Agenda - Council - 01/08/2002 - Laserfiche WebLink

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I I I I I I I I I I I i I I I I I I The acquisition company will also be assuming some of the liabilities of Mateski Properties LLC and Systematic Refrigeration. The Contract for Private Development between the City of Ramsey and Mateski Properties, LLC is regarded as one of these liabilities. In December 2001staff met with the Chairman of C2, Inc. and the President of Zero Zone along with representatives of the Minnesota Department of Trade and Economic Development to discuss a number of issues related to the acquisition. Zero Zone management stated at the meeting that they would require an amendment to the Contract for Private Development in order for the acquisition to proceed. Their main concern revolves around the job creation requirement identified in the agreement. When the agreement was executed, Systematic Refrigeration represented that they would create 50 jobs within 2 years of the completion.of the project at an hourly wage rate of at least $10.00 per hour or more. The company proceeded to construct an 80,000 SF manufacturing plant in the city. However, due to the economy the company currently employs 48 people and will be unable to achieve the goal. Zero Zone does not believe that they will achieve the job creation requirement within the timeframe stipulated in the agreement. Therefore, they have asked that the agreement be amended to read that the company will retain 48 jobs in the City during the term stipulated in the agreement. Recommendation The Minnesota Department of Trade and Economic Development provided a grant to the City in the amount of $300,000 to originally assist the Systematic Refrigeration project. DTED Representatives have said that they believe that the acquisition is in the best interest of the City and State and that they will approve the request being made by the company through a "grant adjustment notice". If the requested amendment is approved, the company will retain the current jobs in the City if Ramsey and the State of Minnesota. If the amendment is not approved it is quite likely that Systematic Refrigeration will cease operations and be liquidated. The jobs will then be lost. Based on my findings I believe that approval of the amendment is reasonable and will result in the jobs and the company being retained in the City of Ramsey. Zero Zone is acquiring Systematic in order to grow the business over the long term and is interested in keeping the operation in the City. Future growth of the business is possible with the level of capital and .distribution network that Zero Zone can bring to the table. I recommend approval of the request. · Page 2 -167-