Meeting of the Iron Range Resources and Rehabilitation Board 21 2018 packet.docx_tcm1047-339759.pdfThe Hoyt Lakes Economic Development Authority (HLEDA) has requested a non-recourse

Meeting of the

Iron Range Resources and

Rehabilitation Board

Minnesota Senate Building – Room 2412 St. Paul, Minnesota

Monday, May 21, 2018 – Noon

Iron Range Resources and Rehabilitation Board Meeting May 21, 2018

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Meeting of the Iron Range Resources and Rehabilitation Board



TABLE OF CONTENTS

Hibbing Fabricators, Inc. ................................................................................................................................................ - 4 -

Ellefson Off Highway, Inc. .............................................................................................................................................. - 6 -

Hoyt Lakes Economic Development Authority .............................................................................................................. - 8 -

Stern Companies, Inc. .................................................................................................................................................... - 9 -

Tower Economic Development Authority ................................................................................................................... - 11 -

FY18 Infrastructure Projects ........................................................................................................................................ - 12 -

Iron Range Higher Education Account ........................................................................................................................ - 16 -

Exhibit A – FY19 Budget .......................................................................................................................................................i

Exhibit B – IRRRB January 24, 2018, Meeting Minutes ................................................................................................. - 1 -


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MEETING OF THE IRON RANGE RESOURCES AND REHABILITATION BOARD



AGENDA

1) Roll Call

2) Approval of January 24, 2018, Minutes See Exhibit B

3) Commissioner’s Comments a. Mesabi Trail Washout Update b. Giants Ridge Non-Profit Update

FY18 Budget Amendment

4) Hibbing Fabricators, Inc.

5) Ellefson Off Highway, Inc.

6) Hoyt Lakes Economic Development Authority

7) Stern Companies, Inc.

8) Tower Economic Development Authority

9) FY18 Infrastructure Projects

10) Iron Range Higher Education Account

11) FY19 Budget See Exhibit A

12) Adjournment


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Hibbing Fabricators, Inc.

525 West 41st Street Hibbing, Minnesota 55746

IRRRB Bank Participation Loan

Applicant: Hibbing Fabricators, Inc.

Project Location: 525 West 41st Street, Hibbing, MN 55746

Principal(s): Sandy Bryant

Project Description: This loan would be used to purchase new Turret punch press.

Market Opportunity:

Hibbing Fabricators, Inc. has a large presence in the aerospace and medical industries, and this new Turret punch press will allow the company to remain competitive through precision and efficiencies.

Project Investment:

Equipment Loan – Security State Bank – 120 month amortization at a negotiated rate.

$ 220,000

IRRR – 120 month amortization. $ 220,000

TOTAL $ 440,000

Jobs: __0__ Planned New __31__Retained Wages $_21,000____ - $_42,000___ per year plus benefits

Collateral: Secured by all Inventory, Equipment, Accounts Receivable, Furniture & Fixtures, and Machinery including PMSI in Haas Lathe and Haas Mill

Business History: Hibbing Fabricators is an S Corporation established in the mid 1980’s for the purpose of manufacturing precision sheet metal fabricated parts for various industries. The three primary industries they sell to are the healthcare industry, the aerospace industry and the electronics industry. Over the years they have established strong relationships with companies such as General Electric, Cyrus Design and Saver Danfoss. They presently have 25 major customers with the largest concentration being 17% with GE Healthcare. They appear to be well diversified among customers as well as industries. Locally they sell to customers and companies such as L & M Radiator, Trison Electronics and Detroit Diesel Remanufacturing.


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Past IRRRB History: Loan No Project description

FY Funded Amount Status

824005 Purchase equipment for expansion 1998 $150,000 PIF

135807 Equipment for expansion of manufacturing operations 2000 $250,000 PIF

189408 Equipment for expansion of manufacturing operations. 2002 $150,000 PIF

237211

Laser cutter and ancillary equipment for sheet metal business. 2006 $300,000 PIF

258121 Add manufacturing and precision inspection equipment 2014 $250,000 CUR

448523 Purchase equipment for a business expansion 2016 $175,000 CUR

486123 Purchase equipment for business expansion 2016 $212,500 CUR

Contingencies: None

Technical Advisory Committee Recommendation:

The Technical Advisory Committee recommended approval of the project at its May 16, 2018 meeting.

Funding Authorization:

Douglas J. Johnson Economic Protection Trust Fund: This project is authorized under the provision of the Douglas J Johnson Economic Protection Trust Fund Act (Minnesota Statues sections 298.291 – 298.298) pertaining to expenditures of Douglas J Johnson Economic Protection Trust Fund monies for economic development projects in that these statues authorize small business development loans to private enterprises for the purpose of job creation and economic development within the Taconite Assistance Area defined in Minnesota Statues Section 273.1341


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Ellefson Off Highway, Inc.

8906 Highway 37 Iron, Minnesota 55751


Applicant: Ellefson Off Highway, Inc.

Project Location: 8906 Highway 37, Iron, MN 55751

Principal(s): Christopher Ellefson

Project Description: This loan would be used to build a 4200 sq. ft. component building.

Market Opportunity:

The new facility will allow Ellefson Off Highway increase their presence in various markets as well as expend in to new markets. Currently Ellefson does only 12 to 18% of their business in the Iron Range area. The new facility will allow Ellefson to hire more technicians and retain the highly skilled ones that they currently have. This new facility will also increase purchases and needs from local vendors in every industry from fasteners, hardware supplies, freight, fuel oil and propane to technology, cleaners and various other vendors. By being able to hire more technicians and produce more parts and components, Ellefson believes it can increase annual sales by 4 to 7.2%.

Project Investment:

Real Estate – Security State Bank – 240-month amortization at a negotiated rate.

$ 300,000

Real Estate - IRRR – 240-month amortization.

$ 300,000

Equity $ 200,000

TOTAL $ 800,000

Jobs: __13.5__ Planned New __15.5__Retained Wages $_15 / hr.____ - $_27 / hr._ per year plus benefits

Collateral: Secured by a 2nd REM on property located at 8906 Hwy 37 Iron MN, SSB/IRRRB have first lien position.

Business History: Ellefson Off Highway was formed in 2010 and deals in construction and mining application parts, components and full pieces of equipment. Their primary product lines are Caterpillar and Komatsu; which are sold to a worldwide customer base. This customer base consists of both retail and wholesale companies/people. On average our customers are seventy to


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eighty percent retail, which can also be referred to as end-users, examples being mines, quarries and construction companies; and twenty to thirty percent wholesale, which would be other dealers similar to Ellefson. Ellefson Off Highway purchases whole pieces of equipment from across North America and Overseas, then the equipment is then brought to the Iron Range facility where it is either prepared for resale or dismantled for parts and components. Once these products are inspected and/or refurbished they are marketed to a worldwide audience.

Past IRRRB History: $650,000 Participation Loan Approved 9/14/12. $397,000 Balance – Loan is current.

Contingencies: None






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Hoyt Lakes Economic Development Authority P.O. Box 441

4261 Highway 53 South Eveleth, Minnesota 55734-0441 (218)735-3000 • 800-765-5043

Date: May 21, 2018 To: Iron Range Resources & Rehabilitation Board From: Mark Phillips Commissioner RE: NON-RECOURSE LOAN REQUEST OF $850,000 FROM THE HOYT LAKES ECONOMIC DEVELOPMENT

AUTHORITY _______________________________________________________________________________________ The Hoyt Lakes Economic Development Authority (HLEDA) has requested a non-recourse loan in the amount of $850,000 to purchase the former Premier Plastics building to accommodate an expansion of Stern Companies, Inc., a Brainerd area based plastics manufacturer, into the Laskin Industrial Park. The 30,000 square foot building was constructed as a “spec” building by the HLEDA in 2002. In 2004, the building was completed for occupancy by Premier Plastics and a 5,000 square foot warehouse addition was added in 2007. The building and addition were financed with non-recourse loans from the DIRRR to the HLEDA. Robert Menne III, the owner of Premier Plastics, exercised a purchase option with the HLEDA in 2016. All remaining agency debt on the building was repaid in full with the proceeds of the sale. Later in 2016, Menne sold Premier Plastics to DOWCO Powersports, based in Manitowoc, Wisconsin. DOWCO leased the facility from Menne. In 2017, DOWCO announced it was going to consolidate its Hoyt Lakes operations to its Manitowoc headquarters and almost immediately began winding down operations and transferring equipment to Wisconsin. Stern is in the process of negotiating a long term lease with HLEDA for facility. In addition, they are working on a financing package for production equipment. The DIRRR has agreed to consider a bank participation loan as part of the financing package. Additional information can be found under the Stern loan request section of the agenda. Stern will enter into a lease for a minimum of five years with HLEDA. It is proposed that the loan to HLEDA would be at 0%, over a 20-year term, with repayment coming from “net rents” collected on the facility. The Technical Advisory Committee recommended approval of the project at its May 16, 2018 meeting.


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Stern Companies, Inc.

7756 College Road Baxter, Minnesota 56425


Applicant: Stern Companies, Inc.

Project Location: 5520 Colby Lake Rd, Hoyt Lakes, MN 55750

Principal(s): Shawn Hunstad

Project Description: This loan would be used to purchase rotational molding and thermoforming equipment for the purpose of expansion to the former Premier Plastics building in Hoyt Lakes.

Market Opportunity:

This project will build on the already established expertise in the rotational and thermoform molding experience of the employees in this region. Due to the tight labor market in Stern’s existing region, it is the intent to bring additional work to the Hoyt Lakes area with growth in the customer base. The expansion from the current production capability will able Stern to better diversify their customer base.

Project Investment:

Equipment Loan – Bank Vista – up to 120 month amortization at a negotiated rate.

$ 624,000

Equipment Loan - IRRR – up to 120 month amortization

$ 1,000,000

Equipment Loan - SBA 504– up to 120 month amortization.

$ 1,299,200

Subordinated debt $ 300,000

Equity $ 24,800

TOTAL $ 3,248,000

Jobs: __13__ Planned New (Initial). Up to 35 within 3 years. Wages $_13 / hr.____ - $_23 / hr._ per year plus benefits

Collateral: First position lien, shared only with bank, on equipment purchased.

Business History: Stern Companies, Inc. is a supplier of rubber and plastic components to the OEM market. Customers include Polaris, Arctic Cat, Textron, Terex, ASV, Nilfisk, Geringhoff & Toro to name a few. They supply through two entities, Stern Assembly & Rotomolding and Stern Industries. Stern rotational molds and assembles various products for the Agricultural,


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recreational and commercial cleaning industries as well as brokers various rubber & plastic parts. Stern Companies, Inc. was established in 2008. However, Shawn Hunstad has over 26 years of experience within the rubber and plastic manufacturing industry.

Past IRRRB History: None

Contingencies: None






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Tower Economic Development Authority P.O. Box 441

4261 Highway 53 South Eveleth, Minnesota 55734-0441 (218)735-3000 • 800-765-5043

Date: May 21, 2018 To: Iron Range Resources & Rehabilitation Board From: Mark Phillips Commissioner RE: NON-RECOURSE LOAN REQUEST OF $1,850,000 FROM THE TOWER ECONOMIC DEVELOPMENT

AUTHORITY _______________________________________________________________________________________

The City of Tower has requested a non-recourse loan in the amount of $1.85 million to construct a 9,000 square foot building in its industrial park adjacent to Highway 135. Half of the building, 4,500 square feet, will be leased to Lamppa Manufacturing to facilitate an expansion of the business. Lamppa Manufacturing has been producing wood burning sauna stoves and warm air furnaces out of their plant in Tower since 1977. Its stoves have been recognized both for their quality and environmental stewardship. Lamppa Manufacturing is poised for significant growth, having received certification from the Environmental Protection Agency in August 2017 for its wood burning stoves. This new EPA certification requirement has proven difficult to attain, with many manufacturers not being able to withstand the rigors of the certification process and going out of business. The existing building that has been owned by the Lamppa family formerly housed the Tower Dairy and is in general very inefficient and inadequate to meet the needs of the growing business. By the end of 2019 it is projected employment at Lamppa Manufacturing will grow from its existing level of 8 to 20. Production wages are $18-25 per hour and a benefit package is offered. Lamppa will enter into a ten-year lease with TEDA. The building is designed to be able to accommodate multiple tenants. The remaining 4,500 square feet will be available to another manufacturer. It is proposed that the loan to TEDA would be at 0%, over a 20-year term, with repayment coming from the “net rents” collected on the facility.

The Technical Advisory Committee recommended approval of the project at its May 16, 2018 meeting, subject to submission of an acceptable updated business plan for Lamppa Manufacturing.


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FY18 Infrastructure Projects

P.O. Box 441 4261 Highway 53 South

Eveleth, Minnesota 55734-0441 (218)735-3000 • 800-765-5043

Date: May 21, 2018 To: Iron Range Resources & Rehabilitation Board From: Mark Phillips Commissioner RE: FY18 DEVELOPMENT & COMMUNITY INFRASTRUCTURE PROJECTS _______________________________________________________________________________________ PURPOSE The Development Infrastructure Grant program provides funds for cities, townships and tribal units of government that can be used for infrastructure, site work or healthcare capital projects that support community and economic development.

The Community Infrastructure Grant Program helps cities and townships fund infrastructure projects located within the agency's service area to support community development. ECONOMIC IMPACT

FY18 infrastructure grants 6

Iron Range Resources & Rehabilitation investment $1,440,000

Total public/private investment $21,405,053

Leverage 14 to 1

City of Aitkin Grant Amount: $130,000 This project includes full street reconstruction of First Street Northwest along with storm water replacement. This construction includes the street that runs along the county office complex and serves as the access point for county health and human services, county jail and county staff parking. For many years there has been an issue with major flooding whenever there is a heavy rain. Many times, there will be over two feet of water standing in the street. The plan is to re-route a storm sewer pipe from below an existing manufacturing/commercial building and increase the size of the sewer pipe used. The project is projected to create 13 construction jobs.

USES SOURCES

Street and storm sewer reconstruction

$1,531,878 Iron Range Resources & Rehabilitation

$130,000

A&E 345,900 City 657,967

Contingency 153,188 LRIP 1,150,000

County 92,999

TOTAL $2,030,966 TOTAL $2,030,966


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Chisholm-Hibbing Airport Authority Grant Amount: $250,000 The project consists of airport taxiway reconstruction. Properly maintained airfield pavement is an obvious critical safety issue and is required for an airport to possess an FAA operating certificate to allow airline operations. The proposed Taxiway pavements to be reconstructed were constructed in 1991 and 1984 respectively and have met their useful life. Pavement Condition Index (PCI) survey conducted by the Minnesota DOT indicates the pavements are in poor condition and recommend pavement replacement. The airport experiences over 30,000 aircraft operations and over 30,000 people traveling through the terminal facilities. The project is projected to create 28 construction jobs.

USES SOURCES

Taxi-lane reconstruction $3,692,948 Iron Range Resources & Rehabilitation

$250,000

A&E 293,433 Chisholm-Hibbing Airport 135,000

Contingency 249,819 FFA 3,851,200

TOTAL $4,236,200 TOTAL $4,236,200

Cook County/Grand Marais EDA Grant Amount: $192,000 The project consists of infrastructure and road construction for Phase II of a new housing development in Grand Marais. One Roof Community Housing (ORCH) will construct 10 single-family owner occupied community land trust homes. Phase I included the construction of two community land trust homes that will be priced to be affordable to households that earn up to 80% of the area median income and two community land trust homes that will be priced and affordable to buyers who earn up to 115% of the area median income. Phase II includes the construction of two community land trust homes that will be priced to be affordable to households that earn up to 80% of the area median income and four community land trust homes that will be priced and affordable to buyers who earn up to 115% of the area median income. This development is intended to provide workforce home-ownership for a variety of income levels. The project is projected to create 11 construction jobs.

USES SOURCES

Infrastructure and road construction

$215,547 Iron Range Resources & Rehabilitation

$192,000

Home construction 1,297,060 ORCH 1,076,007

Land 91,750 MHFA 300,000

A&E 118,650 Cook County/Grand Marais EDA

75,000

FHLB 80,000

TOTAL $1,723,007 TOTAL $1,723,007


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City of Mountain Iron Grant Amount: $350,000 The project consists of infrastructure and site development for a new 80-room hotel development on the Rock Ridge site in Mountain Iron. The developer intends on adding a 150-seat meeting center and a craft beer pub and grill as part of the first phase of development. Additionally and subsequently, the developer will be reinvesting to completely renovate the existing Holiday Inn Express Hotel on Rock Ridge to make it like new once again. The project is projected to create 30 permanent jobs and 68 construction jobs.

USES SOURCES

Utilities and site work $517,500 Iron Range Resources & Rehabilitation

$350,000

Hotel construction 8,976,524 City of Mountain Iron (Tax abatement)

500,000

A&E 243,243 Private 9,534,880

Contingency 647,613

TOTAL $10,384,880 TOTAL $10,384,880

City of Tower Tower Economic Development Authority (TEDA) Grant Amount: $268,000 The project consists of funding the City of Tower with a grant to be administered by the Tower Economic Development Authority (TEDA). TEDA is requesting funds to assist with the Phase II restoration and preservation of the Historic Lake Vermilion Cultural Center (formerly St. Mary’s Church) on Main Street in Tower. The building was initially built as a mission church in 1889 and is one of the oldest still-existing structures of its kind in Minnesota. The fully restored 127-year old cultural center will serve as a community, cultural, educational and social center for the Tower, Soudan, and Lake Vermilion area. The community of Tower has privately raised $540,000 to date, and construction to restore the facility has begun. The project is projected to create 12 construction jobs.

USES SOURCES

Site work $70,000 Iron Range Resources & Rehabilitation

$268,000

Building construction 1,445,000 Private 1,462,000

FF&E 170,000 TEDA 40,000

A&E 65,000 USDA 35,000

Contingency 55,000

TOTAL $1,805,000 TOTAL $1,805,000


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City of Virginia Virginia Economic Development Authority (VEDA) Grant Amount: $250,000 The project consists of funding the City of Virginia with a grant to be administered by VEDA. The VEDA revolving loan fund currently doesn’t have the funding capacity to assist a downtown business in a large-scale redevelopment project. VEDA will administer the grant funds through their revolving loan fund and provide loan funding as part of the hotel redevelopment project. The repayment of loan funds to VEDA by the developer will be used for future VEDA loans to assist additional business in Virginia’s downtown area. The hotel redevelopment is a total project investment of $1,225,000 and will create two permanent jobs and 10 construction jobs.

* Grant Reallocation

City of Tower Grant Amount: $350,000 Reallocation Amount: $350,000

Tower Harbor Redevelopment Project. The City of Tower Harbor Redevelopment Project (FY2017) has $350,000 remaining. The project developer is continuing to work through project financing details. The City of Tower has requested amending the current grant scope of work and would like to reallocate $350,000 in grant funds to the Lamppa Manufacturing Expansion project for infrastructure and site development. This is a $2.2 million project.


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Iron Range Higher Education Account

P.O. Box 441 4261 Highway 53 South

Eveleth, Minnesota 55734-0441 (218)735-3000 • 800-765-5043

Date: May 21, 2018 To: Iron Range Resources & Rehabilitation Board From: Mark Phillips Commissioner RE: IRON RANGE HIGHER EDUCATION COMMITTEE – HIGHER EDUCATION ACCOUNT EXPENDITURES

The Iron Range Higher Education Committee (IRHEC) is a legislatively created committee charged to advise the Commissioner of the Department of Iron Range Resources and Rehabilitation (IRRR) on providing higher education programs in the Taconite Assistance Area (TAA). Monies allocated to the Iron Range higher education account under Minn. Stat. Sec. 298.28, subd. 9d, may be used for higher education programs conducted at educational institutions in the TAA, and must be approved by the IRHEC and the Commissioner, after consultation with the IRRR Board. The IRHEC met on Tuesday, April 24, 2018 to hear program updates and consider program funding requests. At that meeting, the IRHEC approved an expenditure of up to $175,000 of the higher education account funds to provide a grant to the Northeast Higher Education District (NHED) for the expansion of the Associate of Applied Science Veterinary Technician Program at Vermilion Community College due to increased demand. The IRHEC also approved an expenditure of up to $85,000 for research and planning of a Center for Transportation and Logistics at Hibbing Community College. The IRHEC also approved an expenditure of up to $1,000,000 of the Higher Education Account funds to provide a grant to the Northeast Higher Education District (NHED) for the continued delivery of Iron Range Engineering; a higher education program that, in collaboration with private industry, will allow students to earn a Bachelor’s of Science degree in engineering from Minnesota State University Mankato. I am recommending Board approval of these expenditures. Funding Authorization: These expenditures are authorized under the provisions of the Iron Range Higher Education Committee and the Iron Range Higher Education Account as codified under Minnesota Statutes, Section 298.2214 and 298.28, subdivision 9d, respectively.

FY 2019 Budget

To promote and invest in business, community and workforce development for the betterment of northeastern Minnesota.

lhallTypewritten TextEXHIBIT A

FY 2019 Budget Monday, May 21, 2018

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FY 2019 Budget Table of Contents

INTRODUCTION ........................................................................................................... 3

FY19 BUDGET ............................................................................................................... 4

PROJECTS ..................................................................................................................... 5

Development Projects .................................................................................................. 5 Public Works ................................................................................................................. 5 Public Works – DJJ Corpus Trust ................................................................................... 5 Regional Trails Program ............................................................................................... 5 Projects Budget ............................................................................................................ 5

PROGRAMS ................................................................................................................. 6

GRANTS .............................................................................................................................. 6 Community Development ............................................................................................. 6 Workforce Development .............................................................................................. 7 Mining and Mineland Reclamation .............................................................................. 7 Culture and Tourism ..................................................................................................... 8 Commissioner Program ................................................................................................ 8 Application Fund ........................................................................................................... 9 Recharge the Range ..................................................................................................... 9 Programs Budget .......................................................................................................... 9

REGION III .................................................................................................................. 10

GIANTS RIDGE ............................................................................................................ 11

Giants Ridge Budget ................................................................................................... 12

OPERATIONAL COSTS ................................................................................................. 13

Operational Costs Budget .......................................................................................... 13


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Introduction FY18 July 1, 2018 – June 30, 2019 This proposed FY19 Iron Range Resources & Rehabilitation budget represents the agency’s commitment to investing in a better future for northeastern Minnesota. It is organized in order of funding priorities - public investments in development projects and programs, Giants Ridge, and operational costs. Approval of specific projects is governed by Minnesota statutes, which may be amended in FY19. Development projects and programs account for 62% of the agency’s spending; Giants Ridge 23%; and operations 15%.


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FY19 Budget

Iron Range Resources & Rehabilitation Board FY 2018 Budget

FY 2018 Projected

FY 2019 Budget

Resources Carryforward In $15,114,267 $16,870,811 $13,391,699 Current Resources Taconite Production Taxes $21,051,255 $21,051,255 $17,225,829 Investment Earnings 1,198,691 2,211,187 2,185,688 Loan Revenues 1,986,835 2,256,055 2,113,773 Facilities Revenues 5,454,727 5,262,544 5,468,359 Occupation Tax Region III 502,866 502,866 481,646 *Taconite Property Tax Relief Account 0 0 3,210,974 **DJJ Corpus Trust 0 0 7,000,000 Subtotal Current Resources $30,194,374 $31,283,907 $37,686,269 Total Resources $45,308,641 $48,154,718 $51,077,968 Estimated Expenditures Projects Development Projects 7,672,000 7,672,000 7,000,000 Public Works 6,000,000 6,000,000 6,000,000

**Public Works - DJJ Corpus Trust 0 0 4,000,000

**Regional Trails Program - DJJ Corpus Trust 0 0 3,000,000 Total Projects $13,672,000 $13,672,000 $20,000,000 Programs Program Grants 4,810,000 4,478,612 6,924,000 Occupation Tax Region III 502,866 502,866 481,646 Total Programs $5,312,866 $4,981,478 $7,405,646 Giants Ridge $10,045,648 $9,841,610 $10,030,212 Operations & Development Fixed Costs $7,146,008 $6,267,931 $6,989,343 Total Budget $36,176,522 $34,763,019 $44,425,201 Estimated Carryforward Out $9,132,119 $13,391,699 $6,652,767

*Current proposed legislation to transfer TPTRA funds into the agency Board account

**DJJ Corpus Trust funds to cover additional Public Works Projects and a new Regional Trails Program


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Projects Development Projects - $7,000,000 A total of $7,000,000 is designated for economic development projects to promote business development opportunities and attract new investments to the region. To streamline approvals, improve timeliness, and better serve businesses, the Commissioner, with approval of the IRRR Board Chair, is authorized to approve development projects of $500,000 and less for projects that meet the following conditions:

• Qualify for Iron Range Resources & Rehabilitation financing under established guidelines.

• Approved by the Technical Advisory Committee (TAC). Public Works - $6,000,000 Public works grants help cities, townships, airport authorities, hospital boards, utility commissions and collaborative organizations complete projects that support community and economic development. Eligible projects include, but are not limited to, publicly owned infrastructure such as wastewater, drinking water, storm water and utility systems, health care and airport facility improvements and renewable energy or energy efficiency initiatives. Public Works – DJJ Corpus Trust - $4,000,000 These funds cover additional Public Works projects. Regional Trails Program - $3,000,000 The Regional Trails Grant Program provides funding to assist cities and townships with trail planning, design and construction of various types of trails within the region. Trail types may include: bike, hiking, ATV and snowmobile. Projects Budget

Development Projects

FY 2018 Budget

FY 2018 Projected

FY 2019 Budget

Development Projects $7,340,000 $7,340,000 $7,000,000 Public Works 6,000,000 6,000,000 6,000,000 Public Works – DJJ Corpus Trust 0 0 4,000,000 Regional Trails Program 0 0 3,000,000 Total Development Projects $13,340,000 $13,340,000 $20,000,000


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Programs

Grants Community Development

Commercial Redevelopment - $800,000 Commercial Redevelopment grants fund the demolition and removal of commercial or publicly-owned structures, or the clean-up of brownfield sites, making way for new development. Residential Redevelopment - $300,000 Residential Redevelopment grants help create cleaner and safer communities and encourage new construction by assisting in the demolition of dilapidated residential structures. Development Partnerships - $250,000 The program funds partnerships for research, education, and development-based initiatives which support long term economic growth within the region and are consistent with Iron Range Resources & Rehabilitation strategies. Past and present partnerships include: APEX, Northspan, East Range Joint Powers Board, Enterprise Minnesota, Minnesota Power, Minnesota Logger Education Program, Arrowhead Manufacturers & Fabricators Association, Iron Range Tourism Board and UMD Center for Economic Development Small Business Development Center. Downtown & Business Corridor - $200,000 The Downtown & Business Corridor Grant Program incentivizes further investment in downtown areas and business corridors by promoting safe and attractive environments for residents, shoppers, workers and visitors. This program provides funding for highly visible and creative projects to create excitement, encourage citizen engagement and generate visible improvements. Business Energy Retrofit - $1,000,000 The program is funded by Iron Range Resources & Rehabilitation and administered through a partnership with Arrowhead Economic Opportunity Agency (AEOA) to assist business owners with energy efficient improvements to their buildings. Blandin Broadband Communities Partnership - $714,000 To continue regional broadband progress, Iron Range Resources & Rehabilitation and St. Louis County would continue to partner with Blandin Foundation on this project. For FY19, this would entail continuing to support the original six Iron Range Broadband Communities with technical support and project grant funds


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and engaging and recruiting four additional communities to begin the broadband development process. Dentist Recruitment - $240,000 The Dentist Recruitment program funds loan forgiveness grants within the Taconite Assistance Area (TAA). Funding will be used to administer the Martha Mordini Rukavina Loan Forgiveness Program. The purpose of this competitive program is to provide an incentive to attract dentists to practice general dentistry in the TAA, which has a documented need for dentists to provide services to its communities and underserved populations.

Workforce Development - $250,000 Grants assist in workforce development by funding sector specific customized training programs for industry, industry clusters, schools or collaborative partnerships that build capacity, responsiveness or innovation to address workforce needs. Funding is also available for secondary and post-secondary educational institutions and other regional workforce development partners to develop and deliver curriculum that prepares students for a seamless transition from high school or post-secondary education to the workforce.

Mining and Mineland Reclamation

Mining & Mineland Reclamation - $440,000 FY19 funded projects and programs include stocking mine pits with fish, Shoremine Restoration Grant Program to improve access locations at mine pit lakes ($120,000), emergency safety projects and repair ($220,000), and the Drilling Incentive Grant Program ($100,000) to stimulate additional exploration in Minnesota – primarily for manganese and gold. Laurentian Vision Partnership - $200,000 The Laurentian Vision Partnership Innovation Grant Program assists cities, townships, mining companies or joint powers boards with projects to promote the LVP vision and mission of “transforming pits and piles to living lakes and landscapes…our legacy for the future.” Grant funds are used to preserve lands that sustain current and future mining, promote landscape options for post-mining uses, identify and plan new development opportunities, and provide the tools to achieve these goals. Enterprise for Strategic Resources - $250,000 The Enterprise for Strategic Resources (ESR) is a national center of excellence to project Minnesota's leadership in the stewardship and strategic use of the country's natural resource endowment. This endowment is richly represented by northeastern Minnesota with its abundant resources including minerals and related metals and materials, timber and biomass, renewable energy, energy storage options and plentiful fresh water. The ESR will set the standard for


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public-private partnership by integrating industry, academic and governmental efforts. The DIRRR’s funds represent the state’s first investment in providing the foundation for the ESR initiative. Initial efforts will be primarily directed at specific economic development outcomes for the Iron Range that are realistic and measurable. This effort will aim for outcomes that are above and beyond current and past efforts with a focus on effective collaboration. The DIRRR investment will be a “force multiplier” in driving technology development, commercialization, and integration in new ways so that Minnesota itself becomes a global leader for a new, strategic approach to the stewardship and use of natural resources for the nation. This time represents a unique opportunity where state and national leadership is keenly interested in more effective public-private partnerships that can simultaneously derive economic value and positive social impact. The ESR is an endeavor that will initially drive value-added industry and job growth on the Iron Range with the added benefit of leading environmental stewardship. The longer term goal of ESR will be to position Minnesota itself as the global leader for the simultaneous stewardship and strategic use of the nation’s natural resource endowments, with the Iron Range at its core.

Culture and Tourism

Culture and Tourism - $350,000 Culture and Tourism grants assist non-profit organizations to undertake projects that stimulate tourism and enrich the quality of life in communities through artistic, cultural, heritage or recreational activities. Minnesota Discovery Center - $1,350,000 Minnesota Discovery Center’s mission is to “collect, preserve, interpret and promote the history and cultural heritage of northeastern Minnesota; and to manage, promote, sustain and develop the assets of Ironworld for the long-term benefit of area residents and visitors.” Through FY 2019 the Sublease/Management Agreement provides an annual $1,000,000 operating subsidy, the interest on an endowment fund and a $150,000 challenge grant for operating or endowment fund raising. In addition to these financial terms, the budget includes $200,000 for building capital improvements.

Commissioner Program - $300,000 Grants under the Commissioner Program allow the agency to respond quickly to emergency situations or to support development opportunities that may not meet other program requirements.


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Application Fund - $30,000 The grant program reimburses communities, non-profits and educational organizations for up to one-half of the cost of applying for funding from other state, federal or private grant programs. Recharge the Range - $250,000 In its first year, Recharge the Range engaged scores of citizens from across the region to offer ideas and participate in community and economic development efforts. For FY19, Recharge the Range is included in the agency's strategic plan as the primary ongoing community engagement tool. Recharge the Range will continue hosting workshops and conferences, developing community-driven grant programs and promoting the region to improve business, community, workforce and quality of life in area communities. Programs Budget Program Grants

FY 2018 Budget

FY 2018 Projected

FY 2019 Budget

Community Development Commercial Redevelopment $800,000 $800,000 $800,000 Residential Redevelopment 300,000 300,000 300,000 Development Partnerships 250,000 240,000 250,000 Community Comprehensive Plan Updates 20,000 20,000 0 Downtown & Business Corridor 200,000 200,000 200,000 Business Energy Retrofit 500,000 500,000 1,000,000 Blandin Broadband Communities Partners 0 0 714,000 Dentist Recruitment 0 0 240,000 Total Community Development $2,070,000 $2,060,000 $3,504,000 Workforce Development $200,000 $185,750 $250,000 Mining and Mineland Reclamation Mining & Mineland Reclamation $140,000 $75,764 $440,000 Laurentian Vision Innovation Projects 200,000 78,775 200,000 ESR 0 0 250,000 Total Mining and Mineland Reclamation $340,000 $154,539 $890,000 Culture & Tourism Culture & Tourism $250,000 $250,000 $350,000 Minnesota Discovery Center 1,350,000 1,350,000 1,350,000 Total Culture & Tourism $1,600,000 $1,600,000 $1,700,000 Commissioner Program $300,000 $300,000 $300,000 Application Fund $50,000 $33,000 $30,000 Recharge the Range $250,000 $145,323 $250,000 Total Program Grants $4,810,000 $4,478,612 $6,924,000


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Region III State law directs Iron Range Resources & Rehabilitation to serve as the fiscal agent for Carlton and Koochiching County (Region III) grants from occupation taxes for economic and environmental development projects. Iron Range Resources & Rehabilitation does not make any funding decisions, but funds pass through under the following provisions:

• The Region III allocation is equal to the amount that would have been generated by a 1.5-cent tax imposed on each taxable ton for the preceding production year.

• By law, one-third of the portion allocated for Koochiching County must be used to fund the Koochiching County Economic Development Commission.

Region III Grant – Carlton/Koochiching

FY 2018 Budget

FY 2018 Projected

FY 2019 Budget

Region III $502,866 $502,866 $481,646


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Giants Ridge Giants Ridge promotes destination tourism and offers a variety of recreational opportunities that enhance the quality of life for visitors and area residents. It also supports the agency’s mission to enhance and diversify the economy of the Iron Range Resources & Rehabilitation service area. Multiplier economic impacts from Giants Ridge on the local economy are estimated to be over $43 million today and $98 million by 2035. Continued investments in the facility help meet customer expectations and keep Giants Ridge competitive. Giants Ridge offers a mountain of outdoor experiences year around, including snow sports with alpine and Nordic skiing and snow tubing; two championship golf courses and disc golf; and mountain bike and hiking trails. Two new lifts installed this past year have improved the skier experience and will provide access to mountain biking gravity trails this summer. An additional 30+ miles of biking trails are currently being designed and construction will begin this year. Giants Ridge is a destination for amateur and high school sports and is currently the host site for the Minnesota State High School League alpine and cross country state championship races. Private sector lodging partners help fulfill hospitality needs in the recreation area and it is also home to a growing residential development population. The contract manager at Giants Ridge, Guest Services, has implemented a new business model that integrates all functional areas owned by Iron Range Resources & Rehabilitation under a single operator. The model has expanded revenue opportunities, provides more flexibility in staffing, broader control over the guest experience and it consolidates expenses. The changes have helped the facility achieve better service and management outcomes. This budget supports strategic reinvestment at Giants Ridge to build a better future.


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Giants Ridge Budget

Giants Ridge

FY 2018 Budget

FY 2018 Projected

FY 2019 Budget

Revenues Admissions $2,783,948 $3,076,751 $3,221,172 Facility Rental 0 0 0 Other Revenue 298,200 109,677 0 Retail Sales 2,120,388 1,827,282 2,098,995 Total Revenues $5,202,536 $5,013,710 $5,320,167 Expenses Cost of Sales $792,680 $819,796 $777,456 Salaries & Benefits 5,343,120 4,836,290 4,916,329 Utilities 356,815 418,989 671,169 Advertising & Marketing 510,000 525,064 566,000 Equipment Rental 4,600 10,555 0 Management Fees 279,817 264,287 266,008 Professional Services 35,730 123,538 23,880 Maintenance & Repairs 713,262 942,608 771,541 Supplies 329,800 312,946 286,870 Insurance 166,008 164,042 132,448 Purchased Services 98,316 233,701 401,511 Total Operational Expenses $8,630,148 $8,651,816 $8,813,212 Non Operational Expenses Non-Capital Assets 625,500 320,883 594,000 Capital Assets 790,000 868,911 623,000 Total Non-Operational Expenses $1,415,500 $1,189,794 $1,217,000

Total Expenditures $10,045,648 $9,841,610 $10,030,212


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Operational Costs Operational costs include day-to-day general and administrative expenses for running the agency: payroll, purchased services, indirect costs, supplies, materials, repairs and maintenance. Payroll expenses include all Operations and Development employees. Operational Costs Budget

Operational Costs

FY 2018 Budget

FY 2018 Projected

FY 2019 Budget

Payroll Wages and Benefits $4,384,200 $4,040,799 $4,286,643 Retirement Insurance 323,837 238,182 331,378 Unemployment Compensation 50,000 47,180 50,000 Workers Compensation 71,000 70,949 62,614 Other Payroll Costs 13,970 5,684 12,490 Total Payroll $4,843,007 $4,402,794 $4,743,125

Purchased Services Rentals and Utilities $50,100 $67,096 $54,640 Printing and Advertising 70,500 54,266 88,500 Professional/Technical Services 447,100 337,656 401,500 Computer and Computer Services 179,000 140,915 182,000 Communications 144,300 141,304 143,600 Travel 216,600 155,737 191,400 Employee Development 44,000 32,933 47,000 Total Purchased Services $1,151,600 $929,906 $1,109,640 Supplies and Equipment $322,950 $296,936 $387,250 Repairs and Maintenance $239,000 $3,765 $504,000 Indirect Costs Statewide Indirect Costs $331,051 $305,676 $35,928 Attorney General Costs 15,000 1,942 15,000 Total Indirect Costs $346,051 $307,618 $50,928

Other Operating Costs $243,400 $326,913 $194,400

Total Operational Costs $7,146,008 $6,267,931 $6,989,343

Iron Range Resources and Rehabilitation Board Meeting Minutes January 24, 2018

Page 1

EXHIBIT B

IRRRB Meeting Minutes Wednesday, January 24, 2018 – 11:00 a.m.

Iron Range Resources & Rehabilitation – Mesabi Conference Room Eveleth, Minnesota

1) Roll Call Senator David Tomassoni, chair, called the meeting to order at approximately 11:10 a.m. Present: Representative Rob Ecklund, Representative Sandy Layman, Representative Dale Lueck, Representative Jason Metsa, Senator Carrie Ruud, Representative Julie Sandstede, Senator Tom Bakk, Senator Justin Eichorn. Minute Taker: Laureen Hall, Executive Aide. Also present: Mark Phillips, Commissioner; Mary Finnegan, Deputy Commissioner; Steve Peterson, Executive Director of Development; Al Becicka, Legal Counsel; Roy Smith, Director of Talent Development; Matt Sjoberg, Director of Business Development; Janelle Greschner, Business Recruiter; Barbara Sanders, Human Resources Director; Linda Johnson, Director of Mining and Reclamation; Bob Scuffy, Accounting Director; Chris Ismil, Community Development Representative; Jim Plummer, Real Property Coordinator; Sheryl Kochevar, Communications Director; Janette Godec, Executive Assistant; Scott Sundvall, Loan Officer; Joni Olson, ISD 318; Martin Pochtaruk, Heliene, Inc.; Pete Kero, Barr Engineering. 2) Approval of the October 26, 2017, Minutes Representative Jason Metsa moved approval of the October 26, 2017, meeting minutes. Seconded by Senator Justin Eichorn. Motion carried. Voting in Favor of the Motion: Representative Rob Ecklund, Representative Sandy Layman, Representative Dale Lueck, Representative Jason Metsa, Representative Julie Sandstede, Senator Tom Bakk, Senator Justin Eichorn, Senator Carrie Ruud, Senator David Tomassoni Voting Against the Motion: None Abstain: None Excused: None 3) FY18 Infrastructure Projects – Resolution #18-009 Representative Jason Metsa moved that the Board recommend an expenditure of up to $1,675,000 of FY18 TEPF Public Works Funds to provide grants for community and economic development infrastructure projects as presented in Resolution #18-009. Seconded by Representative Sandy Layman. Motion carried.

Voting in Favor of the Motion: Representative Rob Ecklund, Representative Sandy Layman, Representative Dale Lueck, Representative Jason Metsa, Representative Julie Sandstede, Senator Tom Bakk, Senator Justin Eichorn, Senator Carrie Ruud, Senator David Tomassoni Voting Against the Motion: None Abstain: None


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Excused: None

IRON RANGE RESOURCES AND REHABILITATION ADVISORY BOARD OF THE STATE OF MINNESOTA

TACONITE AREA ENVIRONMENTAL PROTECTION FUND INFRASTRUCTURE PROJECT RECOMMENDATIONS

Resolution No.: 18-009 WHEREAS, the Commissioner is authorized to expend, after consultation with the Iron Range Resources and Rehabilitation Advisory Board (“Board”), the Taconite Area Environmental Protection Fund monies made available under Minnesota Statutes Section 298.223 (“TEPF Funds”) to promote the economic development of the Taconite Assistance Area designated in Minnesota Statutes Section 273.1341 (“TAA”), by investing in local economic development projects within the TAA; and WHEREAS, the agency’s approved fiscal year 2018 ("FY18") Budget includes the allocation of up to $6,000,000 for infrastructure projects from TEPF Funds (“TEPF Public Works Funds”), of which $3,027,238 has already been obligated for projects by prior Board actions, leaving $2,972,762 that has not yet been approved by the Board for expenditure during FY18; and WHEREAS, the Commissioner has received proposals for the expenditure of up to $1,675,000 of such TEPF Public Works Funds for community and economic development infrastructure projects, which are more specifically described in Exhibit A, which is attached hereto and incorporated by reference (collectively the “Proposed Projects”); and WHEREAS, the Board met in open session at 11:00 a.m. on January 24, 2018, at the agency’s Administration Building near Eveleth, Minnesota, to consider, among other matters, the Proposed Projects and has determined that the expenditure of TEPF Funds for the purposes and in the amounts specified below would be in the public interest and promote economic development within the TAA. NOW, THEREFORE, IT IS RESOLVED, that the Board hereby recommends the expenditure of up to $1,675,000 of FY18 TEPF Public Works Funds to provide grants for the Proposed Projects in the amounts and for the purposes set forth in Exhibit A. BE IT FURTHER RESOLVED that the Board’s recommendation for the expenditure of FY18 TEPF Public Works Funds for all Proposed Projects, including those Proposed Projects which have associated private development work, is contingent upon the agency, in its grant contracts, requiring each such grantee entity to commit to the payment of prevailing wages for the funded project as required by law, or to the extent required in the Board’s Resolution 96-005. BE IT FURTHER RESOLVED that the Board’s recommendation for the expenditure of FY18 TEPF Public Works Funds for the Proposed Projects is further contingent upon all such project financing being in place before the agency’s funds are released.


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PASSED AND ADOPTED BY VOTE OF THE IRON RANGE RESOURCES AND REHABILITATION ADVISORY BOARD THIS 24th DAY OF JANUARY 2018.

Member Aye Nay Abstain Excused

Senator Tom Bakk X

Senator Justin Eichorn X

Senator Carrie Ruud X

Senator David Tomassoni X

Representative Rob Ecklund X

Representative Sandy Layman X

Representative Dale Lueck X

Representative Jason Metsa X

Representative Julie Sandstede X

TOTAL 9 0 0 0

Signed:__________________________ Senator David Tomassoni, Chair

EXHIBIT A Cook County EDA Grant Amount: $200,000 The Cook County Economic Development Authority is requesting funds to assist with a local business expansion project. The North House Folk School’s strategic plan addresses the need for additional educational campus capacity. The school will expand their footprint to include the Dockside Fish Market, which is a unique lakefront parcel adjacent to the North House Folk School’s campus property. The project is projected to create five permanent jobs and three construction jobs.

USES SOURCES

Site expansion and new construction


$200,000

Cargill Foundation 850,000

Blandin Foundation 50,000

North House Folk School 25,000

Private 667,500

TOTAL $1,792,500 TOTAL $1,792,500

City of Ely Grant Amount: $140,000 The project consists of infrastructure and site development for a new crisis/respite home to provide services to people with intellectual and development disabilities in the City of Ely. The home will serve up to four individuals at a time and an anticipated staff of 24 to 26 when fully operational. Direct staff wages will be in the $14 to $17 per hour range plus benefits, and management staff wages will range


Page 4

from $20 to $34 per hour plus benefits. The project is projected to create 26 permanent jobs and six construction jobs.

USES SOURCES

Infrastructure and site work $126,600 Iron Range Resources & Rehabilitation

$140,000

New building construction 500,000 Private 530,048

A&E 30,788

Contingency 12,660

TOTAL $670,048 TOTAL $670,048

City of Ely Grant Amount: $450,000 The project consists of total road reconstruction and utility upgrades to 17th Avenue East in the City of Ely. 17th Avenue East is the access route to the Vermilion Community College and the east access to the Ely Industrial Park and Ely Business Park. This roadway is gravel with little shoulder and no sidewalks. With the high level of traffic, the roadway remains muddy and rutted every spring, being nearly impassible at times. There is also a large drainage ditch in this area that collects storm sewer from a large area of Ely. During numerous rain events in the past the ditch has been over capacity resulting in culvert washouts and road closure. Many businesses in this area are negatively affected by the unsatisfactory road condition. The project is projected to create five permanent jobs and 12 construction jobs.

USES SOURCES

Road reconstruction and utility upgrades


$450,000

A&E 245,492 City of Ely 400,000

Contingency 122,746 DEED FY2017 200,000

DEED FY2018 545,698

TOTAL $1,595,698 TOTAL $1,595,698

City of Eveleth Grant Amount: $175,000 The City of Eveleth is requesting funds to be administered by the Eveleth Economic Development Authority (EEDA) to assist with a project consisting of internal and external infrastructure and HVAC upgrades to the currently city owned former Fingerhut building in Eveleth. The City of Eveleth is working with a developer to open a new childcare facility in the former Fingerhut building. The childcare center would provide care and education for up to 124 full-time children ages 6 weeks through 12-years-old. The project is projected to create 14 permanent jobs and three construction jobs.

USES SOURCES

Infrastructure, HVAC and building upgrades

$255,000 Iron Range Resources & Rehabilitation

$175,000

FF&E 177,000 Private 422,000

Building acquisition 200,000 United Way 40,000


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A&E 5,000

TOTAL $637,000 TOTAL $637,000

Eveleth-Virginia Airport Grant Amount: $180,000 The Eveleth-Virginia Airport Authority is planning to reconstruct the north and east portions of the aircraft parking apron and taxiway. The apron and taxiway pavement sections are estimated to be over 40 years old and have several major pavement distresses. The reconstruction will adjust the geometry to meet FAA airport design standards for safe maneuvering of aircraft. Full-depth reconstruction is needed to extend the useful life of the apron to accommodate passenger and cargo traffic. In addition, an access road, fencing, and relocated fuel station will be constructed in order to serve new fueling areas and discourage unauthorized access to the airfield. The project is projected to create 15 construction jobs.

USES SOURCES

Apron and taxi lane redevelopment $1,895,000 Iron Range Resources & Rehabilitation

$180,000

Fuel station construction 385,000 Airport 64,000

FAA 2,036,000

TOTAL $2,280,000 TOTAL $2,280,000

City of Hibbing Grant Amount: $225,000 The City of Hibbing is looking to reconstruct approximately 750 feet of sanitary sewer pipe along Brooklyn Drive, near the intersection of Highway 169 and 37th Street. The existing sanitary line was deemed too shallow and susceptible to freezing. Construction of a new Orthopedic Associates building, utilizing the existing Pizza Hut structure, has prompted the city to install a new sanitary line to accommodate the new business. In addition, the line will serve the Thrifty White Pharmacy and Component Machine Services buildings along Brooklyn Drive. The project is projected to create four permanent jobs and 12 construction jobs.

USES SOURCES

Sewer line upgrades $204,670 Iron Range Resources & Rehabilitation

$225,000

New facility 1,500,000 Private 1,543,557

A&E 38,887

Contingency 25,000

TOTAL $1,768,557 TOTAL $1,768,557

City of Mountain Iron Grant Amount: $260,000 The project consists of infrastructure, site development and wetland mitigation for the construction of a new childcare facility in Mountain Iron. A new 8,500 sq. ft. building will be constructed on South Enterprise Drive. The new childcare facility will be licensed to provide care and education for 90 full-time


Page 6

children ages 6 weeks through 12-years-old. The project is projected to create 10 permanent jobs and nine construction jobs.

USES SOURCES

Infrastructure and site development $178,600 Iron Range Resources & Rehabilitation

$260,000

Wetland mitigation 58,000 Private 788,790

New facility 656,000 DEED (Northland Fdn) 16,600

FF&E 117,000 United Way 16,000

A&E 45,000

Contingency 26,790

TOTAL $1,081,390 TOTAL $1,081,390

City of Virginia Grant Amount: $45,000 The City of Virginia is requesting funds to be administered by the Virginia Economic Development Authority (VEDA) to assist with a project consisting of internal and external infrastructure upgrades to allow for expansion and ongoing operation of two childcare providers and increase childcare license capacity within the City of Virginia. The project is projected to create six permanent jobs and three construction jobs.

USES SOURCES

Landscaping and site work $30,000 Iron Range Resources & Rehabilitation

$45,000

Internal infrastructure 15,000 Private 27,800

Facilities remodel and repairs 30,000 United Way 8,600

FF&E 15,000 IRRR 8,600

TOTAL $90,000 TOTAL $90,000

4) Heliene, Inc. – Resolution #18-010 Representative Jason Metsa moved that the Board recommend the expenditure of up to $1,750,000 of Douglas J. Johnson Economic Protection Trust Fund monies (in conjunction with $1,750,000 in proposed financing from the State of Minnesota’s Department of Employment and Economic Development 21st Century Fund) to provide a $3,500,000 loan to Heliene, Inc, as presented in Resolution #18-010 and Board packet materials. Seconded by Senator Justin Eichorn. Motion carried.

Voting in Favor of the Motion: Representative Rob Ecklund, Representative Sandy Layman, Representative Dale Lueck, Representative Jason Metsa, Senator Tom Bakk, Senator Justin Eichorn, Senator Carrie Ruud, Senator David Tomassoni Voting Against the Motion: Representative Julie Sandstede Abstain: None Excused: None


Page 7


DOUGLAS J. JOHNSON ECONOMIC PROTECTION TRUST FUND HELIENE, INC. PROJECT

Resolution No.: 18-010 WHEREAS, the Commissioner is authorized to expend, after consultation with the Iron Range Resources and Rehabilitation Advisory Board (“Board”), the Douglas J. Johnson Economic Protection Trust Fund monies made available under Minnesota Statutes Sections 298.291 – 298.294 and Minnesota Statutes Section 298.28, subdivision 11 (“DJJ Funds”) to provide loans and participate with private sources in providing financing for various projects located within the Taconite Assistance Area (“TAA”) as that term is defined in Minnesota Statutes Section 273.1341, which will serve the purposes detailed in Minnesota Statutes Section 298.292, subdivision 1; and WHEREAS, Heliene, Inc. (“Heliene”) is an established Canadian manufacturer of photovoltaic solar panels and since 2016 has been operating in the building owned by the Mountain Iron Economic Development Authority (“MIEDA”) in the Renewable Energy Park in Mountain Iron; and WHEREAS, the agency has been in negotiations with Heliene to provide financial incentives to entice Heliene to purchase an additional production equipment line for manufacturing use in the MIEDA building (the “Project”) that will facilitate Heliene’s growth into the U.S. market and will lead to the creation of approximately 66 new permanent, full-time jobs; and WHEREAS, pursuant to an application submitted by Heliene in support of the Project, the Commissioner has requested the Board to recommend the expenditure of up to $1,750,000 of DJJ Funds, in conjunction with $1,750,000 in proposed financing from the State of Minnesota’s Department of Employment and Economic Development’s (“DEED’s”) 21st Century Fund, to provide a $3,500,000 loan to Heliene as more fully set forth in the Board packet materials and as otherwise discussed at the meeting; and WHEREAS, the technical advisory committee appointed by the Commissioner under the provisions of Minnesota Statutes Section 298.297 to review the terms and conditions of the proposed Project, met on January 12, 2018, and recommended approval of the Project and the proposed agency funding for it; and WHEREAS, the Board met in open session at 11:00 a.m. on January 24, 2018, at the agency’s Administration Building near Eveleth, Minnesota, to consider, among other matters, Heliene’s request for financial assistance for the Project; and WHEREAS, the Board has determined that it would be in the public interest to recommend the expenditure of DJJ Funds for the Project, and that granting of the requested financial assistance would promote economic development in the TAA.


Page 8

NOW, THEREFORE, IT IS RESOLVED that the Board hereby recommends the expenditure of up to $1,750,000 of DJJ Funds for the Project, on the terms and subject to the conditions set forth in the materials submitted to the Board for its consideration at this meeting. BE IT FURTHER RESOLVED that, to the extent Board consultation is necessary, the Board hereby recommends the proposed expenditure of up to $1,750,000 of DEED’s Minnesota 21st Century Fund monies under Minnesota Statutes Section 116J.423-116J.424, as such laws currently exist or may be amended by future legislative actions. BE IT FURTHER RESOLVED that the approval of funding for this Project is subject to the condition that, to the extent any part of the funds for the Project are for construction, Heliene must pay or require to be paid to all laborers, workers and mechanics performing construction work wages at a rate not less than the prevailing wage rates as defined in Minnesota Statutes Section 177.42, subdivision 6, consistent with Board Resolution number 96-005. PASSED AND ADOPTED BY VOTE OF THE IRON RANGE RESOURCES AND REHABILITATION ADVISORY BOARD THIS 24th DAY OF JANUARY 2018.


Senator Tom Bakk X









TOTAL 8 1 0 0


Heliene, Inc. 520 Allens Side Road

Sault Ste. Marie, Ontario Canada P6A 6K4

Direct Loan Program

Applicant: Heliene, Inc. (“Heliene”)

Project Location: Mountain Iron, Minnesota

Principal(s): Martin Pochtaruk, President


Page 9

Project Description: Expansion of a photovoltaic solar manufacturing plant located in the

Renewable Energy Park in Mountain Iron. Proceeds of the $3.5 million

loan (split between Department of Iron Range Resources and

Rehabilitation and DEED) will be used to purchase an additional

equipment line.

Market Opportunity: Increased demand in the US domestic market for renewable energy, in

general, and solar power, specifically. Consolidation in industry.

Project Investment:

IRRRB – see attached draft term

sheet

$1,750,000

DEED – see attached draft term

sheet

$1,750,000

Borrower – Working capital $5,200,000

TOTAL $8,700,000

Jobs: 66 Planned New 4 Retained

Wages $31,000 - $63,000 per year plus benefits

Collateral: First priority lien on all equipment purchased with proceeds of the loan.

Business History: Heliene was established as a manufacturer of photovoltaic solar panels in

Sault Ste. Marie, Ontario, Canada in 2010. In 2016, Heliene established

an operation in the Renewable Energy Park in Mountain Iron, in the

building owned by the Mountain Iron EDA and formerly leased to Silicon

Energy, taking advantage of the Made in Minnesota program. Sales in

the US continue to grow, currently accounting for 60% of total sales.

Heliene USA Inc. was recently formed and this expansion into Mountain

Iron will facilitate additional growth into the US market.

Past IRRRB History: None.

Contingencies: 1) Heliene or Heliene USA enter into a lease with the Mountain Iron EDA acceptable to the DIRRR.

2) Heliene demonstrates it has adequate capital available to fund its growth.

3) Equipment must be physically located at project site prior to

release of loan proceeds.


Page 10


Approved by TAC Committee on 1/12/2018

Funding

Authorization:

Douglas J. Johnson Economic Protection Trust Fund: This project is authorized under the provisions of the Douglas J. Johnson Economic Protection Trust Fund Act (Minnesota Statutes sections 298.291-298.298) pertaining to expenditures of Douglas J. Johnson

Economic Protection Trust Fund monies for economic development

projects in that these statutes authorize small business development

loans to private enterprises for the purposes of job creation and

economic development within the Taconite Assistance Area defined in

Minnesota Statutes Section 273.1341.


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Page 12


Page 13


Page 14

5) School Collaboration Fund – Resolution #18-011 Representative Sandy Layman moved that the Board recommend an expenditure of up to $4,700,000 of Iron Range School Consolidation and Cooperatively Operated School Account Funds to the Grand Rapids School District for building projects, contingent upon approval of a voter referendum for such projects no later than May 14, 2018, as presented in Resolution #18-011. Seconded by Senator Justin Eichorn. Motion carried.

Voting in Favor of the Motion: Representative Rob Ecklund, Representative Sandy Layman, Representative Dale Lueck, Representative Jason Metsa, Representative Julie Sandstede, Senator Tom Bakk, Senator Justin Eichorn, Senator Carrie Ruud, Senator David Tomassoni Voting Against the Motion: None Abstain: None Excused: None

IRON RANGE RESOURCES AND REHABILITATION ADVISORY BOARD

OF THE STATE OF MINNESOTA IRON RANGE SCHOOL CONSOLIDATION AND COOPERATIVELY OPERATED

SCHOOL ACCOUNT EXPENDITURE Resolution No.: 18-011 WHEREAS, Minnesota Statutes Section 298.28, subdivision 7a created the Iron Range school consolidation and cooperatively operated school account (“School Account”) for the purpose of authorizing the Commissioner, after consultation with the Iron Range Resources and Rehabilitation Advisory Board (“Board”), to provide disbursements to assist certain statutorily identified school districts with the payment of bonds that were issued for qualified school projects, or for any other school disbursement to school districts that are located within the taconite assistance area as defined in Minnesota Statutes Section 273.1341 (“TAA”); and WHEREAS, the Commissioner has received a proposal for the expenditure of up to $4,700,000 of such School Account funds as more specifically set forth in Exhibit A, which is attached hereto and incorporated by reference (“Proposed Disbursement”); and WHEREAS, the Board met in open session at 11:00 a.m. on January 24, 2018, at the agency's Administrative Building located near Eveleth, Minnesota, to consider, among other matters, the Proposed Disbursement and has determined that such expenditure would be in the public interest and promote the advancement of schools within the TAA. NOW, THEREFORE, IT IS RESOLVED, that the Board hereby recommends that the Commissioner approve the expenditure of up to $4,700,000 of School Account Funds for the Proposed Disbursement. PASSED AND ADOPTED BY VOTE OF THE IRON RANGE RESOURCES AND REHABILITATION ADVISORY BOARD THIS 24TH DAY OF JANUARY 2018.


Page 15


Senator Tom Bakk X









TOTAL 9 0 0 0

Signed:___________________________ Senator David Tomassoni, Chair

EXHIBIT A

Grand Rapids School District - $4,700,000 A $4.7 million disbursement to the Grand Rapids School District for building projects, contingent upon approval of a voter referendum for such projects no later than May 15, 2018. School Collaboration Account

P.O. Box 441

4261 Highway 53 South

Eveleth, Minnesota 55734-0441

(218)735-3000 • 800-765-5043 Date: January 24, 2018 To: Iron Range Resources and Rehabilitation Board From: Mark Phillips

Commissioner RE: IRON RANGE SCHOOL COLLABORATION ACCOUNT EXPENDITURE

Minnesota Statutes Section 298.28, subdivision 7a created the Iron Range school consolidation and cooperatively operated school account (“School Account”) for the purpose of authorizing the Commissioner, after consultation with the Iron Range Resources and Rehabilitation Advisory Board (“Board”), to provide disbursements to assist certain statutorily identified school districts with the payment of bonds that were issued for qualified school projects, or for any other school disbursement to school districts that are located within the taconite assistance area as defined in Minnesota Statutes Section 273.1341 (“TAA”)


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On October 26, 2017, the Iron Range Resources and Rehabilitation Board heard a presentation from representatives of Independent School District 318 outlining a funding request for a proposed school building renovation and construction project required to meet instructional space issues as the result of continued growth in the district. After discussing the project the Commissioner and the Board agreed that a focus group selected by Board Chair Tomassoni would convene at a later date to determine what, if any, role the agency might have in the project. The focus group met on November 13 and determined that a grant from the School Account in the amount of $4,700,000 for demolition and infrastructure costs associated with the project would be an appropriate investment. Funding for the project is contingent upon the approval of a referendum by the voters of ISD 318. Funding Authorization: This expenditure is authorized under the provisions of the Iron Range School Consolidation and Cooperatively Operated School Account as codified under Minnesota Statutes, 298.28, subdivision7a. 6) Mountain Bike Trails – Resolution #18-012 Representative Dale Lueck moved to recommend the expenditure of up to $4,950,000 of DJJ Corpus Fund monies for the development of three mountain bike trail projects across the Mesabi Range, as described in Resolution #18-012 and Board packet materials. Seconded by Representative Sandy Layman. Motion carried.

Voting in Favor of the Motion: Representative Rob Ecklund, Representative Sandy Layman, Representative Dale Lueck, Representative Jason Metsa, Representative Julie Sandstede, Senator Justin Eichorn, Senator Carrie Ruud, Senator David Tomassoni Voting Against the Motion: Senator Tom Bakk Abstain: None Excused: None


DOUGLAS J. JOHNSON ECONOMIC PROTECTION TRUST FUND MOUNTAIN BIKE TRAIL PROJECTS

Resolution No.: 18-012 WHEREAS, Minnesota Statutes Section 298.296, Subdivision 2 (d) authorizes the Commissioner to expend, upon recommendation of the Iron Range Resources and Rehabilitation Advisory Board (“Board”), within or for the benefit of the Taconite Assistance Area defined in Minnesota Statutes Section 273.1341 ("TAA"), , the corpus of the Douglas J Johnson Economic Protection Trust Fund, (the “DJJ Fund Corpus”), for projects and programs described in Minnesota Statutes Section 298.292, subdivision 1 that either (a) are designed to create and maintain productive, permanent, skilled employment, including employment in technologically innovative businesses; or (b) encourage diversification of the economy and promote the development of certain sectors of the TAA economy,


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specifically including tourism; or (c) for which technological and economic feasibility have been demonstrated; and WHEREAS, the Commissioner has received a proposal for the expenditure of up to $4,950,000 of DJJ Corpus Fund monies for the development of three mountain bike trail projects across the Mesabi Range (the “Mountain Bike Trail Projects”) that are more specifically described in Exhibit A, which is attached hereto and incorporated by reference; and WHEREAS, the Board met in open session starting at 11:00 a.m. on January 24, 2018, at the agency's Administration Building near Eveleth, Minnesota to consider, among other matters, the proposed expenditure of up to $4,950,000 of DJJ Corpus Fund monies for the Mountain Bike Trail Projects, and determined that the proposed expenditure of those funds for that purpose would be an expenditure that supports the development of tourism and otherwise benefits the economy within the TAA. NOW, THEREFORE, IT IS RESOLVED, that the Board recommends the expenditure of up to $4,950,000 of the DJJ Corpus Fund monies for the Mountain Bike Trail Projects. BE IT FURTHER RESOLVED that the Board's recommendation of this expenditure is subject to the payment of prevailing wages for the Mountain Bike Trail Projects as required by law or by the Board's Resolution 96-005. PASSED AND ADOPTED BY VOTE OF THE IRON RANGE RESOURCES AND REHABILITATION ADVISORY BOARD THIS 24th DAY OF JANUARY 2018.


Senator Tom Bakk X









TOTAL 8 1 0 0


MOUNTAIN BIKE TRAIL TOURISM COLLABORATION In an effort to stimulate tourism, business development and retention, and enrich the quality of life in communities throughout the core Iron Range, a mountain bike trail infrastructure project has been initiated through a regional collaboration of trail systems across the Mesabi Iron Range. Current regional success on the Cuyuna Range includes 25 miles of mountain bike trails, with an economic impact of $2 million and 25,000 plus mountain biker visits annually. Fifteen new businesses have opened in Ironton and Crosby in the last five years. Duluth has 100 plus miles of trails and is a national mountain bike destination. A 2016 National Ski Area Association study cited that mountain biking was up 98% for summer operations at recreational locations on a


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national scale. Fifty million Americans age 16 and over mountain bike. With the current regional success, this investment will secure northeastern Minnesota as a national mountain biking destination. Project Locations: Cohasset (Tioga) Consists of 30 miles of high quality flow trails through hills and valleys at the former Tioga mine site located on overburden and waste rock stockpiles. This system includes the desirable all-weather trails that remain open during rain events. $1.3 million has already been secured for this project. Chisholm (Redhead) Consist of 25 miles of flow trails and two-bare rock free-ride areas, inside and around a mine pit lake. The site is unique with great vistas, red rock faces, Western-like aesthetic, and good compacted mine-rock soils that provide a durable, all-weather trail system. Biwabik (Giants Ridge) Consist of 10 to 12 miles of gravity/downhill trails (lift assisted), plus 25 miles of cross-country trails. The mountain bike trails will add value to the summer offerings. A portion of the trail system will be designed to serve as a race venue for the Minnesota High School Cycling League (MHSCL) and the National Interscholastic Cycling Association (NICA). The collective trail system consists of a total of up to 92 miles. The funding would provide for the construction and contingency, design, permitting, project management and oversight.

Trail System Funding

Cohasset (Tioga)

$625,000

Chisholm (Redhead)

$1,777,000

Biwabik Giants Ridge

$2,548,000

Total $4.950,000

Total Infrastructure DJJ Project Request: $4,950,000 Project Timeline: Design and Bid Spring 2018 – Buildout 2018- 2019 Funding Authorization This proposed project is authorized under the provisions of the Douglas J. Johnson Economic Protection Trust Fund Act (Minn. Stat. Secs. 298.291-298.298) pertaining to expenditures of the DJJ corpus for projects and programs described in Minn. Stat. Sec. 298.292, subd. 1, clause 2, that encourage diversification of the economy and promote the development of minerals, alternative energy sources utilizing indigenous fuels, forestry, small business, and tourism.

7) Range Trust – Resolution #18-013 Representative Jason Metsa moved to recommend the Rescission of Board Resolution #15-016, which authorized the transfer of specified funds from the Douglas J. Johnson Economic Protection Trust Fund to Range Trust, a nonprofit organization established by the agency, as presented in Resolution #18-013. Seconded by Senator Justin Eichorn. Motion carried. Voting in Favor of the Motion: Representative Rob Ecklund, Representative Sandy Layman, Representative Dale Lueck, Representative Jason Metsa, Representative Julie Sandstede, Senator Tom Bakk, Senator Justin Eichorn, Senator Carrie Ruud, Senator David Tomassoni Voting Against the Motion: None


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Abstain: None Excused: None


RESCISSION OF BOARD RESOLUTION NO. 15-016 Resolution No.: 18-013 WHEREAS, on December 18, 2014, the board passed its Resolution No. 15-016 which authorized the transfer of specified funds from the Douglas J. Johnson Economic Protection Trust Fund established pursuant to Minnesota Statutes Sections 298.291-298.297 (“DJJ Fund”) to Range Trust, a nonprofit corporation established by the agency, subject to conditions as more fully set forth in the Board’s resolution; and WHEREAS, statutory changes enacted since the passage of Resolution No. 15-016 have mitigated the conditions that led the Board to pass such resolution to protect the DJJ Fund; and WHEREAS, the Board met in open session at 11:00 a.m. on January 24, 2018, at the agency’s Administration Building near Eveleth, Minnesota, to consider, among other matters, rescinding its Resolution No. 15-016 and has determined that such rescission would be in the public interest. NOW, THEREFORE, IT IS RESOLVED, that the Board hereby rescinds its Resolution No. 15-016. PASSED AND ADOPTED BY VOTE OF THE IRON RANGE RESOURCES AND REHABILITATION ADVISORY BOARD THIS 24th DAY OF JANUARY 2018.


Senator Tom Bakk X



Senator David Tomasson

Documents

Meeting of the Iron Range Resources and Rehabilitation Board 21 2018 packet.docx_tcm1047-339759.pdfThe Hoyt Lakes Economic Development Authority (HLEDA) has requested a non-recourse