City sets tax abatement schedule for Custom Mold and Design
The owner of one of Forest Lake’s largest employers plans to bring a second business to town.
Wayzata businessman Ray Newkirk’s components manufacturer, Teamvantage, is in the midst of a move from Everton Avenue North to a new facility in the airport industrial park.
It appears the former Teamvantage building will next house Custom Mold and Design, of which he is the principal owner. The City Council and Economic Development Authority last week each unanimously approved tax abatement incentives to help close the deal.
Custom Mold and Design, currently located in New Hope, offers tooling and design services to clients in the medical, defense and communications fields, among others. Its 70 workers earn an annual payroll of approximately $4 million with an average wage of $57,000.
Custom Mold and Design is forecasting growth, and the facility here is larger than the New Hope building, City Administrator and EDA Executive Director Aaron Parrish told the EDA.
Management has indicated that it would expect about two-thirds of the current staff to commute to the new location, Parrish said. A larger portion of the jobs will eventually be staffed locally due to attrition, new positions and the relocation of current workers to the area, he added.
Terms approved last week in the tax abatement agreement call for the city to remit up to $30,000 in property taxes annually from 2014-18. That number represents approximately the amount of real estate taxes currently generated by the property at 22455 Everton Ave. N.
The annual abatement amount is tied to a schedule based on the number of employees. TMI, LLC, which owns Custom Mold and Design, will qualify for 100 percent abatement by employing 55 or more full-time equivalent employees. The incentive declines in steps and goes away entirely if the business employs less than 25 full-time workers. Parrish said TMI, LLC asked for a 10-year abatement with no employment-related strings.
TMI, LLC will pay the difference if property taxes increase during the agreement window.
Mayor and EDA President Chris Johnson said he inquired with Newkirk two years ago about relocating Custom Mold and Design to Forest Lake. Newkirk expressed no interest then, Johnson said, but called Johnson about the subject several months ago.
Parrish spoke to the benefit of growing the city’s basic economic sector. While most residents notice supposed economic development through new retail and dining options, Parrish said, such developments usually only redistribute the same pool of money. New industrial businesses, however, serve to grow the local economy.
“They’re serving a much broader market than Forest Lake, they’re spending money in the community in a lot of different ways, and they’re not as dependent on the ups and downs – how many households, where’s discretionary income at – to as great of an extent,” Parrish said. “From that perspective, this really does represent a good opportunity to enhance the overall economy in Forest Lake.”
Johnson told the City Council to focus on the long-term benefits of the relocation rather than the short-term loss of tax revenue.
“It’s going to bring in dollars, one way or another, into our economy that wouldn’t otherwise be there,” he said. “While you can get focused on the city’s operating revenue and if it’s going to go down $30,000 this year and end your analysis at that point, I think it’s worthwhile to look at the bigger picture.”