Competing for Business Investment - Ehlers, Inc

Competing for Business InvestmentJason Aarsvold – Ehlers

Steve Stahmer – City of Rogers

• Introduction

• Keys to success working with Site Selectors

• Project Case Study – Graco (Rogers, MN)

• Project Case Study – Uponor (Hutchinson, MN)

• Local resources to compete for business investment

Overview

• A request comes into the office for a business looking to site a facility•Commonly represented by some kind of site search consultant

• Other parties may already be involved• State (DEED), County, other competing cities, greater MSP• If you are getting the call, they already know a lot about you

• What they want from you:• Information• Ability to build a good working relationship• Money

Introduction ‐ Site Search Inquiries

• Staff and policymakers on the same page• Good policies/procedures • Know up front if this a project you want to pursue

• Responsiveness goes a long way• Submit information on time – incomplete and late submissions

are often tossed

• Ensure open communication between parties• Need to feel free to call and ask questions• Building a relationship (business needs to feel comfortable

making a significant investment)

Keys to Success Working With Site Selectors

• Maintain confidentiality and respect the importance of the data that’s been shared with your organization

• Decision‐making is data driven –provide online access to applicable information, not just why you are a great place to live and work• Available land and buildings• See list

• Available workforce questions are at the top of the list• What is your available workforce? • What are you doing about workforce issues


• Ask questions – most roadblocks are due to misunderstandings and can be overcome by communication

• Reduce Uncertainty• Shovel ready sites (not shovel ready, you’re not on the list…)• Clearly defined zoning & permitting process• Workforce recruitment assistance• Single point of contact


Operating Costs• Labor• Transportation• Utilities• Taxes & incentives• Occupancy costs

Data list – Site Selector Interest

Operating Conditions• Utility reliability• Workforce availability• Access to

transportation• Employee‐labor

relations

Quality of Life• Schools and Recreational amenities

• “Breweries & festivals”, Etc.

Graco Case Study

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• Potential Project Background – how initially approached• Already the largest premier employer in terms of number and

quality of jobs• Council is very cognizant of Graco’s long‐term importance to

the City• 479,766 square foot expansion (795,960 total), $80 million

investment• 400 jobs retained; 95 new jobs with an average wage of

$42,940• Important to secure further investment by the company to

solidify ongoing tenure

Graco Case Study

Graco Case Study

• City preparation in advance of request• Annual goal setting & communication with City Council to understand

priorities ‐ new, higher‐paying jobs important• Know your available/priority sites, infrastructure, etc.

• Ensure that Council and staff on the same page about supporting a given project type

• Learn as much about the project as possible in advance of initial meetings

• Prepare summary information related to the site/project to facilitate productive meetings

‐Preparation makes the process easier for all involved‐

Graco Case Study

• Assemble your team

• Pull team members into the discussion early• Community Development/Admin• Finance• Public Works/Engineering ‐ infrastructure and site issues• Financial/Economic Development Advisor• Bond/TIF Counsel

Graco Case Study

• Sample Summary InfoGraco Case Study

City of Rogers - Project Hunter, March 13, 2018

Existing Site Location/Operations Proposed Expansion Project

Total Acreage 29.95 acres, two parcels Company "Project Hunter"

Employment 300 New Employment 95 (avg. wage, $20.63/hr)

Existing Bldg315,000 sq ft manufacturing/Office Proposed Facility 300,000 sq ft manufacturing

Current Market Value $11,361,000 Pay 2018 Mkt Value, Improvements $12,000,000 Current Property Tax $420,498 Pay 2018

Property Tax of Improvements, Annual $448,502 Total Property Taxes, Annual (2 parcels) $871,793

Amount Excluded from TIF $676,924 Annual Gross Tax Increment (TIF) $194,869 Est. Platting Fees (incremental only) $166,500 Est. Building Permit (incl. SAC/WAC)* $380,000

Completion Assumptions25% complete for Pay 2019, 100% Pay 2020

*includes City "hard " costs of $35,000

Draft City Proposal - Contingent Upon Analysis and Approval by City CouncilStaff Recommended City participation/assistance:

- Tax Increment Financing, up to 90% of tax increment through 2028- Replatting Fees, waiver of $166,500- Forgiveness of $100,000 City MIF Portion

DisclaimerAny and all negotiations by City staff are conditioned upon final approval by the Rogers EDA/City Council and subject to State statute.

• 3 potential sites in 3 different states

• Rogers to be compared to the low‐cost option as presented by the site selector• Comparison of development cost plus 10‐year operating costs• Rogers site up to $10 million more than low‐cost alternative

prior to negotiations

• City worked with MN DEED and Hennepin County as public funding partners

Graco Case Study

• As a city, we aren’t dealing with perfect information• No way to 100% verify the gap between low‐cost site

• After determining that the project aligns with City economic development goals, engaged financial advisor to undertake a TIF run and gap analysis of the project

• TIF run to determine available increment (9yr econ. dev. district)• Project financial feasibility/gap analysis to include both:

• Cost comparison analysis, Rogers site vs. low‐cost site• Investment/lease analysis to compare w/ a traditional developer lease back arrangement

Both reviews demonstrated feasibility gaps, justifying assistance

Graco Case Study

• MN DEED and Henn. Co. Economic Development brought in to identify additional resources

• Multi‐jurisdictional assistance package included:• $1.1 million TIF over 9 years• $700k Job Creation & $800k MN Investment funds by DEED• $836k Hennepin County Econ. Dev. Infrastructure Funds• Total assistance of $3.4 million

• City provided offsite stormwater treatment at Graco’s cost, to maximize site utilization

Graco Case Study

Graco Storm Water Solution

• Upon completion, Graco will be operating more than 1 million sq ft in Rogers (including 225k sq ft of offsite leased distribution)

• Working with a site selector requires communication, preparation and organization in order to be successful and rise to the top of the list

• But site selectors can help streamline the process by “speaking our language,” understanding the issues better than most end users and focusing more directly on key decision points

Graco Case Study: Final Thoughts

Uponor Case Study ‐ Hutchinson

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• Uponor acquisition of former Hutchinson Tech. Building

• 237,000 Sq. Ft. Facility

• 100 Jobs

• $15.35/hr.

Uponor Case Study – Hutchinson, MN

• City Tax Abatement

• DEED Assistance

• Public purposes of subsidy:• Enhance economic diversity of the city• Create high quality job growth• Increase tax base of the community



• City Sources• Economic Development TIF

• Manufacturing; Warehousing, storage, distribution; Research and development; Telemarketing

• Redevelopment TIF • Tax Abatement• Existing fund balance

• County Sources• Varies by County• Not a significant source

Local Resources to Compete for Business Investment

• State Resources• Minnesota Investment Fund (MIF)

• $611,000 average award size• Largest award $4.9 million

• Job Creation Fund (JCF)• $472,000 average award size• Largest award $1.9 million

• Grant Funding • Clean up, Infrastructure

• Job Training


• Taken together, all sources max out at around $4 million for any Minnesota community• Average is more likely around $2 million

• Other states / countries can offer significantly more

• Need to provide value to the business beyond just the monetary incentive.

• Illustrates the importance of responsiveness and demonstrating a quick and easy path to getting a project done.


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Jason AarsvoldEhlers(651) 697‐8512jaarsvold@ehlers‐inc.com

Steve StahmerCity of Rogers(763) 428‐[email protected]

Documents

Competing for Business Investment - Ehlers, Inc