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Business subsidy for EZ Fabricating expansion

Fri, Oct 18th, 2013
Posted in Chatfield Government

The Chatfield City Council at its October 14 meeting approved a resolution to provide financial assistance to EZ Fabricating, Inc. to help with an expansion of the business.

Chris Giesen, EDA Coordinator, said he had been working with the owners for 12 months. The metal parts fabricating company started in 2004 and now plans to consolidate their operations to one of their existing sites. They will purchase more land and buildings from Tuohy Furniture’s St. Albans Place location and build a 19,000 square foot expansion for additional manufacturing and office space. Also needed will be additional public infrastructure.

The request is for tax increment financing (TIF) from the city along with low interest loans from the EDA ($125,000 for 15 years at 1 percent interest) and the Minnesota Investment Fund (MIF) ($408,000 for 15 years at 1 percent interest). The company will reimburse the city for the cost of extending water and sewer lines to the property.

The company is required to create an additional 17 full time jobs within two years after the expansion is complete. Prorated repayment with interest is required if that goal is not met.

TIF District 3-4 will be established with a total benefit over nine years of $84,000. The city will also waive all development fees totaling $38,500. The total benefits including the loans are $655,500. The total cost of the 7.7 acre property purchase, additional 19,000 square foot expansion and necessary infrastructure (water and sewer) is $1.4 million.

During the public hearing on the business subsidy there was no comment from the public. There was a separate public hearing on the expansion of the boundaries to TIF District 3 on the Fillmore County side. The district is for manufacturing and industrial. Mike Bubany, David Drown Associates, discussed the details of that modification which will also include a possible expansion of Tuohy Furniture Corporation in the future. There was no public comment on the modification of TIF District 3.

The resolution regarding the business subsidy was unanimously approved for EZ Fabricating. The financial assistance includes the waiving of development fees, the $125,000 EDA revolving loan, the authorization for the city sponsorship of an application for a state loan in the amount of $408,000, and the TIF ($84,000). A resolution approving the modification of Municipal Development District 3 was unanimously approved.

EZ Fabricating had requested the waiving of normal requirements including the installation of utilities along the complete frontage of the development property and the improvement of the road to the property. It had been agreed to allow the company to install only water and sewer as necessary to service their building and to leave the road as is.

However, Chris Giesen had already applied for DEED funds to pay one half the cost of the infrastructure including utilities along the complete frontage and improvement of the road. The maximum amount of the grant from the state would be $87,000. This would mean that improvements which are estimated to cost at least $175,000 could be installed for about half of that.

Councilor Paul Novotny suggested they consider upgrading St. Albans Place with a mill and overlay, adding we don’t want to miss that opportunity. Giesen said there were strong indications that the city could get the grant, but he couldn’t guarantee that. The council made a motion to amend the business subsidy to include the possibility of the grant.

Twiford Street Improvement

In August the Chatfield EDA applied for a Redevelopment Grant from DEED to assist with infrastructure costs associated with the Twiford Street Redevelopment Project. The goal is to have adequate infrastructure for a future retail shopping/variety store. The EDA was notified earlier this month that it was one of seven projects statewide that had been approved and the city was awarded $233,611. The council approved a resolution to enter into an agreement with the State.

City Clerk Joel Young praised Chris Giesen for his good work.

Daryl Haner’s Retirement

Chatfield WWTP Superintendent Daryl Haner submitted a notice of his retirement effective November 1. This will be after a total of more than 35 years of service with Chatfield and Rochester. He has managed the Chatfield plant for the last six years.

Mayor Russ Smith thanked him for his service and said he will be missed. A motion to accept his letter of retirement was approved. A posting for his replacement will be made internally.

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