HomeMy WebLinkAboutItem 06.eFebruary 28, 2014 Item No.
RESOLUTION CALLING FOR A PUBLIC HEARING TO CONSIDER MODICFICATION OF THE
AIRLAKE REDEVELOPMENT PROJECT NO. I AND THE ESTABLISHMENT OF TAX
INCREMENT FINANCING DISTRICT NO. 18
March 3, 2014 City Council Meeting
Proposed Action
Staff recommends adoption of the following motion: Move to adopt a resolution calling for a public
hearing upon the request of the HRA for the City to consider the modification of the Airlake
Redevelopment Project No.1 and the establishment of the Tax Increment Financing District No. 18.
Passage of this motion will result in the scheduling of a public hearing to consider the creation of a
new Tax Increment Financing (TIF) District to facilitate an expansion of the Menasha Packaging Co.
facility in Airlake Industrial Park.
Overview
Menasha Packaging contacted the City in late 2013 to present plans for a 123,000 square foot
expansion of their 238,000 square foot manufacturing facility located at 8085 220 Street West.
Menasha is experiencing considerable growth and needs to add additional warehouse,
manufacturing, and office space at their Lakeville facility. The company has submitted a request for
tax increment financing to assist in the $1,365,453 site development costs associated with the project.
Menasha Packaging has operated in Airlake since 1970 and currently has 221 employees with an
annual payroll of approximately $15.2 million. In addition to retaining the existing 221 jobs in
Lakeville, proposed expansion will create an additional 10 -17 jobs.
The City Council will be reviewing this project and the request for TIF assistance in greater detail at the
March 24th Council Work Session and the EDC will be reviewing it at their March 25th meeting. Staff
recommends scheduling the public hearing for April 7, 2014.
Primary Issues to Consider
• Is this request for Tax Increment Financing assistance consistent with the City's policies? The
request is consistent with the City's TIF and Business Subsidy Policies.
Supporting Information
• Reso tion uling lic hearing for April 7 to consider the creation TIF District No. 18.
David L. Olson, Community and Economic Development Director
Financial Impact: $ Budgeted: Y/N
Source: Related Documents:
CITY OF LAKEVILLE, MINNESOTA
RESOLUTION NO.
RESOLUTION CALLING A PUBLIC HEARING BY THE CITY UPON
THE REQUEST OF THE HOUSING AND REDEVELOPMENT
AUTHORITY FOR THE CITY OF LAKEVILLE ON THE PROPOSED
MODIFICATION OF THE AIRLAKE REDEVELOPMENT PROJECT
NO. 1 AND THE ESTABLISHMENT OF TAX INCREMENT FINANCING
DISTRICT NO. 18 WITHIN THE REDEVELOPMENT PROJECT AND
THE PROPOSED APPROVAL AND ADOPTION OF MODIFIED
REDEVELOPMENT PLAN AND TAX INCREMENT FINANCING PLAN
RELATING THERETO.
BE IT RESOLVED by the City Council (the "Council ") of the City of Lakeville,
Minnesota (the "City "), as follows:
Section 1. Public Hearing The Council shall meet on April 7, 2014, at approximately
7:00 P.M., to hold a public hearing at the Council Chambers located at 20195 Holyoke Avenue,
Lakeville, Minnesota, on the proposed modification of the Airlake Redevelopment Project No. 1
and establishment of Tax Increment Financing District No. 18 within the Redevelopment Project
in and for the City of Lakeville, Minnesota pursuant to Minnesota Statutes, Section 469.001 to
469.047 and the proposed approval and adoption of a Tax Increment Financing Plan relating
thereto, all pursuant to and in accordance with Minnesota Statutes, Sections 469.174 to
469.1794, inclusive, as amended.
Section 2. Notice of Public Hearing Filing of Plans City staff and consultants are
authorized and directed to prepare the Modification and TIF Plan and to forward such documents
to the appropriate taxing jurisdictions, including Dakota County and Independent School District
No. 194 (Lakeville). The City Clerk is authorized and directed to cause notice of the hearing to
be given, together with appropriate map(s), as required by law, to be published at least once in
the official newspaper of the City not less than 10, nor more than 30, days prior to April 7, 2014,
and to place a copy of the proposed Tax Increment Financing Plan on file in the Clerk's office at
City Hall and to make such copy available for inspection by the public prior to the public
hearing.
Approved and Adopted by the City Council of the City of Lakeville, Minnesota this 3r day
of March, 2014.
CITY OF LAKEVILLE
ATTEST:
Mayor
City Clerk
Menasha Packaging Company Location
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Disclaimer: Map and parcel data are believed to be accurate, but accuracy is not guaranteed. This is not a Map Scale
legal document and should not be substituted for a title search, appraisal, survey, or for zoning 1 inch = 388 feet
verification. Dakota County assumes no legal responsibility for the information contained in this data. 2/28/2014
M E VAS HA
C O R P O R A T 1 O N
January 27, 2014
Mr. David Olson
Community and Economic Development Director
City of Lakeville
20195 Holyoke Avenue
Lakeville, MN 55044
RE: Proposed Expansion — Incentive Request
Dear David:
Thank you for previously meeting with our firm to discuss our proposed expansion and
the potential assistance that the City of Lakeville can provide.
We include, for your consideration, the application form, fee and additional information
for your review.
Please proceed with your process — time is of the essence.
Sincerely,
Shannon Van Dyke
Menasha Packaging Co., LLC
8085220 Street West
Lakeville, MN 55044
Email: Shanon.VanDyke @Menasha.com
Enclosures: 11 x 14 Civil and Architectural Drawings
CITY OF LAKEVILLE TAX INCREMENT FINANCING
APPLICATION
PROJECT:
1. Business Name: Menasha Packaging Co., LLC
Address: 8085 220 Street West, Lakeville, MN 55044
Telephone: 952 - 469 -4451
Contact: Shannon VanD
2. Brief description of the business: The facility has been located in Airlake
Industrial Park since approximately 1970 and is a packaging
manufacturing facilibf.
3. Present ownership of the site: The facility is corpgE&ly owned by
Menasha Packaging Co., LLC
4. Proposed project: Building square footage, size of property, description of
buildings — materials,
etc.
* Site — approximately 18.73 acres
• Building Addition(,) — approximately 126,223 total W. ft.
• Exterior wall materials — insulated precast wall panels as manufactured
by Fabcon, Inc. of Savage. New wall materials to match existing_
5. Total Estimated Project Costs: (approximate)
a.
Land Acquisition
$ 0.00 (existing)
b.
Site Development
$ 1,615,380.00
c.
Building Cost
$ 4,910,566.00
d.
Soft Costs(design /permitting /reimb)
$ 657,616.00
e.
Financing Costs
$ Not included
f.
Contingencies
$ Not included
Total $ 7,183,562.00
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6. Estimated Project Costs Eligible for TIF Assistance (i.e. Acquisition, Demolition,
Site Improvements, Utilities, Streets):
a. Demolition $ 36,900.00
b.
Concrete curb
$ 16,580.00
c.
Grading, excavation
$ 614,270.00
d.
Asphalt paving
$ 228,500.00
e.
Site utilities
$ 68,020.00
f.
Storm sewer
$ 60,000.00
g.
Landscaping
$ 18,633.00
h.
Soils correction
$ 91,000.00
i.
Reuse rail back/switch
$ 231,550.00
Total
$ 1,365,453.00
7. .PLEASE SUBMIT PROJECT PROFORMAS SHOWING NEED FOR ASSISTANCE
(I.E. WITH ASSISTANCE AND WITHOUT).
See attached Lease Study
8. Total Estimated Market Value at completion: $11,756,962.00
9. Estimated real estate taxes upon completion: $TBD by City of Lakeville
10. Source of Financing
a. Equity
b. Bank Loan
c. TIF (Gap)
Total
$6,131,551.00
$
$1,052,551.00
$7,183,567.00
11.Amount of Assistance (Estimated Gap): Up to $1,052,551.00
12.Type of Assistance Requested (Upfront or Pay -as- you -Go): Pay-as-you-Go
13. Name & Address of architect, engineer, and general contractor:
Civil Engineer — Jacobson Engineers & Surveyors, 21029 Heron Way, Lakeville, MN
Architect — APPRO Development, Inc. 21476 Grenada Avenue, Lakeville, MN
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Structural Engineering— LS Engineers, 234 North Main Street. LeSueur, MN
General Contractor — To be determined
14. Project construction schedule:
a. Construction Start Date
b. Construction Completion Date
c. If phased project:
March 2014
August 2014
Year % Complete
Year % Complete
15. State specific reasons why assistance is necessary for the project (the "but for"
test).
Corporate determination for feasibility and approval for project is
contingent on the costs and economy of the structure being equal to
or more economical than "off - site" options. The ability to match
actual costs to "market rates" is a necessity.
16. Please indicate how the project would meet one or more of the following:
Economic Development goals; creation of jobs that pay wages adequate to
support households, job retention, or tax base expansion.
As a Iona time tenant in Airlake Industrial Park, Lakeville, MN — Menasha's
expansion would -
• Retain an existing employee base of 221 and approximately
annual payroll of approximately $15,220,645.47
• Raise the existing annual real estate taxes of $171,580
to approximately $ TBD per year
• Employ 10 -15 new employees (FTE)
17. Municipal Reference (if applicable). Please name any other municipalities
wherein the applicant, or other corporations the applicant has been involved
with, has completed developments within the last five years.
• Neenah, WI
• Hartford, WI
• Philadelphia, PA
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18.Additional Comments:
19. Submit this form along with an initial $500 nonrefundable application fee. An
additional fee of $5,500 will need to be submitted should the request for
assistance proceed.
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LEASE STUDY
Menasha Packaoina Co.. LLC Needs:
Design /office areas 4,645 sq. ft.
Rail dock/warehouse 118,893 sq. ft.
Shop office /break/toilets 2,685 sq. ft.
Total 126,223 sq. ft.
Off -site (market) lease rates:
Design /office 7,642 sq. ft. @ $8.00 /sq. ft. (midpoint) $ 37,160.00
(cost range - $7.50 to $8.50 sq. ft. /net)
Warehouse 118,893 sq. ft. @ $4.00 /sq. ft. (midpoint) $475,572.00
(cost range - $3.90 to $4.10 /sq. ft. /net)
Shop office /break/toilets 2,685 sq. ft. @ $9.32/sq. ft. (midpoint) $ 25,020.00
(cost range - $8.82 to $9.82/sq. ft. /net)
Approximate net rent/year $537,752.00
(target rate)
Actual proiect costs /lease capitalization rates:
Land - (assume 40% coverage ratio) 307,000 sq. ft. $1,135,900.00
Site development costs $1,615,380.00
Building /design /permitting costs $5,568,182.00
Total Project Cost $8,319,462.00
(estimated — to be confirmed)
Lease Capitalization (using actual costs
$8,319,462.00 @ 7.4% CAP rate = $615,640.00/year (actual lease rate)
$615,640.00 (actual lease rate) - $537,752.00 (target rate) _ $77,888.00/year (gap)
$77,888.00 (gap) = 7.4% (CAP rate) _ $1,052,551.00 (project cost gap)
ADDITIONAL DOCUMENTATION AND CHECKLIST
Applicants will also be required to provide the following documentation.
All personal financial information will be kept private and confidential.
❑ 1. Written business plan or a description of the business, ownership/
management, date established, products and services, and future plans.
[l 2. Two year financial projections, or if housing project, or leased space, include a
10 -year operating pro - forma.
❑ 3. Letter of commitment from other sources of financing, stating terms and
conditions of their participation in the project.
❑ 4. Initial nonrefundable application fee of $500, with a $5,500 fee to follow
should the request for assistance proceed. In addition to defraying the cost of
staff time, the fee will be used to pay costs associated with processing this
request for financial assistance such as legal, engineering and financial
analysis. The City reserves the right to stop the processing of the request until
additional fees are paid should the original amount be insufficient to pay such
costs. That portion which remains unspent, if any, will be returned only if the
project is denied approval.
❑ 5. Attach the following documentation:
Part 1 — Corporation /Partnership Description
Part 2 — List of Shareholders /Partners
Part 3 — Description of Project
Part 4 — But For Analysis
Part 5 — List of Prospective Lessees
Part 6 — Legal Description, Property Identification Numbers,
maps of the project area, and project renderings
Part 7 — Public Purpose Narrative
Part 8 — Sources & Uses of Funds — Additional Information
The undersigned certifies that all information provided in this application is true and
correct to the best of the undersigned's knowledge. The undersigned authorizes the City
of Lakeville to check credit references, verify financial and other information, and share
this information with other political subdivisions as needed. The undersigned also agrees
to provide any additional information as may be requested by the City after the filing of
this application.
Applicant Name
By
Its 1
Date / J:)7 i I
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