The Stillwater City Council on Tuesday will consider a proposal giving Vista Technologies a $250,000 forgivable TIF loan as incentive to relocate to the former UFE site on Greeley Street.
City staff believe Vista Tek is “a successful and expanding business” that would bring high-paying jobs into the city and be a great fit for the vacant UFE facility, Community Development Director Bill Turnblad wrote in a memo to the council.
VistaTek, established in 1996 and currently located in Vadnais Heights, is described as a high-quality manufacturing firm in the injection-molding business.
Their client base has grown and diversified to a point that now requires expansion, Turnblad's memo reads. The company will need the equivalent of 28 full-time employees to meet their business demands by July 2013, and is expected to grow to 35 “highly-skilled and highly-paid” positions by July 2014.
As an incentive for the company to move to Stillwater, city staff has proposed a $250,000 TIF loan that would be forgivable after five years, if the level of employment stays at or above 35 full-time equivalent employees.
“The TIF incentive is necessary, and justifiable by State law, since the industrial site has been vacant or underutilized for many years,” Turnblad wrote. “The vacancy has been due in part to environmental issues associated with industrial contaminants. However, with clean up efforts underway and this TIF loan VistaTek is able to find financing to purchase and relocate here.”
- By July 1, 2013 VistaTek expects to employ the equivalent of 28 full-time positions; by July 1, 2014 this would increase to 35 full-time equivalent jobs.
- Begining Jan. 1, 2015, and for each subsequent year until 2019, VistaTek will report the number of employees to the city. If a level of 35 full-time positions is maintained, no payment to the city will be required. If the number of employees falls below the minimum, Vista Tek will be responsible to repay a pro-rated portion of that year's $50,000 TIF loan value.
- On Jan. 1, 2019 if VistaTek still owns the building and employs the required minimum number of employees, then the loan is forgiven in full
- A check for $250,000 would be provided at the time of closing to the title company.
All economic development incentived deals come with some risk, Turnblad wrote to the council. In this particular project, the risk is that VistaTek could go out of business or have to cut its work force prior to Jan. 1, 2019.
If that were to occur the city "would have to stand third in the mortgage line to recoup its 250,000 investment."
The risk is minimized, Turnblad wrote, by the 16-year track record of Vista Tek, their current strength and the fact that a financial institution has found the company to be mortgage worthy.
The City Council will hear the proposal during a workshop that starts at 4:30 p.m. at City Hall.