After nearly leaving FL, company to become first tenant in business park with $4.2 million facility
Teamvantage’s plans to build a new headquarters in Forest Lake’s Airport Business Park earned final approval from the city council on Monday, June 25.
The council passed a series of resolutions to pave the way for a $4.2 million facility which will keep Forest Lake’s largest non-government/non-retail employer in town.
But the idea of staying here was far from a formality, it was learned at the Economic Development Authority meeting earlier that evening. In fact, Teamvantage was set to build in another community at one point in the negotiations.
That fact came to light during the EDA’s consideration of an uncomfortable, unforeseen dilemma regarding the marketing of the property involved. Gaughan Companies handled those duties for the city on the 7.49 acre lot off Fenway Avenue under an agreement that tied commission to a percentage of the final sale price.
The city put together a package of incentives to attract Teamvantage, highlighted by offering the land for $1. As no commission floor was negotiated into the listing agreement, Gaughan was left looking at a payment of 6 cents from the city.
However, the EDA recommended to the council that the city pay Gaughan nearly $12,000 out of good faith after Mayor Chris Johnson explained the real estate company’s key role in preventing Teamvantage from pulling over 100 jobs out of the community.
Gaughan’s developer had determined the site in the business park was not feasible for their building plans, Johnson said, and the company was prepared to move out of town rather than build on a different lot closer to the Forest Lake Area Athletic Association Sports Center.
“It was Lou Suski from Gaughan who actually put together a site plan based on experience with these type of developments and brought it back to them to show that actually their site could fit on this unusually shaped lot,” Johnson told his fellow EDA members. “That, coupled with our subsequent adjustment to our proposal, I think, were the two key things that brought them back to town.”
City Administrator Aaron Parrish felt the city was not required to pay Gaughan more than the 6-cent bill, but recommended a commission of $11,952. That number represents a 4 percent commission assuming a sale price of $1 per square foot.
The EDA approved Parrish’s recommendation but left it to the city council to determine where the payment should come from.
“Given the situation, I think they should get something,” said board member Mike Muske. “They did a lot of work. I don’t know what the amount should be, that’s the tough part in my mind. To pay them 6 cents or zero is not a smart move.”
The board also recommended a one-year extension of the city’s listing agreement with Gaughan for marketing in the business park. The former agreement had expired. In the new agreement, Gaughan is proposing a minimum commission of 6 percent based on a sale price of $1 per square foot, or a commission of 6 percent of the total sale price if a buyer pays more than $1 per square foot.
Following the EDA discussion, the city council approved six measures related to the Teamvantage project. Four came via unanimous votes.
The steps included: the adoption of a Business Assistance Policy, the establishment of a Tax Increment Financing District, the authorization of an interfund loan, the approval of a business subsidy agreement, the approval of a development agreement and the approval of a site plan.
Councilwoman Jackie McNamara felt the subsidy agreement should be contingent on Teamvantage continuing operation for 10 years, rather than the five years specified, because the city is kicking in a $150,000 incentive for site improvements.
“I still think it’s our responsibility to be absolutely certain that we are going to recoup the dollars, keeping our taxpayers’ dollars we are using for this incentive,” she said.
Councilman Mike Freer cast the lone nay vote concerning the interfund loan which will cover the $150,000 payment to Teamvantage.
“I think there needs to be some type of job component in [the agreement] before we allow $150,000 of our taxpayers’ hard-earned money to go out the door,” he said.
Mayor Johnson responded to the concerns, including several from members of the public, with a ringing endorsement of the project.
“By my assessment, the city is going to collect about $300,000 over these next 10 years on this property, and that is net after receiving back the $150,000 that we’re paying now,” he said of the tax increment financing revenues. “So we’re going to bring in $450,000 that in the end will be about $300,000, and I look at that compared to what’s happened on that piece of property in the last 10 years. I think that’s probably $300,000 that we otherwise wouldn’t get.
“We’re getting about $300,000 for that property, – that’s probably about what it’s worth – and we’re retaining 100-plus jobs and I think there’s a fairly high degree of likelihood we’re going to pick up another 100 jobs over the next five years…I think it makes financial sense, and I also think it’s a big boost in development for that area.”
Teamvantage’s 93,400-square-foot building will be the first in the five-lot, 23-acre business park. The company currently is located at 22455 Everton Ave. and employs about 110 workers. The component manufacturer plans to break ground in August on the nine-month building project.