.12 Comms. Emond / Longie moved to defer the election of officers to the next regularly scheduled EDC meeting. Motion carried unanimously. 4. Update on Review of Park Dedication Ordinance and Fees Mr. Mielke reviewed background information on the park dedication ordinance and introduced Dan Licht to review the EDC memo outlining an analysis of Lakeville's park dedication fees. Park dedication rates for single - family versus multi - family dwelling unit developments were discussed and the calculations used to determine the fees were detailed by Mr. Licht. Economic Development Commission Meeting Minutes April 24, 2012 Vice Chair Tushie noted that multi - family park dedication rates make it difficult to finance an apartment building project in Lakeville. He also asked if a reduction or exemption from the park dedication fee could be considered for affordable housing projects. He also asked about senior housing provisions and if different types have different park dedication fees. Mr. Licht responded that changes to the park dedication fee structure have been included to reflect different types of senior care levels (independent, assisted living, memory care). Mr. Michaud added that the revised park dedication fees are all based on demand formulas and are established to fund the remaining build out of the Lakeville parks system. He noted that the existing system is already overtaxed and will need to accommodate an additional 30,000 residents that Lakeville is 'expected to grow to at full build out. Vice Chair Tushie commented that he didn't think the revised. formulas for calculating park dedication fees is defensible if it were to be challenged again. Mr. Licht reviewed the state statute park dedication fees are based on and noted that it has been reviewed and supported by the City. Attorney's office. Mr. Mielke added that the challenge made by Shamrock development to cause this study is supported by the results presented in the memo which recommends an overall 38% reduction in land values. between 2008 through 2012. This land value reduction when applied to the calculation of park dedication fees in lieu of land results in a 25.6% reduction in park dedication fees for single - family units and a 29.7% reduction for multifamily units. The EDC discussed several components of the Lakeville parks and trails system and Mr. Michaud: noted that the individual components are continually reevaluated based on and usage trends. Comm. Vlasak asked if the park dedication fees can pay for anything besides new park development. He also commented on the demand for ice rinks and basketball courts in the city and how demand is prioritized for new park components. Mr. Michaud responded that park dedication fees can be used to purchase park land and other capital costs, but not for park maintenance. He noted that certain activities and uses such as ice rinks have an incredibly high peak demand, but that balance is needed in the types of facilities that are built into the system. Comm. Brantly noted the challenges in balancing the fee structure for park dedication. You have to try and please everyone while maintaining a balance that is both legally acceptable and salable to the general public. Mr. Mielke added that staff will pursue a similar analysis of park dedication fees for commercial and industrial development. 2 Economic Development Commission Meeting Minutes April 24, 2012 5. Update on Business Marketing Strategy Project Mr. Kienberger and Mr. Olson reviewed the EDC memo providing an update on the Business Marketing Strategy. Staff will be making a presentation to the Lakeville CVB regarding the strategy and has set up the next Partners meeting to discuss sharing portions of the new brand components. Comm. Longie requested additional detail on the timeline for individual components of the implementation strategy. Comm. Brantly suggested at some point retaining an additional consultant to provide additional details and ideas on selling the Lakeville brand. 6. Business Retention Visits Program and Spotlight on Business Program Mr. Olson reviewed the EDC memo and Mr. Bornhauser expressed his support for coordinating additional business visits in partnership with the Chamber of Commerce. Motion 08.12 Comms. Emond /Smith moved to support the business visit and Spotlight on Business program as recommended. Motion carried unanimously. 7. Director's Report Mr. Olson reviewed the Director's Report..,. . 8. Adjourn The meeting *as, adjourned at 6:10 p.m. Respectfully submitted by: Attested to: Adam Kienberger, .Recording Secretary R. T. Brantly, Secretary 3 Item No. 2 City of Lakeville Community and Economic Development Memorandum To: Economic Development Commission From: Adam Kienberger, Economic Development Specialist Copy: Steven Mielke, City Administrator David L. Olson, Community & Economic Development Director Date: May 22, 2012 Subject: Election of Officers Because City Council shifted board and commission appointments to the first quarter of the year instead of the end of the year, officer elections for the EDC will take place at this month's meeting. At the April meeting the EDC voted to defer elections to the May meeting. EDC members elected Jack Matasosky as Chair, Gary Tushie as Vice Chair and Bob Brantly as Secretary for 2011. Commissioners are asked to elect officers to serve the 2012 year. Item No. � City of Lakeville / Community and Economic Development Memorandum To: Economic Development Commission From: David L. Olson, Community & Economic Development Director Copy: Steven Mielke, City Administrator Adam Kienberger, Economic Development Specialist Date: May 22, 2012 Subject: Review of "Open to Business" Program The Dakota County CDA has facilitated two meetings with representatives of Dakota County cities during which the "Open to Business" Program has been discussed. The most recent meeting was held May 17 and included Chamber of Commerce Directors from Dakota County. "Open to Business" is a program operated by the Metropolitan Consortium of Community Developers (MCCD) based in Minneapolis. Dakota County is considering participating in the Emerging Small Business Program administered by MCCD that provides access to capital and technical assistance for existing businesses and entrepreneurs that are looking to start a business. The Open to Business program began in Brooklyn Park in 2010 and now operates in 15 cities in Hennepin County. In 2011, MCCD provided financing for 110 projects that received a total of $1.2 million in financing that leveraged $3.2 million in other funding. Some of the types of financing packaging that would be available to Open to Business Clients include: • Loan Packaging /Facilitation • Micro Loans • Four Percent Loan Program • Real Estate Participation Loans • Real Estate Acquisition Financing • Transitional Financing Additional information on these financing packages is included in the attached program information. In addition, participation in this program would allow small business owners or aspiring entrepreneurs access to the following technical assistance: • Business Plan development • Feasibility Analysis • Marketing • Cash flow and other financial projection development • Operational Analysis • City and State Licensing and Regulatory Assistance • Loan packaging, and other assistance in obtaining financing • Help in obtaining competent legal advice The minimum cost to make this program available in Dakota County is $100,000. MCCD has proposed annual fees for Dakota County cities based on population and employment that would total $130,000. The Dakota County CDA has indicated a willingness to cover one half of the cost of this program. That would bring the cost of this program to the City of Lakeville to $7,500 per year. If this program does proceed, staff recommends funding Lakeville's portion from our Economic Development Fund. This fund was initially established with repayments of a loan that was provided to New Morning Windows and funded by the MN Department of Trade and Economic Development. The funds retained by the City from this loan are required to be used to provide loans to businesses that are locating or expanding in Lakeville. There are currently no pending or outstanding loan commitments. The balance of the fund at the end of 2011 was approximately $65,000. The fund receives $2,000 to $2,500 in administrative fees from a private activity bond issue that was done in 2008. This will continue to be received annually until 2017. ACTION REQUESTED No action is requested at this time. Staff would recommend inviting a representative of MCCD to attend next month's meeting to explain the Open to Business program in greater detail. Attached is an email received from Todd Bornhauser after the May 17 meeting at the CDA. Provided that the details of the program can be worked out to the satisfaction of Lakeville and the other cities in Dakota County, this program would be an excellent addition to the City's toolbox of incentives that could be made available to existing and prospective businesses. Olson, David From: Todd Bornhauser <todd @lakevillechambercvb.org> Sent: Friday, May 18, 2012 10:40 AM To: Olson, David Subject: MCCD Program Good Morning Dave, I just wanted to follow up on our meeting with the Dakota County City /County Economic Development professionals and Chamber Executives on May 17, 2012 and the presentation on the Minnesota Consortium of Community Developers (MCCD) "Open to Business" program. Bases on the presentation of materials and the discussion we had after the meeting, I recommend that the EDC continue to evaluate joining this partnership /organization through the CDA for the following reasons: 1. Coordinated technical assistance for existing businesses and aspiring entrepreneurs - the ability to have someone in Lakeville on a scheduled basis that can answer questions, give guidance ect. 2. Access to capital through their small business loan fund. 3. Ability to use existing city revolving loan fund to and match with other dollars to have a greater impact. Also allows the city to utilize those dollars but the MCCD deals with the staffing and loan application /processing/ regulation issues. This program would be an excellent way to allow the City's economic development and Chamber to work together to provide and market value added services without hiring staff to administer an "in- house" program. Todd MCCD is TO BUSINESS in your community Who is MCCD? The Metropolitan Consortium of Community Developers (MCCD) is a 49 member association committed to increasing opportunities for development of quality, community -based projects through collaborative action on public policy issues, loan fund development, public education efforts, and long -term strategic planning. Through these efforts, we have been able to demonstrate the effectiveness and efficiencies gained by a shared vision and cooperation. Our mission is to: "work collectively to build strong, stable communities by leveraging resources for the development of people and places. " Our goals are to: 1) increase popular, political, business, and financial support for community -based housing and small business development organizations; 2) create access to loan capital and technical assistance for emerging entrepreneurs; and 3) increase the effectiveness of community -based development through coordination, collaboration, and capacity building activities. MCCD's work is centered on three distinct program areas: Emerging Small Business Program, Member Convening, and Public Policy. Emerging Small BusinessProgram: Provides capital access and technical assistance for existing businesses and aspiring entrepreneurs who are unable to fully access the commercial banking system. The organization funds or participates in an average of 50 loans per year, with loan amounts of up to $100,000. Along with capital, MCCD staff provides more than 2,000 hours of direct technical assistance to entreprenuers. Technical assistance services include business plan development, loan packaging, feasibility studies, cash flow and financing projections, marketing plans, assistance with licensing and filing requirements, and development of sound financial management and tracking systems. Historically, more than 80% of MCCD's loans have been to minority borrowers. For many of our borrowers the loans provide self - employment, and unique opportunities for advancement and personal enrichment as business owners that may not be available to them as employees. Open to Business is a part of the Emerging Small Business Program. Convening: MCCD acts as a convener for our members. This is accomplished through monthly meetings of our Housing Committee, Economic Development Committee, and St. Paul Task Force. Agendas for each reflect the focus of the participating members. Meetings typically involve guest presenters on topics of relevance, strategy sessions related to common concerns, or general updating and sharing among the attendees. On at least an annual basis, staff from the City of Minneapolis' Community Planning and Economic Development (CPED), City of St. Paul's Planning and Economic Development (PED), the Minnesota Housing Finance Agency (MHFA), the Family Housing Fund, and Hennepin County among others, would be invited. Public Policy: With the combined expertise of the leading community development organizations, MCCD has become a recognized and respected voice on housing, small business development, and inner- city commercial development. Through the work of our standing committees, MCCD shapes an annual policy platform and legislative agenda that is formally adopted by the board of directors. These documents provide direction to staff as to items MCCD takes the lead on, those that we support others, and those that we monitor. Aside from the adopted positions, MCCD responds frequently to new program proposals, changes in policy or procedures, and funding changes at the local, state and federal levels. MCCD is TO BUSINESS in your community What is Open to Business? MCCD's Open to Business program brings on -site business services specialists who can expand your community development staff's expertise in such areas as start-up financing and business plan development. We can respond to requests for business assistance when those requests are beyond the range of the services normally provided by your municipal agencies. Open to Business Technical Assistance Services in Dakota County: MCCD will provide intensive one -on -one technical assistance to small City /County business owners and aspiring entrepreneurs intending to establish, purchase, or improve a business in the City /County. Technical assistance includes, but is not limited to the following: ➢ Business plan development ➢ Feasibility analysis ➢ Marketing ➢ Cash flow and other financial projection development ➢ Operational analysis ➢ City and State licensing and regulatory assistance ➢ Loan packaging, and other assistance in obtaining financing ➢ Help in obtaining competent legal advice MCCD intends to hire a full time staff person once the minimum amount of contract is secured in Dakota County. This staff member will be based in Dakota and Carver County full time. The business advisor will be available to meet clients at the various city halls of municipalities that are OTB cities or at their place of business. This staff person will be based out of donated office space either at the Dakota CDA or another facility in the area. Currently in OTB cities in Hennepin County we hold two -hour "Test Drive Your Business Idea" sessions once a month. We plan to offer this service to Dakota County municipalities. MCCD has offered technical assistance services since 2003, primarily through our staff facilitator, Rob Smolund. Rob came to MCCD from the City of Richfield Enterprise Facilitation project — a Hennepin County supported initiative. In the years since, our program has added specialists in the areas of business accounting, finance, real- estate development, and regulatory compliance. We now offer a team of professionals and former business owners who can provide real world advice to clients, and tailor that support to meet each client's specific needs. Depending on the needs of the client, that assistance can include business plan development, feasibility studies, cash flow and financing projections, marketing plans, licensing and filing requirements, and development and implementation of sound financial management and tracking systems. Even if the client can obtain all their financing from a bank, staff will assist them in preparing their loan request and will advocate for the client with the bank. In essence, MCCD staff members become an advisor, an advocate, and a partner for that entrepreneur to lean on. In addition, each entrepreneur can draw on the diversity of backgrounds and expertise of our team MCCD is TO BUSINESS in your community of experts, gaining the kind of support more established businesses benefit from with hired professionals and/or Boards of Directors. Open to Business Access to Capital Access to capital will be provided to qualifying businesses through MCCD's Emerging Small Business Loan Program (see Exhibit B Small Business Loan Program Guidelines below). MCCD also provides its financing in partnership with other community lenders, banks or municipalities interested in making capital available to residents and/or businesses in their community. EXHIBIT B Small Business Loan Program Guidelines Loan Amounts: • Up to $25,000 for start-up businesses • Larger financing packages for established businesses • Designed to leverage other financing programs as well as private financing provided by the commercial banking community. Eligible Proiects: Borrowers must be a "for- profit" business. Business must be complimentary to existing business community. Borrowers must have equity injection as determined by fund management. Allowable Use of Proceeds: • Loan proceeds can be used for working capital, inventory, building and equipment and general business operations. Interest Rates: • Loan interest rate is dependent on use, term and other factors, not to exceed 10 %. Loan Term Length: • Loan repayment terms will generally range from three to five years, but may be substantially longer for major asset financing such as commercial property. Fees and Charges: • Borrowers are responsible for paying all customary legal and other loan closing costs. MCCD is To BUSINESS in your community Open to Business Loan Products MCCD manages a multi - million dollar loan pool consisting of a mix of State, Federal, Bank and private capital sources. We are able to structure financing packages for a variety of business purposes that are flexible and designed to either enhance a business's opportunities to leverage private financing, or act as a bridge to future financing be traditional capital markets. Below are some examples of the financing packages available to Open to Business clients: • Loan Packaging/Facilitation MCCD staff can assist potential borrowers with the preparation of business plans, cash flow and other financial projections and loan application materials. Our staff can assist entrepreneurs in identifying borrowing needs and accessing community lending programs that provide favorable terms and conditions for small business borrowers. We work with our clients to help them find the financing that best meets their unique needs. • Micro Loans Direct loans from MCCD for a variety of business purposes, including inventory, working capital, asset and equipment purchases, and start-up costs. Typical loan terms of 3 -5 years, loan sizes up to $25,000 for retail /service businesses, or $50,000 for manufacturing businesses. This program is targeted to start -up and early stage businesses that cannot secure financing from traditional commercial lenders. Four Percent Loan Program MCCD loans in partnership with private lenders for physical improvements and hard asset/equipment purchases. MCCD can provide financing of up to $40,000 at an interest rate of 4% provided that its funds are matched by an equal or greater amount of bank funds. The 4% rate is available for bank partnership loans provided that the term on the MCCD loan does not exceed five years. Real Estate Participation Loans MCCD loans in partnership with private lenders to provide gap financing for real estate acquisition projects — including projects financed through the SBA 504 program. MCCD matches the bank's rate. MCCD also matches the bank's term provided that the term does not exceed 10 years. • Real Estate Acquisition Financing MCCD, in partnership with private lenders, provides permanent term financing for commercial real estate acquisition — up to 90% of the property's appraised value. MCCD MCCD is To BUSINESS in your community will provide up to 40% of the appraised value, with the bank providing 50% and holding first secured position. MCCD will match the bank's rate with terms up to 10 years (though amortizations may be longer). • Transactional Financing MCCD provides short term loans for businesses whose cash flow cycle inhibits them from making regular monthly loan payments. Transactional loans are often used by construction contractors who have received or about to receive a construction contract with a community agency. MCCD can provide up front financing to cover the cost of labor and material associated with the contract. When the work on the contract is completed, the contracting agency issues a two -party check to cover the completed work, payable to MCCD and to the contractor. Larger loans are also available for businesses with performance bonds and escrow payment arrangements. Loan Origination and Servicing MCCD seeks to integrate its financing products with other available resources in its service areas. To facilitate that integration, MCCD may be able to originate, package, underwrite and potentially service loan funds or programs offered by the County, individual Cities, or other Development authorities. Partnerships in other Open to Business communities include management of community fagade /fix -up grants, packaging of City - controlled loan products, and full underwriting and servicing of Commercial loans with City funds "purchasing" a portion of the total financing. Where appropriate, MCCD and the municipal lending authority shall enact a separate agreement to govern the rights and duties of each party to such a partnership. MCCD is TO BUSINESS in your community Dakota County Fees: Based on MCCD's current work load and resources, we would have to have a minimum of $100,000 in annual fees to begin work in Dakota County. The individual city pricing is listed below. To avoid confusion on what city is an Open to Business city, we would recommend covering all of Dakota County for $150,000 annually. Whole population employment county OTB (2010) (2011) Annual Fee Dakota County 400,000 170,582 $150,000.00 Sort by population; largest to smallest Open To population employment Business (2010) (2011) Annual Fee Eagan 64,206 49,032 $ 15,000.00 Burnsville 60,306 31,656 $ 15,000.00 Lakeville 55,954 14,522 $ 15,000.00 Apple Valley 49,084 14,350 $ 15,000.00 IGH 33,880 9,647 $ 12,500.00 Hastings 22,172 8,303 $ 10,000.00 Rosemount 21,874 6,980 $ 10,000.00 Farmington 21,086 4,461 $ 10,000.00 SSP 20,160 8,112 $ 10,000.00 WSP 19,540 7,683 $ 10,000.00 MH 11,071 11,528 $ 7,500.00 City Total 379,333 166,274 $130,000.00 Marketing Open to Business. • Inform all city staff of OTB program, especially staff that has contact with prospective entrepreneurs and existing businesses. Have OTB staff make short presentation at city staff meetings • Feature OTB on website, especially advertise monthly walk in counseling sessions • Include article in city newsletter • Notices in utility bills • Promote program through local chamber of commerce • Coordinate meetings with key community bankers and OTB staff • Press releases to community newspapers on businesses helped by OTB item No. 5 City of Lakeville N�p Community and Economic Development Memorandum To: Economic Development Commission From: Adam Kienberger, Economic Development Specialist Copy: Steven Mielke, City Administrator David L. Olson, Community & Economic Development Director Date: May 22, 2012 Subject: Lakeville Business Marketing Strategy Timeline and Work Plan During April's EDC meeting the group discussed some of the recommendations of the Business Marketing Strategy report completed by Arnett Muldrow & Associates. It was requested that staff provide a more detailed timeline outlining the implementation of the recommendations from the document and report back to the EDC. Attached is a suggested timeline including the work that has been completed to date and estimations for completing additional components recommended in the Business Marketing Strategy. Action Requested: The above is intended to be an update on the progress of the implementation of the approved Business Marketing Strategy. Lakeville Business Marketing Strategy Implementation Timeline Completed items: - Official launch of the "Positioned to Thrive" brand at the State of the City Address - Produced pull -up banners showcasing the new brand - Ordered branded collateral (pens /notepads /coffee tumblers /decals) - Attending the Minnesota High Tech Association (MHTA) conference and networked with Minnesota technology companies while promoting the Lakeville brand — April 25 Linked Google Analytics to the City websites o Continue to monitor and track website traffic with Google Analytics - Developmentalliance.com o Added City contact information next to GreaterMSP data 2012 Items in progress: Develop final logo and tagline graphics and related brand designs - Communications department is working to finish this in the next several weeks - May /June 2012 Professional memberships /associations: - Economic Development Association of Minnesota (EDAM) o Update logo currently in ads (newsletter and website) o Updated upon completion of final artwork Potential sponsorships /conferences /advertising opportunities - EDAM Summer Conference sponsor /exhibitor space o June 6 -8, 2012 - Other industry conferences /sponsorships as available City website redesign - Community &Economic Development Website — www.lakevillebusiness.com o June /July 2012 Lakeville cable TV production /videos (in- house) - Continuing "Out and About" segments as part of the City Limits show on cable channel 16 - Produced quarterly 2012 Business Bullets newsletter - Monthly business newsletter - Incorporate new graphics and tagline as ready - Ongoing through 2012 Print advertising: - Met with Sun ThisWeek newspaper regarding ad rates - Exploring other print ads as recommended - June /July 2012 Social Media integration - Facebook o Utilize Hootsuite and Pagemodo applications - Twitter • Incorporate Twitter feeds into website • Greater MSP feed • Other relevant business /local news feeds - YouTube channel o Currently features Lakeville Government TV (LGTV) productions - Third quarter 2012 Partnership Committee - Meet monthly with representatives from ISD 194, Lakeville Chamber /CVB, DLBA and EDC o Next meeting scheduled for Monday, May 21 - Ongoing through 2012 Costar: - Property information and broker data - - Would allow us to be able to better accomplish the "provide relevant data to site selectors" recommendation of the report - Met with a representative regarding pricing and data licensing - Could be implemented as early as June 2012 i Item No! City of Lakeville 0 Community and Economic Development Memorandum To: Economic Development Commission 0 From: David L. Olson, Community and Economic Development Director Copy: Steve Mielke, City Administrator Adam Kienberger, Economic Development Specialist Date: May 18, 2012 Subject: May Director's Report The following is the Director's Report for May, 2012. Status of DEED Infrastructure Grant Application DEED has recently notified the City that our grant application to fund street and utility extensions for Airlake 70 located east of Cedar Avenue has been approved. However, DEED will not release any grant funds until a business that meets the grant program's criteria as an "Innovative" business has committed to locating in the Airlake 70 Development. This will likely result in a delay in the construction of the infrastructure until an eligible business commits to locating in the development. Further updates will be provided at the meeting. Building Permit Report The City issued building permits with a total valuation of $28,919,608 through April. This compares to a total valuation of $16,222,485 through April of 2011. The City issued commercial and industrial permits with a total valuation of $2,137,500 through April compared to a total valuation of $3,464,500 during the same period in 2011. The City has also issued permits for 68 single family homes through April with a total valuation of $20.138,000. This compares to 31 single family home permits through April of 2011 with a total valuation of $9,150,000. Development Update ConAgra: The City issued a temporary Certificate of Occupancy on May 14 to ConAgra for a 27,000 square foot warehouse addition on the west end of their plant. ConAgra starting moving into the space this week. Genpak LLC: The company is completing work on the former Berry Plastics Plant located at 8235 - 220 Street that it purchased in late 2011. The City recently issued a building permit to allow Genpak to construct a small addition on the north side of the existing building for a paint mixing room. Several of the production lines have been moved from Bloomington and are up and running in Lakeville. The remaining production lines in Bloomington will be removed by June 30 and up and running in Lakeville by the end of August. All but one of the 100+ employees in the Bloomington plant have elected to continue working for Genpak at the new Lakeville plant. Hosanna / Ebenezer Senior Housing Project: This 93 unit senior housing project is completely enclosed. Drywall is being installed through -out the building. Model units are planned to be available soon. Krause - Anderson is the general contractor and plans to complete the project this Fall. Roffe Container: This is a new plastics manufacturing company based in Moorhead, MN that received approval of a Conditional Use Permit from the City Council on Monday, March 19 to install several silos at this former Genpak building on Hamburg Avenue in Airlake. Roffe has made application for a building permit to make the necessary interior alterations. Walmart Project: The contractor is now pouring floors and doing interior partitions. Work is expected to be begin on the parking lot in the next several weeks. Immel, the general contractor for the project, plans to turn the building over to Walmart by Labor Day and Walmart would open the store sometime in October. Foreclosure Update Attached is a copy of the February Foreclosure Update from the Dakota County CDA. There were 30 Sheriff Sales during the month of April. The total number of Sheriff Sales through April is 101 compared to 284 in all of 2011. 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A O N Vt —I N W 00 A J W �l W tD t.A -4 O W E A N �--' 0 C C O O O O O C C C C C C W C C O O O C O O O O C O O O O �- �O tr A b W 0 � N -P C1 LA (.A �] J N W V N_ 00 O C O O 0 0 0 O O O O O O O w O 0 C 00 O O cA C 00 O w .- C O O O O C O O O C O C 0 0 0 0 O C C O C C O O O O O O C C O O C O O 0 0 0 C O O O coo C C C C C O C C cc O C O O O O W J aD O C O O O O Q w O O C O O C U :;� s C O O f N f O i C O C C J = W 00 O U O O O O J W O C C C C i f f . O W O O O CI C C ICI C O C IOI O O IC LA fT N N N C� W - O W i C V i i O . 0 c 0 O O O O C w tit C C f f 00 1 Q v W LA ? 00 c LA 0 N OO C cn O O w C 0 f C C C C C O C C If CI C C ICI C C C ICI C C ICI C C C C ICI C C C C C C C C I, O O O O O C C C C C Oo O O T N t!� C O to J O O O O W O O� W J J O 00 � O w O O � w O C C C O O O O O O O O O C O t From: Lisa Henning Date: May 15, 2012 Re: Foreclosure Update Foreclosure Information Sessions Scheduled The Dakota County Community Development Agency (CDA) will be hosting free foreclosure information sessions on a monthly basis through September 2012. All sessions will be held at the CDA's office building, which is located at 1228 Town Centre Drive in Eagan from 6 -7 p.m. The foreclosure information sessions are scheduled as follows: • Thursday, May 24 • Thursday, June 21 • Thursday, July 26 • Tuesday, August 28 • Thursday, September 20 The sessions will include general information about the foreclosure process and possible loss mitigation options presented by certified housing counselors. The presentation will begin promptly at 6 p.m. Individual appointments can be scheduled following the event. Pre - registration is required To pre- register, homeowners should call the CDA's foreclosure intake line at 651- 675 -4555. After registering, visit the CDA's website at www.dakotacda.org /homeowners.htm to download a foreclosure counseling application and authorization forms. Documents can be emailed to skehoe(gD-dakotacda.state.mn.us faxed to 651- 287 -8026 or dropped off at the CDA's office. Packets should be addressed to CDA Foreclosure Counseling Team. If homeowners are unable to provide the required documents beforehand, please plan to arrive at the session at 5:45 p.m. to complete the paperwork. For more information or to speak to a housing counselor, call the CDA's foreclosure intake line at 651- 675 -4555. 1 Dakota County Stats — April 2012 • # of Sheriff Sales in April — 171 (compared to 191 in April 2011) • Total Sheriff Sales for 2012 — 588 (compared to 704 Jan. -April 201 1) • # of Notices of Pendency Filed in April — 257 • Total Notices of Pendency Filed in 2012 — 1,070 A Notice of Pendency is filed by a mortgage company's attorney as official notification that the foreclosure process has begun. Not all of these result in Sheriff Sales. Mapping Using Dakota County GIS http://gis.co.dakota.mn.us/website/dakotanets!is/ The Dakota County Office of GIS is updating the 2012 Foreclosures and Notice of Pendency layers on a monthly basis. If you need assistance using this Web page, please call Randy Knippel or Mary Hagerman with the Office of GIS at (952) 891 -7081. In The News Provided in this PDF file are a few notable foreclosure articles that were published in the last month. Among the points of interest: • The number of foreclosures in Minnesota during the first quarter of 2012 fell to the lowest level since 2007. If you have any concerns, please call me at (6S 1) 675 -4467 or send me an email at Ihenning _an__dakotacda.state.mn.us • t x� i w L 3 O u L 0 4J V 41 O fA a� s H — a, Co C4 %D N (7, V L _ (7, off 00 .O O C4 N — C O N N M N - -- N -- � — V1 M Co N Ln — N CC V 1� O h V*.o co V 140 N� Cr C% V M M N V N N Ln O' 00 H Vf O N Z 4J u C V V O — ,� h — r J Ln IA H M � Q co 3 CO c M r4 CC C. Ln Ln p . C� Co r Q — N M — ,n _ 'O M 1� Oz N co N Co t� I� M N O% CO N co O N . O `� ;; N Ln c. 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CL � •� C b0 4J O V) N u J C td _ •£ �+ L • 0) 0 4J h l Q H Q- Q 3 m W m U. > = ed JE d O O N G W O H C 41 75 H fD L N N N L L -p O ` o Z V C C � b E O -C N N � U o � L N G1 L � 7 O C L � o U N V j L 0 L V C � o U a Y o 0 a C [0 C U 7 0 o U o a�i Y Eo O t � T 0 C C fd •– E O C G) d D C d 0 "- E O w eV V O N Z 4= O L l� N V N � fd CL W -0 0 E _uZ 0 N O Z ( N LU r Os Z O1 V IA C 0 V C 4 C U� d Ln N � Q) C Ln 3%0 0 v = E u 2 o N OA QO ft1 U$ 0 4� 0 ° C Cd c O • f� N_ E > 0 C N 0 E O L- Page 1 of 1 Publication: Star Tribune; Date: May 5, 2012; Section: Business; Page: D1 Minnesota foreclosures lowest since 2007 Though foreclosures fell in most counties in the first quarter, some in exurban areas saw rises. By 7IM BUCHTA jbuchta(t@startribune.com Foreclosures fell to their lowest level since 2007 across the state, but there are still some counties where the problem is getting worse. According to a first- quarter report from HousingLink, there were 4,836 sheriff's sales from January through March, or 10 percent fewer than the same quarter last year. Dan Hylton, HousingLink's research manager, said that while the trend is positive, he warned that the number of people who have lost their home is still nearly four times higher than the 1,618 quarterly average posted in 2005. "It's about what I've expected," said Hylton. "But we know that there are still a lot out there." Though the report bolsters evidence that the state's economy is improving, it's unclear whether the d e - clines in some areas are a sign that homeowners are doing better financially, or whether lenders are simply delaying the inevitable. "It's still a mystery how many we'll see coming through the pipeline," Hylton said. Throughout the state, the declines have been steady, falling on average 3.3 percent from quarter to quarter. They were strongest in the Twin Cities metro, which posted a 11.5 percent decline compared with a 7.4 percent decline in outstate counties. The report is based on sheriff sale data collected directly from counties throughout the state, and it reveals dramatic differences in how coun- ties are recovering from the foreclosure crisis. In general, the highest foreclosure rates have spread from urban communities where the crisis got its start as the result of mortgage fraud, into exurban areas where economic problems are mostly to blame. Those "collar communities" are particularly vulnerable because so many of them were places were developers could build hundreds of houses aimed at first -time buyers who couldn't afford higher prices in communities closer to their jobs within the metro area. Isanti County was one of those "drive -'til- you - qualify" communities, and it was among several where the number of foreclosures actually increased. During the first quarter, there were 95 sheriffs sales in that county, a 20 percent increase from last year. The trend was similar in Sherburne and Stearns counties. "These people are not only burdened by cost of housing, but by the fact that they have to have to pay high gas costs to commute to the Twin Cities, and that doesn't help things," Hylton said. The report doesn't track the number of delinquencies that will eventually lead to foreclosures, but a CoreLogic report earlier this month suggests that mortgage delinquencies are down slightly in Minnesota. Colleen Hernandez, who is chief executive of the Homeownership Preservation Foundation, a Twin Cities - based national foreclosure prevention center, said that declines in foreclosure rates aren't always a sign that homeowners are in better financial shape. She said that recent legal settlements that impose fines on lenders who improperly process foreclosures are causing some lenders to either delay the filing, or to go the short-sale route. Jim Buchta ' 612 - 673 -7376 FF r http:// digital.olivesoftware.com/olive/ ode/ startribune/PrintComponentView.htm 51712012 W Ism Lu W ,N O N d C C_ C . N O d 3 O O r M " L CL Article by: DEE DePASS Star Tribune May 17, 2012 - 10:55 PM Minnesota employers cut 3,100 jobs in April, mostly in the retail, construction, hospitality and government sectors, state officials announced Thursday. April's jobs loss marked the first monthly decline since November as only three out of 11 sectors reported job gains last month — manufacturing, financial activities and health and education. The clearly disappointing April report, which followed a flat March career fair Wednesday. and significant job gains in December, January and February, left Kyndell Harkness, Star Tribune economists speculating about possible explanations ranging from the unusually warm winter to statistical methods used to seasonally adjust the figures. Warm weather sped up restaurant, construction and golf club hiring earlier in the year instead of in March and April. "If I have to take the job numbers at face value, then it looks like we are in a sluggish environment and that the labor market could be weakening over the last three months," said Wells Fargo senior economist Scott Anderson. "If true, we are not super - surprised because we are also seeing this as a national trend." But calculations that make adjustments for such seasonal changes, may have gone too far and undercounted job gains, Anderson said. Meanwhile, the unemployment rate in April, which is derived from a separate survey, dropped 0.2 percentage point to 5.6 percent. Minnesota's unemployment rate remains well below the 8.1 percent national rate. State officials attributed Minnesota's declining unemployment rate to baby boomers retiring and to more discouraged workers ending job searches. Steve Hine, director of the state's Labor Market Information Office, noted that the labor force participation rate is down to 71.1 percent, a level not seen since 1983. Hine blamed the under - reporting of jobs on monthly employer -survey sizes that were too small and on new calculations used by the federal Bureau of Labor Statistics. Hine said annual benchmark revisions will be done by the federal government, but not until around March 2013. "I am very discouraged by the underestimation that is becoming more and more apparent in this monthly survey," Hine said. Year - over -year, Minnesota officially gained 14,700 jobs, for a growth rate of 0.6 percent. That compares with U.S. job growth of 1.3 percent over the past 12 months. But Hine said that a review of more complete administrative records suggests that Minnesota may have gained about 55,000 jobs in the last 12 months, for a 2.2 percent growth rate. "I think it's significant that, as we started to look at recently available data from our new unemployment insurance program, we are seeing that there is quite a discrepancy between our monthly estimates and what these administrative reports are suggesting," Hine said. University of St. Thomas Economics Prof. Mel Gray also has said that he believes job numbers are skewed by overly aggressive seasonal adjustments that underestimated jobs gained during the unusually warm winter and spring. According to Thursday's report, Minnesota added jobs in manufacturing (up 2,200), financial firms (up 2,000) and education/health care (up 1,600). Minnesota showed 3,400 job losses in the trade, transportation and utilities sector, with most of those declines coming from the retail trade. "I am kind of surprised with the weakness we are seeing in the retail trade numbers considering what is happening in sales," which are up, Hine said. Jeanne Boeh, chair of the Economics Department at Augsburg College, said, "Unfortunately, this [entire] report just confirms we are not there yet. Traditionally, Minnesota employment numbers have been better than the nation's and we still are in terms of the unemployment rate. However, our current rate of employment growth remains below the national average. This will be worrisome if it continues." Mark Phillips, the commissioner of the Minnesota Department of Employment and Economic Development, said "Despite the job losses last month, most signs point to employment growth over the long term. The economy continues to move in a positive direction, with fundamentals remaining relatively strong and better than a year ago." Separately, the U.S. Labor Department reported that initial claims for unemployment insurance for the week ending May 12 were unchanged at 370,000. Wells Fargo recruiters Leah Murphy, right, and Eileen Forrester spoke with Ihisha Anderson. of Minneapolis. at a Minnesota manufacturers make a big comeback - Minneapolis / St. Pau... http: / /www.bizjoumals.com/twincities /print- edition/2012 /05 /11 /manuf... From the Minneapolis / St. Paul Business Journal : http:/ /www.bizjournals.com /twincities /print- edition /2012 /05 /11 /manufacturers- hiring -as- revenue- growth.html MN manufacturers make a big comeback Premium content from Minneapolis / St. Paul Business Journal by Sam Black, Senior reporter Date: Friday, May 11, 2012, 5:OOam CDT Related: Manufacturing Human Resources Sam Black Senior reporter - Mi /7neapoiis /St PaUI SUsihessJoUrhal Email I Twitter I Facebook Manufacturing in Minnesota is making a comeback in a big way. Sales are up, as are profits. Companies are hiring, expanding facilities and buying equipment at an accelerating pace. It's a welcome change for an industry that focused on cost - cutting for the past several years. "Going into the recession, we were kind of shouting into a forest that was echoing back at us," said Bob Kill, president of Enterprise Minnesota, a Minneapolis -based nonprofit manufacturing consultant. "But the last 18 or 19 months ... we're talking about manufacturing again in a positive tone." Statewide, the manufacturing sector gained 4,200 jobs between March 2011 and March 2012, up 1.4 percent, according to the Minnesota Department of Employment and Economic Development (DEED). The Twin Cities accounted for more than half of the job gains. Precision Gasket Co., based in Edina, is a good example. The 70- year -old company has about 75 employees. It pulled in more than $15 million in revenue in 2011, up 20 percent for the second consecutive year. And it's planning to double its sales to $30 million within five years. "We have grown dramatically during the recovery. We've hired a good 20 people," said PGC President Steve Hanson of 3 5/18/2012 11:15 AM Minnesota manufacturers make a big comeback - Minneapolis / St. Pau... http:/ /www.bizjournals.com/twincities /print- edition/2012 /05 /11 /manuf... PGC provides parts that seal machines together and help control sound and vibration in products made by medical device, lawn and garden, construction, electronics, defense, and automotive firms. PGC uses its knowledge of high -tech adhesives, like those made by 3M Co. and DuPont, to continuously improve its products that are made to order for companies such as Donaldson Co Inc. and The Toro Co., both based in Bloomington, and Deere & Co. of Moline, III. Hanson does new - business development at Precision Gasket, and his wife, Susan Carv- Hanson is co -owner of the firm and oversees finance, accounting and HR functions. "It's a lot more fun lately with the growth," Cary- Hanson said. Optimism in the sector A survey of 400 manufacturing executives from the first quarter of 2012 commissioned by Enterprise Minnesota found that the mood and outlook among manufacturers this year is good, but slightly tempered from 2011. From a financial perspective, 82 percent of executives say they are confident about the future of their firms. That level is consistent with data from the 2011 survey and spreads across companies of all sizes, locations and revenues. But there are signs that the optimism cooled at the start of 2012. According to the survey, 47 percent of the manufacturers surveyed expect an increase in 2012 revenues, a slight dip from the 51 percent that expected sales increases in 2011. Expectations for profitability and capital expenditures have both dropped slightly, but are much improved from a survey conducted in 2008, during the recession. A ranking released Wednesday by the Washington, D.C. -based Brookings Institution indicated that the number of manufacturing jobs in the Twin Cities grew 4 percent from the first quarter of 2010 to the fourth quarter of 2011. The rate was the 36th - fastest among 100 cities studied by Brookings and it beat the national average of 2.7 percent. Of course, there's still a lot of ground to make up when it comes to manufacturing employment. The Twin Cities had about 179,000 manufacturing jobs in March 2012, down roughly 25 percent since 2000, according to DEED stats. Minnesota's manufacturing sector includes a lot of food and agricultural processing, which helped get it through the recession better than some markets that had a big stake in automobiles. There also are several plastics and medical- device companies that feed off each other's success and buoy the sector. Maple Plain -based Proto Labs Inc., for example, had a successful initial public offering in February, an unusual move for a quick -turn manufacturer of custom parts. Its IPO was priced at of 3 5/18/2012 11:15 AM Minnesota manufacturers make a big comeback - Minneapolis / St. Pau... http:/ /www.bizjoumals.com/twincities/ print- edition/2012 /05/11 /manuf... $16 a share, and after one quarter as a public company, shares are trading nearly twice that at about $30. Proto Labs bought a building in Rosemount in November for about $4 million. It plans to build a new factory there and eventually employ about 300. Skilled workers in demand Enterprise Minnesota's survey showed that close to one -third of executives said they expect to grow their workforce in the next year. The biggest obstacle to growth is finding skilled workers, Kill said. Nearly six out of 10 executives say it is difficult to attract qualified labor to their companies. That's why it's important to stay tight with trade schools and universities and recruiters, said Dale Andersen president of Delkor Systems Inc., another growing Twin Cities manufacturer. Delkor, which makes packaging equipment, recently signed a 114,000- square -foot lease for a building in Arden Hills, where it will relocate in July. It's consolidating three facilities from Circle Pines that total about 72,000 square feet, Delkor expects sales of about $57 million in 2012, up 29 percent from $44 million in 2011. The firm has about 160 employees after adding 40 new workers in the past six months. Most manufacturers in the Upper Midwest are improving and hiring, Andersen said, so it's important to stay closely connected to the labor pool. "'We put a lot of effort into the hiring process. You need to be creative." sblackCc kidumals. corrm / (612) 288-2103 Sam Black covers real estate, manufacturing, food, and economic development 3 of 3 5/18/2012 11:15 AM StarTribune - Print Page More manufacturing growth Article by: SUSAN FEYDER Star Tribune May 1, 2012 - 9:08 PM Factories in Minnesota and nationwide ramped up in April, offering more evidence that a sustained resurgence in manufacturing could be ahead. Two widely read barometers of manufacturing activity Tuesday reported solid gains for the month, fueled by strong increases in production, new orders and employment. Both benchmarks hit their highest levels in almost a year. The national Institute for Supply Management (ISM) survey reported an increase in its index from 53.4 in March to 54.8 in April. A reading above 50 indicates growth. The ISM said it was the 33rd consecutive month of expansion. A similar index of a nine - state, mid - America region that includes Minnesota registered 60.0 in April vs. 58.6 in March. It was the highest level since May 2011 for the regional index that is compiled by Creighton University. "The base of the recovery has been laid down," said Josh Bushard, manufacturing leader at audit, tax and advisory firm Grant Thornton's Minneapolis office. He noted that the ISM study reported wide- ranging growth, with expansion in 16 of its 18 industry sectors in April. In a research note, Wells Fargo economist Eugenio Aleman pointed out a drop in the ISM study's inventory component as another positive sign. "This indicates that the manufacturing sector, instead of slowing down over the next several months, should see some strengthening," he said. Although the predominance of farm - related manufacturers continued to help bolster the Creighton survey's results, the recovery is starting to spread to other sectors, said Prof. Ernie Goss, who oversees the study. Goss noted that the growth occurred despite rising energy prices. Minnesota was one of six states that reported higher rates of growth in the Creighton study. Goss attributed the gain of Minnesota's index from 56.7 in March to 61.0 in April to a broad -based increase in activity by the state's durable goods manufacturers. http://www.startribune.com/printarticle/?id= 149655595 Mark Duncan, Associated Press Glen Stubbe, Star Tribune The Creighton study's confidence index, which measures respondents' outlook for the next six months, posted an especially strong increase, from 62.2 to 64.5. Bushard said that confidence among many of his clients has resulted in "measured increases in hiring." of 2 5/2/2012 12:45 PM Gina Johnson performed tests on hydraulic fittings at the Eaton Corp. plant in Berea, Ohio. U.S. factories stepped up hiring and production in March, the latest evidence that manufacturing is growing. Technicians from Douglas Machine Inc. in Alexandria, Minn., tested one of their packaging lines for wrapping cases of bottled water. In the past year, the company has added more than 70 people to its workforce. StarTribune - Print Page http://www.startribune.com/printarticle/?id= 149655595 Rick Paulsen, president and chief operating officer of Douglas Machine Inc. in Alexandria, said his company has been hiring fairly steadily in recent months. In the past 12 months, the company has added more than 70 people to its workforce, he said. Paulsen said he expects to continue adding employees and like many other manufacturers scrambling to find workers, is currently looking for machinists and engineers. Douglas designs and manufactures packaging automation machinery for other manufacturers and therefore is a good gauge of the sector's overall health, Paulsen said. "Order levels have been very good," he said. "Our customers are continuing to invest in technologies that enable them to be more profitable." Most of the company's customers are in the food, beverage and personal care products businesses. Douglas has some customers in Canada and Mexico but otherwise does not do business in foreign markets. "With some companies you see their growth coming mostly from emerging markets, but that's not us," he said. "Our growth is from U.S. manufacturers." Exports did play a key part in boosting both the ISM and Creighton surveys in April. About 26 percent of ISM survey respondents said their businesses had higher export orders in April. That's up from just 18 percent in March. "Exports continue to be one of the most important factors driving growth in the regional economy higher," Goss said in a statement. "Short of trading skirmishes or a strong dollar, I expect exports to remain healthy for most areas of the nine -state region." Susan Feyder • 612 - 673 -1723 © 2011 Star Tribune of 2 5/2/2012 12:45 PM Finance & Commerce > Print > Just Sold: 3 buildings in play as packa. Finance & Comme http: / /fmance- commerce. com/wp- content/plugins /tdc- sociable - toolbar... : / /finance - commerce.com Just Sold: 3 buildings in play as package makers come and go by Anne Bretts Published: May 2nd, 2012 Editor's note: "Just Sold' is a Finance & Commerce feature based on certificates of real estate value (CRVs) recently filed for commercial transactions in Hennepin, Ramsey and Anoka counties as well as in counties using the state's eCRV system. Additional details in the transactions come from Plat Research, the Minnesota Secretary of State's office, company documents, online real estate listings, F &C archives, Costar and other research. 21860 Hamburg Ave., Lakeville Plastics provide the connecting links among three buildings in transition, two of them in Lakeville and one in Bloomington. The most recent deal involved the $1.6 million sale of 21860 Hamburg Ave. in Lakeville to Habile Holdings LLC of Delano, Minn. The closing was April 17. But the process started in November, when Great Pacific Enterprises Inc. closed on the $3.8 million purchase of the former Berry Plastics plant at 8235 220th St. in Lakeville. Rolle Container Inc. of Moorhead bought this plastics manufacturing facility at 21860 Hamburg Ave. in Lakeville, which became available when Genpak moved to a larger facility in Lakeville. (Submitted Great Pacific, based in Vancouver, British photo: Costar) Columbia, is moving 120 employees and all of its Genpak Bloomington operations to the 220th Street site, a transition set to be done in June. That purchase was made through Jim Pattison Development, Great Pacific's property acquisition division. Berry Plastics, based in Evansville, Ind., closed the Lakeville plant in 2010 and let go 95 workers. Genpak, a Great Pacific division based in Glens Falls, N.Y, is a producer of food packaging, with 18 facilities throughout the United States and Canada. Genpak has moved its operations and 10 workers out of its building at 21860 Hamburg Ave. in Lakeville, which opened up an opportunity for another plastic container manufacturer. In mid - April, Great Pacific Enterprises (II) LLC closed on the sale of the Hamburg Avenue building to Habile Holdings LLC. Habile Holdings is an entity of Roffe Container Inc. of Moorhead, an extrusion blow molding company that makes containers for the dairy, water, juice, honey and industrial markets in the Midwest. "We were filling up in Moorhead," said Tom Janas, Roffe's president and owner. He sees growth opportunities in the dairy and industrial container sectors in the Twin Cities. He is particularly excited about the increase in demand for single - serving drink containers. "As we were looking at the market, we decided it would make sense to add a facility there," he said, adding that rail service, highway access and a strong industrial area made Lakeville a good choice. Janas expects to be moved into the 46,000- square -foot Lakeville facility in August and to have 14 workers there by 2014. Once all the moves are done, the 96,386- square -foot Bloomington building will be vacant. The building, which has a Hennepin County market value of $2.26 million, is listed for sale with Bryan Van Hoof and Jeff Przytarski of CBRE in Bloomington. I of 4 5/2/2012 10:05 AM StarTribune - Print Page StarTribune As home sales rise, builders smile Article by: JIM BUCHTA Star Tribune April 30, 2012 - 9:35 PM Robust demand for rentals and strengthening sales of new houses helped lift construction activity in the Twin Cities metro during April, putting builders on track to have one of their best years since 1997. Throughout the 13- county area, home builders were issued 294 permits to build 387 units, according to the Builders Association of the Twin Cities (BATC). That was a 45 percent increase in permits and a 68 percent increase in new units. Marlin Levison, Star Tribune "We are going crazy," said Tom Budzynski, owner and president of TJB Homes in Blaine. Page 1 of 1 He said business has been bolstered because his company offers buyers a special program that allows them to trade tl existing home for a new one, alleviating concerns about the resale market. But for most builders, home sales have been anything but brisk. The demand for rental housing has helped lead the construction industry out of what has been one of the worst downturns in history. With apartment vacancy rates near record lows of about 3 percent, about half of all planned units so far this year in the Cities are attached housing, mostly rentals. For longtime commercial and industrial contractors in particular, rising apar construction has helped fill deep gaps in commercial construction. During March, residential construction in the Twin Cities was up by about a third while non - residential projects fell 11 pe compared with last year, according to contracts for future construction tracked by McGraw -Hill Construction. At $124 m the value of those residential projects is nearly triple the value of all non - residential projects. In Minneapolis alone, the value of all new buildings -- both commercial and residential -- planned for the city so far this $68 million, which is five times higher than during the same period last year, according to its Department of Community Planning and Economic Development. In recent weeks, the market has gone through a noticeable shift, with multifamily housing permits during April falling to percent of all permits from a year -to -date average of 54 percent, according to BATC. "While a couple of large multifamily projects have boosted permits this year, we're still seeing steady growth in single -fF_ permits, which are 20 percent higher than they were at this point in 2011," said Curt Christensen, BATC's president anc owner of Lee Lyn Construction. That shift has come about largely because of an increase in pending new home sales, which increased almost 26 perc( during March, according to the Minneapolis Area Association of Realtors. Jim Buchta • 612 - 673 -7376 © 2011 Star Tribune http:// www. startribune.com /printarticle / ?id= 149594685 5/1/2012 Construction worker Jeff Kowalke worked on the roof s of a single - family house in Maple Grove. Finance & Commerce > Print > City loan underwrites Southdale Center overhaul Page 1 of 2 Finance & Commerce http: / /finance - commerce.com City loan underwrites Southdale Center overhaul by Burl Gilyard Published: April 26th, 2012 Interest -free deal taps TIF money The Edina City Council recently voted to provide a $5.1 million interest -free loan toward the renovation of Southdale Center by mall owner Simon Property Group Inc The publicly traded company, based in Indianapolis, bills itself as the "largest real estate company in the world." The deal, approved in a 4 -1 vote on April 17, calls for the Simon Property Group to invest at least $14 million in the mall upgrade. The plan taps money from the Centennial Lakes Tax Increment Financing (TIF) District and establishes the new Southdale 2 Tax Increment Financing District in Edina. According to city documents outlining the deal, the Simon Property Group argued that it needed the loan from the city to help pay for a more extensive renovation: "Without the assistance, the mall owner has submitted statements that it would limit the renovations to approximately $7.34 million in basic improvements." Edina City Council Member Joni Bennett cast the lone vote against the deal. Bennett said the mall upgrade did not strike her as an appropriate use of the city's TIF money. "I don't think this is a public purpose for those funds," Bennett said. "My colleagues felt differently." Les Morris, director of public relations for the Simon Property Group, did not respond to questions about why the company sought the interest -free loan from the city. In February, Simon reported net income of $1.02 billion on revenue of $4.3 billion for 2011. The numbers suggested that the retail business was bouncing back after some sluggish years. In a statement announcing the results, David Simon, chairman and chief executive officer of the company, said: "Our portfolio of high quality assets continues to demonstrate strength as our regional malls and Premium Outlets generated comparable property net operating income growth of 4.5% in the [fourth] quarter." The company owns or has an interest in 337 retail properties in the U.S. and Asia. The Simon Property Group also owns a 29 percent interest in a French real estate investment trust (REIT) that owns 270 shopping centers in Europe. Southdale Center opened in 1956 and remains an iconic piece of local real estate. Developed by the Dayton family, the center was the first enclosed regional shopping mall in the U.S. The area around the mall remains a strong retail corridor. Just last week, Austin, Texas -based Whole Foods Inc. opened a grocery store just a few blocks from Southdale. But in recent years, the mall has languished. Former owner Mills Corp. struggled financially and was not able to invest in improvements. The former Mervyn's department store sat empty for seven years before a Herberger's store opened in the space last year. http: // finance - commerce .com /wp- contentlplugins /tdc- sociable - toolbar /wp- print.php ?p =45113 5/2/2012 The Simon Property Group, owner of Southdale Center, is under way on renovations to the Edina shopping center, which dates to 1956. (Staff photo: Bill Klotz) Finance & Commerce > Print > City loan underwrites Southdale Center overhaul Page 2 of 2 "There has been very little work done for 10 years," Bennett said of Southdale Center. Simon and an investment partner acquired the 1.3 million- square -foot Southdale in 2007 from the Mills Corp. Simon owns 50 percent of Southdale Center. According to its most recent annual filing with the U.S. Securities and Exchange Commission, the mall was 80.2 percent occupied at the end of 2011. That put the mall's vacancy rate notably above other local retail properties. Bloomington -based Cushman & Wakefield /NorthMarq Real Estate Services reported the local retail vacancy rate at 8.4 percent at the end of 2011. Morris, the spokesman for the Simon Property Group, declined to provide the total budget for the Southdale renovation project but said it would be completed in November. In an email to Finance & Commerce, Morris stated: "Simon Property Group has more than 20 renovation and expansion projects under construction in the U.S. with completion dates in 2012 and 2013. The cost of these projects is approximately $700 million (our share) and the expected stabilized return on our invested capital is 10 percent. We have also identified 16 additional expansions and renovations where we expect to begin construction in 2012 and 2013." The company recently completed renovations of the Maplewood Mall, which it also owns. That project did not include city assistance. Cary Teague, planning director for the city of Edina, said Simon did not need planning approvals for the updates to Southdale Center. The project will include interior upgrades, refurbished entrances, and improvements to signage, lighting and restrooms. Complete URL: http: // finance - commerce.com/ 2012/04/ city-loan- underwrites - southdale- center - overhaul/ http: // finance - commerce .com /wp- contentlplugins /tdc- sociable - toolbar /wp- print.php ?p =45113 5/2/2012 L M 0 d Y t9 r to C d fZ Q y.i w C L 7 3 N 3 Z Article by: JIM BUCHTA Star Tribune April 26, 2012 - 10:45 PM The apartment boom that has taken hold in Minneapolis is migrating to the suburbs. Twin Cities developer Chris Culp is building the Flats at West End in St. Louis Park, part of a larger rental surge that will result in more than 1,100 units in areas outside the city. The apartments are the first housing at the West End, a $400 million mixed -use development. Culp said its perks will rival some aspects of downtown living, with a grocery store, movie theater and bus line all within walking distance. Bruce Bisping. Star Tribune "Anybody looking for the ease of suburban living with the convenience of being in an urban setting will feel like it's a wonderful location," said Culp, of the Excelsior Group, adding that the West End's 119 luxury apartments will open next spring. Renting outside Minneapolis and St. Paul has largely been limited to housing built decades ago, but experts say the suburbs are ripe for a new wave of apartment development, especially in mixed -use projects like the West End. It's a trend driven by a fundamental shift in attitudes toward renting plus a growing appetite for suburban rental housing with urban perks. Experts say the number of units underway in the suburbs is the highest in more than two decades. Throughout the metro area, most of the apartments are upscale, renting from about $1.50 to $2 per square foot. At the Flats at the West End, rents will range from $1.70 to $1.90 per square foot. The 40 -acre West End site sits near a key transportation hub along the St. Louis Park - Minneapolis border in what was once an underused commercial area on the east side of the city. Its proximity to this corridor makes the development attractive for those looking for easy bus and highway access to downtown, Culp said. Location a savior Duke Realty launched the West End project amid the real estate downturn. But its prime location helped it attract several key retail tenants, including Rainbow Foods and Kerasotes Theatres. Today, the project is nearly built out, with housing being a major attribute. "We're all excited to have it under construction," said Kevin Locke, community development manager for St. Louis Park. Adding housing is "a great complement to what's already there." Such mixed -use projects aren't new, but they're creating opportunities for developers to create rental housing in the suburbs. Long before the West End, St. Louis Park had Excelsior & Grand, which was driven by housing development instead of offices and retail. With 600 condos and apartments and only 85,000 square feet of retail and commercial space, the 15 -acre development was intended to primarily serve residents of St. Louis Park, while West End is being positioned as more of a regional attraction, Locke said. Most new suburban apartments are in fully developed communities along key commuter routes. StuartCo is building the Genesee, a 200 -unit building in a mixed -use development near Penn Avenue S. and American Boulevard in Bloomington. The company is also building 124 apartments called the View at Long Lake, which is part of the New Brighton Exchange redevelopment project. Lisa Moe, StuartCo's president and CEO, said her company is being very strategic about where it's willing to build. The company is targeting sites in established suburbs with easy access to freeways, retail, restaurants and schools. "Not everyone wants to live in the downtown or Uptown markets or among concrete," she said. "People like green space and the convenience of the suburban markets, as well as a convenient location to their place of work." With the metrowide apartment vacancy rate now at about 3 percent and 1,500 rental units underway in Minneapolis, some say the suburban rental boom is just getting started. Beyond those buildings already under construction, more than 3,000 more units are at various stages in the development pipeline. How many will actually get built depends largely on the economy and the timing of their completion. That's why Culp, who envisions the West End Apartments as a place where residents won't have to get into their cars, is relieved that the units are under wustruction after a yearlong financing delay. "I think there is going to be a sustained healthy demand for more apartments in good locations, whether those locations are suburban or urban," he said. "Still, we're trying as hard as we can to get to market as fast as we can." Jim Buchta • 612 -673 -7376 Developer Chris Culp stood at the site of the Flats at West End, a 119 -unit apartment complex to be built in St. Louis Park.