Douglas Machine plans to expand scientific research division

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A $1.6 million project to expand a scientific research facility at Douglas Machine, Inc. may receive tax help from the city of Alexandria.

The city council approved Douglas Machine/Douglas Scientific's preliminary application for tax increment financing (TIF) at its meeting Monday night.

The company plans to build a new 26,000-square-foot facility to expand Douglas Scientific and other core manufacturing functions.

The building would be located east of Douglas’ existing facility on the corner of Minnesota Street and 36th Avenue and would be connected to it. It would include space for a clean room/laboratory for research and development, along with manufacturing space.

Douglas Machine is a manufacturer of automated packaging equipment. Douglas Scientific, one of its divisions, makes a “revolutionary fluid dispensing and array tape platform for genetic screening and discovery,” according to the company.

Douglas Scientific will use roughly 9,000 square feet for research and development related activities, a clean room and other laboratory uses.

The remaining 17,000 square feet would be used for manufacturing, allowing the company to expand its Frito Lay packaging machine division.

The expansion is expected to create 10 to 12 new jobs over the next two years. The pay would meet or exceed the rates of comparable jobs in the region, according to Jason Murray, director of the Alexandria Area Economic Development Commission.

TIF is a tool cities use to encourage economic development. Taxes on property to be developed are frozen at the existing level for a certain length of time – in this case nine years.

Cities benefit because the property ends up generating more tax dollars.

Right now, the Douglas Machine property is valued at $530,700 and generates $14,984 in taxes. After the TIF period ends, the value is projected to increase to $1.46 million and generate $56,186 in taxes.

The city would also retain 10 percent of the average annual increment of $26,403.

The total amount of the TIF, roughly $215,000, would be used to offset site preparation costs, extend infrastructure and cover other development expenses.

The project is consistent with the city’s zoning ordinances and comprehensive plan, which allows for light-industrial uses in that area, according to the city planner’s office.

The council scheduled a public hearing to discuss the TIF application on Monday, May 11 at 7:15 p.m. at city hall.

Another noteworthy topic at Monday's meeting was how the council is dealing with proposed cuts in local government aid.

Governor Tim Pawlenty’s proposal would result in Alexandria losing $315,000 in aid, according to City Administrator Jim Taddei.

Although the city doesn’t know what the final cut will end up being, the council decided to take a pro-active approach by taking the following actions, as recommended by its budget committee:

No major capital improvement of equipment will be purchased until after July 2009.

Two police officer positions, which were in the 2009 budget, will be delayed until after July 2009. Staff was directed to contact federal agencies for possible funding under the federal stimulus program. This is expected to save the city $89,200 in salary alone.

Health insurance costs for city employees, which had been roughly estimated, were tightened to reflect the actual costs, said Taddei. This added up to $67,600.

Other major cuts of $5,000 or more in the 2009 budget include: record retention ($5,000), overtime for full-time employees in the police department ($27,500), PERA in the police department, ($13,700), building repairs and maintenance at the fire station ($7,584), other building repair and maintenance ($16,000), part-time street department employees ($12,500), and part-time park department employees ($10,000).

Some of the smaller cuts the public may notice include eliminating $1,000 for Community Night Out, $1,000 for the Citizens Police Academy and $1,000 for sidewalk replacement.

Combined, all of the cuts and adjustments will trim about $314,000 from the city’s budget.

Council member Cindy Bigger noted that more cuts are likely since the governor is proposing nearly twice as much of a cut in LGA in 2010.

In other action, the council:

--Approved an amendment for the planned unit development (PUD), Lakewood Terrace, LLC.

The amendment increases the number of apartment units from 48 to 54; adds a 300 square foot building; increases the total developed area by 1,649 feet; and increases the parking stalls from 102 to 112 in the residential portion and from 60 to 66 in the commercial portion.

The main reason apartments were added is to provide more affordable housing, which will enable the project to receive tax increment financing.

The previous application contained only income restrictions for renters – not rent rates.

The project must still meet several conditions, including a plan on how sanitary sewer will be provided to the site.

In related action, the council also approved Lakewood Terrace’s TIF application, which had been tabled at the last meeting, pending the PUD application. The application passed on 4-1 vote; Bigger voted against it.

The developers – Scott Kluver, Randy Roers and Harold Gesh – are proposing to build a 36-unit, multi-family and general occupancy apartment complex on the east side of South Broadway, south of 34th Avenue.

Monthly rent, including garbage, water and sewer, would start at $533 for a one-bedroom unit. The rate for a three-bedroom, two-bathroom unit would be $1,450.

As required under the city’s TIF guidelines, at least 20 percent of the units must be occupied by tenants whose income is 50 percent or less of the area median income, in this case, eight units.

Right now, the Lakewood Terrace property is valued at $167,900 and generates $1,542 in taxes. After the TIF period ends, the value is projected to increase to $3.6 million and generate $44,432 in taxes.

The city would also retain 10 percent of the average annual increment of $38,757.

--Amended the city’s 2007 Comprehensive Plan Future Land Use Map.

It now incorporates the Johnson Family Master Plan, which was approved by the city last December. It encompasses a 550-acre parcel of land south of 18th Avenue and east of Nokomis Street (the area near the proposed new high school).

The amendment is the first step in a process that would allow the property to be rezoned and developed in a manner that’s consistent with the approved master plan.

The owners are proposing two distinct development styles for the site.

The property fronting Rosewood Lane would be strictly single-family residential. Property fronting County Road 46, meanwhile, would be higher-density residential – apartments, assisted living, detached townhomes, etc.

Commercial complexes would be located on the corner of busy streets. Some commercial buildings are expected to have retail businesses on the bottom with housing or apartments on the upper floors.

A new First Lutheran Church may also be built in the area.

Another future goal is to change the alignment of Pioneer Road as it intersects with County Road 23 to make it more conventional, providing 90-degree approaches.

Parks, ponds and walking trails will also likely be located throughout the development. A trail may be built under County Road 46 to the new elementary school.

--Approved a subdivision application for Bergen Sunrise Living Addition, located along Pioneer Road, east of the proposed new high school and north of 50th Avenue.

The developers plan to build apartment buildings on the property but have placed the project on hold until Knute Nelson, which is building a new senior living campus in the area, figures out how it will get water and sewer to the site.

Up to 62 units could be allowed on the property, according to City Planner Mike Weber.

The council approved the subdivision with several conditions, including that a planned cul-de-sac be eliminated from the plans. Instead, it called for a public road to be extended to the east property line.

--Was reminded that a special meeting is set for Monday, March 30 at 7 p.m. at city hall to hold a public hearing regarding the proposed phase III annexation area waterline assessments.

Informational packets have been mailed to all property owners in the area, according to City Administrator Jim Taddei.

--Called for bids to make improvements and expand the city-owned Plaza Liquor – its first facelift in 25 years.

The cost, not including site improvements, is estimated at $292,800.

The project includes adding 2,160 square feet, new asphalt shingles, metal siding, stonework, personnel doors, an aluminum storefront, a coiling door, an overhead door, and metal fascia, soffit and gutter work.

The project is expected to start next month and be completed this summer. The store will remain open throughout construction.

--Decided to extend sanitary sewer on South Broadway to serve a proposed new housing development, Lakewood Terrace and adjoining property along South Broadway.

The city plans to extend the sewer 1,200 feet from 34th Avenue.

The cost of the project is estimated at $90,000. Instead of using assessments, the city will cover most of the cost of the project through sewer connection charges.

The action is contingent on the apartment developers receiving a building permit.

In related action, the city hired Widseth Smith Nolting and Associates to do the engineering work for the project at an estimated cost of $14,016.

--Agreed to close 2nd Avenue, from Kenwood Street to Broadway, to accommodate the Alexandria Lakes Area Chamber of Commerce's "Awake the Lakes" festival.

The event will take place on Memorial Day weekend, May 22-25. Planned activities include a rib fest, car show, entertainment and a beer garden.

--Welcomed Brad Stevens as the newly hired lodging bureau coordinator for Alexandria Hotel and Hospitality (AHH).

The position is paid for through the lodging tax proceeds.

Stevens said his goal is to promote Alexandria and increase the number of "heads in beds."

He said AHH's upcoming advertising campaigns will focus on drawing people from the Fargo-Moorhead area, which he said has showed significant growth even during the recession.

A native of Winger, Stevens attended Minnesota State University in Moorhead and has extensive experience in the lodging and tourism business sector. He worked as the executive director with the Montevideo Area Chamber of Commerce since September 2008. He was also the hotel and sales manager with Shooting Star Casino Hotel and Event Center.

--Authorized city staff to send a letter to the Alexandria Post Office to relay concerns about the elimination of a mail drop box that had been located behind the post office.

Council member Sara Carlson said several residents have complained about a backlog of traffic and congestion on the post office's remaining drop box.

Mayor Dan Ness said he, too, has heard complaints about traffic bottling up at 6th Avenue West.

The letter will ask the post office to reconsider putting the drop box back or adding one at another location.

--Was informed that Mayor Ness and council member Owen Miller plan to attend a rally at the state Capitol this Thursday to support local government aid funding.

--Proclaimed April 19-25 as "Week of the Young Child" – an awareness campaign supported by the Lake Region Association for the Education of Young Children and others.

The organizations are working to improve early learning opportunities, including early literacy programs that can provide a foundation of learning for children.

--Approved the following licenses: peddler's – Doug's Kettle Corn at Ace Hardware and during Alexandria Beetles games (renewal); charitable gambling – Alexandria Lakes Area Chamber of Commerce to sell raffle tickets for a June 8 event, and Habitat for Humanity to sell raffle tickets for a May 24 event.

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