Final Project Proposal For The RENU Committee 1. Group Proposing Infrastructure Project Name: City of New Ulm- Community Development Department & the New Ulm Economic Development Corporation ( NUEDC) b. Address: 100 North Broadway, New Ulm Minnesota c. Telephone: David Schnobrich ( 507) 359-8250 or Brian Tohal ( 507) 233-4305 d. Contact Person: David Schnobrich & Brian Tohal e. Email Address: david. schnobrich @ci. new - ulm. mn. us or nuedc@newulmtel. net 2. Need for the Project What need is addressed by proposed project: The NUEDC is responsible for the advancement of industrial development in the City of New Ulm. In this capacity, NUEDC has served as the owner of the Airport Industrial Park. At the present time, there are only 22 acres of property left in this industrial park. This area serves as the City' s only industrial park. Of the 22 acres, approximately 2. 5 acres are unbuildable due to steep slopes. The next industrial park will be needed in a few short years. It is important for a community wanting to attract new employers to have industrial lots shovel -ready for construction. Expanding industries cannot wait for farm land to be converted to developed industrial lots. They are expanding due to a current need. A developed industrial park provides a place where jobs will be created. People who have jobs generally reside in the immediate area and have disposable income that circulates within the community. The City' s Comprehensive Plan, last updated in September, 2007, has as a goal to Create an economically vital and sustainable community". This goal further states that the City should promote the creation of jobs, promote the retention and expansion of existing businesses, and provide new areas for a wide range of new industrial development. Our proposal helps address an important need identified in the City' s current Comprehensive Plan. b. Describe evidence to determine that a need exists: The remaining 22 acres in the Airport Industrial Park consists of 5 lots. A portion of these lots have steep slopes. The topography and configuration of the lots limit the type of industrial development that can take place on the property.
Recently, the NUEDC submitted a proposal to a manufacturing firm seeking 20 to 40 acres to build a large factory and hire up to 140 employees. The 22 acres in the Airport Industrial Park was the land identified in our proposal for this project. NUEDC' s proposal was rejected due in part to the size and shape of our site. If New Ulm had been successful in securing this project, NUEDC would have been left with no available industrial land. In 2011, the owners of M. R. Paving and Excavating Company platted an industrial subdivision of 22 acres in the North Spring Street are All of the available, platted lots in the subdivision have been sold. This is an indication of the current supply and demand for industrial property in the community. c. Can the need be measured? The need is measured by the number and size of industrial lots available for development in the Airport Industrial Park. 3. Project Description Describe the project: The project involves the purchase and development of 22 acres of property on the west edge of the Airport Industrial Park by the City of New Ulm. Ten 10) ton roads, underground utilities and a storm water retention pond would be installed. This acreage would be phase one of a two phase project. The second phase would involve the purchase and development of an additional 22 acres. This would expand the size of the industrial park by a total of 44 acres. This site is the first option for expansion of the industrial park. There are other suitable locations for the industrial park in this general area of the community. b. How will the project address the need? The new land would be an extension of the existing Airport Industrial Park and would provide shovel ready industrial lots for existing and new businesses that are expanding, relocating or growing and need a new location. 4. Project Funding What are the estimated total costs of the proposed project and the basis of the estimate? The estimated cost to purchase the land is $ 50,500 per acre for a total land acquisition cost for phase one of $1, 111, 000. The per acre cost is based on recent Land sales in this are The City' s Engineering Department has estimated the cost of utilities and roads for phase one to be $ 1, 651,980. This results in a total project cost of 2, 762,980. b. How are the costs proposed to be funded? It is proposed that 100% of the cost would be funded by the sales tax extension.
c. What alternative sources of funding have been considered? NUEDC financed the purchase and construction of the Airport Industrial Park with the assistance of a loan from the City of New Ulm. The City also paid the land acquisition cost for the properties currently occupied by Elkay Wood Products Company. NUEDC does not have the financial resources to purchase and develop the new site for industrial purposes. A financial partnership with the City is not possible given NUEDC' s need to secure a more immediate return on its investment, the high cost of the land and annual utility and street assessments for the new site. NUEDC also needs to fund its annual operating expenses and reserve funding to initiate local industrial expansions and new construction. If NUEDC incurred this debt and for some reason could not make its loan payments, it could fall to the City and its taxpayers to assume this responsibility. City bond funds with debt service payments, the use of City financial reserves or fund balances and annual City budget appropriations are also options. Two of these financing sources would require direct participation by City taxpayers. The third, a reduction in City financial reserves, could require higher property taxes to rebuild these accounts. d. Are there similar facilities in other Minnesota Cities? How have they been funded? Every Minnesota city of New Ulm' s size has available and developed industrial land. City bonds are the most common funding source. Funding has also been provided from tax increment financing districts but this would require a new project paying property taxes. Since there are no planned projects at this time, this is not a potential revenue source. e. What is the anticipated schedule for planning /construction? Planning and construction would be dependent on the date sale tax bonds were sold. Once determined, the project could begin immediately. Some preliminary work could begin in advance of this date. It appears planning could begin in either 2017 or 2018 with the purchase of land. Road and utility construction could occur in 2018 or 2019. 5. Program staffing Will the project require staffing? Any required staffing would be provided by existing City and NUEDC staff members. b. How is the staffing proposed to be secured and funded? Not applicable. 6. Operating and Maintenance Demands Identify any future sustainability, operating and maintenance costs. Upon purchase of the land and the completion of construction activities, there would be minimal maintenance or operating costs.
b. How are these costs proposed to be funded? Revenues from land rentals and land sales would pay for any maintenance costs. 7. City Funding Commitments Why should funding be considered by the City? The City will be the owner and developer of the property. As noted earlier, NUEDC does not have the financial resources to assume this role. Nearby cities have more industrial land than New Ulm and they serve as our competitors for industrial firms. Fairmont has 69 acres, Austin has 150, Albert Lea has 80, Mankato has 182 in 3 parks, Le Sueur has 152 and Hutchinson has 50. b. How will the project be impacted if the funding is not provided or is less than the requested amount? It is difficult to say with any degree of certainty, but quite likely the City would have to either to sell bonds, use existing fund balances or provide annual budget appropriations or a combination of the three to complete the project. All would result in the City taxpayer paying a significant share of the project cost. A lesser amount of sales tax revenue would require a reduction in either the size or the extent of installed utility and street improvements. For example, gravel roads instead of blacktop. It would not make sense to further reduce the size of the land purchase since it represents a minimal amount of area for new lots. The other option would be to have no property available for industrial development. 8. Overlap / Need Addressed by Other Governmental Units Do other federal, state or local governments have programs or a responsibility to address this need? The State of Minnesota has a grant program that will cover a portion of the infrastructure costs. However, this program requires that a business commit to locating in the industrial park and creating new jobs. Timing is an issue with this program. To use it, the City needs to have a shovel ready industrial lot and a business ready to start construction. b. If so, are those programs sufficient to address the need? If not, why not? The grant program covers 50% of the infrastructure cost up to $200, 000. If successful, this would pay for a small portion of the total project cost. However, the program runs out of money every year. c. Is the City being requested to address the need in partnership with other units of government, private interests, or non - profit corporation? This proposal envisions a
partnership between the City and NUEDC to plan, develop and market the site. The City would be the property owner and would be responsible for the installation of utility and street improvements. 9. Project Benefits What are the benefits? If the project is completed, New Ulm will have industrial lots for expanding, relocating and growing industries. New jobs will be created in New Ulm. New jobs are a fundamental part of a thriving community. With jobs, money is circulated in the community. There are more students in our schools. Other businesses are strengthened. Real estate taxes collected by the City will increase as new buildings and facilities are built. Additional property taxes will also benefit the City taxpayer. A secondary impact of this proposal would be an extension of the City' s transportation system. The project would provide a link leading to the eventual connection of Highway 14 and CSAH 29. b. How will you measure or determine your projects success? The project will be a success when the lots are available for purchase by expanding, relocating and growing industries. 10. Project Implementation Who will be constructing the project and who will administer /manage the project post construction? The City of New Ulm will purchase the property, install the infrastructure and maintain the industrial park. NUEDC will market the property to relocating or growing industries. b. If it is a project to be constructed by the City, what is the department priority? Not applicable. c. If it is one of multiple projects proposed, then prioritize the projects. Not applicable.
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