SHOVEL READY CERTIFIED SITES & THE SITE LOCATION PROCESS Gene Goddard, Senior Business Development Specialist High Value Projects.

SHOVEL READY CERTIFIED SITES & THE SITE LOCATION PROCESS

Gene Goddard, Senior Business Development SpecialistHigh Value Projects

Why are you talking about growth when the economy is so bad?

Source: Office of the Speaker, U.S. House of Representatives

Major MSA’s Employment Gains and Loses

Announced Layoffs In Minnesotaby IndustryCurrent Calendar Year

0

500

1000

1500

2000

2500

3000

3500 BiofuelsBiotechnologyConstructionConsultingDefenseIT/ElectronicsFinanceFood & BeverageManufacturingRetailTransportationOther

What’s the Projection for Growth?

Select Industries Short Term Growth(2010)

Long Term Growth(2016)

Professional Services -4.2% 22.7%

Education/Health Svcs

2.7% 21.6%

Financial Activities -.06% 19.3%

Mgmt of Companies -2.3% 18.7%

Leisure & Hospitality -2.2% 13.8%

Construction -20.8% 7.4%

Wholesale Trade -1.5% 4.4%

Information -3.5% 3%

Retail Trade -1.8% 2.1%

Manufacturing -5.5% -5.6%Source: DEED LMI Projections

Business Development Trends(Industrial)

We are Seeing:• Reduced prospect activity• Companies in survival

mode• Consolidation/portfolio

review of existing manufacturing sites and leases

• Incentives playing a bigger role

• More entrepreneurs• Affordable rents and great

investment opportunities

Clients are seeking:• Existing Facilities 100,000 sqr. ft

to 150,000 sqr. ft.• Greenfield – rapid development

site (20 - 50 acre sites)• Data Centers (150-350 acre

sites)• Existing Workforce• Supply Chains/Supplier

Networks• Considering Alternative Energy

Options• University/Product Development

Support• Business Partnerships• Strong push for incentives

The Economic Developer’s Serenity Prayer

• God, grant me the Serenity to accept the things I cannot change, Courage to change the things I can, And Tax Incentives to cover the difference.

What is your “Sphere of Influence” to Attract and Secure a

Major Manufacturing Project

Source: Gregg Wassmansdorf, Colliers

The Site Location Process

“The Survey Says!”

Area Development Magazine’s 2008 Consultants Survey

1. State and local incentives

2. Highway accessibility

3. Availability of skilled labor

4. Energy availability and costs

5. Tax exemptions6. Occupancy and

Construction Costs 7. Corporate Tax Rate8. Proximity to major

markets

9. Available land 10.Labor costs11.Expedited or “fast-

track” permitting 12.Available Buildings13.Accessibility to major

airport14.Availability of

advanced IT services15.Proximity to supplier

(tie)Low union profile (Tie)

Top 15 Site Selection Factors

Area Development Magazine’s 2008 Corporate Survey

1. Highway accessibility2. Labor costs3. Occupancy and

Construction Costs 4. Tax exemptions5. Energy availability and

costs6. Availability of skilled

labor 7. State and local

incentives 8. Corporate Tax Rate

9. Low union profile 10.Available land 11.Available Buildings12.Proximity to major

markets 13.Right-to-work state14.Environmental

regulation15.Expedited or “fast-

track” permitting

Top 15 Site Selection Factors

Site Location Evaluation Process

• Phase I – Initial Discussion With Search Team to Define Key Selection

Criteria– Screen Locations and Identify Top Sites

• Geographic Preferences – (Driven by logistics or other business considerations)

• Industry Presence– (Indicator for determining the presence of certain skills or industry cluster)

• Resource Availability– Demographic profile (population, growth rates, education levels, etc.)– Transportation access (air, interstate, rail and port depending on operation)– Workforce (quantity/quality of available skills)– Education and training resources– Overall costs (real estate, labor, construction, taxes, power, insurance, etc.)– Availability of water, sewer, gas, telecom and electric power– Ability to recruit staff to an area (quality of life/cost of housing)– The presence of certain suppliers, competitors and/or industry partners– Gather examples of available real estate options and lease/purchase

costs/terms* • Develop Comprehensive Profiles of Top Location Sites

– Present Screening/Profiling Information to Client

Source: MS&B Consulting

RESOURCE REQUIREMENTS BY FACILITY TYPE

Site Location Evaluation Process

Continued

• Phase II – On-Site Field Visits

• Review available real estate and related lease/purchase options (buildings and sites)*

• Evaluate labor and other resources critical to the company’s operation

– Incentives Negotiation (where available) • Review available incentives that are applicable  to

the company’s situation

– Feasibility Analysis• Develop Net Present Value (NPV) of costs and

incentives (10 or 20-year pro forma)

– Final Presentation and Decision

Source: MS&B Consulting

Site Readiness Options

• Level 1 - Developed site, new building needing finish and minor modifications.

• Level 2 - Developed site, building shell in place or existing building needing modest renovation.

• Level 3 - Developed site with virtual permitted building.

• Level 4 - Developed site ready for building construction.

• Level 5 - Undeveloped Shovel Ready site.

• Level 6 – Properly zoned but in hands of original owner.

• Level 7 - Land zoned agriculture but is to be zoned industrial or O/I.

LOW

.

.

.

.

.

.

H

IGH

Undeveloped Site

DevelopedSite

Building in Place

9Source: MS&B Consulting

What is a Shovel Ready Site

• Definitions may vary but “Shovel-Ready” refers to commercial and industrial site that has:– All of the planning, zoning, surveys, title work,

environmental studies, soils analysis and public infrastructure engineering completed prior to putting the site up for sale.

– And is under the legal control of a community or other “willing” third party partner.

Why are Shovel Ready Sites Important?

• Companies are deadline driven.

• Nobody likes surprises.

• With fewer unknowns it is easier to control budget.

• Shovel Ready has become a “brand” giving the seller a competitive advantage.

Why are Shovel Ready Sites Important?

Cont.– You have time to work on the deal rather than

looking for information (while your prospect talks to someone else).

– You are better prepared to offer development assistance without guessing cost.

– Your competition is doing it!

– It builds confidence in your client. “Your are Business Friendly and Business Ready.” Your client will know they can depend on you to get the job done.

The Prospects Perspective:

• In every site search there are representations regarding the site(s) made that are incorrect.

• Everything has to be verified.• When site information is incomplete, that

gives me or the client time to look elsewhere.

• I can’t risk discovering something bad after we are committed.

What Information do I need to Gather?

• General Site Information – Site selectors need a wide variety of information to

determine whether a location is suitable. General site information must include:

• A legal description of all parcels that make up the site • A site map and schedule for site plan approvals and permits • A zoning description of the site plus current and future

planned zoning of adjacent sites. Land use maps must be provided.

• Information about whether the site or adjacent sites fall within the boundaries of special Economic Development Zones

• Aerial photos noting site boundaries • The current price offering for land • Current real estate taxes and special assessments on all

parcels that make up the site • Identification of current and former land use of the site and

adjacent sites

What Information do I need to Gather?

(cont.)

• Specific Tests and Assessments– Site selectors need to know whether the

ground on a particular site is suitable for specific structures or uses. Certain tests and site assessments must be completed and documented, including:• Geotechnical soil tests • Phase I Environmental Assessment and

Phase II (if required)

What Information do I need to Gather?

(cont.)

• Utility Services– The availability of utilities is an extremely

important factor that site selectors consider.  The types of services available at the site and the names of the providers must be documented, including:

• Electric power • Sanitary sewer • Natural gas • Telecommunications • Water and wastewater treatment • Municipal storm sewer

What Information do I need to Gather?

(cont.)

• Transportation Access– The ability to receive raw materials and

components and move finished products to market is crucial to manufacturers. Transportation access documentation includes: • Distances to major state highways and

Interstates • Access to navigable river, inland or sea ports • Rail access to site

WHAT IS THE PROCESS OF CERTIFYING A SITE?

• Step 1: Download Shovel Ready Site Application and support documents from the Positively Minnesota Web Site.

• Step 2: Gather required information and complete tests/assessments.

• Step 3: Submit documentation in electronic and hard copy to MN DEED along with $2,950 fee.

• Step 4: Submit documentation to DEED and Moran, Stahl & Boyer (MS&B) for review.

• Step 5: MS&B to review application and have discussions with applicant.

• Step 6: MS&B conduct on-site review

• Step 7: DEED issues letter of certification or actions required for certification (6 weeks)

3Source: MS&B Consulting

Shovel Ready Concerns

• But it costs too much! - You have to pay to play.

• Did you really want that? (code for - Looks like too much work or I don’t have the time!)

• Why do you need that? – Because the client asked for it.

FREQUENTLY ASKED QUESTIONS

1. Can a community or site owner submit more that one site?

Yes, but each site will be considered separately a require its own application and fee. Note that a site consists of parcels that are contiguous to one another.

2. Can we contact MS&B during the review process?

Yes, the MS&B project team will be interfacing with the site contact during the review phase.

3. Is there a minimum or maximum size limitation to a site?

No, as long as the sites consists of contiguous parcels.

4. If a site is certified, what actions are required to maintain certification?

Site contact confirms accuracy of site information every 120 days

Notify DEED of any information/ownership changes

5

Summary

• Companies are deadline driven.

• Nobody likes surprises or risk.

• You get more control of the site selection process.

• While the economy is down right now, it will bounce back and you want to be ready when it does.

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