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HomeMy WebLinkAbout6.A. Consideration of Minnesota Investment Fund Application for Rosemount Inc. Res. No. 7474 Public Hearings 6. A. SHAKOPEE TO: Mayor and City Council Mark McNeill, City Administrator FROM: Samantha DiMaggio, Economic Development Coordinator DATE: 08/19/2014 SUBJECT: Consideration of Minnesota Investment Fund Application for Rosemount, Inc. - Res. No. 7474 (D) Action Sought To hold a Public Hearing, and adopt a resolution authorizing staff to apply for a grant from the Minnesota Investment Fund, and to enter into agreement with the Department of Employment and Economic Development and Rosemount, Inc. Background On June 18, 2013 the Shakopee City Council held a public hearing and authorized City staff to apply for a Minnesota Investment Fund(MIF) on behalf of Rosemount, Inc. Rosemount, Inc. was awarded $500,000 in MIF funds, which were used to purchase machinery and equipment for Phase 1 of their project. Minnesota Investment Funds are awarded to local units of government who provide loans to assist expanding businesses. Cities, counties, townships and recognized Indian tribal governments are eligible for this fund. All projects must meet minimum criteria for private investment, number of jobs created or retained, and wages paid. There is a maximum of$500,000 per project for projects of this size /number of jobs. At least 50 percent of total project costs must be privately financed through owner equity and other lending sources (most applications selected for funding have at least 70 percent private financing).Terms are for a maximum of 20 years for real estate and a maximum of 10 years for machinery and equipment. Interest rates are negotiated. Rosemount, Inc. has requested a forgivable loan in the amount of$500,000 for the second phase of their project. Total project costs for the Phase 2 expansion plans are approximately $26,345,000. Rosemount, Inc. applied for, and was awarded $905,000 in Job Creation Funds from the Department of Employment and Economic Development(DEED)to assist with their expansion plans. The remaining $25,000,000 will be financed through owner equity. Phase 2 includes a 94,000 sq. ft. fit-out/expansion of the Shakopee facility to accommodate final assembly operations and a technology lab. The final assembly of the first stage production line will use approximately 68,000 square feet, and a new technology lab will be located in the remaining space (approximately 26,000 square feet). This expansion will meet Rosemount, Inc.'s 2-3 year capacity needs for the main product assembly lines, for the manufacturing support groups and technology labs; and for the infrastructure for receiving, shipping, warehouse & manufacturing utilities. With this expansion, Rosemount, Inc. will add 200 new full time equivalent(FTE)positions. Recommendation Staff recommends that Council hold the Public Hearing, and, if appropriate, approve the submittal of the Minnesota Investment Fund application. If awarded, the Council should also enter into a Grant Agreement with DEED which allows the issuance of a forgivable loan to Rosemount, Inc. Budget Impact As these are state funds, there is no direct financial impact on the City as a result of the MIF loan and other items considered in this Public Hearing Relationship to Vision This supports Goal D, "Maintain, improve, or create strong partnerships with other public or private sector entities." Requested Action Following the Public Hearing, if the Council concurs, it should, by motion, approve the following Resolution: Resolution No. 7474, A Resolution authorizing and approving a Minnesota Investment Fund Application, Grant Agreement, and Forgivable Loan in connection with Rosemount, Inc. Attachments: Res. No. 7474 CITY OF SHAKOPEE,MINNESOTA RESOLUTION NO.7474 RESOLUTION REGUARDING THE AUTHORIZATION AND APPROVAL FOR A MINNESOTA INVESTMENT FUND APPLICATION,GRANT AGREEMENT AND FORGIVEABLE LOAN IN CONNECTION WITH ROSEMOUNT,INC. WHEREAS,the City of Shakopee,Minnesota,desires to assist Rosemount,Incorporated,a corporation chartered in the State of Missouri to expand at its current location,6201 Innovation Drive,Shakopee, Minnesota(the"project"),and WHEREAS,in addition to offering and facilitating certain economic development incentives to Rosemount, Inc,the City of Shakopee will act as the legal sponsor for the project contained in the Business and Community Development Application to be submitted on or after August 20,2014;and WHEREAS,the Mayor and the City Clerk of the City of Shakopee,Minnesota,are hereby authorized to apply to the Department of Employment and Economic Development for funding of this project on behalf of the City of Shakopee;and WHEREAS,the City of Shakopee has the legal authority to apply for financial assistance,and has the institutional,managerial,and financial capability to ensure adequate construction,operation,maintenance and replacement of the proposed project for its design life;and WHEREAS,the City of Shakopee has not incurred any costs,nor has it entered into any written agreements to purchase property on behalf of the project;and WHEREAS,the City of Shakopee has not violated any Federal,State,or local laws pertaining to fraud,bribery,kickbacks,collusion,conflict of interest or other unlawful or corrupt practice relating to this project;and WHEREAS,the City of Shakopee has called for a Public Hearing to consider application for a Minnesota Investment Fund application,and grant agreement,and forgivable loan,all in connection with Rosemount,Inc.;and WHEREAS,upon approval of its application by the State of Minnesota,the City of Shakopee may enter into an agreement with the State Department of Energy and Economic Development for the above-referenced project;and WHEREAS,the City of Shakopee certifies that it will comply with all applicable laws and regulations as stated in all contract agreements and described on the Compliance Section(S-7)of the State's Business and Community Development Application;and WHEREAS,the City of Shakopee and Kennedy and Graven,Chartered,the City's legal counsel,has obtained credit reports and credit information regarding Rosemount,Inc.,and upon review,has found no adverse findings or concerns regarding,but not limited to,tax liens,judgments,court actions,and filings with state,federal and other regulatory agencies,the failure of Rosemount,Inc.,to disclose any adverse information could result in revocation or other legal action;and WHEREAS,the City Council of the City of Shakopee held a duly noticed public hearing on August 19,2014, related to the submission of a grant application to the Department of Employment and Economic Development and the business subsidy of approximately$500,000 to be granted to Rosemount,Inc.if the City receives the grant,and that all interested parties were given the opportunity to be heard. NOW,THEREFORE,BE IT FURTHER RESOLVED that,as a result of this action,the Mayor and the City Clerk of the City of Shakopee,Minnesota,are hereby authorized to execute such agreements and amendments thereto,as are necessary to implement the project on behalf of the applicant. Sworn and Executed Under My Hand this Day of ,2014 Brad Tabke,Mayor ATTEST: Julie Linnihan,City Clerk