HomeMy WebLinkAboutWS Item 04City of Lakeville
Community & Economic Development
Memorandum
To: Mayor and City Council
From: David L. Olson, Community & Economic Development Director
Copy: Allyn Kuennen, Interim City Administrator
Dennis Feller, Finance Director
Date: September 11, 2014
Subject: TIF Application for Proposed BTD Expansion
The City recently received an application for Tax Increment Financing (TIF) from BTD (see
attached application). BTD started their Lakeville operations in 2005 and provides custom
metalwork services to some of the world's top brands including Polaris, GE, Honda, Kawasaki,
3M, John Deere, and Toro, to name a few. BTD has experienced considerable growth in
recent years and currently occupies 317,000 square feet in three separate buildings in Airlake
Industrial Park and has approximately 215 employees in Lakeville.
BTD currently leases 193,000 SF in the former Toro Warehouse building along Cedar Avenue.
The owner of this building is proposing a 200,000 square foot expansion of this building to
allow BTD to consolidate two of their production and warehouse operations and would result
in the company occupying a total of 412,000 square feet. BTD is estimating this proposed
expansion will result in the creation of an additional 100 jobs in the first two years of
operations. The total estimated cost of this proposed expansion is $14.2 million. Company
President Paul Gintner will be at Monday's Work Session to describe BTD's recent as well as
anticipated growth.
BTD is requesting TIF assistance to offset some of the estimated $4.3 million in TIF eligible
costs associated with the project. Actual wage levels of the different jobs to be created will
be presented as part of the presentation on Monday. BTD representatives have indicated that
all new jobs to be created will exceed the $13 per hour minimum referenced in the City's TIF
Policy. Staff has determined that the proposed project is consistent with the City's TIF policy.
The EDC reviewed this TIF application at their August 26th meeting and recommended
unanimously that City Council authorize the preparation of a TIF Plan for the creation of a new
TIF District for the proposed BTD expansion.
Recommended Action: Staff is requesting authorization for the preparation of a TIF Plan by
Springsted Inc. The cost of this would be covered by the Part II TIF Application. A resolution
calling for a public hearing would be brought to the City Council at a future meeting. The
specifics of the TIF Plan and proposed level of assistance will also be brought back to the EDC
and City Council for additional review.
Mr. David Olson
Community and Economic Development Director
City of Lakeville
20195 Holyoke Ave
Lakeville, MN 55044
RE: Proposed Expansion at 21350 Cedar Ave — Request for Assistance
Dear Mr. Olson,
August 1, 2014
Thank you again for our earlier meeting to discuss BTD's proposed consolidation and expansion of
our Lakeville facilities and operations. Since we met, our staff has been working to obtain corporate
support and has been given direction to proceed with the project design, engineering, and obtaining
the City of Lakeville's support.
BTD's Lakeville operations began in 2005 with the purchase of Performance Tool & Die and the
opening of a production and warehouse operation in the old Performance Office Papers building. In
2013, BTD also leased a large portion of the old Toro building, expanding both production and
warehouse operations. BTD now occupies approximately 317,000 sq. ft. in three separate buildings
within Airlake Industrial Park, employing nearly215 employees in Lakeville.
BTD would like to consolidate the two Lakeville production and warehouse operations (eliminating
multiple logistical moves), introduce an additional value added service (painting), and eventually
consolidate manufacturing and warehousing activities presently located in Otsego, MN to the
expanded "Toro" building.
Included for your review and comment is supporting information and documents that explain our
intended expansion at 21350 Cedar Ave. Currently, we are tenants of this facility and lease 193,000
sq. ft.; we would like to expand the existing building by approximately 200,000 sq. ft. Our total
leased area would be approximately 412,000 sq. ft.
Thank you, David, and the entire City of Lakeville, for your support over the years. We are
extremely satisfied with our choice to locate in Lakeville and continue to look for ways to expand our
operations here.
We are anxious to move forward with this project and are prepared to answer any questions you may
have.
Res ectfully submitted,
Paul Gintner Dave Welte
President and President Vice President of Finance
Cc: James Fulford, Fulford Group, LLC
Jack Matasosky, APPRO Development, Inc.
CITY OF LAKEVILLE TAX INCREMENT FINANCING
APPLICATION
PROD ECT:
BTD Manufacturing, Inc./Fulford Group LLC. — 21350 Cedar Ave Expansion
1. Business Name: BTD Manufacturing, Inc.
Address: 1111 13th Ave SE, Detroit Lakes, MN 56501
Telephone: 218-846-2836
Contact: Dave Welte, Vice President of Finance
2. Brief description of the business:
BTD first located operations in Lakeville in 2005 by acquiring Performance
Tool and Die Company. Throughout the years manufacturing operations
and warehouse space have increased to 96,000 sq. ft. In 2013 BTD
leased an additional 193,000 sq. ft. in the former Toro facility and desires
that this building be expanded to consolidate some of the operations
3. Present ownership of the site:
Airlake Development, Inc., Daniel Regan. A purchase agreement is in
place to acquire the additional land that the facility will be built on.
4. Proposed project: Building square footage, size of property, description of
buildings — materials, etc.:
• Additional land — approx. 14 acres.
• Total building expansion(s) — approx. 199,615 sq. ft.
• Building area to accommodate company's — painting,
manufacturing and warehousing/distribution activities.
• Wall materials to be architectural precast concrete wall panels with
pre -colored finishes.
5. Total Estimated Project Costs:
a. Land Acquisition
b. Site Development
c. Building Cost
d. Soft Costs
1
$ 1,800,000.00
$ 2,349,147.00
$ 8,007,142.00
$ 1,438,723.00
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 55044
Architect/G.C. - APPRO Development, Inc.
Jack Matasosky
21476 Grenada Ave, Lakeville, MN 55044
14. Project construction schedule:
a. Construction Start Date October 2014
b. Construction Completion Date July 2015
c. If phased project: 2014 Year 30% Complete
2015 Year 100% Complete
15. State specific reasons why assistance is necessary for the project (the
'"but for" test).
The Project, without tax increment assistance, is not feasible as rental
rates would far exceed "Market rates".
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.
Existing Lakeville jobs Retained) 215
Projected new jobs (First two years of operation) 100
Real Estate Tax Impacts - Present (2014) $239,466.14
Projected (Future) $599,280.14
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.
BTD Manufacturing has a large presence in Detroit Lakes MN:
254,000 sq. ft., 480 employees.
BTD also has facilities in Washington, Illinois and Otsego, MN
3
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.
❑ 2. Two year financial projections, or if housing project, or leased space, include a
10 -year operating pro -forma. Please refer to the Ottertail Corporation annual
report posted on the company web site; ottertail.com/annual.cfm .
❑ 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 ') T c( l Date
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Lease Study Analysis
With/Without T.I.F. Impact
August 1, 2014
BTD Manufacturing — Additional space requirements:
Office 14,400 sq. ft.
Truck/dock/loading area 2,240 sq. ft.
Warehouse/manufacturing 182,975 sq. ft.
Total 199,615 sq. ft.
Market Rates — "Target"
Office 14,400 sq. ft. @ $8.00/sq. ft. (midpoint) $115,200.00
(range $7.50 — $8.50/sq. ft.)
Truck/dock/loading area 2,240 sq. ft. @ $5.50/sq, ft. (mid point) $ 12,320.00
(range $5.00 — $6.00/sq. ft.)
Warehouse/manufacturing 182,975 sq. ft. @ $4.20/sq. ft. (mid point) $768,495.00
Approx. Net Rent/Year $896,015.00
(Target rate)
Actual Project Costs/lease capitalization rates:
Land $ 1,800,000.00
Site Development Costs $ 2,349,147.00
Building Costs $ 9,712,550.25
Finance Costs $ 336,624.00
$14,198,321.25 (Estimated)
Lease Capitalization (using actual costs):
$14,198,321.00 @ 7.8% CAP rate = $1,107,469.00/year (lease rate without T.I.F.)
$ 1,107,469.00 (actual lease rate) - $896,015 (target rate) _ $211,454.00 (gap)
$ 211,454 - 7.8% CAP rate = $2,710,949.00 (project cost gap)
Lease rate with T.I.F. impact:
EMV — upon completion of project
14 acres land — rezoned to 1-2, approx. $1,800,000.00
Building Improvements - shell $8,007,142.00
Est. EMV = $9,807,142.00
Total EMV does not reflect site improvements specific to truck yard, storm ponds, etc...
Estimated taxes upon completion $372,671.00/year
Present land tax — Estimated (14 acres) $ 12,857.00/year
Net increment/year $359,814.00/year
Estimated TIF available to developer/year — Approx. $201,496.00 (year 1)
Effective net rent (years 2-9) with T.I.F. impact:
$1,107,469.00 - $201,496.00 (year 1) _ $905,973.00/year (Approx. $4.54/sq. ft./year)
T.I.F. impact and operational efficiencies bring net rents close to industry market rate standards.
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Dakota County Property Information
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Property Information Search
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http://gis.co.dakota.mn.us/maps/property.htm 5/16/2014
Dakota County Property Information
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Property Information Search
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Property Card Parcel ID Number 22-77001-01-013
Owner Information
Fee Owner
FULFORD GROUP LLC
Mailing Address
% TODD NOLLENBERGER
701 4TH AVE S STE 320
MINNEAPOLIS MN 55415
Property Address
Address
21350 CEDAR AVE
Municipality
LAKEVILLE
Parcel Information
Last Qualiified Sale Total Acres 18.07
Sale- Value $0.00 R/W Acres 0.50888649
Uses COMMERCIAL- Water Acres
PREFERRED
Plat TORO AIRLAKE IND PARK 2ND ADD
Lot and Block 1 1
Tax Description
2014 Building Characteristics (payable 2015)*
Building Type WHS,BLKDST Year Built 1984 Bedrooms 0
Building Style Foundation Sq Ft NOT APPL Bathrooms 0.00
Frame Above Grade Sq Ft Garage Sq Ft
Multiple Buildings Finished Sq Ft 304,360 Other Garage
Miscellaneous Information
School District Watershed District Homestead Green Acres Ag Preserve Open Space
192 VERMILLION RIVER NON HOMESTEAD
Assessor Valuation
Taxable Estimated
2014 Land Values (payable 2015) $2,295,500.00 $2,295,500.00
2014 Building Values (payable 2015)* $3,935,100.00 $3,935,100.00
2014 Total Values (payable 2015)* $6,230,600.00 $6,230,600.00
2013 Total Values (payable 2014)* $6,230,600.00 ' $6,230,600.00
Property Tax Information
Net Tax (payable 2014) Special Assessments (2014) Total Tax & Assessments (2014)
$252,323.14 $0.00 $252,323.14
* Manufactured Homes Payable the Same Year as Assessment.
Disclaimer: Map and parcel data are believed to be accurate, but accuracy is not guaranteed. This is not a legal
document and should not be substituted for a title search, appraisal, survey, or for zoning verification.
Thursday, July 24, 2014 Dakota County, MN Page 1 of 1
Property Card
Owner Information
Fee Owner
AIRLAKE DEVELOPMENT INC
Mailing Address
1875 HWY 36 W STE 200
ROSEVILLE MN 55113
Property Address
Address
Municipality
LAKEVILLE
Parcel ID Number 22-03400-26-016
Parcel Information
Last Qualified Sale Total Acres 32.22
Sale Value $0.00 RNV Acres 3.83308063
Uses AG Water Acres
Plat SECTION 34 TWN 114 RANGE 20
Lot and Block 29.20 ACRES 34 114 20
ALL S OF RR OF NW 1/4 EX S 650 FT & EX N 630
Tax Description FT OF S 1280 FT OF W 1093 FT EX W 1309.70 FT
LYING S OF STH 50 SUBJ TO PARCEL 3 DAKOTA
COUNTY RNV MAP #166
2014 Building Characteristics (payable 2015)*
Building Type Year Built 0 Bedrooms
Building Style Foundation Sq Ft Bathrooms
Frame Above Grade Sq Ft Garage Sq Ft
Multiple Buildings Finished Sq Ft Other Garage
Miscellaneous Information
School District Watershed District Homestead Green Acres Ag Preserve Open Space
192 VERMILLION RIVER NON HOMESTEAD
Assessor Valuation
Taxable Estimated
2014 Land Values (payable 2015) $2,404,000.00 $2,404,000.00
2014 Building Values (payable 2015)" $0.00 $0.00
2014 Total Values (payable 2015)* $2,404,000.00 $2,404,000.00
2013 Total Values (payable 2014)* $2,201,800.00 $2,201,800.00
Property Tax Information_
Net Tax (payable 2014) Special Assessments (2014) Total Tax & Assessments (2014)
$29,589.36 $0.00 $29,589.36
* Manufactured Homes Payable the Same Year as Assessment.
Disclaimer: Map and parcel data are believed to be accurate, but accuracy is not guaranteed. This is not a legal
Friday, May 16, 2014 Dakota County, MN Page 1 of 2