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CR 99-187 Submission of a Pre-App for the Mn Investment Fund-Reuter Manufacturing, Inc /" " GITY OF .. HOPKINS September 29, 1999 Council Report 99-187 SUBMISSION OF A PRE-APPLICATION FOR THE MINNESOTA INVESTMENT FUND - REUTER MANUFACTURING. INe. Proposed Action Staff recommends approval of the following motion: Approve submission of a pre- application for the Minnesota Investment Fund re: Reuter Manufacturing, Inc.. proiect. subject to staff conditions. Overview The Minnesota Department of Trade & Economic Development (D.T.E.D.) administers the Minnesota Investment Fund Program. The program awards grants to eligible local units of government who then loan the funds for upgrading and expanding businesses. Reuter Manufacturing, Inc., located at 41O-11th Avenue South, is requesting funds from D.T.E.D. to purchase equipment, which will help expand their operations and employee base. Staff is requesting authorization to submit the attached pre-application subject to staff conditions. The pre-application does not commit the City to this project or program at this time. The final application will be presented to the Council for action at a future meeting. Primarv Issues to Consider · What are the specifics of the Minnesota Investment Fund? . What are the staff conditions? Supportim!: Documents · Letter from Reuter Manufacturing requesting the City of Hopkins to submit a pre- application for the Minnesota Investment Fund Minnesota Investment Fund Pre-application 1m Hartshorn conomic Development Coordinator Council Report 99-187, September 29,1999 - Page 2 Primary Issues to Consider What are the specifics of the Minnesota Investment Fund? The Minnesota Investment Fund Program is available to local units of government for eligible projects up to a maximum amount of $500,000. Eligible projects include loans for land acquisition, buildings, equipment and training needs. Terms for real estate include a maximum of 20 years; machinery and equipment a maximum of 10 years. Interest rates and collateral are negotiable. At least 50 percent of total project costs must be privately financed through owner equity and other lending sources. Most applications selected for funding have at least 70 percent private financing. What are staff conditions? Staifis recommending an approval be conditional on the following: that Reuter agree to reimburse the City for any legal or consulting fees incurred with the preparation, processing, and administration of the application or disbursement of funds. . Alternatives The City Council has the following alternatives regarding this matter: 1. Approve the action as recommended by staff. This will allow submission of the application to the Department of Trade & Economic Development. 2. Do not approve this subject action. This action will not allow Reuter to utilize funds from this program. ~1' :I ".;.' ", ~REUTS ~ MANUFACTURING, INC. September 28, 1999 Jim Hartshorn City of Hopkins 1010 First Street South Hopkins, MN 55343 Dear Jim; Reuter Manufacturing, Inc. is requesting the City of Hopkins to submit an application to the Minnesota Investment Fund Program on Reuters' behalf. As we discussed, the funds would be used to purchase equipment to expand the Company's line of oil centrifuges and filtration products. If you have any questions, please call me at 939-2624. Sincerely, w~ 9/. William H. Johnson V.P., CFO 41O-1lth Avenue South, Hopkins, MN 55343 Phone: (612) 935-6921 Fax: (612) 933-5803 1-800-473-8837 ~~\~NESOF ~' _. <1 E Trade & · conOIDlC Development Business & community Development . ~~; f)u- . -. ~ Minnesota Department of Trade and Economic Development Pre-Application . . Th Bu ine 5 and Community Dev lopment Pre-Application The pre-application enables businesses and communities to apply for financial assistance for multiple projects at a single time on one application form. The two-part process of the pre-application enables our professional staff to become involved with your project proposal(s) at an early development stage, providing you with customized assistance and guidance to help make your project(s) more competitive, or to customize a package of technical assistance which enables you to form realistic community and/or economic development plans. You may receive additional copies of this pre-application by calling (1-800-657-3502) in greater Minnesota or (651-297-5710) in the seven county metropolitan area. Available Assistance The Business and Community Development Division administers many financial programs, which can be accessed through this Pre-Application. The purpose of the pre-application is to allow you to describe potential projects that might be funded by the division; it is not essential that you have identified the specific program that would fund the project. The following types of programs are offered (with the programs that fit generally in these categories): . .' '. Business Financing Minnesota Investment Fund Small Business Development Loan Program Rural Initiative Program Urban Initiative Program · Tourism Loan Program Underground Petroleum Tank Replacement Program Capital Access Program Job Training Minnesota Job Skills Partnership Program Minnesota Pathways Program HIRE Education Loan Program Community Infrastructure, Redevelopment & Housing . Small Cities Development Program . Contamination Cleanup and Investigation Grant Program . Water Pollution Control Revolving Fund . Wastewater Infrastructure Funding Program . Drinking Water Revolving Fund . Transportation Revolving Loan Fund Initial questions about Trade and Economic Development's programs may also be directed to DTED's Regional Marketing Representatives, who can be identified by calling 1-800-657-3858 in greater Minnesota, or (651) 297-1291 in the seven county Twin Cities metropolitan area. The regional representative staff can also provide information about business development and site selection services, industry specialists, community profiles, and other technical services of the department. .. ~ . i . J ,:! , ; 'r:;. Minnesota Department of Trade and Economic Development Pre-Application The Pre-Application Proc Complete the pre-application and return it to the Business and Community Development Division. Generally describe what you want to do for each proposed project (i.e. the improvements you want to make); and finally, include an estimate of the funds and the program, if known, that would be requested for each project. If you are seeking financial assistance, and an application is recommended, you will be provided a program application, or you will receive information on other sources of funding outside the department that may better assist your project. Application Timelines The pre-application may be submitted year round for financial/technical assistance. , . ~ .... . . r . I .' NOTE: The Small Cities Development Program has a deadline for submittal of October 1st for the program application Once completed, return to: Minnesota Department of Trade and Economic Development Business and Community Development Division Attn: Pre-Application Coordinator 500 Metro Square 121 7th Place East St. Paul, MN 55101-2146 Telephone: 651-297-5710 or'(8dO-657~35d:2 TTY-TDD: 651-282-6142 or 1-800-366-2906 Fax: 651-296-5287 or 651-296-1290 : I' .,' I' 'I i._ ": ; . If you choose to fax an application, please do not submit an additi91J-a! paper copy of that ~pli~wn. . If you are returning your application on a computer disk, please provide a paper copy for processing. Minnesota Department of Trade and Economic Development Pre-Application . Pre-Applicant Information , ~ Section I Applicant: City of Hopkins Mailing Address: 1010 First Street South Hopkins, MN 55343 On behalf of: Reuter Manufacting,Inc. County: Hennepin Legislative District: 44A Congressional District: 3 Section" Name: Qfmployee of ApplicaUD Employee of Consulting Organization Jim Hartshorn Contact person is an: Title: Economic Development Coordinator Organization: City of Hopkins 1010 First Street South Address: Hopkins. MN 55343 Phone: (..QlL) 939-1359 Fax: (Q.lL) 935-1834 .1 .. . . , E-Mail: ihartshorn@hopkinsmn.com Definitions Applicant: The organization designated as the official project sponsor. The applicant can be a local unit of government, a business or a development organization. On behalf of: The organization for which the applicant has prepared the application. For instance, a city may apply on behalf of a business. A county may apply on behalf of very small cities or rural townships within the county. . Minnesota Department of Trade and Economic Development Pre-Application I '! Project De cription Generally describe what you want to do for each proposed project (i.e. the improvements you want to make); and include an estimate of the funds. (Use separate pages for multiple projects.) ; : Name of Community/Applicant City of Hopkins Project Name: Reuter Manufacturing, Inc. Expansion Project 1. The funding from the Minnesota Investment Fund Program will be used to purchase equipment to help expand Reuter's product line of oil centrifuges and filtration products. Reuter currently generates about $1,000,000 of revenue from this product line. Reuter desires to merge another company into their operations, and the combined operations would provide approximately $4,000,000 in annual revenue. The merger would increase Reuter's employment role by approximately 40 employees in two years. The total cost of Project 1 is approximately $500,000. Project 2. The second part of the project introduces current manufacturing practices to Reuter Manufacturing, Inc., including setting up cell structures using lean manufacturing concepts. The total cost of Project 2 is estimated at $1 million for specialized equipment that will be utilized in these cell structures. This restructuring of manufacturing processes will enable Reuter to be more competitive and increase penetration into the market place. As a result they anticipate a twenty percent increase in their workforce for the next two to three years. Reuter has gone through some downsizing over the past year, having a high employment of approximately 150 employees and a low employment of95 employees. With the above projects in place, employment should exceed 150 employees. The total cost of both projects is approximately $1.5 million. The amount requested from the Minnesota Investment Fund is $250,000. . ~\~ N ESOl'<1 . -Trade&- Economic Develo:Rment Business & Community Development 500 Metro Square 121 7th Place East St. Paul, MN 55101-2146 Return completed pre-application to: Minnesota Department of Trade and Economic Development Business and Community Development Division ATTN: Pre-Application Coordinator 500 Metro Square 121 7th Place East St. Paul, MN 55101-2146 - Bulk Rate U.S. Postage PAID Permit No. 171 St. Paul, Minn.