7.0.EDSR 06-14-2004 - Laserfiche WebLink

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Consider Financing Assistance for Badger Ventures,LLC (Gradient Technology)Project June 14,2004 EDA Meeting Page 2 of 3 Project Description Gradient Technology (G.D.O., Inc.) demilitarizes munitions for various branches of the military. None of the demilitarization is performed at the company's Minnesota facility,but rather at Crane Naval Service Warfare Center in Crane, Indiana. The Minnesota facility will be used for Gradient Technology's business office and for providing chemical engineering design services and equipment fabrication. The company will also have a lab for conducting research and development. The company currently employs 13 full-time staff,including 7 based in Minnesota and 6 in Indiana and elsewhere. The positions have an hourly wage between$15-75.00 per hour. Staff has been in contact over the past one and a half years with Eric Haehn,Vice President/CFO of Gradient Technology. The company currently leases space in Blaine,MN and is seeking a suitable location within the northwest metro area to relocate. Badger Ventures,LLC proposes to construct a 13,000-square foot light industrial/business park building for lease to Gradient Technology's office,research&development, and equipment fabrication operation. Badger Ventures proposes to purchase 2.05-acres within the Elk River Business Park and has requested that the city and county consider a write down of the land cost ($145,556) to $0 through a pay-as-you-go note to the limited liability company. Analysis Bank Lender, Micro Loan and Financing Terms The company has selected The Bank of Elk River as its primary lender for the project. The bank's financing terms is attached. In addition the company applied for$100,000 from the city's Industrial Incentive Program Micro Loan. The attached memo from Assistant Director of Economic Development, Heidi Steinmetz, outlines the committee's recommendations regarding policy amendments and the current application. In addition to the 7 existing Minnesota based positions the company is committing to create up to 5 new positions at the Minnesota facility within 2-years. The new positions will likely consist of management and engineers at a wage range between$15-75.00 per hour. The job and wage goals for Badger Ventures,LLC & Gradient Technology meet the attached City of Elk River Business Subsidy Policy that requires the job creation to have a minimum wage of$15.00 per hour, exclusive of benefits. The project sources and uses include: Project Costs Land—2.05 Acres $ 145,556 Construction— 13,000 SF $1,035,000 Total Project $1,180,556 Project Financing Bank Loan $ 883,500 • EDA Micro Loan $ 100,000 °el Cash Equity 4% $ 47,056—cash Eligible Equity 5% $ 60,000—exhaust hoods purchased Ineligible Equity $ 90,000—company labor Total $1,180,556