Council discusses development plan,
financing for EZ Fabricating expansion
Wednesday, October 23, 2013 6:20 AM
Chatfield business EZ Fabricating is looking to expand their manufacturing and office space in a project estimated to cost $1.4 million. They went to the city's Economic Development Authority (EDA) seeking a number of things to help in the development process. The Chatfield City Council heard information on this business venture and held a couple of public hearings during its regular meeting on Monday, Oct. 14.
Requested was a $408,000 state loan from which the city would receive a 20 percent reimbursement for its own revolving loan fund. EZ Fabricating also requested a $125,000 city loan and the waiving of all development fees at about $5,000 per acre. The business also asked to have the city's policy to extend utilities to the next available property waived. They had also asked to receive the net benefit from a new nine-year $84,000 tax increment finance district. All this help had been recommended by the EDA.
This assistance from the city would help EZ Fabricating with its 19,000-square-foot expansion south of Tuohy Furniture's main headquarters off of St. Albans Place. It would include utility extensions since water and sewer is not located under the property.
The expansion would lead to the hire of 17 additional full-time employees, which will be a requirement for the deal to be completed by the end of two years from the project completion. The project will begin by Nov. 1 of this year and be mostly completed by Dec. 31, 2014.
The hearings related to considerations of the business subsidy package to EZ Fabricating and modifications to the Municipal Development District #3. Mike Bubany from David Drown Associates, Inc., spoke to the board on both and presented information to the council along with Chatfield EDA coordinator Chris Giesen.
The first hearing about the business subsidy was held because the request for assistance exceeded $150,000. The total benefit that would be received by EZ Fabricating would be $655,500. Bubany noted most of that money would be coming back to the city with one percent interest, so it could be used for other projects.
Going through a list of requirements for the company, Bubany said, "It's no longer clean and easy for a new business. They have to make certain promises."
Bubany explained the city's requirement to establish a tax increment financing district or TIF district. The city will pay back a percentage of the new taxes received from the completed project over a period of nine years.
The maximum amount EZ Fabricating could receive through the TIF district is $84,000, but the city is not required to meet that full amount. In order to make TIF funds available, the city held another public hearing for the modifications to the Municipal Development District (MDD) #3.
Prior to the creation of a TIF district, a city has to create a planning document and development program, which is the MDD. The city currently has two districts. The site of EZ Fabricating's project will be the fourth TIF district in MDD #3.
Tuohy's is looking to expand in the next two years and the city could expand the new TIF district to include them.
Bubany showed that the TIF budget was set to include both the EZ Fabricating and possible Tuohy project at $264,000. If the Tuohy project happens outside of a five-year window, they would risk not receiving as much of the TIF money. The city could still decertify the TIF district and certify a new one. Bubany showed that the assistance, though large, would cause a drop in tax rate of less than 2 percent.
Both resolutions for the business subsidy and the MDD #3 modifications were approved.
The council also approved the $408,000 state loan.
St. Albans Place Improvement
Though the requirement to extend utilities along the entire stretch of the property was waived, it came to the attention of the council that a Business Development Public Infrastructure state grant could pay for 50 percent of that improvement along St. Albans Place.
"There was a larger pot of money to draw from. We are eligible for something we aren't normally offered," explained Councilman Paul Novotny while expressing interest for the city to figure out how they would pay for the other 50 percent.
The state had told the city that a placeholder had been put on funds depending on the projects scope. Young clarified that the EDA did not want EZ Fabrication to pay for improvements on St. Albans Place.
"If half of it's available, you hate to have it fall by the wayside," said Smith.
The council passed a motion to apply for the state grant at a project scope of $194,000 with the understanding that the city would pay for the other half if the grant is received. This would lead to the improvement of St. Albans Place.
Twiford Redevelopment Update
The city and EDA are currently in discussion with a business interested in developing a lot in the Twiford Redevelopment. The EDA had applied for and received a Redevelopment Grant of $233,611 through the Minnesota Department of Employment and Economic Development (DEED) that would cover infrastructure costs. Chatfield had been one of seven projects in the state to receive funds through DEED. Smith pointed out that six of the seven projects had been located in metro or large city areas. The council approved receiving the grant. Young thanked Giesen for his work on both the BDPI and Redevelopment grants.
Prior to the regular council meeting, the Chatfield Committee of the Whole had met to discuss public works projects for next year. Projects would include Bench Street along with the previously discussed Twiford Street and St. Albans Place roads. Young noted if the city received the grants they were continuing to pursue, the residents would see less of an impact on their taxes.
Darryl Haner, superintendent of the wastewater treatment plant, had turned in his request to retire after 35 years in public service. Smith said he had a chance to thank him for his service in Chatfield. "He was a great asset for the city," he said, while noting that with the plant requiring a Class-B operator, the transition would go more smoothly than if they needed a Class-A operator. Upon recommendation, the council approved the request and a resolution to post internally for the position.
In the clerk's report, Young said the city was getting close to having the paperwork for FEMA reimbursement completed. The city had sustained damage in drainage ways and on Territorial Road, which had qualified for federal assistance. Young said he wasn't sure how much the city would receive.