ECONOMIC DEVELOPMENT AUTHORITY- Erik Thorvig, Economic Development Coordinator
Title
HOLDING A PUBLIC HEARING AND APPROVING A RESOLUTION OF SUPPORT FOR A MINNESOTA INVESTMENT FUND LOAN APPLICATION ON BEHALF OF GENERAL PATTERN COMPANY
Background
General Pattern Company (GPC) is a family owned single source solution for plastic part manufacturing including design, prototyping, tooling and forming of plastic parts. GPC been operating in Minnesota for over 95 years and has operated for the last 34 years from its sprawling 180,000 square foot campus in the City of Blaine in the Northstar Industrial Park just south of 85th Avenue near 35W. GPC also has a 55,000 square foot site off of Radisson Road, north of 109th Avenue. The company currently employs 112 people.
GPC is embarking on an expansion project that will include purchase of a 28,800 sf. building at 3100 84th Lane for $1,750,000; purchase of new machinery and software for $1,195,000 and $538,000 in renovations to the purchased building for a project total of $3,483,000. The expansion will allow for the creation of 50 jobs (35 direct reports, 5 managers and 10 sales/support staff).
GPC has been working with the City of Blaine and the Minnesota Department of Employment and Economic Development (DEED) to help identify programs that could assist in the expansion. GPC is proposing to finance the project with a combination of bank financing, SBA 504 loan, cash equity and a $450,000 loan from the Minnesota Investment Fund (MIF), a DEED program. The MIF provides financing to help add new workers and retain high-quality jobs on a statewide basis in manufacturing, and technology-related industries. The MIF loan application is prepared and submitted by City staff and funds are awarded to the local unit of government (EDA) who provide the loan to the eligible business. Therefore the City will act as a pass through and administrator for the loan however there is no financial risk to the City if the loan defaults.
The MIF loan amount requested is $450,000. The Blaine EDA is allowed to set the interest rate, which staff has proposed at 2%, which is consistent with other MIF loans in the state. All interest payments go to DEED. The lower interest rate is attractive for businesses. The term is 20 years. The MIF program also allows the local government unit to keep 20% ($90,000) of the loan amount for a revolving loan fund or forgive the amount towards the project. The City currently does not have a revolving loan fund. Though the City may eventually establish a revolving loan fund, staff would recommend forgiving the 20% towards the project. The business has also requested that the City forgive the amount.
Assuming the attached resolution is approved; staff will be submitting the application for approval to DEED. If the loan is approved, GPC will purchase the building before the end of the year and proceed with improvements in 2018.
Recommendation
Staff recommends holding a public hearing and approval of the attached resolution.
Body
WHEREAS, the Blaine Economic Development Authority act as the legal sponsor for the project contained in the Minnesota Investment Fund Application to be submitted on or about November 1, 2017 and that Erik Thorvig, Economic Development Coordinator and Clark Arneson, Executive Director are hereby authorized to apply to the Department of Employment and Economic Development for funding of this project on behalf of Blaine Economic Development Authority; and
WHEREAS, the Blaine Economic Development Authority has the legal authority to apply for financial assistance, and the institutional, managerial, and financial capability to administer the proposed project; and
WHEREAS, the Blaine Economic Development Authority has not violated any Federal, State, or local laws pertaining to fraud, bribery, kickbacks, collusion, conflict of interest or other unlawful or corrupt practice; and
WHEREAS, that upon approval of its application by the State, the Blaine Economic Development Authority may enter into a Grant Contract with the State of Minnesota for the approved project, and that the Blaine Economic Development Authority certifies that it will comply with all applicable laws, statutes, regulations and rules as stated in the Grant Contract and described in the Project Compliance Certification of the Application; and
WHEREAS, the Blaine Economic Development Authority has obtained credit reports and credit information on General Pattern Company and Dennis Reiland and Staci Thill Upon review by the Blaine Economic Development Authority, no adverse findings or concerns regarding, but not limited to, tax liens, judgments, court actions, and filings with state, federal and other regulatory agencies were identified. Failure to disclose any such adverse information could result in revocation or other legal action; and
WHEREAS, the Blaine Economic Development Authority agrees to forgive up to 20% of the loan amount to General Pattern Company; and
NOW, THEREFORE BE IT RESOLVED that Erik Thorvig, Economic Development Coordinator and Clark Arneson, Executive Director or their successors in office, are hereby authorized to execute the Grant Contract and amendments, thereto, as are necessary to implement the project on behalf of the Blaine Economic Development Authority.
PASSED by the Blaine Economic Development Authority of the City of Blaine this 2nd day of November, 2017.