HomeMy WebLinkAbout9. Continuation of public hearing on Challenge Printing, Inc. Minnesota Investment Fund loan
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CITY OF SHAKOPEE
Memorandum
TO: Mayor and City Council
FROM: Paul Snook, Economic Development coordinato~
SUBJECT: Public hearing regarding Minnesota Investment Fund application
and related Business Subsidy Agreement for Challenge Printing,
Inc.
MEETING DATE: October 5,2004
Introduction & Background
At the August 17th meeting, City Council adopted Resolution 6099, authorizing
application to the Minnesota Department of Employment and Economic Development
(DEED) for the Minnesota Investment Fund for Challenge Printing, Inc. In addition,
Council initiated the required public hearing to provide citizen notification and
involvement prior to submitting the application, and continued the hearing to the October
5th meeting (see attached memo). The hearing was started in August so that the MIF funds
could be reserved for Shakopee, and was. continued to October 5th in order to provide
time for drafting ofthe loan agreement and business subsidy agreement (which with the
application, requires a public hearing) to be considered at the same public hearing, rather
than having two separate public hearings.
DEED representatives have informed City staffthat the MIF funds have been reserved for
this project, but the grant agreement is not complete but should be ready within the next
two weeks, and then the loanlbusiness subsidy agreement will be completed (which is the
agreement that requires the public hearing).
With this, City Council is asked to continue the public hearing to the November 3, 2004
meeting.
Action Requested
Continue the public hearing to November 3, 2004.
mif - challenge ph memo lO-05-04.doc
CITY OF SHAKOPEE
Memorandum
TO: M~yor and City Council
FROM: Paul Snook, Economic Development Coordinator ~
SUBJECT: Public hearing regarding Minnesota Investment Fund application
and related Business Subsidy Agreement for Challenge Printing,
Inc.
Resolution No. 6099, Authorizing application to the Minnesota
Department of Employment and Economic Development (DEED)
for the Minnesota Investment Fund for Challenge Printing, Inc.
MEETING DATE: August l7, 2004
Introduction & Background
City Council is asked to adopt Resolution 6099, authorizing application to the Minnesota
Department of Employment and Economic Development (DEED) for the Minnesota
Investment Fund for Challenge Printing, Inc.
At the July 6, 2004 meeting Council unanimously approved TIF contract with Challenge
Printing. Another element of the project financing is to attain a Minnesota Investment
Fund loan from DEED to assist in financing new equipment, an 81 inch press (according
to Challenge senior management, the first and largest press of its kind in North America).
In 2002, the City applied to DEED for a $440,000 MIF loan for the CertainTeed
expansion project, however, the company opted for an alternate funding source. When
that happened, staff was able to negotiate with DEED to retain/reserve the $440,000 in
MIF funds for a future project in Shakopee, which has turned out to be the Challenge
Printing expansion.
Staff and company representatives have completed the Minnesota Investment Fund
Application (attached) for which the City must pass a resolution to finalize the
processing ofthe application and to receive a grant upon approval by DEED.
DEED staff is of the opinion that the Minnesota Investment Fund would be a good fit
with Challenge Printing's expansion project; MIF is a grant to the City and a loan to the
company. An additional benefit to the City of using the MIF program is that it presents
the City the opportunity to establish an economic development revolving loan fund;
$100,000 of the MIF program for Challenge would be paid back to the City to establish
the revolving loan fund.
mif - challenge ph memo 8-17-04.doc
The revolving loan fund would be used specifically for businesses within the "basic"
sector of the local economy; manufacturing, assembling, or processing operations,
including new technology-based businesses, that are primarily dependent upon external
markets, exporting their products. Basic sector activity is the true generator of economic
expansion in a community. Non-basic sector businesses such as retail and services (which
depend largely upon local markets), and whose products are consumed locally will not be
eligible.
The Minnesota Investment Fund application process requires that a public hearing be held
to provide citizen notification and involvement prior to submitting the application. The
action at the August 1 ih meeting will be to open the public hearing and continue the
hearing to the October 5, 2004 meeting. The meeting needs to be continued because the
Loan Agreement will be presented at that time, and within the Loan Agreement will be
the Business Subsidy Agreement, which requires a public hearing. The reason for the lag
time in the public hearing is that DEED needs the application now in order to continue to
reserve the funds for Shakopee (rather than provide the funds to another community), but
due to scheduling circumstances, DEED will not have the Loan Agreement (with the
Business Subsidy Agreement) drafted and ready until the October meeting. So, rather
than having two public hearings (and attendant published notices, etc.), it would be more
efficient to continue the August 1 ih hearing to October 5th.
Budget Impact
A successful application will add $100,000 to establish an economic development
revolving loan fund. In addition, for the 2005 budget, staff will be proposing that an
additional $100,000 be used from the EDA reserve fund for the ED revolving loan fund;
the $100,000 MIF payback to the City plus $100,000 from the EDA reserve would total
$200,000 for the ED revolving loan fund.
Action Requested
Offer Resolution 6099, authorizing application to the Minnesota Department of
Employment and Economic Development (DEED) for the Minnesota Investment Fund
for Challenge Printing, Inc., and move its adoption.
Continue the public hearing to October 5,2004.
mif - challenge ph memo 8-17-04.doc