Commissioners Receive MEDOFAB Report

Tuesday the Manhattan City Commission received a report on the companies that have received more than $11 million in sales tax money from the City.

Here is a list of the companies and comments made by Diane Stoddard, Assistant City Manager.

2Linc. / EMI

• Existing corporation received a $75,000 grant to relocate its pipe/pump distributing business from Wichita to Manhattan in July of 1995

• Company repaid $7,955 of a $125,000 loan prior to becoming insolvent in early 1997 due to illness of CEO

• City is a primary beneficiary in the amount of $125,000 on a personal life insurance policy covering Mr. Gary LaGrange who is making premium payments on the policy

• Local successor company (Environmental Manufacturing, Inc.) acquired 2Linc. assets and has produced 15 jobs

Transportation Design and Manufacturing

Vehicle Modifier/Alternative Fuel Vehicle Assembly Plant

Grant: $1,525,000 Primary Loan: $418,000

SKILLS Training Loan: $270,000

• Job creation: 32.18 FTEs created as of 12-31-01 (projected FTEs were 138)

• Total 2001 payroll: $924,166

•Median annual salary for 2001: $17,333

• Total 2001 sales: approx. $3 million

• Grand Prix modification occurred during 2001

• TDM management remains dedicated to bringing additional activities to the Manhattan facility- Current activity includes production of corn and pellet home heating stoves for Country Flame

•Received prestigious EMS (Environmental Management System) certification regarding practices and processes.

Grain Industry Alliance

Grain and Food Science Research & Consulting Consortium

Job Incentive Grant: $125,000 (voluntary update)

• GIA maintains 0.8 FTEs, representing 0.3 administrative staff, 10-15 people working on projects and 2 support staff

• 5 current industry members

• Sales were up for 2001 for the third consecutive year.

• GIA is organizing a mini-conference for 2002 to address the topic of Agri-Bioterrorism and what the food industry can do about it.

Manhattan Holdings, LLC

Seed and Venture Capital Funds: $600,000

• Seed capital feeds new companies, creating new jobs, and providing financial returns.

• Partners include City of Manhattan, State of Kansas through KTEC, and KSU Foundation.

• Goal is to generate compounded annual returns of 12-22% through investment strategies within 5 years.

• Nanoscale Materials, Inc., and NutriJoy, Inc., are success stories.

• Job creation figures are reported jointly with Kansas Entrepreneurial Center figures.

Kansas Entrepreneurial Center

Business Incubator

Special Projects Grant: $300,000 and Loan: $250,000

• Incubation services to assist start-up high-growth businesses and create new high-value jobs.

• Received a $300,000 Special Projects Grant for City to purchase building at 1500 Hayes Drive in 1996 and a $250,000 loan to add improvements to the facility in December of 2000.

• Jobs created by KEC and MHL to date are 85 FTEs as of December 31, 2001 and 88.1 FTEs as of June 2002. Exceeds goal of 75 for 2001.

• Companies assisted by KEC and MHL have created $3.6 million in payroll with an average annual salary of $39,000.

KSU High Energy Physics

Physics Laboratory and Research Facility

Special Projects Grant: $112,500 (voluntary update)

• Job creation exceeds expectations- 7 positions were originally targeted and 15 FTE positions were created as of 2001.

• Median Income: Professional positions at $20,000-$60,000 and students at $7.50 to $12 per hour

• The High Energy Physics lab leverages significant research funds for the university and the community. The lab has leveraged approximately $10 million since its establishment.

Manko Window Systems

Job Incentive and Value Differential Grant: $931,000

• Job creation: 156 FTEs as of December 31, 2001. Job creation far exceeds original target of 55 new positions.

• There continues to be a steady increase in sales.

• The City assisted the company in early 2002 with $6.8 million in Industrial Revenue Bonds to finance another expansion and equipment. The expansion will enable the company to produce tempered glass.

ASHA Distributing

Job Incentive Grant: $165,000

•Opened 80,000 sq. ft. warehouse-distribution center in July of 1998 on 8-acre site, with a capital investment of approximately $2.3 million.

•Created 4 FTEs as of December 31, 2001. This figure is down slightly from previous year.

•ASHA Distributing facility provides important warehouse space for lease in the community.

KanGolf, Inc.

Nine Hole Golf Course and Recreation Facility

Job Incentive Grant: $100,000

• Income has improved slightly over 2000 figures

• Job creation was at 5 FTEs, the same number as reported last year. Efficiencies have resulted in less maintenance personnel than projected.

• The company made direct sales tax monthly payments to the City totaling $3,727 in 2001.

• Company has indicated desire to restructure MEDOFAB agreement with regard to required FTEs.

Farrar Corporation

Ductile Iron Machining Facility

Participatory Loan: $1.1 Million

• Company created a total of 8.5 FTEs as of December 31, 2001 with an annual median income of $30,273.

• 10 year business plan shows expansion plans in Manhattan and future sales growth

• Overall company sales were down 20% in 2001, due to the economy. However, sales from the Manhattan facility are on target and expected to increase steadily over the next 6-8 months.

• Farrar is the only company in the U.S. which produces assembly-line ready ductile iron components for machines such as lawnmowers, race care and exercise equipment.

• Achieved prestigious SHARP certification from OSHA and KDHE.

Sykes Enterprises, Inc.

Consumer Technology Support Service Center

Job Incentive Grant: $2,575,000

On-Site Improvements and Property Tax Incentives: $510,000

• Overall revenues down slightly from 2000, yet company generated significant operating cash flow and ended 2001 with no outstanding debt.

• Job creation: 445 FTEs as of December 31, 2001, 453 as of June 30, 2002. Exceeds original estimate of 432 jobs. Currently building workforce to 525.

• Sykes maintains three primary accounts at the Manhattan facility.

Community Online

Resource Exchange (CORE)

Community Technology Center

Special Project Grant: $128,000

• To date, 4.16 FTEs jobs created by the Library/CORE collaboration- down slightly from previous year.

• CORE and Library reached agreement in December 1999 for the Library to assume full management of the Technology Center in order to provide program sustainability.

• The Center has developed a state-of-the-art classroom with networked computers, video projector and projection screen in order to host computer software workshops.

• CORE and the Manhattan Area Technical College have formed a partnership to provide many community technology workshops.

• The Center serves an average of 144 people daily.

National Gas Machinery Laboratory (NGML)

Testing, Research and Educational Institute for Natural Gas Industry

Job Incentive Grant: $100,000

• While NGML continues its testing of external turbochargers for the natural gas industry, testing is down. However, research is now the primary activity and generator of income for the Institute.

• Job creation: Employed 8.6 FTEs at the end of 2001, 54% below projected. Overall median salary is $11.75/hour or $24,400 annually

• With upgrades to its turbocharger test stand nearly complete, the lab will be the only public or private open-loop testing facility in the United States with the capability to test 99 percent of the turbochargers used in the natural gas transmission, marine and nuclear industries.

Paragon Technology, Inc.

Computer Component Distributor

Job Incentive Grant: $50,000

Participatory Loan: $250,000

• Company and its affiliates declared bankruptcy in Spring of 2001

• Banks stand in first position for any recovery of funds-ahead of City

• Unlikely that the City will recoup any funds from the company

• City remains active in the proceedings, filing as a creditor in the bankruptcy case.

• Paragon made its initial loan payment of $58,750 in 2000

Western Wireless

Customer Support Call Center

Job Incentive Grant: $250,000

• Subscriber growth continues and WWC owns cellular licenses covering 30% of the continental U.S.

• 61 additional positions were added in 2001 for a total of 314 FTEs at year end. Ahead of projections and up from 258 previous year.

• Median wage is $19,094 or $9.18 hourly with full benefits.

• Over half of the company’s 19,000 daily calls are answered at the Manhattan facility.

• Seeking 100 additional employees in next 120 days.

Light Solutions, Inc.

Light Fixture Manufacturer

Job Incentive Grant: $50,000

Participatory Loan: $250,000

• Defaulted on loan with the City in early 2001.

• Banks and bond holders received a judgment against the company earlier in the year.

• City has remained involved in the proceedings.

• Building, which is locally-owned and was leased to the company, remains in Corporate Technology Park and is available for occupancy.

Abbott Aluminum

Manufacturer of Industrial Aluminum Work Holding Equipment

Job Incentive Grant: $150,000

• $500,000 building was leveraged with $150,000 in economic development funds.

• Abbott has created 3 new direct jobs in 2001, down 2 from previous year.

• Sales and payroll are down, but not to the level of the machining industry as a whole.

• Carl Reed was a finalist as Entrepreneur of the Year by Ernst & Young.

• Company recently announced collaboration with Connecticut-based company to form an Alliance to design and market workholding products.

Mercy Community Health Foundation

Foundation Supporting Mercy Health Center

Grant: $1,000,000

• Grant awarded to leverage additional funding to support expansion of local hospital and health services.

• Total pledges received as of July 1, 2002 are $2,304,881.

• As of July 1, 2002, three new general internal medicine physicians and one family practice physician has been recruited.

• Hospital expansion is on schedule- new emergency department and intensive care unit opened April 2002.

• Successful employee campaign completed and there is a current effort to gain new pledges from the community.