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PRIOR LAKE ECONOMIC DEVELOPMENT AUTHORITY
AGENDA
Monday, February 13, 2012
4:00 p.m,
Reports included with this agenda can be found in the Document Center at www.citvofpriorlake.com
Please foilow this file path: City of Prior Lake\Economic Development Authority\2012\February 13, 2012
1. CALL TO ORDER/INTRODUCTION
2, APPROVAL OF AGENDA
3. APPR4VAL OF MEETING MINUTES
A. January 9, 2012
B. January 23, 2012
4. PUBLIC HEARINGS
A. No public hearing is scheduled.
5. � OLD BUSINESS
A. EDA Budget Amendment
6. NEW BUSINESS
A, EDAC Report and Subcommittee Reports:
(1) EDAC
(2) Broadband Fiber Network
(3) Technology Village Incubator
B. Technology Village Report (from the Subcommittee)
C. Venture Fair Event Update
D. Consider Approval of a Resolution Authorizing Termination of a Lease with Option to
Purchase Agreement, Ground Lease Agreement and Authorizing Execution of an Escrow
Agreement Relating to the Issuance by the City of Prior Lake, Minnesota, of its $9,825,000
General Obligation Capital Improvement Plan Refunding Bonds, SERIES 2012A
E. Business Inquiry List (to be distributed at the meeting)
7. OTHER BUSINESS
A. Draft March 12, 2012 Agenda
8. ADJOURNMENT: 6:00 p.m.
Phone 952.447.9800 J Faac 952.447.4245 / www.cityofpriorlake.com
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Economic Development Authority Meeting Minutes
January 9, 2012
1. CALL TO ORDER
President Hedberg called the meeting to order at 4:08 p.m. Present were Nedberg, Hitchcock, Morrls, Choudek
and Myser, Community & Economic Development Director Rogness, Executive Director Boyles.
2. APPROVAL OF AGENDA
MOTION BY MYSER, SECOND BY HITCHCOCK TO APPROVE THE AGENDA AS PRESENTED.
VOTE: Ayes by Hedberg, Hitchcock, Morris, Choudek and Myser. The motion carried.
3. APPROVAL OF MEETING MINUTES
MOTION BY MYSER, SECOND BY HITCHCOCK TO APPROVE THE MINUTES OF THE DECEMBER 12,
2011 MEETING AS PRESENTED.
VOTE: Ayes by Hedberg, Hitchcock, Morris, Choudek and Myser. The motion carried.
4. PUBUC HEARING
No public hearing was scheduled.
5. OLD BUSINESS
A. Broadband Discussion.
Rogness: introduced Eric Lampland of Lookout Point Communications, who was asked by the EDA to
lead them in a discussion about the city's goals for a community fiber network system.
Lampland: reviewed the list of questions that had been developed by the EDA at its last meeting. He cat-
egorized them into three topics: (a) six questions related to likelihood of success; (b) five questions related
to how, how much and what to do; and (c) four questions related to information and measurement. Lamp-
land then reviewed an outline that described three broad areas that need to be followed by the EDA and its
Broadband Subcommittee, including a"Commitment and Vision", the "Business Case", and an "Executable
Plan". One key factor in the process is to gain public and city council support.
EDA Commissioners: discussed issues related to city-owned systems, open access, fiber-to-the-home,
and potential roadblocks. Lampland indicated that once the vision is validated, then a business model can
be developed for support.
Hitchcock: asked what makes Prior Lake unique and challenging? Four positive examples were identified
by the group, including a high quality of life, a potential partner with SMSC, and higher income levels.
Challenges included the fact that no municipal electric utility exists here (which was an indicator of success
in other cities), and the 65% vote necessary to publicly fund a project.
Lampland: identified the next steps in the visioning process ... develop, educate, support, plan with facts,
and build the next building blocks. Lampland said that an important overall goal is to create a network that
enables private innovation to occur in Prior Lake.
Myser: asked Lampland why he couldn't duplicate other successful studies for cities rather than spend
considerable time developing a unique plan for Prior Lake? Why isn't there more of a"boiler plate" process
thaf can be used here?
Lampland: responded that technology changes so fast, which requires new ways of looking at a system,
and that the local vision and education process is vita! to achieve success. Lampland then excused himself
from the meeting.
Phone 952.447.9800 / Fax 952.447.4245 / www.cityofpriorlake.com
Boyles: reminded the commissioners that if they decided to move forward with Eric Lampland, his pro-
posal incfuded 420 hours of work resufting in seven deliverables at a cost of $77,500.
EDA Commissioners: discussed the need to move forward with this priority initiative of the EDA, and that
Lampland would ultimately guide and teach them with his knowledge and skills.
MOTION MADE BY MYSER, SECONDED BY HITCHCOCK TO APPROVE ENTERIING INTO A CON-
TRACT WITH LOOKOUT POINT COMMUNICATIONS BASED ON LAMPLAND'S PROPOSAL. VOTE:
Ayes by Hedberg, Hitchcock, Morris, Choudek and Myser. The motion carried.
6. NEW BUSINESS
A. (1) EDAC'Report (no report due to no EDAC meeting in December)
(2) Broadband Fiber Network Report (discussed under Old Business)
(3) Technology Village Incubator Report
Rogness: explained that this subcommittee has been meeting to develop its plan for review by the EDA;
the old NOREX building is stilf being considered as a starting point in Prior Lake.
B. Venture Fair Event
Rogness: reviewed a draft outline showing a March event using two tracks start-up businesses, entrepre-
neurs and angel investors. Commissioners supported this concept and suggested that staff look at lake
March for this event. Rogness indicated that a budget of $10,000 would be a likely target.
C. Business Inquiry List
Rogness: reviewed his list of business inquiries through December. Commissioners suggested that it in-
clude a"next steps" section as part of understanding the full scope of each inquiry.
7. OTHER BUSINESS
A. Draft February 13, 2012 Agenda was reviewed by the commissioners.
ADJOURNMENT
MOTION BY MYSER, SECOND BY HITCHCOCK TO ADJOURN THE MEETING. With all in favor, the meeting
adjourned at 6:02 p.m.
Frank Boyies, Executive Director
DRAFT 121211 EDA meeting minutes
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Economic Development Authority Meeting Minutes
January 23, 2012
1. CALL TO ORDER
President Hedberg called the meeting to order at 4:08 p.m. Present were Hedberg, Morris, Choudek and
Myser, Community & Economic Development Director Rogness, Finance Director Erickson, Executive Director
Boyles, Absent was Hitchcock.
2. APPROVAL OF AGENDA
MOTION BY MYSER, SECONDED BY MORRIS TO APPROVE THE AGENDA AS PRESENTED.
VOTE: Ayes by Hedberg, Morris, Choudek and Myser. The motion carried.
3. APPROVAL OF MEETING MINUTES
None.
4. PUBLIC HEARING
No public hearing was scheduled.
5. OLD BUSINESS
A. Partial Payment to Consultant.
Boyles: explained that Eric Lampiand of Lookout Point Communications is requesting an initial com-
mencement payment for his broadband consulting contract. This amount would be $11,625, which is 15%
of the contract amount. Boyles asked for EDA approval since this is not a normal provision is professional
services contracts.
MOTION BY MYSER, SECONDED BY MORRIS TO APPROVE THE INiT�AL COMMENCEMENT PAY-
MENT OF $11,625 T0 LOOKOUT POINT COMMUNICATIONS.
VOTE: Ayes by Hedberg, Morris, Choudek and Myser. The motion carried.
6. NEW BUSINESS
A. (1) EDAC Report (no report)
(2) Broadband Fiber Network Report
Rogness: informed EDA that the first subcommittee meeting with Eric Lampland will be on January 26.
(3) Technology Village Incubator Report
Rogness: indicated that this subcommittee will likely make it presentation to the EDA on February 13,
which will include a feasibility report and financial plan.
B. Election of Officers
Boyles: asked that the EDA elect officers for 2012, including the positions of President, Vice President and
Secretary. .
MOTION BY MYSER, SECONDED BY CHOUDEK TO KEEP THE SAME OFFICERS IN 2012 AS IN 2011,
INCLUDING HEDBERG AS PRESIDENT, MORRIS AS VICE PRESIDENT, AND BOYLES AS SECRE-
TARY.
VOTE: Ayes by Hedberg, Morris, Choudek and Myser. The motion carried.
Phone 952.447.9800 / Fax 952.447.4245 / www.cityofpriorlake.com
C. Resolution Requesting Amendment to the 2012 EDA Budget
Boyles: reviewed the staff report related to a need to amend the EDA budget in order to fully fund the
Broadband consultant and the proposed Venture Fair event. Staff is proposing to add $33,000 to the EDA
2012 budget expenditure line items related to three sho�falls, including: (a) $27,000 for the Broadband
consulting contract; (b) $5,000 for the Venture Fair event, and (c) $1,000 for the National Business Incuba-
tor Association membership. These funds would come from the EDA's reserve account. Commissioners
agreed with the need to fully fund these 2012 initiatives.
7. OTHER BUSINESS
A. Draft February 13, 2012 Agenda was reviewed by the commissioners.
ADJOURNMENT
MOTION BY MYSER, SECOND BY MORRIS TO ADJOURN THE MEETING. With all in favor, the meeting ad-
joumed at 5:22 p.m.
Frank Boyles, Executive Director
DRAFT 121211 EDA meeting minutes
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ECONOMIC DEVELOPMENT AUTHORITY AGENDA REPORT
MEETING DATE: February 13, 2012
AGENDA #: 5.A
PREPARED BY: Dan Rogness, Director of Community & Economic Development
AGENDA ITEM: EDA BUDGET AMENDMENT
DISCUSSION: Introduction
On January 23, the EDA recommended that the city council approve a$33,000
amendment to the EDA's 2012 budget related to fully funding the Broadband
consultant, the proposed Venfure Fair, and membership to NBIA. Staff pro-
posed using the EDA fund balance to pay these costs. On February 6, this item
was pu!!ed from the city council's agenda due to some additional information
discovered about certain funds in the EDA's fund balance and in light of addi-
tional funding needed for the incwbator initiative.
Staff is requesting that the EDA consider this discussion to be focused more on
the shorf-term funding needs in order to move the Broadband and Venture Fair
initiatives forward. However, this is also an opportunity to look at the short-term
needs in the context of long-term funding for economic development in Prior
Lake. Operationai and project funding are both key components to success.
Hi StON
The EDA's 2012 budget did not anticipate the full costs associated with its 2012
initiatives, including broadband/fiber, business incubator and angel investing.
Therefore, the EDA must recommend to the city council any amendment neces-
sary to its budget once those actual costs are known and approved by the EDA.
In tliis case, the broadband/fiber consulting cost is $80,000, and the Venture
Fair event related to angel investing wilt cost $10,000. As can be seen in agen-
da item 6.6, the incubator project proposal from the subcommittee will be ap-
proximately $160,000 over three years.
Also affecting the budget amendment is the fact that recently, staff became
aware from contacts at the Minnesota Department of Employment and Econom-
ic Development (DEED) that the EDA's fund balance incudes two "dedicated"
accounts that must remain within city revolving loan funds. One such account
relates to a 1995 loan to E.M. Products, and the other account relates to a 1998
loan to NBC Products. These two account balances were transferred into the
EDA general account in 2011. A detailed summary is provided in the attach-
ment showing nearly $195,000 as a combined loan fund balance.
The EDA is aware that there is a balance of approximately $186,000 in TIF Dis-
trict 1-1 which if not dedicated for specific uses by 12/31/12, it must be remitted
to the county. These funds can be used under two categories: (1) modify the
TIF District by identifying eligible redevelopment uses, or (2) identify a construc-
tion project that will be assisted under the Minnesota Jobs Bill. As noted in the
7/28/11 memo from Ehlers, these two approaches require a public hearing to
modify the TIF Plan for that district. With the first option, the existing TIF Plan
must be modified by 12/31/12, and expenditures can be made any time after the
modification. Eligible uses for TIF expenditures under this option would be fu-
ture redevelopment projects, such as ones located in Welcome Avenue Industri-
al Park or the downtown district. With the second option, the existing TIF Plan
must be modified very soon in order to fund an eligible "jobs bill" project that
must begin construction before July 1, 2012. Eligible uses for TIF expenditures
under this option would be a specific private construction or remodeling project
that would start no later than July 1.
Conclusion
The two DEED loan accounts must now be transferred from the EDA general
fund back into two dedicated city revolving accounts. The funds may be used for
economic development purposes under the state/federal guidelines (i.e., must
benefit low/moderate income persons through job creation). The preliminary
combined balance of those funds on 12/31/11 was $196,392.96, which leaves
no fund balance now to use as a transfer source for the proposed budget
amendment. The overall status of funds for economic development is as follows:
• 2012 EDA Special Revenue Fund Budget =$137,923
• 2012 General Fund ED Budget =$40,004
• Scott County CDA Grant =$15,000 (must be used for Broadband study)
• EM Products Revolving Account =$112,546 (w/ 2012 budgeted interest)
� NBC Products Revolving Account =$87,397 (w/ 2012 budgeted interest)
• TIF District 1-1 Excess TIF =$186,000 (estimated balance)
• COMBINED FUNDS FOR ECONOMIC DEVELOPMENT =$578,870
Although the combined fund balance for economic development is substantial,
restrictions on the use of those funds exist for all but the 2012 EDA and General
Fund ED budgets. Therefore, staff is proposing to use funds from the Scott
County CDA grant ($15,000) and to transfer General Fund ED budget ($16,000)
to meet the short-term obligations related to Broadband, Venture Fair and NBIA.
ISSUES: The budget amendment necessary is to: (1) increase the EDA Professional Ser-
vices line item budget from $53,000 to $68,000 due to the additional $15,000
CDA grant; (2) transfer $16,000 from the General Fund ED Professional Ser-
vices budget to EDA Professional Services and Training & Certification ;(3)
move $2,000 from EDA Legal Fees to Training & Certification and Dues & Sub-
scriptions; and (4) reduce the Interest Earnings revenue and Per Diems expense
both by $1,200. These combined changes total $29,800. No other amend-
ments can be made since there is no longer an EDA fund balance.
Note: A corresponding amendment would be proposed for the General Fund to
reflect the $16,000 reduction in the General Fund Economic Development budg-
et and the $16,000 increase in the Transfers to Other Funds.
Staff will also be developing a combined Revolving Loan Fund Plan that brings
the two DEED accounts under one umbrella as a business assistance program
in Prior Lake. This may be a funding source for the business incubator initiative
(i.e., loan/grants to eligible incubator businesses to help pay lease rates or pro-
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vide technical assistance). Finally, the EDA will need to evaluate options related
to the use of excess TIF District 1-1 funds ($186,000).
The constraints on these funds creates some additional process in order for us
to use the funds for economic development priorities already identified by the
EDA. On the other hand it appears that the funding restrictions do allow the EDA
to explore other economic development avenues such as purchase of property,
assistance to businesses which establish incubators, creation of pad ready sites
and the like.
In the long run, the EDA and City Council need to discuss funding sources for
future year EDA Programs. The City Council will conduct a long range budgeting
discussion at a work session in April. This topic will be appropriate for that ses-
sion.
FINANCIAL The EDA will need to move the two DEED fund balances from the EDA fund into
IMPACT: city revolving loan accounts, leaving no EDA fund balance for 2012 initiatives
without using some funds budgeted in the General Fund ED budget. Staff will
evaluate whether the two revolving accounts can possibly fund some part of the
Technology Village Incubator initiative if that moves forward with a positive EDA
recommendation. The EDA also has an opportunity to identify eligible uses for
the TIF District 1-1 fund balance of approximately $186,000.
ALTERNATIVES: 1. Recommend that the EDA budget be amended to: (1) increase the EDA Pro-
fessional Services line item budget from $53,000 to $68,000 due to the addi-
tional $15,000 CDA grant; (2) transfer $16,000 from the General Fund ED
Professional Services budget to EDA Professional Services and Training &
Certification; (3) move $2,000 from EDA Legal Fees to Training & Certifica-
tion and Dues & Subscriptions; and (4) reduce the Interest Earnings revenue
and Per Diems expense both by $1,200. These amendments wil! allow the
EDA to proceed with the Venture Fair and Broadband/Fiber programs, as
well as the incubator program under the assumption that it is self sustaining
except for assistance which can be provided under the guidelines of the re-
volving loan programs.
2. Recommend that the EDA budget be amended to increase the Professional
Services budget from $53,000 to $68,000 by using the CDA $15,000 grant,
but that no other allocations be made from the General Fund ED Budget for
Broadband or the Venture Fair.
3. Request that staff come back with additional information and/or options.
RECOMMENDED Staff recommends Alternative #1.
MOTION:
3
Minnesota Small Cities Economic Development Set-Aside Program
Prior Lake Project: E.M. Products, Inc.
Financial Report:
• Original Loan - $ 50,000.00 (1995)
• Loan Repayment = $ 54,744.44 (fully repaid by Sept. 1998)
• 12/31/11 Balance = $110,547.26
According to the Minnesota Department of Employment and Economic Development (DEED), the EM Products �
loan repayment funds must be in a city revolving account that can only be used fior other eligible "Economic De-
velopment" category projects. Examples include direct grants/loans to businesses, commercial rehab assistance,
and microenterprises. These funds were from a federal source administered through DEED, known as the Small
Cities Community Development Block Grant (CDBG) Program. Federal requirements with these funds include:
1. A CDBG Program national objective must be met ... either benefitting low/mod income persons through
job creation and/or retention, or eliminating slumlblight conditions.
2. Low/Moderate income job creation and/or retention is met by the city verifying that a business hires new
employees that meet this requirement related to "househo{d" income; these employees are hired as a re-
sult of the funding assistance.
3. Eliminating slum/blight conditions is met by the city using funds to address code deficiencies in the public
spaces of commercial buildings (i.e., downtown commercial exterior rehab program).
In May of 1995, the city developed and approved a Revolving Loan Fund Plan that directs the reuse of the repaid
loan funds to other economic development purposes. Some of the key provisions include:
• Minimum loan size is $15,000 and maximum loan size is $100,000 (with anticipated average of $25,000-
$50,000).
• Funds must be used for fixed asset purchases secured by a mortgage on real estate or a UCC fi{ing on
equipment.
• At least 51 % of all jobs created with these funds must be for low/moderate income persons (using annual
HUD guidelines).
• Revolving Loan funds must be matched a minimum of 2:1 with private funds.
• No loans can be made for commercial/retail activities.
A"microenterprise" would be an eligible business, which is defined as an enterprise having 5 or fewer employees,
one or rriore of whom owns the enterprise (which may be a typical business incubator tenant). It qualifies for the
low/mod income national objective if the business owner's household income is at/below the threshold; no other
employee incomes come into play, and there is a 3-year presumption of low/mod status of that owner. Eligible
activities to assist with funds include: (a) grants/loans to establish, stabilize or expand a microenterprise; (b) tech-
nical assistance or business services to the owners of microenterprises; (c) general support to owners such as
transportation, childcare and counseling.
Low/Moderate Income Levels (2012�
1-person HH =$45,500; 2-person HH =$52,000; 3-person HH =$58,500; 4-person HH =$65,000;
5-person HH = $70,200
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Minnesota Investment Fund (MIF) Program
Prior Lake Project: NBC Products, Inc.
Financial Report:
• Original Loan = $ 75,000.00 (1998)
• Loan Repayment = $ 94,230.75 (fully repaid by April 2007)
• Payment to DEED = $(37,038.00) (due to job goals not being met)
• 12/31/11 Balance = $ 85,845.70
According to the Minnesota Department of Employment and Economic Development (DEED), the NBC Products
loan repayment funds must be in a city revolving account that can only be used for other eligible economic devel-
opment projects consistent with the MIF Program. Examples include direct grants/loans for business start-ups,
expansions and retentions. These funds were from a state source administered through DEED, known as the
Minnesota Investment Fund (MIF) Program. Although no specific local Revolving Loan Fund Plan was developed
and approved by the city, DEED directs the reuse of the repaid loan funds to other economic development pur-
poses that follow the same MIF Program guidelines. Some of the key provisions include:
1. Revolving funds must not finance more than one-half of the cost of the project.
2. Businesses receiving revolving funds must pay each empfoyee total compensation thaf is equal to or
greater than at least 110% of the federal poverty level.
3. Assistance must be evaluated on the existence of certain conditions, including; (a) creation/retention of
jobs; (b) increase the tax base; (c) public funds induce private funds; (d) project has excessive public in-
frastructure or improvement costs; (e) provides higher wage levels or adds to the workforce skills.
4. Loans, grants or direct infrastructure assistance are eligible forms of financing.
5, Revolving loan funds may be used for land acquisition, building construction or rehab, site improvements,
public utilities/infrastructure, and machinery/equipment.
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ECONOMIC DEVELOPMENT AUTHORITY
Proposed
Adopted Proposed Amended
Budget Amendment Budget �mments
Revenues / Sources:
Intergovernmental revenues
33610 Grant Revenue $ - $ 15,000 $ 15,000 1) CDAGrant;
Miscellaneous revenues
36210 Interest Earnings 6,000 (1,200) 4,800 4) Reduce interest
Transfers from Other Funds
39203 General Fund - 16,000 16,000 Z�TrensferfromGeneralFund
Total Revenues / Sources $ 6,000 $ 29,800 $ 35,800
Expenditures / Uses:
101 Personnel $ 69,923 $ (1,200) $ 68,723 4� Perdiems waived
201 Office Supplies 500 - 500
304 Legal Fees 9,000 (2,000) 7,000 3) Reallocate $2k to other
expenses;
314 Professional Services 53,000 27,000 80,000 1)CDA grant ($15k) used for prof
serv; 2) Trf from GF ($12k);
331 Training & Certification 5,000 5,000 10,000 2) Trffrom GF ($4k); 3) $Skfrom
legal;
351 Legal Notices 500 - 500
433 Dues & Subscriptions - 1,000 1,000 3) $lkfrom legal
Total Expenditures / Uses $ 137,923 $ 29,800 $ 167,723
Change in Fund Balance $ (131,923) $ - $ (131,923)
O: �EDA�2012 EDA Budget : 2012 Proposed Amended 1/9/2012
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To: Jerilyn Erickson, City of Prior Lake
From: Rebecca Kurtz and Dave CallESter, Ehfers
Date: July 28, 2091
Subject; Use of Tax increment from TIF DisfrEct 1-9
As we have disc�.�ssed, Tax Increment Financing District 1-1 has as esfiinated balance of
� $167,000, aud the Dishict is required to be decertified on Decembe�• 31, 20I2. It is our
understanding that the City is considering optio�is on the tise of the fi�nds, In addition to
rehu�ning the fiuids to the Couniy for redisteibution to the taxing entities, the Ciry has two options
fo�• use of the funds:
■ Modification of the TIF District
■ Adoption of a Spending Plan,
Modification of the T!F District
Since the Dist�YCt is a pre-1990 redevelopment district, the S-yea.r rule does not apply, and the
City lias soine flexibility on the use of the TI� funds. Fnnds cauld be used by the City to acquire
praperty; dematish buildings; canshuct improveinents ar utilities; construct parking facili#ies; or
any other TIF-eligible, redevelopn�ent use.
It is our understanding that the City has coiisidered �jsing the fimds for �tcquiring propei�ty for
fuhire redevelopment. Fron� tlie ii�formation we has�e gathei•ec�, fncluding the TIF Plan, it appears
that it is i�ot specifically stated that the fiinds ca�� be used #o acquire proper[y witl�in tlie Project
A.rea fox• redevelapment. Therefore, ane option for the use of the fiinds would be to moclify the
TIF Plan and add tanguage stating that the TIF could be used #o acquire eitlier speciftc parcels or
any parccl within the Project Area. If the City chose to inove forward witli this op#ion, we would
recommend tl�a# the City also consider modifying the Project Area boundaries and conibining
some of t[ie project areas in the downtown area. Tl�is would allow greater flexibitity for tl�e use
of tax iiicrement not only at this time b�at also for firture pi•ojects ai3d TIF dist�•icts.
The process to modify tlte TIF District and/or expand the Projecf Area would take approximately
45-6U days. After the Council authorizes maving forward, a modification to the T'IF Plan would
be d�afted anc� distributed to the County aEid Scliool Disn�ict. A publie liearing woutd need to be
held by the Gity Council, at2d after tke hearing the Council would consider a resolution adopfing
the moc�ification.
www,ehlers-inc.com
E H L E R S Minnesata pfione 651-697-8500 3060 Centre Polnte Driva
LEAOERS IH PUBItC FINANCE Offices also tn Wisconstn and lilinois (ax 65i-697-8555 Roseviile, MN 55113-i122
toll free 800-552-1171 �
Modifying the TIF Dishict would provide the Cify and EDA the most fle�bility on the use of
fiinds.
Spending Plan
The Mi�mesota Johs Bill passed by t�ie Iegislature in 2010 and amended in 2011 includes several �
pro�isions which liberalize the use of tax inci�en�ent finaticing in order to stimulate job creation.
Section 32 of the Jobs Bill authorizes tax inc�•ements from an existing tax increment district,
whenever the district was certified and notwithstanding any law to tl�e contrary, to be spent for
any af the following purposes:
(a) To provide irnprovaments, loans, interest rate sabsidies or assistaiice in any fo�m
#o private developrnei�t consistiiig of the canshuction or substantial rehabilitatio�z of buildings
and ancillary facilities, if doing so will ereate or retain jobs in tlie state, ineluding construction
jobs, and construction commences before Juty l, 2012, and would not cornme�ice before tl�at
date without the assistanae; and
(b) To make au equity or similar investment in a corporatian, partners��ip or limited
liability compaiiy that the authority determines is necessary fo make the caustruction of a
development meeting tl�e requirements of pat�agraph (a) above financiAlly feasible.
To utilize one of these optians, the City must adopt a written Spending Plan that specifica}ly
authorizes the assistance. The Spending Plan is a shai�t document outlining the source of the
funds and how they will be spent. A notice of public lieariiig on the Spending Plan must be
published in a�ewspaper of gener�l circulatian at least once and not less tlian � a days and not
more tha�� 30 days prior to the date of hearing. After the public hearii�g the Coimcil adopts a
resoh�tion approving the Spenc�ing Plan. This process can be con�pleted 'zn approximately 30
days. The authority to spend fax increments t�ndei f�11S Alit�t01 •ization expires an DecemUer 31,
2012. Expendihues of tax uicrements ai•e not allow�d t�eyond that date. It is also important to
note that funds spent u�ider a spending plan must benefit a private develap�nent.
Ptease do not hesifate to contac# us at 651-G97-8516 (Rebe�ca) or 651-697-8553 {Dave) if you
have questions.
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T�x [ncr�mc�n� ��I�nce� ��n lJ��d ���r �on��ru��ion
Prc�j�cfs to Cr��t� Job� .
The State of Mimiesota Jobs Bill authorized cash balances in existing #ax increment districts to
be used to spur neti� canstruction or suUstantial reliabilitatioit in yaur canunuiuty. Significaiitly,
local gover��ments can spend existing tax inct�ement regardless of when the district �vas certified
without worrying about the n�any restrictio»s that llave heretofore applied, such as the five-year
rule aud pooling litnitations. Any cash balances must be egpended by Deceinl�er 31, 2412.
What kinds of �rojects can we assist with our incremant balanc�s?
The project must cansist of ti2e coush�uction or substa�itial x•ehabilitation of buildii�gs and
ancillary facilities, if doing sa will create or retain jobs in tl�e sfate, includi»g construction jobs.
Construction ntust begiu before July �, 2012.
F-��w can we pr�vide assistai�ce fia � proj�ct7
Tl�e first step is to adopt a ��ritten spending plan that specifically autliorized the assistance. You
will then necd to enter in#a a development agreement that specifies liow much increment will be
prottided, what it �vill pay for, and �viiat foi7n it wi11 falce. Under fhe law, the assistance may be
provided as a:
* Direct loan
e Grant
• Inte�•est rate subsidy on developer's pt•ivate �nancing
p Equiry or si�nilar investment in corporatio��, partnersl�ip, or limited liability company
• ReimUuisement to the City for public improvements such as utilities, sheets, and
storm tvater in�provemen�s.
IJoes this m�an we c�n pay act�al building constriaction costs?
Yes. Assistance can ba provided in any form to a private developnient consistuig of construction
or substantial relittbilitation of buildings.
Can we us� incremet�f to pay for p�ablic cc���strueti�n proj�;cts?
No. Tax increment cannot Ue used to pay for public land, puUlie buildings, ar recreational
facilities. Tncrement may be used to pay for public costs associated �vith a private canstructiou
project, such as utiliry connectian fees, side�valks, parking, or storm tvater ponds.
Do�s it m�tt�r what type of distr the increment is coming from?
Na. Increment fi•oui a housing district can be used to lielp build an office buildiug or increment
fro�n a redevelopment distric# can be used far a ra�v iand site.
1���+�N.�,��llC;t:� 11
� " " � � ""� � Niinnesota }�hu,ac 651 •89T-8500 30B0 Csnire Potnte brive
LEADFNS IH PUBUC FINANCE Offices Blso In Wisconsin and IlGnofs fax 651 •697•8555 Rosevil�, MN 55113-1122
ioi! fraQ 800•552-i 171
� �� [-ct�noi�iic [7e;ve(c���n��enfi anc! �iec:.�c,velopme��t
i�low could I us� t�x inc,r to spur housing constrt�ctiort in an existing
s��bdivision?
There are several �vays incx•emei�t could spur develapment on improved lots, �or example, you
cauld:
• Pay for speciai assessments or improve�nent costs, thereby making the iots more
affordable
• Provide do�va3 paytnent assistance or gap financing to tha homeowner
o Frovide consfiliction financing to a biulder
• Write dotvn the i�terest cost o�� the Uuilders coi�structias� loan
Reinember, tlie lots you assist must have homes under colistruction by July 1, 2012.
How ca�.�ld { us� t�x increm�nt to improve �xist'rng homes and bu�inesses?
Incretnent could be used to make lotv-interest a• forgivable loans #o hame-owners, rental
property otvners, or a businesses tlaat �vill suUstaneially renovate their property. If the loans are
repaid, the repaid amount is stilt considered tax inerement and will need to be accounted for in
fhe dist�ict.
Gan I pledc�e t�x incrcm�;nt I cxpc;ct to receive in th� future?
No. Existii�g ca,sh bala�ices and i�icrement collected throi�gt� December 31, 2012 must be used.
No netv authority for Uonds or inte�•fi�nd loans is aliowed. Tiiere a�•e fechniques for fi�ceing up
tAx increment cash flow to use as much tax increment funds as passiblc before tl�e end of 2012.
Wl�at is th� a����roval process?
Tlic authority must adopt a�vricten spend'u�g plan that specifically ai�thorizes tlie assistance. This
plan niust be adapted followii�g a public hearing. A��otice of the pubtic hearing must be
published i►i a ne��rspaper of geueral eirculation at least o��ce �nd not 4ess than 10 days a�id not
nlore than 3Q days prior to tf�e date of hearing.
Where can I g�t more information?
Contact your Ehlers Fu�ancial Advisor at G51-697-8500. (A list of Minnesota Financial Advisors
and their direct di�l niunbers ca�i ba found under the Con#aet Us tab at the top of our �vebsite at
tivw�v. ehlers-inc.coin)
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tfAOERS IN PU8l1C FINANCE ptficos atso fn Y�isconsln enci Ilfinols (ax 651 •697•$555 Rosc�v�Ve, MN 55i 13•1 i22
1011(tQC 800-552•1171
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v �' 4646 Dakota Street SE
Prior Lake. MN 55372
`i ' t ljyNESp� P
ECONOMIC DEVELOPMENT AUTHORITY AGENDA REPORT
MEETING DATE: February 13, 2012
AGENDA #: 6.A (1) (2) (3)
PREPARED BY: Dan Rogness, Community & Economic Development Director
AGENDA ITEM: EDAC AND EDA SUBCOMMITTEE REPORTS
DISCUSSlON: EDAC Report
The EDAC met on January 26, but a quorum was not present to conduct official
business. However, they did discuss various topics with the majority of discus-
sion focused on comments received at the recent Meet-N-Greet event. Those
topics included the Farmer's Market, business signage and the city's "business
friendliness" approach to businesses and developers. No action was taken. The
next regular meeting is scheduled for February 23.
Broadband Fiber Network Subcommittee Report
This subcommittee held its first meeting with Eric Lampland of Lookout Point
Communications on January 26. There was a lively discussion from all mem-
bers on issues surrounding a fiber network system in Prior Lake. Early discus-
sions were focused on the vision for the city and fiber's purpose in furthering
economic development goals. The subcommittee decided to meet every other
Thursday from 4:00-6:00 PM (the second meeting will be held on Feb. 16).
Technoloay Villaqe Subcommittee Report
This subcommittee met most recently on February 1. They have been working
hard to finalize a report that will be presented to EDA, which will include a broad
review of business incubator models and a proposed start to one in Prior Lake in
partnership with the owner of the old NOREX building at 15815 Franklin Trail
SE. Public funding will be needed to launch this initiative. A subcommittee re-
port will follow this agenda item (6.D).
ISSUES: EDA funding has already been committed to the Broadband Fiber Network initia-
tive ($53,000 in the existing EDA budget with more needed to fully fund the con-
sultant). The Technology Village Incubator initiative will also need funding
committed to its proposal to start an incubator at the old NOREX building.
FINANCIAL Prior to this agenda item, the EDA will be discussing the status of its 2012
IMPACT: budget and the loss of fund balance reserves due to the discovery of two dedi-
cated revolving loan fund accounts that had been previously transferred into the
EDA fund account.
ALTERNATIVES: 1. Reporting by staff only (presentation on Tech Village Incubator to follow)
RECOMMENDED Discussion only.
MOTION:
t
O .� PRIp
�� � v 4646 Dakota Street SE
Prior Lake. MN 55372
�
ECONOMIC DEVELOPMENT AUTHORITY AGENDA REPORT
MEETING DATE: February 13, 2012
AGENDA #: 6.B
PREPARED BY: Casey McCabe, Community Development Specialist
AGENDA ITEM: TECHNOLOGY VILLAGE REPORT (FROM THE SUBCOMMITTEE)
DISCUSSION: Introduction
At the September 16, 2011 meeting of the Economic Development Authority, the
Technology Village Incubator Subcommittee was appointed in an effort to as-
semble and organize human resources to establish a Technology Business In-
cubator, a key objective of the EDA. Members of the subcommittee included
Terry Hitchcock (Chair), Michelle Choudek (Vice Chair), Bob Morris, John Bry-
ant, Bob Jader, and Dan Rogness (Staf�. Subcommittee members have held
six meetings since formation in September, 2011.
Historv
The EDA provided the subcommittee with direction to begin evaluating options
to implement a technology business facility (incubator) in Prior Lake, including a
report that covers these primary issues:
• Identify models of business incubation (public, private, or combination);
• Outline financial models to support start-up and ongoing operating costs;
• Evaluate opportunities for business incubation in Prior Lake; and
• Identify a preferred plan for Prior Lake.
The subcommittee developed a framework and implementation outline, which
was previously reviewed by the EDA, for the purpose of forming the initial focus
and outlining goals for the proposed Technology Village Incubator. The sub-
committee used the framework and implementation plan as a guide to develop
the attached report and recommendations.
Conclusion
The Technology Village subcommittee recommends proceeding with the plan-
ning and implementation of a Technology Village incubator in Prior lake using
the public/private partnership model. Initially, the subcommittee has proposed
"Technology Village I" to be located in the old NOREX building (15815 Franklin
Trail SE). The concept for a partnership with the owner of this building is shown
at the end of this staff report. A similar concept could be replicated for another
building with available space, such as the Village Commerce Building.
It is seeking recommendations and direction from the EDA. Specific direction is
requested as it relates to incubator configuration, potential Iocations, and availa-
ble funding sources to ensure the subcommittee is "on the right track" and is
providing sufficient material for the EDA to make an informed decision on a po-
tential Prior Lake business incubator. If directed by the EDA, the subcommittee
will begin working on the Technology Village I implementation strategies.
t
ISSUES: Prior to solidifying potential stakeholders, tenants, service providers, and poten-
tial sources of funding, the subcommittee would like to receive comments and
direction from the EDA.
FINANCIAL The subcommittee has developed an estimated operational budget of $160,000
IMPACT: over a three year term to implement Technology Village I in Prior Lake. The
subcommittee has identified the following potential sources of funding to cover
all, or a portion of the operational costs: excess tax increment financing reve-
nues, EDA Revolving Loan Fund, Department of Employment and Economic
Development grants, EDA levy, and private donations.
ALTERNATIVES: 1. Provide direction to the Technology Village Incubator Subcommittee.
RECOMMENDED Alternative 1.
MOTION:
ATTACHMENTS: 1. Concept for a Business Technology Village
2. Technology Village Report and Recommendations
�
CONCEPT FOR A BUSINESS TECHNOLOGY VILLAGE
Prior Lake, Minnesota
DRAFT FOR DISCUSSION ONLY — 2/01112
Conceptual Facility Name: Prior Lake Technology Village I(the "Village")
Building Location: 15815 Franklin Trail SE, Prior Lake, MN
Property Owner: Computer 21 LLC
Building Size: 10,400 Square Feet
Leasable Square Footage: 5,300 Square Feet
Common/Conf. Space: 5,100 Square Feet
Age of Building: 1986
Zoning: General Business, G2
Use of Property: Business Offices
Off-Street Parking Spaces: 48
Private Partner: NOREX, Inc., a Professional IT Service Business
Pubfic Partner: City of Prior Lake Economic Development Authority (EDA)
Conceptual Structure:
• NOREX retains ownership of the property; the EDA enters into a 3-year agreement with NOREX to sup-
port the Village within approximately 2,600 square feet of the building. A specific legal structure will have
to be evaluated as necessary.
• NOREX sets aside approximately'/2 of all leasable building space for the Village, and then agrees to
make that space available to eligible businesses to lease.
• EDA invests an estimated $17,500 in capital improvements to the Village, including atrium remodeling,
computers, fumiture, signage and high-speed fiber.
• EDA contributes an estimated $31,000 annual average business support for services related to technol-
ogy advice, administration, marketing and training.
• EDA provides a rent subsidy to eligible businesses; NOREX agrees to a phased business lease subsidy
partnership with the EDA for a minimum 3-year pilot period (see summary below).
• The dedicated Village space is leased to eligible (incubator) businesses that meet the minimum quaiifica-
tion for a"software-as-a-service" (SaaS) tenant. EDA staff will provide the screening necessary to make
that eligibility determination.
• NOREX and the EDA continue to utilize the current broker to help achieve full Village occupancy within
three years; further discussions on the ability of NOREX to sell the building during the 3-year period must
take place.
• An Advisory Committee would be established composed of equal representation of NOREX and the EDA
to evaluate and advise how this process works through the 3-year pilot period.
Lease Subsidy ProposaL•
• The primary objective is to lease all Village spaces to eliqible Village tenants at one-half the current mar-
ket lease rate during each year of the 3-year period. NOTE: the following market gross lease rates
are only assumptions at this time.
�
.
(
• It is estimated that the Village 3-year lease-up will progress gradually as follows; (a) Year 1 initial leasing
= 1,000 square feet; (b) Year 2 total leasing = 2,200 square feet; and (c) Year 3 total leasing = 2,600
square feet.
• NOREX will agree to lease the Year 1 Village 1,000 square feet to eligible businesses at an initial first-
year lease rate of'/2 of market rate (50% x$30.00 gross annual lease per sq.ft. _$15.00/SF). The EDA
will not further subsidize this lease rate during the first year. In essence, NOREX will absorb one-half of
the market lease rate for the eligible Village tenants.
• NOREX will agree to lease the Year 2 Village 2,200 sauare feet to eligible businesses at a second-year
lease rate of 3 / of market rate (75% of $30.00 gross lease per sq.ft =$22.50). The EDA will subsidize the
lease rate during the second year by contributing to NOREX 25% of the market lease rate for the eligible
Village tenants. In essence, NOREX will absorb one-fourth of the market lease rate for Village tenants.
• NOREX will agree to lease the Year 3 Village 2,600 sauare feet to eligible businesses at a third-year
lease rate of 90% of the market rate (90% of $30.00 gross lease per sq.ft. _$27.00). The EDA will sub-
sidize the lease rate during the third year by contributing to NOREX 40% of the market lease rate for the
eligible Village tenants. In essence, NOREX will absorb 10% of the market lease rate for Village tenants.
Summary of EDA Support:
• EDA estimated initial support to building improvements = $ 17,500
• EDA estimated annual support to eligible busines�es = $ 22,500
• EDA estimated lease support during Year 1 = $ 0
• EDA estimated lease/business support during Year 2 = $ 50,000
• EDA estimated lease/business support during Year 3 = $ 70,000
• TOTAL ESTIMATED EDA FINANCIAL CONTRIBUTION = $160,000
Summar� of NOREX Support:
• NOREX estimated lease contribution during Year 1 = $ 15,000
• NOREX estimated lease contribution during Year 2 = $ 16,500
• NOREX estimated lease contribution during Year 3 = $ 7,800
• TOTAL ESTIMATED NOREX CONTRIBUTION = $ 39,300
• NOREX estimated lease revenue during Year 1 = $ 15,000
• NOREX estimated lease revenue during Year 2 = $ 49,500
• NOREX estimated lease revenue during Year 3 = $ 70,200
• TOTAL ESTIMATED NOREX REVENUE _ $134,700
NOTE: Estimated revenue does not include the other one-half of total building space that is not dedicated to
the Village tenants:
• DISCLAIMER: This information is provided by city staff as a starting point for further discussions
with NOREX. Approval of the Business Technology Village and any potential funding amounts will be
at the full discretion of the City of Prior Lake Economic Development Authority and NOREX, Inc.
a
.
PRIOR LAKE TECHNOLOGY VILLAGE 1 February 1, 2012
DRAFT FINANCIA! PARTICIPATION, CITY OF PRIOR LAKE
Participation Ann�al Cost Comments
1. Annual Rent Subsidy $0 Assume NOREX full subsidy
2. Remodeling of Atrium Space $5,000 Conference/meeting space
3. Computers/Furniture $8,000 For Atrium area
4. New Exterior Signage $2,000 Added signage for "name"
5. Fiber Connection $2,500 Estimated (need verification)
6. Voice/Data/Video Service $2,50Q For Atrium space
7. Marketing $5,000 Advertisements
8. Training for Businesses $2,500 Support to new businesses
9. Technology Advisor $12,500 Contracted service for businesses
10. Administration $0 Dan/Casey staff in-kind (15%)
Total Cost Estimate $40,000
Total Revenue Estimate $40,000 Source??
1. Annual Rent Subsidy $16,500 Assume 2,200 SF leased
2. Voice/Data/Video Service $3,500 For Atrium space
3. Marketing $2,500 Advertisements
4. Technology Advisor $12,500 Contracted service for businesses
5. Administration $15,000 Staff in-kind + contracted service
Total Cost Estimate $50,000
Total Revenue Estimate $50,000 Source??
1. Annual Rent Subsidy $31,000 Assume 2,600 SF leased
2. Voice/Data/Video Service $4,OQ0 For Atrium space
3. Marketing $5,000 Advertisements
4. Technology Advisor $10,000 Contracted service for businesses
5. Administration $20,000 Staff in + contracted service
Total Cost Estimate $70,000
Total Revenue Estimate $70,000 Source??
3-Year Total Cost Estimate $160,000
3-Year Total Est. Revenue $160,000 Sources??
Other Potential Revenue $0
;
t =
CITY OF PRIOR LAKE, MINNESOTA
TECHNOLOGY VILLAGE REPORT AND RECOMMENDATIONS
SUBMITTED BY:
TECHNOLOGY VILLAGE SUBCOMMITTEE
TERRY HITCHCOCK (CHAIR�
MICHELLE CHOUDEK (VICE CHAIlt�
BoB Moxius
JOHN BRYANT
BOB JADER
DAN ROGNESS (STAFF�
CASEY MCCABE (STAFF�
SUBMITTED TO:
CrrY oF Px�oR L AKF
ECONOMIC DEVELOPMENT AUTHORTTY
FEBRU�xY,2012
. �
TABLE OF CONTENTS
Overview Page 2
Background Page 2
Technology Village Subcommittee History Page 3
Phase I— Gather Information and Data.
Community Profile Page 5
Community Support Page 7
Review of Existing Regional and National Incubator Models Page 8
Phase II — Preliminary Planning and Partnerships
Determine Incubator Focus Page 8
Determine Incubator Configuration Page 9
Eligibility Requirements Page 11
Business Plan Outline Page 11
Identify and Compile a List of Potential Stakeholders and Service Providers Page 12
Evaluate the Right Real Estate Page 12
Examine Organizational Issues with Preferred Incubator Focus and Configuration Paga 13
Exami.ne Educational Partnership Opporiunities Page 13
Examine SMSC Partnership Opportunities Page 13
Examine SBDC or Financial Assistance Organization Partnership Opportunities Page 13
Financing Opportunities and Options Page 13
Phase III — Proposal and Board Recommendations
Report Proposal to Board Page 16
Board Resolution of Approval Page 16
Phase IV — Implementation Strategies
Organizational Structure Page 16
Finalize Business Plan Page 16
Due Diligence Checklist Page 16
2030 Vision and Strategic Plan Page 16
Recommendations Page 17
Requested EDA Action / Direction Page 18
Resources Page 19
Exhibits
Technology Village Framework and Implementation Plan Page 20
PL Technology Village 1
Repod and Recommendations
Overview
This report was drafted by the City of Prior Lake Technology Village Subcommittee (hereinafter
referred to as "subcommittee"). The subcommittee's purpose is to evaluate options to implement a
technology business incubator in the City of Prior Lake and provide an informational report to the City's
Economic Development Authority.
The intent of this initial report is to identify models of business incubation, outline fmancial options to
support start-up and ongoing operational costs, evaluate opportunities for business incubation in Prior
Lake, and identify a preferred plar� for the City of Prior Lake.
The City of Prior Lake has become a corporate member of the National Business Incubator Association
(NBIA) in an effort to provide the EDA, Technology Village subcommittee, and city staff with up to
date practical information gleaned from existing business incubators throughout the nation. Data and
information for this study were gathered from multiple sources; including NBIA, published NBIA
articles, government data sites, previous City of Prior Lake studies, and published business incubator
studies and articles completed by other entities.
� Background
The National Business Incubator Association (NBIA) defines business incubation as a business support
process that accelerates the successful development of start-up and fledgling companies by providi.ng
entrepreneurs with an array of targeted resources and services. These services are usually developed or
orchestrated by incubator management and offered both in the business incubator and through its
network of contacts. A business incubator's main goal is to produce successful firms that will leave the
program financially viable and freestanding. These incubator graduates have the potential to create jobs,
revitalize neighborhoods, commercialize new technologies, and strengthen local and national
economies.
Critical to the definition of an incubator is the provision of management guidance, technical assistance
and consulting tailored to young growing companies. Incubators usually also provide clients access to
appropriate rental space and flexible leases, shared basic business services and equipment, technology
support services, and assistance in obtaining the financing necessary for company growth.
NBIA estimates around 7,000 business incubators exist worldwide, with an estimated 1,400 incubators
in North America. The incubation model has been adapted to meet a variety of needs, from fostering
commercialization of university technologies to increasing employtnent in economically distressed
communities to serving as an investment vehicle. According to Business Incubation Works, business
incubators reduce the risk of small business failures. Historically, NBIA member incubators have
reported that 87 percent of all firms that have graduated from their incubators are still in business.
There are many advantages to membership in an incubator program in addition to the shared overhead
costs and below market rental rates. Incubator managers, staff inembers, consultants and service
providers can often provide insightful advice and/or information on a broad spectrum of business issues, ,
from marketing to business expansion financing. Also, the presence of fellow entrepreneurs has been
cited as a key element in their success by many small business owners that have launched successful
ventures from incubators. Incubators promote the sharing of information on business related subjects
and help establish valuable networks of communication and business contacts.
PL Technology Village 2
Report and Recommendations
� ,
Technologv Villa�e Subcommittee Historv
At the September 16, 2011 meeting of the Economic Development Authority, the Technology Business
Incubator Subcommittee was appointed in an effort to assemble and organize human resources to
establish a Technology Business Incubator, a key objective of the EDA. Members of the subcommittee
included Terry Hitchcock (Chair), Michelle Choudek (Vice Chair), Bob Morris, John Bryant, Bob Jader,
and Dan Rogness (Staf fl.
The EDA provided the subcommittee with direction to begin evaluating options to implement a
technology business facility (incubator) in Prior Lake, including a report that covers these primary
issues:
• Identify models of business incubation (public, private, or combination);
• Outline financial models to support start-up and ongoing opera.tional costs;
• Evaluate opportunities for business incubation in Prior Lake; and
• Identify a preferred plan for Prior Lake.
The subcommittee held monthly meetings to form the initial focus and outline goals for the proposed
Prior Lake business incubator; referred to in this report as Technology Village. The focus and goals
identified by the subcommittee included:
• Create a place for entrepreneurial and small business growth.
• Once a Technology Village client has established a solid foundation and "graduated" from
Technology Village, it is our hope that they will choose to remain in the City of Prior Lake on a
pad ready site made available in the community. In the event a business chooses not to remain in
Prior Lake, every effort will be made to help the business find a home in Scott County.
• Technology Village should be the precursor for the future of business and economic
development for the City of Prior Lake aligned with the 2030 Vision and Strategic Plan.
• Technology Village should be a fast-track initiative where start-ups are provided with an
environment that consists of all the necessary resources they need to evolve and grow from a
start-up to a ripened business.
• Technology Village should provide qualified incubator clients with the necessary infrastructure
support, academic research assistance, technology and prototype development support, and most
importantly assistance in obtaining funding through business consulting assista.nce and angel
networks.
• Technology Village, in the true sense of its definition as a technology incubator, should offer
promising and qualified start-up companies access to support services for assistance with
business plans, marketing plans, and commercialization plans while providing additional
opportunities to exhibit at technology trade shows, conferences, and venture capital showcases.
• The subcommittee understands Technology Village will require investments, some of which will
be fmancial. It is the intent of the subcommittee to invest in a fashion which will maxi.mize the
effectiveness of Technology Village, in terms of businesses served, while limiting the public
investment to the amount absolutely necessary to accomplish our objectives.
PL Technology Village 3
Report and Recommendations
With the initial program goals and focus identified, the subcommittee developed the Technology Village
mission statement.
Mission Statement - The Prior Lake Technology Village is dedicated to providing a
diverse sustainable environment as an incubator in which new and emerging companies
can develop and achieve, with the end result being profitable business, job crearion,
capital generation, economic diversity, and a positive impact in Prior Lake and the Scott
County communities.
With the understanding that many studies indicate that one key advantage of a business incubator is that
the concept works in communities of all shapes, sizes, demographic segments, and industries, the
subcommittee determined an initial feasibility study was not necessary. In lieu of hiring a private
consultant to develop an initial feasibility study to determine the viability of a business incubator in the
community, the subcommittee chose to draft the Technology Village Fraxnework and Implementarion
Plan (attached as Exhibit A). The purpose of this framework was to provide a guideline for the
subcommittee to work from to gather sufficient information to property respond to the tasks outlined by
the Economic Development Authority.
The Framework and Implementation Plan was formed following research into best practice methods
from regional and national incubator programs; the plan was divided into four general phases:
Phase I— Gather Information and Data: This phase will compile community profile information such as
population data, per capita income, education levels, major business employment sectors, changes in
employment levels, and information related to entrepreneurial activity. Phase I will also evaluate
existing regional and national incubator models and determine which communities or organizations may
be valuable sources of information as this process continues.
Phase II — Preliminary Planning and Partnerships: Following the informational gathering phase, the
Technology Village subcommittee will evaluate multiple types of incubators to determine the
recommended focus (manufacturing, mixed-use, technology, service, other). Phase II involves research
into the possible incubator configurations; i.e. public/private partnership, public leasing and sub-leasing
of incubator space, public purchase and renovation of an existing building, public construction of an
incubator facility, virtual incubator, and private/for-profit incubator.
The preliminary business plan will be developed during Phase II as well as compiling a list of potential
stakeholders and service providers. If a bricks and mortar building is desired for the incubator program,
the subcommittee will begin to evaluate real estate options as it relates to site performance, cost
efficiency and site amenities.
Phase II will � also examine the organizational structure of the preferred incubator focus and
configuration, as well as the City of Prior Lake's role with staffing and operational support related to
administration, information technology, shipping and receiving, etc. In addition, educational, SMSC,
financing, and other partnership opportunities will be exarnined.
Phase III — Proposal and Board Recommendation: After the information detailed in the Framework and
Implementation Plan has been reviewed, the Technology Village subcommittee will complete a report
detailing its research, analysis, and recommendations to be presented to the City of Prior Lake Economic
Development Authority. .
PL Technology Villagc 4
Report and Recommendations
1 {
Phase IV — Implementation Strategies: Provided the EDA approves the Technology Village concept and
authorizes the subcommittee to continue its research, Phase IV will establish the organizational
structure, including potential members of the Board of Directors. Phase IV will also finalize the
business plan, esta.blish a marketing plan, estimate profits and expenses, identify initial clients, and
compile an inventory of local service providers who will be available to provide free or discounted legal,
accounting, financial, maxketing, management, etc. services to incubator clients.
Phase I— Gather Information and Data
Communit�Profile
The City of Prior Lake covers approxi.mately 18 square miles and is bisected from northeast to
southwest by Upper and Lower Prior La.ke. County Road 21 skirts between Upper Prior Lake and Lower
Prior Lake and is the only connection between the eastern and western portions of the City from County
Road 42 on the north to Spring Lake Road on the south (approximately five miles).
The land use in Prior Lake is predominately residential. According to the City's 2030 Comprehensive
Land Use Plan, as of 2005, 85% of the developed land is residential (3,628 acres when excluding
agricultural and vacant land, lakes and ponds, right-of-ways, SMSC land, and parks and recreation).
Public/semi-public uses occupied 9.3% of the developed land (339 acres), commercial uses occupied
3.5% (126 acres), and industrial uses occupied 2.2% (80 acres).
Papulation Data
Population data. from the U.S. Census Bureau indicates Prior Lake is a growing community with a 2010
population of 22,796, which represents a 43.2% increase over the 2000 population. The population
growth in the State of Minnesota was 7.8% over the same time period.
The U.S. Census information shows Prior Lake's population is younger than the Minnesota average with
35.9% of its population under the age of 18 years, compared to a State of Minnesota. average of 30.9%
under the age of 18 years. Prior Lake also has a lower percentage of residents over the age of 65 years,
with 9.3% of its residents over the age of 65 compared to a State of Minnesota average of 12.9%.
Maxfield Research, Inc. has projected that the City of Prior Lake is expected to add 6,000 people and
2,800 households during this decade.
Per Canita Income
The 2010 U.S. Census identifies Prior Lake's Median Household Income (MHI) as$89,428, which is
$32,421 higher than the State of Minnesota MHI. Prior Lake has only 2.7% of its residents living in
poverly compared to 10.0% in the State of Minnesota.
The median value of owner-occupied housing units in Prior Lake of $297,700 is $90,700 greater than
the State of Minnesota median value and the homeownership rate of 89.7% in Prior Lake is 14.8%
higher than the State of Minnesota, homeownership rate.
Education
According to the U.S. Census Bureau, Prior Lake has a very high percentage of High School graduates
(97.1%) and almost 40% of its residents over the age of 25 years have received a Bachelor's Degree or
higher; compared to 31.2% in the State of Minnesota. and 27.5% nationally.
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Major Business Employxnent Sectors
According to the U.S. Census Bureau, Prior Lake has 714 total business establishments. Below is a
table detailing the number of establishments based on industry code description and the number of
establishments by employment size.
Paid employees for pay period including March 12, 2009: 8,285
First-quarter payroll ($1000): $59,023
Annual payroll (in $1,000): $259,153
Number of Establishments by Employment-Size Class
Industry Code Total 10- 20- 50- 100- 250- 500- 1000
Description Establishments 1-4 5-9 19 49 99 249 499 999 +
Forestry, fishing, hunting, 1 1 0 0 0 0 0 0 0 0
and Agriculture Support
Mining, quarrying, and oil 1 0 1 0 0 0 0 0 0 0
and gas extraction
Construction 152 120 15 9 7 0 1 0 0 0
Manufacturing 26 15 6 4 1 0 0 0 0 0
Wholesale trade 38 32 3 2 1 0 0 0 0 0
Retail trade 60 34 15 8 2 1 0 0 0 0
Transportation and 26 18 2 1 5 0 0 0 0 0
warehousing
Information 9 6 2 0 1 0 0 0 0 0
Finance and insurance 44 37 2 4 1 0 0 0 0 0
Rea1 estate and rental and 33 30 1 1 0 1 0 0 0 0
leasing
Professional, scientific, and 122 102 12 3 3 2 0 0 0 0
technical services
Management of companies g $ 1 0 0 1 1 0 0 0
and enterprises
Administrative and Support
and Waste Management and 46 30 10 4 1 1 0 0 0 0
Remediation Services
Educational services 10 9 0 0 1 0 0 0 0 0
Health care and 53 26 8 11 8 0 0 0 0 0
social assistance
Arts, entertainment, and 14 7 1 2 1 2 0 0 0 1
reereation
Accommodation and food 21 2 5 5 8 0 0 0 Q 1
services
Other services (except A9 30 8 5 4 2 0 0 0 0
public administration)
Industries not classified 1 1 0 0 0 0 0 0 0 0
Total for all sectors 714 505 92 59 44 10 2 0 0 2
Source: U.S. Census Bureau
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Following are the eleven major/leading employers within the City of Prior Lake as identified in the
Preliminary Official Statement, General Obligation Bonds, Series 2011B:
Employer Produc�/Service No. of Employees
Mystic Lake Casino Entertainment 3,800
ISD No. 719, PLS Area Schools Public Education 740
Village Market Grocery Stoze 107
City of Priar Lake City Government 89
Edina Realty Real Estate 64
Phillips & TemroB.M. Products Noise Abatement Products 50
NOREX Corporation Computer Sales 49
U.S. Postal Service Government Mail Service 45
Integra Telecom Communications 44
Prior Lake State Bank Banking/Financial Services 41
Keyland Homes Millwork Company 30
Number of employees includes full-time, part-time and seasonal employees.
Changes in Emplokrrient Levels
According ta the employment growth trend research completed by Maxfield Research, Inc., Prior Lake's
employment more than doubled, increasing by 166% between 1990 and 2000; however, the past decade
showed a loss of -372 employed persons (-4.7%). Over this same timeframe the Twin Cities Metro Area
showed a loss of -5.4% of employed persons. Projections for the current decade show employment
increasing by 2,300, or +30.3% in the City of Prior Lake and increasing by 19.7% in the Twin Cities
Metro Area. M�field Research, Inc. did indicate that the projections for the current decade may be
somewhat overstated given the current sluggish economy and longer timeframe to recover.
Communitv Support
The City of Prior Lake recently contracted with Decision Resources to complete a I35-question survey
which was administered to 400 City of Prior Lake residents by telephone. The intent of the survey was
to provide community feedback on existing services and provide a better sense of the perspectives of
City of Prior Lake residents. With the sample size used, the results of the survey are projectable to the
entire population at a plus or minus 5% confidence level. The survey covered a wide variety of city
services and included the following question related to a business incubator:
"A business incubator provides support and mentoring to small businesses to help the business during
their start-up period. Typically, small businesses occupy one building to share services, such as
telephone and internet service at a reduced rental rate. After a set amount of time, the business would
leave the office space, but hopefully remain in the city providing jobs for the community. The City of
prior Lake is considering supporting business incubator. Would you favor or oppose the City supporting
business incubators? Do you feel strongly that way?"
The survey results indicated the majority of Prior Lake residents are in favor of City support of a
business incubator; survey results were as follows: strongly agree 24%, agree 48%, disagree 9%,
strongly disagree 5%, don't know/refused 15%.
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Review Existing Regional and National Incubator Models
The subcommittee has compiled a list of list of existing regional and national incubator models to
determine which communities or organizations may be valuable sources of information as this process
continues. At this point the subcommittee has identified ten existing business incubators that appear to
be good sources of information as they have a similar focus and provide many of the same services that
are desired for Technology Village.
Phase II- Preliminarv Planning and Partnerships
Determine Incubator Focus
Incubators vary in the way they deliver their services, in their organizational structure, and in the types
of clients they serve. There are many examples of incubator programs throughout the nation with a
specific focus, such as serving a specific minority population, kitchen/food, electronics, eBusiness, arts,
fashion, agri-business, energy/environment, medicaUhealthcare, bio-technology, etc. For the purposes
of the subcommittee's research, the members chose to focus on the strengths and challenges of the four
main North American incubator focuses, which according to 2006 State of the Business Incubation
Industry, are mixed-use, followed by technology, service/professional, and manufacturing.
Mixed-Use - A mixed-use incubator (also called general purpose incubator) is a business incubation
program that fosters the growth of all kinds of companies; the businesses in a mixed-use incubator are
not required to fit into any specialized niche. Companies in mixed-use incubators may include service,
manufacturing, technology, and other types of firms.
Technology - A technology incubator is a program that fosters the growth of companies involved in
emerging technologies such as soflware, biotechnology, robotics, or instrumentation.
Service/Professional - A service/professional incubation program fosters the development of
entrepreneurial firms in the service sector. Firrns may range from landscapers, graphic designers, and
accountants to internet-based companies and Web development firms. A service/professional incubation
program may target a specific segment of the service industry or a range of service-oriented firms.
Manufacturing - A manufacturing incubation program is designed to assist new enterprises, primarily
engaged in the manufacturing sector. Because clients typically require manufacturing�space in addition
to office space, manufacturing incubators tend to occupy more square footage than do other types of
incubators.
After evaluating multiple examples of industry focus for Technology Village, the subcommittee's
recommendation is to focus on technology related businesses; ideally attracting and developing software
as a service (SaaS) and telemedicine clients. At this point it is the belief of the subcommittee that
facilities are not currently available to operate a service or manufacturing incubator, although, should an
opportunity axise in the future, the subcommittee would invite further discussions about expanding the
program. The subcommittee also discussed a mixed-use incubator facility but it was determined that the
incubator clients should be a complimentary use to each other to fully capture the business incubator �
concept, a11ow clients the opporha�iity to share information on business related subjects, and best utilize
available resources. For these reasons, the subcommittee determined a technology focus would provide
the greatest opportunity to impact the community and assist with job creation.
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Determine Incubator Confi ation
The subcommittee evaluated many possible configurations to implement the proposed incubator
program, such as a public/private partnership, public leasing and sub-leasing of incubator space,
building purchase, renovation and leasing of incubator space, new building construction, virtual
incubator, and private/for-profit. The subcommittee's evaluation of each incubator configuration
included financial obligations, non-monetary opportunities for public assistance, legal requirements,
incubator management structure, staffing requirements, and the City of Prior Lake's role in program
implementation.
Public/Private Partnership — The advantages of a public/private partnership are shared obligations and
costs. Both parties would be responsible for certain functions of the business incubator and both parties
would have an important stake in the success of the program. In this case the City would likely partner
with a private property owner who would provide a physical location for the incubator. The private
party would provide a discounted rental rate to incubator clients; possibly receiving a minor rental
subsidy from the City of Prior Lake. The city would oversee the program and have the primary
leadership role in the programs implementation. The advanta.ge to the private partner is the opportunity
to lease vacant or underutilized space. The public advantage of this configuration is it will potentially
limit the financial responsibilities of the City while maintaining program control.
The challenges of the publiclprivate partnership include staffing of the facility, determining each party's
role in the incubator program, no public control over the potential sale of the facility, and the legal
structure and necessary partnership agreements. As the subcommittee's research continues, the benefits
and private cost savings of this approach will need to be measured against the level of public investment,
if any, the city wishes to make in a private property.
Public Leasing and Sub-Leasing Incubator Space — This scenario would involve the City of Prior Lake
leasing space at or below market rental rates in one or several properties in the community and then
subleasing that space to incubator tenants depending on their needs. Advantages to this plan would be
the City of Prior Lake's full control over the management and implementation of the incubator program.
This option may secure space in the area, but it puts the City of Prior Lake in the position of carrying a
lease obligation. Public sub-leasing of incubator space would be less expensive than purchasing or
constructing a new facility; however, the financial obligation on behalf of the City would be on-going
and annual funding would need to be obligated with this model.
Building Purchase, Renovation, and Leasing of Incubator Space — Purchase and renovation gives the
City of Prior Lake ownership of a building for incubator clients and perhaps market lease rate tenants.
Next to new building construction, the purchase and renovation is the second most expensive option.
The upfront costs would be much greater than the public/private partnership or sub-leasing options;
however, unlike the leasing options, the City can collect revenue from the leased space and conduct
analysis to determine if and when the property will cash flow. There is a potential in the future that this
model would become self-funded through rental revenues. As a considerably more expensive option,
the City would need to examine potential financing plans to determine the fiscal viability of purchasing
and renovating a building.
New Building Construction - The appeal of new construction is that the building can be designed with
the incubator concept in mind, making the facility efficient for its intended purpose. Constructing a
building entirely for a business incubator may be the ideal option but it is also by far the most expensive
option. As was the case with the purchase and renovation option the CiTy can collect revenue from the
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leased space and determine if and when the property will cash flow and generate sufficient revenue to
fund the Technology Village program. Before this option is pursued, the City will need to examine
potential financing plans to determine the fiscal viability of constructing a building.
Virtual Incubator — The virtual incubator approach would involve the City of Prior Lake maintaining a
network of incubator needs and services. Under this scenario, Prior Lake would maintain an active
portfolio of available rentable spaces in the community to meet the needs of a wide variety of new
companies. The City would maintain an active list of goods and services available to incubator clients,
such as accounting, legal, and financial services. Prior Lake's main function under this scenario would
be to manage the portfolio of incubator services and act as an honest broker for service providers and
incubator clients. The City could facilitate the lease space or service transactions or become the legal
management entity of the virtual incubator. The virtual incubator is a low cost alternative as far as real
estate obligations, but this is perhaps the most labor intensive option as it requires a large amount of
active tenant and lessor management, superior lessor relations, and a high degree of tenant/City
interaction. Because a bricks and mortar building is not required, a virtual incubator program would be
able to serve a wide variety of clients; however, because of the anticipated labor demand a full-time
position would likely need to be created to manage this program.
Private/For-Profit — For-profit business incubators are privately funded and managed, although they
generally offer the same benefits of shared services and assistance. Under this scenario a private entity
would own and operate the incubator as a for-profit business. The primary advantage of this alternative
would be location of an incubator program in the community with little or no financial obligations
required of the City of Prior Lake. The major challenges with the private/for-profit model are the -
difficulty of attracting a private investor to develop the business incubator program in the community
and the City of Prior Lake would give up all control over how the incubator plan was being implemented
and would have no say in which companies were accepted into the incubator program. For-profit
incubators generally seek an equity stake in a company they assist and tend to be more interested in fast-
growth high-tech companies; for-profit incubators may not be interested in assisting smaller start-up
companies that do not have the opportunity to grow as quickly or generate an enormous profit.
During the late 1990's NBIA estimated that nearly 30% of all incubation programs were for-profit
ventures; however, in the wake of the dot-com bust, many of those programs closed. In NBIA's 2002
State of the Business Incubation survey, only 16% of responding incubators were for-profit programs.
By the 2006 State of the Business Incubation survey, just 4% of respondents were for-profit.
According to 2006 State of the Business Incubation Industyy, North American business incubators aze
sponsored by:
• 31 percent are sponsored by economic development organizations.
• 21 percent axe sponsored by government entities.
• 20 percent are sponsored by academic institutions.
• 8 percent are sponsored by other types of organizations.
• 8 percent of business incubators are "hybrids" with more than one sponsor.
• 4 percent are sponsored by for-profit entities.
• 8 percent of incubators have no sponsor or host organization.
After reviewing each of these configuration options, the subcommittee recommends a public/private
partnership; opposed to an entirely public or entirely private configuration. This configuration will
provide opportunities for public assistance while potentially limiting the financial responsibilities of the
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Report and Recommendations
City of Prior Lake. This method will need to be further evaluated by the subcommittee to determine
what public support options are available, financial and otherwise, and what will be required of the city
and the private party to ensure program success.
Eli i�ility Requirements
The subcommittee felt it was important to identify eligibility or screening requirements to determine
which business start-ups fit the preferred focus of the incubator plan and to help identify which
companies had a strong opportunity to succeed. The following eligibility requirements were drafted
after review of best practices of existing incubator organizations.
� Must be in target industry as identified by the Technology Village Board of Directors.
• Must be in the early stages of business development (first three years).
• Must be a for-profit business with growth potential.
� Must demonstrate strong market for products and services.
• Must have potential for positive economic impact on the community through:
o A technology, product, or service deemed to have a high marketplace potential.
o A potential for company growth and the associated creation of high paying jobs within
Prior Lake.
• Must have a product or service that can be commercialized within the time set forth in the lease
agreement.
� Must plan to remain headquartered within the City of Prior Lake or Scott County.
• Must have a written description of the business, a draft business plan in place including a draft
financial forecast.
Business Plan Outline
Provided the EDA recommends proceeding with the Technology Village planning, the subcommittee
will develop an initial business plan that sets out the future strategy and financial development of the
program, including:
• Executive Summary
• Mission and Objectives
• Client Focus
• Organizational Structure / Legal Structure
• Board Composition
• Services and Programs �
o Services for incubator clients
o Programs for entrepreneurial assistance
o Business assistance providers
• Marketing, Public Relations, and Client Recruitrnent
o Marketing and public relations plan
o Client recruitrnent strategy
• Client Application, Selection, and Graduation Process
o Application guidelines
o Selection and screening process
o Sample application
o Graduation policy
• Staffing Plan
o StafFmg structure and job descriptions
o Staff selection and training plan
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• Facility
o Description of the incubator facility
� o Technical requirements
• Budgets
o Operating pro formas for at least two years
Identify and Com�ile a List of Potential Stakeholders and Service Providers
The subcommittee identified the need to establish a list of potential stakeholders and service providers
who should be involved in the process of planning and implementing a business incubator program. For
the purposes of our discussions, a sta.keholder refers to someone or an organization with direct interest
or investment in the business incubator program; key stakeholders would be the City of Prior Lake,
Shakopee Mdewakanton Sioux Community, Prior Lake Chamber of Commerce, educational institutions,
possible private party building ownership, among others. A service provider is a person or organization
who participates in the program by providing assistance with a specific skill or service to incubator
clients at low- or no-cost, such as legal, accounting, marketing, finance, administxation, huxnan
resources, information technology, or other expertise.
In addition to the many local businesses the subcommittee will reach out to, the region has two service
providers who may be able to provide a great deal of assistance, such as the South Metro Service Corps
of Retired Executives (SCORE), which is located in Burnsville, and the Sma11 Business Development
Center (SBDC), who has a satellite office in Apple Valley. Both of these organizations have va.tuable
experience working with entrepreneurs and should be recruited to assist with the planning and
implementation of Technology Village.
Evaluate the Ri�ht Real Estate
Working on the assumption that the City will be looking for an existing facility rather than new
construction, properties will be evaluated based on site performance criteria established by the
subcommittee, such as available parking, easy access to major arterials and highways, a business setting
that will be attractive to prospective tenants, appearance & Iandscaping, architectural character of the
building, and cost efficiency related to any potential building improvements.
It is strongly encouraged that the facility will have common and shared facilities that will not only make
the building more efficient for its tenants but it will promote the sharing of ideas. Ideally the facility
would have conference and meeting space with media projection, lunch/break room, accessible
restrooms, adequate utilities, existing interior signage boards and exterior monument sign, adequate
mechanical and network rooms, and good circulation; additional opportunities would be reception and
secretarial services and a product display area within a common space.
The subcommittee has spent a sma11 amount of time evaluating a few properties within the community
as possible incubator locations. The primary focus to date has been the former NOREX, Inc, building
� located at 15815 Franklin Trail SE, which the subcommittee feels is a potentially strong location for
Technology Village. The subcommittee will evaluate additional properties in the future as the planning
process moves forward and extensive discussions will need to occur with any future private property
owner/partner.
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. ,
Examine Or�anizational Issues with Preferred Incubator Focus and Confi uration
The preferred incubator focus is a technology based public/private partnership whereby the City of Prior
Lake would provide yet to be determined services to assist the Technology Village in a privately owned
facility. Once a facility is identified to house Technology Village, the subcommittee will meet with the
property owners to discuss public and private financial and administrative responsibilities as it relates to
st�ng and operational support, administrative support, technology, telecommunications/broadband,
and on-site services such as shipping and receiving, copy machine, fax machine, etc. The subcommittee
and city stafF will also need to meet with building ownership to determine cost sharing or financial
responsibilities related to annual and on-going maintenance costs such as property taxes, natural gas,
electric, water/sewer, telephone and technology costs, janitorial service, cleaning, trash removal,
grounds maintenance, security, signage, management costs, etc.; although these costs are generally
covered by the property owner and included in the monthly rent payments as Common Area
Maintenance (CAN� costs.
Examine Education Partnershin Onnortunities
City staff has met with a representative from Dakota. County Technical College in Apple Valley to
discuss any cooperative measures that can be taken to involve DCTC or another educational institution
with the proposed incubator program. Members of the subcommittee have also made contact with
representatives from other educational institutions within the Greater Minneapolis / St. Paul region to
gauge interest in participating in this program. The educational partnership discussions are on-going
and will be further evaluated throughout the planning process.
Examine SMSC Partnership Opnortunities
As the largest employer in Scott County, the Shakopee Mdewakanton Sioux Community should be
considered a key stakeholder and participation from the SMSC should be strongly encouraged.
Examine SBDC or Financial Assistance Organization Partnershi� Opportunities
Incubators differ from the U.S. Small Business Administration's Small Business Development Centers
(and similar business support programs) in that they serve only selected clients. SBDCs are required by
law to offer general business assistance to any company that contacts them for help. In addition, SBDCs
work with any small business at any stage of development, not only start-up companies. Many business
incubation programs partner with their local SBDC to create a"one-stop shop" for entrepreneurial
support.
The incubator program would provide additional services that are not commonly offered by the Sma.11
Business Development Centers; however, the local SBDC should be heavily relied upon to ensure the
success of Technology Village clients. The SBDC provides business consulting assistance at no charge
to help business owners develop strategies, attract customers, increase sales and improve profitability.
Financin� Opporhanities and Ontions
Working under the assumption that the City of Prior Lake will need to provide some level of financial
assistance to develop Technology Village, the subcommittee estimated annual operating costs and
identified potential City of Prior Lake investment opportunities using the NOREX building on Franklin
Trail SE as an example.
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The subcommittee estimated the following "initial" financial participation that would need to be made
by the City of Prior Lake over the first three years of operation. Although there are countless
opportunities to expand the scope of services and technology available to Technology Village clients,
the subcommittee chose to focus on the elements of a business incubator that it deemed essential.
Participation Annual Cost Comments
1. Annual Rent Subsidy $0 Assume NOREX full subsidy
2. Remodeling of Atrium Space $5,000 Conference/meeting space
3. Computers/Furniture $8,000 For Atrium area
4. New Exterior Signage $2,000 Added signage for "name"
5. Fiber Connection $2,500 Estimated (need verification)
6. Voice/Data/Video Service $2,500 For Atrium space
7. Marketing $5,000 Advertisements
8. Training for Businesses $2,500 Support to new businesses
9. Technology Advisor $12,500 Contracted service for businesses
10. Administration $0 Dan/Casey staff in-kind (15% hours)
. Total Cost Estimate $40,000
Total Revenue Estimate $40,000 Source?7
1. Annual Rent Subsidy $16,500 Assume 2,200 SF leased
2. Voice/DataNideo Service $3,500 For Atrium s ace
3. Marketing $2,500 Advertisements
4. Technology Advisor $12,500 Contracted service for businesses
5. Administration $15,000 Staff in-kind plus contracted service
Total Cost Estimate $50,000
Total Revenue Estimate $50,000 Source??
1. Annual Rent Subsid $31 000 Assume 2,600 SF leased
2. Voice/Data/Video Service $4,000 For Atrium s ace
3. Marketing $5,000 Advertisements
4. Technology Advisor $10,000 Contracted service for businesses
5. Administration $20,000 Staff in-kind lus contracted service
Total Cost Estimate $70,000
Total Revenue Estimate $70,000 Source?7
3-Year Total Cost Estimate $160,000
3-Year Total Est. Revenue $160,000 Sources??
Other Potential Revenue $0
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The City of Prior Lake has a few financing mechanisms available to provide the necessary funding for
the proposed Technology Village; including:
Excess Tax Increment Financing Revenues — In 1985, the City of Prior Lake approved the use of tax
increment financing to assist in the redevelopment of the downtown area. The TIF district was modified
in 2002 with an estimated 26-year increment generation of nearly $2.4 million. The tax increment
district, with a current excess increment balance of $186,000, is set to decertify on December 31, 2012.
The city has the opportunity to identify eligible uses for the excess tax increment; one eligible use for
funding may be to assist in the establishment of a business incubator within the community.
EDA Revolving Loan Fund — In September, 1998, the City of Prior Lake received a Minnesota.
Investment Fund (MIF) grant in the amount of $75,000 from the State of Minnesota. The grant funds
were then loaned to NBC Products, Inc. at 6.0% interest to assist with a building addition. The loan was
to be repaid to the City of Prior Lake and funds from the repayment were placed in a staxe revolving loan
fund to be used for other eligible "Economic Development" purposes. To date, the NBC Products loan
has generated a total of $87,397 in principal and interest..
In addition to the state revolving loan funds generated from the NBC Products loan, the City applied for
and received a$50,000 Small Cities Development Prograxn (SCDP) grant from the State of Minnesota. to
assist with the development of the EM Products project in 1995. The grant funds were loaned to EM
Products and were repaid to the City of Prior Lake. Funds from the repayment were placed in a federal
revolving loan fund to be used for other eligible "Economic Development" purposes. To da.te, the EM
Products loan has generated a total of $112,546 in principal and interest.
Examples of eligible Economic Development projects would include direct grants/loans to businesses,
commercial rehab assistance, and microenterprise loans. A microenterprise is defined as a commercial
enterprise that has five or fewer employees, one or more of whom owns the enterprise, which may be a
typical Technology Village client.
DEED Grant(s) — There may be an opportunity for public assistance through available grants, such as
the State of Minnesota Department of Employment and Economic Development (DEED) Innovative
Business Development Public Infrastructure (BDPn program. The BDPI program focuses on job
creation and retention through the growth of new innovative businesses and organizations. The program
provides grants to local governmental units on a competitive basis for up for 50 percent of the capital
cost of the public infrastructure necessary to expand or retain jobs. The City of Prior Lake may be able
to utilize BDPI program funds to connect an existing fiber network or improve public infrastructure at a
chosen facility.
EDA Levy — The City of Prior Lake Economic Development Authority has the authority under M.S.
469.107 to levy a ta�t for the benefit of the EDA in an amount not to exceed 0.01813 percent of the
taxable market value. The City of Prior Lake Preliminary Official Statement, General Obligation
Bonds, Series 2011B indicates the City's taxable market value in levy year 2010 was $2,640,986,500.
Using the 2010 taxable market value as an example, the City EDA could levy a tax in an amount not to
exceed $478,810 for the benefit of Technology Village and/or additional EDA priorities.
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Report and Recommendations
Private Donation — In addition to the public financing options outlined above, there is also an
opportunity to securing funding from a local business or businesses that choose to donate to Technology
Village. The subcommittee chose not to explore private business support for the incubator until the
program structure, configuration, and focus were determined and the EDA had an opportunity to review
the subcommittee's progress and provide recommendations and direction.
Phase III — Pronosal and Board Recommendation
Re op rt Proposal to Board
The initial report, fmdings, and recommendations will be presented to the City of Prior Lake Economic
Development Authority on Monday, February 13, 2012.
Board Resolution of A�proval
The subcommittee will accept the comments and direction provided by the Economic Development
Authority on February 13, 2012 and will continue its research of the Technology Village Incubator
concept based on the direction received by the EDA.
Phase IV — Imnlementation Strategies
Provided the EDA authorizes the subcommittee to continue its research of the Technology Village
incubator concept, the subcomxnittee will refine and finalize its initial report as directed by the EDA and
begin working on the Technology Village implementation strategies, including:
Or�anizational Structure .
a. Establish Board of Directors
b. Establish Bylaws
Finalize Business Plan
Due Diligence Checklist
a. Promotional Materials / Marketing Plan
b. Price List
a Initial Client List
d. Projected Balance Sheet / Income Statement
e. Service Provider Inventory — Experts and Resources
i. Lega1, Accounting, Banking/Finance, Marketing, Management, etc.
2030 Vision and Strate�ic Plan
The Technology Village subcommittee feels the establishment of a business incubator in the community
will be a positive step towards the vision for Prior Lake; not as a bedroom community, rather a dynamic
place to live and grow — a new beginning. Technology Village will help achieve the following
Economic Development Goa1s outlined in the 2030 Vision and Strategic Plan;
Goa1: Develop and 'unplement a strategy to expand and diversify the City's business tax base
through current business retention and new business developments.
Goal: Identify and evaluate older commercial, industrial and residential properties for
business development/redevelopment potential. `
Goa1: Develop and implement financing tools, resources and partnerships to facilitate
economic and business development.
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Report and Recommendations
Recommendations
The Technology Village subcommittee recommends:
• Proceeding with the planning and implementation of Technology Village.
• A technology focus for the incubator program; ideally attracting and developing software as a
service (SaaS) and telemedicine clients. However, the program should not focus on a specific
technology industry and should be open to any technology field meeting the eligibility
requirements outlined by the Board of Directors.
• Viewing the incubator program as a pilot program "Technology Village I". The success and
challenges of the pilot will be analyzed to determine if additional incubator facilities can be
utilized to assist in the creation of additional employment opportunities within the community.
Alternatively, what opportunities exist to improve the facility or program if the investment in
Technology Village does not produce the desired results?
• A public/private partnership configuration opposed to an entirely public or entirely private
configuration. This configuration will provide opportunities for public assistance while
potentially limiting the fmancial responsibilities of the City of Prior Lake. This method will
need to be further evaluated to determine what public support options are available and what will
be required of the city to ensure program success.
• Compiling a list of potential stakeholders and contacting each in writing with information about
Technology Village, current status of the planning process, and request for fmancial or
professional assistance.
� Compiling list of potential service providers and contacting each in writing with information
about Technology Village, current status of the planning process, and request for fmancial or
professional assistance.
• Operation of Technology Village as a"true" business incubator. In order for Technology
Village to be successful the program must operate as a"true" business incubator, which means
the clients must have access to technology, including high speed fiber capabilities, the program
must provide training opportunities and new business development assistance programs, such as
assistance with business planning, legal advice, administrative expertise, sales and marketing,
accounting, human resources, information technology, etc.
In order to ensure success of Technology Village the city must offer more than a low cost office
space. The success or failure of the program will hinge on the available financial resources, the
City of Prior Lake's commitrnent to the p�ogram, and the level of involvement from the
established network of stakeholders and service providers.
• Providing adequa.te staffing and operational support. Ideally Technology Village would have
dedicated stafF available to assist with any questions from the incubator clients; however, the
subcommittee realizes full-time staffing of the incubator may be unrealistic at the start due to
financial constraints.
PL Technology Village 17
Report and Recommendations
• Once the organizational structure and Board of Directors has been established, the subcommittee
recommends regular monthly meetings with each of the clients to gauge their individual
successes and respond to questions. It may be beneficial to assign one member from the Board
of Directors or a member from one of the service provider organizations to act as an advisor to
each business based on their individual expertise.
• Exploring all available funding sources for Technology Village clients. A"true" business
incubator should provide entrepreneurs with access to early-sta.ge capital. A strong financial
network must be developed to provide multiple financing opportunities to Technology Village
clients. The financial network should include a blending of private fmancial institutions, SBDC,
U.S. Sma11 Business Administration (SBA) loan programs (Prior Lake State Bank — participating
lender), Angel Investors, and the City of Prior Lake, among others.
Reauested EDA Action / Direction �
The Technology Village subcommittee would welcome comments and further discussion with the City
of Prior Lake Economic Development Authority at their February 13, 2012 meeting.
Specific direction is requested from the EDA as it relates to incubator configuration, potential locations,
funding sources, and the next steps to ensure the subcommittee is "on the right track" and is providing
sufficient material for the EDA to make an informed decision on a potential Prior Lake business
incubator.
PL Technology Village 18
Repod and Recommendations
Resources
2006 State of the Business Incubation Industry, Author: Linda Knopp, Publisher: NBIA Publications
Business Incubation Works, Author: University of Michigan, NBIA, Southern Technology Council and
Ohio University, Publisher: NBIA Publications
U.S. Census Bureau, State & County QuickFacts, www.census.�ov
NBIA — National Business Incubator Association, www.nbia.or�
Incubating Success: Incubation Best Practices that Lead to Successful New Ventures, Authored by
David A. Lewis, Elsie harper-Anderson, and Lawrence A. Molnar, Editor: Linda Knopp, NBIA, 2011
University of Michigan Institute for Research on Labor, Employment, and the Economy
Powell Community Improvement Corporation — Powell Business Incubator, Managed by Historic
Downtown Powell, Inc., Powell, Ohio, http://www.powellcic.org/documents/IncubatorPacket2011.pdf
Business Incubators — the International Experience, Support for new and potential start-up incubators in
the field of Information and Communication Technology (ICT), Irina Nunberger
iDisc, infoDev Incubator Support Center, www.iDisc.net
Reference for Business, Encyclopedia of Business, 2nd Edition, Business Incubators -
Advantages of Incubators,
hrip://www.referenceforbusiness.com/smallBo-Co/Business-Incubators.html
PL Technology Village 19
Report and Rewmmendations
J
Exhibit A .
PRIOR LAKE TECHNOLOGY VILLAGE
FRAMEWORK AND IMPLEMENTATION PLAN
P�oR LA�, MINNESOTA
Revised January 2012
Mission Statement —
The Prior Lake Technology Village is dedicated to providing a diverse sustainable environment as an
incubator in which new and emerging companies can develop and achieve, with the end result being
profitable business, job creation, capital generation, economic diversity and a nositive impact in Prior
Lake and the Scott Countv communities.
Phase I- Gather Information and Data
A. Community Profile
a. Population Data
b. Per Capita Income
c. Education
d. Major Business Employment Sectors
e. Changes in Employment Levels
B. Community Support •
C. Review Existing Regional and National Incubator Models
Phase II - Preliminary Planning and Partnerships
A. Determine Incubator Focus
a. Manufacturing
b. Mixed-Use
c. Technology
d. Service
e. Agri-Business
f. Other
B. Determine Incubator Configuration
a. Public/Private Partnership
i. Public support options
ii. Financial responsibilities and opportunities for public assistance
iii. Legal requirements
b. Public Leasing and Sub-leasing Incubator Space
i. This would involve the City of Prior Lake leasing space in one or several
properties in the community and then subleasing that space to incubator tenants
depending on their needs.
l. Under this scenario the City of Prior Lake would need to determine
whether they or the building owner manages the leased space.
PL Technology Village 2 �
Report and Recommendations
2. This option may secure space in the area, but it puts the City of Prior Lake
in the position of carrying a real estate obligation; however, this would
also eliminate the large capital outlay required to purchase a building.
c. Building Purchase, Renovation, and Leasing of Incubator Space
i. This option gives the City of Prior Lake ownership of a building for incubator
tenants and perhaps market lease rate tenants.
1. Financials would need to be completed to determine the fiscal viability of
purchasing a building as part of the purchase negotiations.
d. New Building Construction
i. The appeal of new construction is that the building can be designed with the
incubator concept in mind, making the facility efficient for the purpose.
1. Financials would need to be completed to determine the fiscal viability of
constructing a building.
e. VirtualIncubator
i. This is a non-building leasing approach where the City of Prior Lake maintains an
active network of incubator needs and services.
1. Under this scenario, Prior Lake would maintain an active portfolio of
available rentable spaces in the community that would satisfy new
company requirements.
2. The City of Prior Lake would maintain an active list of service providers
who incubator companies could retain, such as accounting, legal, and
financial services.
3. The City's main function would be to manage the portfolio of incubator
services and act as an honest broker for service providers and incubator
businesses.
4. The City could facilitate the space or service transactions or become the
legal management entity of the virtual incubator.
a. The virtual incubator is a low cost alternative, but perhaps the most
labor intensive as it requires a large amount of active tenant/lessor
management, superior lessor relations, and a high degree of
tenantlCity interaction.
f. Other Incubator Configuration Options
C. Eligibility Requirements
D. Business Plan Outline
a. Executive Summary
b. Mission and Objectives
c. Client Focus
d. Organizational Structure Legal Structure
e. Board Composition
f. Services and Programs
g. Marketing, Public Relations, and Client Recruitment
h. Client Application, Selection, and Graduation Process
i. Staffmg Plan
j. Facility
k. Budgets
E. Identify and Compile a List of Potentia.l Stakeholders and Service Providers
a. SMSC
b. Educational Partnership
PL Technology Village 21
Report and Recommendations
c. Private Business
i. Legal, Accounting, Marketing, Finance, Administration, HR, IT, etc.
d. SBDC
e. Other
F. Evaluate the RIGHT Real Estate
a. Site Performance Criteria
i. Available parking
ii. Accessibility to highways
iii. Appearance & landscaping
1. Architectural character of the building that is compatible with brand image
of start-up corporations.
iv. Cost efficiency
1. Assuming a purchase or lease of the building what is the cost of improving
the facility on a cost per square foot basis.
b. Common and Shared Facilities
i. Conference/Meeting Space Availability
ii. Provide training equipment such as media projection
iii. Reception & Secretarial
1. At main entry lobby of building with area for seating.
iv. Product Display
1. Common display space to showcase goods and services of tenants.
v. Lunch and Break Rooms
vi. Restrooms per building code along with accessible units
vii. Signage boards
1. Listing of tenants on either a monumental sign on site with or on wall
mounted sign �
viii. Mechanical Space
1. HVAC equipment, telephone, electrical panel, water meter, fire sprinkler
pipes, janitorial closet
2. Network Room
a. Area for server, routers, hubs, Wi-Fi broadcast, internet
connections
a Circulation
i. Corridors, vestibules, stairs
d. Site Amenities
i. Easy and short access to major arterials and highways
ii. A business setting that will be attractive to prospective tenants
iii. Compatible building and land uses surrounding the Incubator
iv. Parking stall counts sufficient for the tenants and per local zoning ordinances
v. Utilities to handle loads
vi. Current lease agreement sta.tus
vii. Improvements needed or desired
G. Examine Organizational Issues with Preferred Incubator Focus and Configuration
a. Staffing and Operational Support
i. Administrative Support, IT, HR, Marketing, Mentoring, Shipping & Receiving,
TelecommunicationsBroadband, Copy Machine, Fax, etc.
b. Evaluate City of Prior Lake's Financial Support and Administration Role
c. On-going Maintenance and Other Cost Responsibility
PL Technology Village 22
Report and Recommendations
ii. Property Tax
iii. Gas
iv. Electric
v. Water/Sewer
vi. Telephone/Technology
vii. Janitorial, Cleaning, Trash Removal �
viii. Grounds Maintenance — Snow and Lawn/Landscaping
ix. Management Costs
x. Security
xi. Signage
H. Examine Education Partnership Opportunities
I. Examine SMSC Partnership Opportunities
J. Examine SBDC or Financial Assistance Organization Partnership Opportunities
K. Financing Opportunities and Options
a. Privately Financed
b. Public Financial Participation
c. Potential Grant or Other Funding Availability
Phase III — Proposal and Board Recommendation
A. Report Proposal to Board
B. Board Resolution of Approval
Phase IV — Implementation Strategies
B. Organizational Structure
a. Establish Board of Directors
b. Establish Bylaws
C. Finalize Business Plan
D. Due Diligence Checklist
f. Promotional Materials / Marketing Plan
g. Price List
h. Initial Client List
i. Projected Balance Sheet / Income Statement
j. Service Provider Inventory — Experts and Resources
i. Legal, Accounting, Banking/Finance, Marketing, Management, etc.
PL Technology Village 2 3
Report and Recommendations
O � PIZIp
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v "' 4646 Dakota Street SE
Prior Lake. MN 55372
�rNNE5
ECONOMIC DEVELOPMENT AUTHORITY AGENDA REPORT
MEETING DATE: February 13, 2012
AGENDA #: 6.0
PREPARED BY: Dan Rogness, Director of Community & Economic Development
AGENDA ITEM: VENTURE FAIR UPDATE
DISCUSSION: Introduction
On October 25, 2011, Dan Rogness and Suesan Lea Pace met with Steve Mer-
cil of RAIN Source Capital. The purpose of this meeting was to explore Steve's
involvement with a Venture Fair event in Prior Lake, possibly to be held in Feb-
ruary or March of 2012. This half-day or full-day event would conclude with a
dinner for prospective investors to a local community angel fund.
Hi StON
Attorney Pace has advised the EDA that it cannot be a direct investor to the pro-
posed community angel fund in Prior Lake. However, it can fund a local busi-
ness event that would include an opportunity for investors to meet and discuss
RAIN Source Capital. The EDA previously identified a"venture fair" concept that
would include session topics such as entrepreneur seed capital, the investment
process, fundraising strategies and business incubation.
Conclusion
The agenda is being finalized, and a date/location has been set for March 22 at
The Wilds (see attached agenda). Speakers are being confirmed, and a budget
estimate of $10,000 is proposed by staff. Staff is proposing that each registrant
pay $25 with the expectation that this will cover the lunch cost. Staff is estimat-
ing 50 attendees for the afternoon seminar and 25 attending the reception and
dinner for potential angel investors.
ISSUES: Staff is finalizing details of this event once the EDA agrees to the budget alloca-
tion of $10,000.
FINANCIAL The EDA needs to approve a budget allocation for the Venture Fair event in the
IMPACT: amount of $10,000 as proposed by staff in Agenda item 5.A.
ALTERNATIVES: 1. Authorize staff to finalize the Venture Fair Event based on a budget alloca-
tion of $10,000 to be split evenly between the EDA budget and the General
Fund ED budget.
2. Don't authorize the Venture Fair due to budget constraints.
RECOMMENDED Staff recommends Alternative 1.
MOTION:
VENTURE FAIR
Prior Lake, Minnesota
March 22, 2012
Location: The Wilds in Prior Lake
Start Time: 11:30 AM Sign-up
Lunch: 12:00 —1:30 PM (with a featured speaker)
End Time: 4:45 PM
Reception: 5:00 PM (for potential angel investors)
Dinner: 6:00 PM (far potential angel investors)
***********************************
12:00 PM: Lunch with Featured Speaker, Mac Lewis, CEO of FieldSolutions
Track 1 for Entrepreneurs and New Businesses LBob Voss, Dakota County Technical Coilege):
1:30 — 2:30 Why Starting a Business Works in a Bad Economy
2:30 — 3:30 Five Reasons Start-up Businesses Fail, and Five Things to Enhance Business Success
3:30 — 3:45 Break
3:45 — 4:45 The Importance of Business Planning, and Business Plan Writing Made Easy
Track 2 for Entrepreneurs and Angellnvestors (Steve Mercil, RAIN Source Capital):
1:30 — 2:30 What Do Angels Look for in Investment Opportunities, and How to Pitch to Angel Investors
2:30 — 3:30 Private and Public Sources of Capital for Your Business (panel discussian)
3:30 — 3:45 Break
3:45 — 4:45 Is Angel Investing Right for You?
5:00 PM Reception and Dinner for Potential Angel Investors Onlv
(Steve Mercil, RAIN Source Capital)
ry
.
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4646 Dakota Street SE
`�INxESO��' Prior Lake, MN 55372
ECONOMIC DEVELOPMENT AUTHORITY AGENDA REPORT
MEETING DATE: February 13, 2012
AGENDA #: 6.D
PREPARED BY: Jerilyn Erickson, Treasurer
PRESENTED BY: Jerilyn Erickson
AGENDA ITEM: CONSIDER APPROVAL OF A RESOLUTION AUTHORIZING
TERMINATION OF A LEASE WITH OPT10N TO PURCHASE
AGREEMENT, GROUND LEASE AGREEMENT AND AUTHORIZING
EXECUTION OF AN ESCROW AGREEMENT RELATING TO THE
ISSUANCE BY THE CITY OF PRIOR LAKE, MINNESOTA, OF ITS
$9,825,000 GENERAL OBLIGATION CAPITAL IMPROVEMENT PLAN
REFUNDING BONDS, SERIES 2012A
DISCUSSION: Introduction
The purpose of this agenda item is to consider approval of the termination
of a lease with option to purchase agreement, ground lease agreement and
authorizing execution of an escrow agreement relating to the issuance by
the City of Prior Lake of $9,825,000 General Obligation Capital
improvement Plan Refunding Bonds, Series 2012A.
Hi StOry
In 2005, the EDA issued $10M of Public Project Revenue Bonds to finance
the construction of City Hall and Police Station. The City of Prior Lake
entered into a lease agreement for both of the facilities which required an
annual appropriation equal to the amount of the annual debt service
payments.
Current Circumstances
On �ebruary 6, 2012, the Prior Lake City Council approved the issuance
and sale of $9,825,000 General Obligation Capital Improvement Plan
Refunding Bonds, Series 2012A, for purposes of refunding the EDA Public
Project Revenue Bonds, Series 2005C. City taxpayers will realize over
$1.619M in interest savings from this refunding.
Conclusion
The EDA should adopt the resolution to terminate the lease agreement.
FINANCIAL Proceeds from the issuance of the $9,825,000 General Obligation Capital
IMPACT: Improvement Plan Refunding Bonds, Series 2012A will be placed in escrow
to pay off the outstanding principal and interest of the EDA Public Project
Revenue Bonds, Series 2005.
The annual debt service payments of the EDA Public Project Revenue
Bonds, Series 2005 were funded by an annual appropriation from the City
of Prior Lake in conjunction with a lease agreement between the two
entities. Ownership of the facilities will transfer from the EDA to the City of
�
� Prior Lake and will, therefore, negate the necessity for a lease agreement.
ALTERNATIVES: 1. Approve Resolution Authorizing Termination of a Lease with Option
to Purchase Agreement, Ground Lease Agreement, and Authorizing
Execution of an Escrow Agreement Relating to the Issuance by the
City of Prior Lake, Minnesota, of its $9,825,000 General Obligation
Capital Improvement Plan Refunding Bonds, Series 2012A
2. Reject Resolution for a Specific Reason.
RECOMMENDED Alternative 1.
MOTION:
EXTRACT OF MINUTES OF A MEETiNG
OF THE BOARD OF COMMISSIONERS OF THE
ECONOMIC DEVELOPMENT AUTHORITY OF THE
CITY OF PRIOR LAKE, MINNESOTA
HELD: February 13, 2012
Pursuant to due call and notice thereof, a regular meeting of the Board of Commissioners
of the Economic Development Authority of the City of Prior Lake, Scott County, Minnesota,
was duly held at the City Hall on February 13, 2012, at o'clock P.M., for the purpose, in
part, of authorizing termination of docuxnents relating to a refunding.
The following members were present:
and the following were absent: �
Member introduced the following resolution and moved its adoption:
RESOLUTION AUTHORIZING TERMINATION OF A LEASE WITH OPTION TO
PURCHASE AGREEMENT, GROUND LEASE AGREEMENT AND AUTHORIZING
EXECUTION OF AN ESCROW AGREEMENT RELATING TO THE ISSUANCE BY THE
CITY OF PRIOR LAKE, MINNESOTA, OF ITS $9,825,000 GENERAL OBLIGATION
CAPITAL IMPROVEMENT PLAN REFUNDING BONDS, SERIES 2012A
A. WHEREAS, the City of Prior Lake, Minnesota (the "City") proposes to issue its
$9,825,000 General Obligation Capital Improvement Plan Refunding Bonds, Series 2012A (the
"Bonds") to finance the acquisition of the city hall and police station located in the City (the
"Facilities") from the Economic Development Authority of the City of Prior Lake, Minnesota
(the "Authority"); and
B. WHEREAS, the proposed purchase price for the Facilities is an amount equal to
the outstanding principal of and interest on the Authority's $10,000,000 original principal
amount Public Project Revenue Bonds, Series 2005B (City of Prior Lake, Minnesota Lease With
Option to Purchase Project), dated May 15, 2005 (the "Prior Bonds") issued pursuant to a
Revenue Bond Resolution adopted by the Authority's Board of Commissioners on April 18, 2005
(the "Prior Resolution").
NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF COMMISSIONERS
OF THE ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF PRIOR LAKE,
MINNESOTA, as follows:
1. Callable Prior Bonds. $8,590,000 aggregate principal amount of the Prior Bonds
which matures on and after December 15, 2014 is callable on December 15, 2013 (the "Callable
Prior Bonds"), the refunding of the Callable Prior Bonds is consistent with covenants made with
the holders of the Prior Bonds, and is necessary and desirable for the reduction of debt service
cost to the City.
2. Noncallable Prior Bonds. $480,000 aggregate principal amount of the Prior
Bonds which matures on December 15, 2012, through and including December 15, 2013 (the
"Noncallable Prior Bonds"), are not callable, but the payment of the Noncallable Prior Bonds on
December 15, 2012 and December 15, 2013, respectively, is also consistent with covenants made
with the holders of the Noncallable Prior Bonds.
3. Escrow A�reement. The Noncallable Prior Bonds shall be paid and the Callable
Prior Bonds shall be redeemed and prepaid in accordance with the terms and conditions set forth
in the Escrow Agreement, dated as of March 13, 2012 (the "Escrow Agreement") by and
between the City, the Authority and Northland Trust Services, Inc. (the "Escrow Agent"), in
substantially the form submitted to the Board of Commissioners. The terms and conditions of
the Escrow Agreement are hereby approved and incorporated herein by reference. The Authority
hereby approves the execution by the President and Secretary on behalf of the Authority of the
Escrow Agreement.
4. Prepavment of Purchase O�tion Price. As provided in Section 4.6 of the Lease
With Option to Purchase Agreement between the City and the EDA, dated as of May 15, 2005
(the "Lease") to prepay the Purchase Option Price (as defined in the Lease), the Authority hereby
determines and declaxes that upon the issuance of the Bonds and the funding of the Escrow
Deposit as provided in the Escrow Agreement, the Lease, and the Ground Lease shall be
terminated and the Authority shall have no further right, title or interest in and to the Facilities.
5. Severabilitv. If any section, paragraph or provision of this resolution shall be held
to be invalid or unenforceable for any reason, the invalidity or unenforceability of such section,
pazagraph or provision shall not affect any of the remaining provisions of this resolution.
6. Headin�s. Headings in this resolution are included for convenience of reference
only and are not a part hereof, and shall not limit or define the meaning of any provision hereof.
The motion for the adoption of the foregoing resolution was duly seconded by member
and, after a full discussion thereof and upon a vote being taken thereon, the
following voted in favor thereof
and the following voted against the same:
Whereupon the resolution was declared duly passed and adopted.
4432183v1
.
�
STATE OF MINNESOTA
COUNTY OF SCOTT
ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF PRIOR LAKE
I, the undersigned, being the duly qualified and acting Secretary of the Economic
Development Authority of the City of Prior Lake, Minnesota, DO HEREBY CERTIFY that I
have compared the attached and foregoing extract of minutes with the original thereof on file in
my office, and that the same is a full, true and complete transcript of the minutes of a meeting of
the Board of Commissioners, duly called and held on the date therein indicated, insofar as the
minutes relate to authorizing termination of a lease and calling prior bonds.
WITNESS my hand on February 13, 2012.
Secretary
4432183v1
O � PRIp�
!� � V 4646 Dakota Street SE
Prior Lake, MN 55372 ,
�
PRIOR LAKE ECONOMIC DEVELOPMENT AUTHORITY
DRAFT AGENDA
Monday, March 12, 2012
4:00 p.m.
Reports included with this agenda can be found in the Document Center at www.cityofpriorlake.com
Please follow this file path: City of Prior LakelEconomic Development Authority120121March 12, 2012
1. CALL TO ORDERIINTRODUCTION
2. APPROVAL OF AGENDA
3, APPROVAL OF MEETING MINUTES
A. February 13, 2012
4. PUBLIC HEARINGS
A. No public hearing is scheduled.
5. OLD BUSINESS
A,
6. NEW BUSINESS
A. EDAC Report and Subcommittee Reports:
(1) EDAC
(2) Broadband Fiber Network
(3) Technology Village Incubator
B. Venture Fair Event Update
C. Business Inquiry List (to be distributed at the meeting)
7. OTHER BUSINESS
A. Draft Apri19, 2012 Agenda
8. ADJOURNMENT: 6:00 p.m.
Phone 952.447.9800 / Fax 952.447.4245 / www.cityofpriorlake.com