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HomeMy WebLinkAbout10-30-18CITY OF LAKEVILLE ECONOMIC DEVELOPMENT COMMISSION MEETING MINUTES October 30, 2018 1. Chair Scherer called the meeting to order at 4:00 p.m. in the Marion Conference Room at City Hall. Members Present: Comms. Collman, Dautel, Emond, Gillen, Matasosky, Scherer, Smith, Starfield, Vlasak Ex-officio members: Mayor Anderson, City Administrator Miller, Chamber President Jech Members Absent: Comm. Seiler Others Present: David Olson, Community & Economic Development Director; Kati Bachmayer, Economic Development Specialist; Rachel Gradner, CBRE; Travis Scoles, QA1; Kylle Jordan, MN Department of Employment and Economic Development (DEED); Dan Salzer, Scannell Properties 2. Approval of September 25, 2018 Meeting Minutes Comms. Matasosky / Emond moved to approve the minutes of the September 25 meeting as presented. Motion carried unanimously. 3. Review of Preliminary Application for Tax Increment Financing Assistance from QA1 Precision Products Inc. The City recently received a Tax Increment Financing application from QA1 Precision Products Inc. to assist in the potential development of a new 100,000 square foot manufacturing facility. The proposed new building would be the third project developed in Interstate South Logistics Park, located at the southwest quadrant of Co. Rd. 70 and Dodd Blvd, and would replace two existing adjacent buildings owned by QA1 in Airlake Industrial Park. If the proposed project moves forward, it would result in the retention of 95 Lakeville jobs and the creation of 44 additional full-time jobs in Lakeville over the next five years, with an average wage level of $40,600 per year, not including benefits. The estimated total development cost of this new proposed manufacturing facility is $11,459,000 and $2,809,000 of the estimated cost is considered eligible for TIF assistance. The TIF application has identified a financing gap of $3,000,000 for the project. The Developer’s estimated building construction cost at $7,500,000 and it is estimated that this proposed project would generate between $500,000 and $700,000 in available tax increment. The tax increment would be paid out over the next 10-11 years on a “pay-as-you-go” approach with annual reimbursements based on a percentage of the actual new tax increment received. The TIF application indicates that “but for” Tax Increment Economic Development Commission Minutes October 30, 2018 Page | 2 Financing, it is not economically feasible for QA1 to construct a new manufacturing building in Lakeville. QA1 indicates that the estimated costs of expanding in Lakeville versus an out-of-state market is approximately $3 million more over a 10- year period. The cost gap is caused by the cost of labor, real estate taxes, and sale taxes on the one-time costs. Receipt of TIF support is identified as making the project feasible from a Return-on-Investment (ROI) standpoint. Rachel Gradner, CBRE and Travis Scoles, QA1 Precision Products Inc. attended the meeting to present information about the company and its TIF application. Dan Salzer, Scannell Properties was also present as a representative of the proposed location in Interstate South Logistics Park. Scoles said QA1 has experienced significant growth since 2011 and anticipates that growth to continue. The current two-building system is inefficient and lacks space for expansion. EDC members asked for more information about the project’s equity package, its current employee travel radius, a breakdown of the new job wages and benefits, and its hiring plans in a tight labor market. Kylle Jordan, DEED shared information on the state agency’s programs that may be available to the company should this proposed project occur in MN. Those programs include the Minnesota Job Creation Fund, Minnesota Investment Fund, and Minnesota Job Skills Partnership. Comms. Starfield / Smith moved to recommend review of the preliminary Tax Increment Financing application from QA1 by the City Council and HRA Board. Motion carried unanimously. 4. Presentation of Proposed County Road 70 Expansion Plan by City Engineer Zach Johnson, City Engineer attended the meeting to provide information on the upcoming County Road 70 Expansion Plan. The City is partnering with Dakota County officials on the project which will expand County Road 70 into a 4-lane, principle arterial roadway from Kenrick Ave/Kensington Blvd to Cedar Ave. Meetings have already been held with businesses and land owners who will be directly affected by the project. Public meetings will be held in early December to share information with the community. Feedback on the project will be collected through the end of 2018, design and Right-of-Way acquisition will take place in 2019 and preliminary construction could begin in Summer 2020. Updates and information about the project can be found at: www.highway70expansionproject.com. 5. Director’s Report / Development Update Mr. Olson reviewed the Director’s Report and showed a PowerPoint of recent commercial construction projects occurring in the City. Lakeville is on track to issue a similar number of single-family building permits in 2018 compared to 2017. The City had a good turnout for its Manufacturers Appreciation Event held on October 2. A Workforce Development Panel Discussion and Appreciation Reception were held Economic Development Commission Minutes October 30, 2018 Page | 3 at Brackett’s Crossing Country Club. City staff hosted a Lakeville booth at the annual Minnesota Commercial Association of Real Estate Expo (MNCAR) on October 23. The event was a great opportunity to speak with real estate brokers, developers, and related companies about current or future projects in the City. Mr. Olson informed EDC members that Applebee’s in Lakeville recently closed. The location was owned by an investment group who closed several other locations in the metro. The next EDC meeting will be held on November 27. Adjourn Meeting adjourned at 5:49 p.m. Respectively submitted by: Kati Bachmayer, Economic Development Specialist