SHOVEL READY CERTIFIED SITES &

THE SITE LOCATION PROCESS

EDAM Summer Conference

June 17, 2009

Gene Goddard, Senior Business Development Specialist

High 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 Minnesota

by IndustryCurrent Calendar Year

0

500

1000

1500

2000

2500

3000

3500 Biofuels

Biotechnology

Construction

Consulting

Defense

IT/Electronics

Finance

Food & Beverage

Manufacturing

Retail

Transportation

Other

What’s the Projection for Growth?

2.1%-1.8%Retail Trade

3%-3.5%Information

4.4%-1.5%Wholesale Trade

7.4%-20.8%Construction

13.8%-2.2%Leisure & Hospitality

18.7%-2.3%Mgmt of Companies

19.3%-.06%Financial Activities

22.7%-4.2%Professional Services

-5.5%

2.7%

Short Term Growth

(2010)

-5.6%Manufacturing

21.6%Education/Health Svcs

Long Term Growth

(2016)

Select Industries

Source: DEED LMI Projections

DEED Business Expansion Leads

By Industry(2009 - Q1 & Q2)

0

10

20

30

40

50

60

1st Qtr 2nd Qtr

Bio/Med Device

Manufacturing

IT

Biofuels/Energy

Call Centers

Ware/Dist

Svc/Fin/Ins

Food/Bev

Other

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 accessibility3. Availability of skilled

labor 4. Energy availability and

costs 5. Tax exemptions6. Occupancy and

Construction Costs7. Corporate Tax Rate8. Proximity to major

markets

9. Available land10. 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 accessibility

2. Labor costs

3. Occupancy and Construction Costs

4. Tax exemptions

5. Energy availability and costs

6. Availability of skilled labor

7. State and local incentives

8. Corporate Tax Rate

9. Low union profile

10. Available land

11. Available Buildings

12. Proximity to major markets

13. Right-to-work state

14. Environmental regulation

15. 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

94

Evaluation of Specific Site

Level 1: Proximity (30-45 minutes)

•Labor resources (education/demographics)•Quality of life/housing costs•Business/R&D partners•Airport access

Level 2: Local Access

•Distance to limited access highway•Public transportation access•Restaurants/shopping/services•Business services•Sensitive areas for trucks

Level 3: Site Conditions

•Overall size of site/lot sizes•Options for future expansion•Wetlands/flood plains/soil•Utility capacity, cost, backup•Zoning/adjacent site use•Road access and condition •Rail access (some industrial)•Level of site readiness

Level 4: Facility Situation

•Size/age/condition of structure•Layout/types of space/flexibility•Cost and buy vs. lease options•Level of Readiness

8Source: MS&B Consulting

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

..

.. .

.HIGH

Undeveloped

Site

Developed

Site

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.

www.positivelyminnesota.comwww.positivelyminnesota.com

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