HomeMy WebLinkAbout03 17 2014 EDA Report 7A Attach1
Memo
Date: January 21, 2014
Frank Boyles, City Manager
To:
Economic Development Authority Members
From: Dan Rogness, Community & Economic Development Director
Subject: Technology Village Participant - Innovative Computer Professionals
One of the current Technology Village program participants, Innovative Computer
Professionals (ICP), is considering relocating their home office from Burnsville to Prior Lake.
ICP is a Veteran Owned Small Business providing custom software and database
development, engineering, and technical project management services.
Although ICP was an established company, they were accepted into the Technology Village
program because they began using its Veteran Owned Small Business status to focus some
business opportunities on government contracts. ICP leased one Technology Village office
for an employee focused on securing government contracts.
ICP is now interested in moving approximately ten employees, with an average annual wage
of $80,000 to $100,000 from their current location in Burnsville to Prior Lake. The company
is considering an office location in the Village Commerce Building or the Fountain Hills Office
Building. They need to make a decision on whether to move to Prior Lake or not by the end
of January.
ICP has approached the Technology Village Board of Directors (BOD) and city staff to discuss
whether or not this expansion would allow them to continue as a Technology Village program
participant, or to explore any different forms of financial assistance that may be available. As
an existing and expanding Technology Village program participant, the BOD may choose to
obligate
Approximately one-half of that amount would be needed in 2015. If the BOD chooses to
provide this amount of rental subsidy to ICP there would be no remaining funds to assist new
program participants in 2014.
The EDA may want to provide input to the BOD prior to its meeting on Wednesday, January
22. Other funding options may include a Revolving Loan using State funds, or a combination
of revolving loan funds and Technology Village rent subsidies.
Below are a few points for consideration:
ICP would likely move out of their Technology Village office which would open that office
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space up for an additional program participant.
The EDA has previously identified a desire to see existing residents, who are company
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presidents and CEOs, The
, Rick Beer, is a Prior Lake resident.
The goal of the Technology Village program is to attract and grow businesses in this
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community which
opportunities. ICP would likely not be considering a relocation of their corporate office to
Prior Lake if it were not for the Technology Village program.
Phone 952.447.9800 / Fax 952.447.4245 / www.cityofpriorlake.com
A lease of approximately 3,000 SF of privately-owned office space would help address
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existing vacancy rates in the community.
The city would assist in the creation of well-paying technology jobs, which is an identified
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target industry for Prior Lake.
Staff is not aware of the proposed lease rates at the potential office locations; however, based
on the assumption of ten employees, a 3,000 square foot office space, and $20.00 per square
foot lease rate (rent + tax + CAM), under the Technology Village Phase II Business Plan, ICP
would be eligible for the following rent subsidy.
ICP has ten employees and leases a 3,000 square foot office at a cost
Example Scenario
of $20 per square foot in a private building. Although ICP is leasing 3,000 SF, the Phase II
Business Plan limits the amount of square feet per employee to 150 SF so the rental subsidy
would be calculated based on a 1,500 SF office. Because two-thirds of the gross lease rate
of $20/SF is in excess of $12/SF, the EDA/Technology Village would reimburse at the rate of
$12 per square foot.
First Year
1,500 SF X $20 = annual lease rate of $30,000; monthly lease rate of $2,500.
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EDA would reimburse $12 X 1,500 SF = annual reimbursement of $18,000; monthly
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reimbursement of $1,500.
Program participant would be responsible for the annual lease rate balance of $12,000;
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monthly lease rate balance of $1,000.
Second Year
1,500 SF X $20 = annual lease rate of $30,000; monthly lease rate of $2,500.
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EDA would reimburse $6 X 1,500 SF = annual reimbursement of $9,000; monthly
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reimbursement of $750.
Program participant would be responsible for the annual lease rate balance of $21,000;
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monthly lease rate balance of $1,750.
Third Year
1,500 SF X $20 = annual lease rate of $30,000; monthly lease rate of $2,500.
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EDA would not reimburse lease rates during the third year.
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Program participant would be responsible for the annual lease rate of $30,000; monthly
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lease rate of $2,500.
Total EDA/Technology Village contribution = $27,000
Total program participant contribution = $63,000 (plus all rental costs for space in excess of
1,500 SF; estimated at $90,000)
The Technology Village budget is not sufficient to provide this amount of reimbursement
because a program participant of this size was not contemplated when the Phase II Business
Plan was being developed. The above scenario is only provided to show the total amount of
rental subsidy that could be expected for a participant of this size. Staff believes a forgivable
loan, rent subsidy, or a combination of the two may
One final option would be to consider some type of special business assistance allocation
using EDA reserves, which would require a budget amendment to be approved by the City
Council.