Business prospect dealt blow

by Paul Rignell

Contributing writer

After investing about $100,000 in plans that he has developed over the past 12 months, Dan Bosshart could be just days away from starting construction on an Elk River building where he would move Preferred Powder Coating, a business he has owned since 2009, from its currently leased space in Rogers.

A hearing is scheduled for Aug. 19 at Elk River City Hall when the City Council will begin considering a tax increment financing (TIF) district for the Nature’s Edge Business Center, off of Highway 10 at 171st Avenue, where Bosshart intends to move his business. It would be the first development on this plot of former agricultural land that is owned by the city. TIF works as a business subsidy through which taxes that are forgiven at the start of a development’s life, in theory, will be recouped in future years after the value of once-vacant land has grown significantly.

 Preferred Powder Coating’s efforts to locate in Elk River’s newest business park suffered a setback after a split Sherburne County Board vote last week.
Preferred Powder Coating’s efforts to locate in Elk River’s newest business park suffered a setback after a split Sherburne County Board vote last week.

The city of Elk River has exclusive authority to approve a TIF program for Preferred Powder Coating, whose commercial paint applications have included work on computer chassis, air vents, automotive parts, lawn furniture, signs and license plate frames. Bosshart told the Star News this week that his company also worked with Rogers High School to color and customize the end zones on its football field.

In conjunction with preparing for the Aug. 19 Elk River hearing, Bosshart is sending standard letters both to Sherburne County, whose commissioners will meet Aug. 20, and to Independent School District 728, where the board of education will meet Aug. 26. The county and school district are allowed comment on a TIF proposal because though their elected officials are not involved in a final vote, those taxing agencies would be affected by a TIF agreement.

Bosshart’s business plans have been endorsed by the city, for one, through several months of review. But TIF was not on his radar just one week ago, and the look at this form of business subsidy is stemming from a vote of the Sherburne County commissioners Aug. 13.

County reduction

The county board’s agenda that day included an option for tax abatement, or a different form of business subsidy, to total $576,939 over a period not to exceed 12 years. The number would have matched a figure that the city had committed at an earlier meeting. The county board gave conditional approval for the tax abatement at a meeting June 4, and the city determined its numbers for a vote in July. Those figures were deemed critical for moving ahead with Bosshart’s project, based on studies that were ordered by Elk River from two independent financial consultants.

Bosshart has estimated that his 100,000-square-foot building could be a $5 million project, and allow him to expand staff and operations from the company’s 73,000 square feet of leased space in Rogers. But his wetland mitigation costs will be high, perhaps more than $600,000 or three times as much as those for an average lot.

Therefore, he was uncertain for the future when the county board, on a split decision Aug. 13, voted to allow tax abatement but to slash the $576,939 in proposed dollars by nearly one-third to an even $400,000. As they supported that reduction, the prevailing commissioners Ewald Petersen, John Riebel and Felix Schmiesing also agreed to limit their abatement for an eight-year period, and allowing only partial abatement beginning in the third year on a sliding scale.

Riebel said the new figure would compare more with abatements that were approved for two other Elk River manufacturers, Metal Craft and Sportech, totaling $844,000. Riebel said the county has the means to consider tax abatement for business and job growth, but with more companies to consider. “There are a lot of little businesses out there that need help, too,” Riebel said Aug. 13.

On a week when Bosshart was not available to visit the county board, at an Aug. 6 meeting, the commissioners were scheduled then to vote on the abatement. The board was unanimous that day in stating support for abatement, but tabled the vote for one week after Petersen and Schmiesing, who moved and seconded for the tabling, discussed what they saw as another county issue with the city.

Petersen said that compared with aid for Preferred Powder Coating or other businesses, he did not believe Elk River has been nearly as supportive of the county’s efforts to sell and develop a parcel adjacent to the county Government Center campus. Members of the prevailing vote to lower the abatement for Bosshart’s business also questioned park dedication fees for that open county parcel, reaching $140,000 to $150,000 based on square footage in its commercial-industrial zone.

Commissioners Rachel Leonard and Bruce Anderson both voted against the tabling Aug. 6 and the lowered abatement Aug. 13. Leonard and Anderson said they have toured Bosshart’s plant in Rogers.

Leonard said if the board majority’s vote Aug. 13 would mean that Bosshart could not move his business from leased space to its own space as planned, she was certain Preferred Powder Coating’s landlord in Rogers would be glad to keep the company as a tenant.

Anderson sounded more intent on making sure the project could proceed, when speaking after the meeting. “It’s the kind of business we would want,” he said, noting his displeasure with the board’s last-minute handling  of a prospective business.

In Bosshart’s letters this week to the county and the school district, he was asking those boards to waive a 30-day period that they would rightfully have to complete any comments on the city’s TIF plan.

The dollars will work out the same, he told the Star News, based on his understanding that the county’s portion of TIF for the project would work out to about $400,000.

But the delays have pushed back his schedule, and he is concerned that an early winter would shut down asphalt plants so that even if the building goes up by the end of 2013, there is a possibility he could not pave a parking lot until next spring.

Bosshart would double his production lines in a new building, and plan to expand his staff from 24 employees to more than 30 almost immediately. He has said the payroll could push past 40 workers in two years.

“We’re a small business, wanting to be a bigger business,” Bosshart told the county board Aug. 13.

“There are people working for me today that want to go into bigger and better places for even more opportunities,” he later told the Star News. “I think this is a very good project for the community, city and the county.”

If the plan has the full county support, Bosshart said that the actions of some commissioners has clouded that. “They brought me in as a leverage point to fight that battle (over the county parcel),” he said. “What they did was put me into a fight that wasn’t really my fight.”