Manhattan Economic Development Annual Report and Update 2006

Transcription

1 Manhattan Economic Development Annual Report and Update 2006 Property Tax Generated 17

2 Property Taxes (Real and Personal) Generated in by Companies Receiving Economic Development Funding Property Taxes (Real and Personal) by Year Company Abbott Aluminum $39,128 $49, Alltel (Western Wireless) $194,959 $186, ASHA Distributing $44,290 $37, Covan NA NA Farrar Corporation $87,946 $51, Flint Hills Beverage $26,873 $26, Florence Corporation of Kansas* $0 $ GTM* NA $0.00 ICE Corporation* $0 $0.00 KanGolf $14,622 $11, Manko Window Systems* $74,105 $80, Nanoscale* $49,497 $48, NISTAC/Manhattan Holdings $9,887 $10, Sykes (Alorica) $110,255 $105, TOTAL $651,562 $607,963 Notes: * Subject to Property Tax Abatement Old TDM property now occupied by Kansas Army National Guard

3 Manhattan Economic Development Annual Report and Update 2006 individual active companies & accountability reviews 19

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5 Manhattan Economic Development Annual Report and Update 2006 Funds Allocated: $781,483 Grant $80,000 Forgivable Loan Manhattan economic development opportunity fund Annual Accountability Review City of Manhattan 5935 Corporate Drive auth-florence (florence corporation of Kansas) 21

6 MANHATTAN ECONOMIC DEVELOPMENT OPPORTUNITY FUND ACCOUNTABILITY CHECKLIST Company: Auth-Florence Date of Review: September 2007 Report for year ending: June 30, 2007 Review Team: Diane Stoddard and Nick Arena Company Representatives: Kerri Winter, Vice President of Accounting and Administration GOAL OF COMPANY: Florence Corporation of Kansas is a commercial mailbox manufacturer specializing in mailbox installations for large residential developments as well as locking mail boxes to address mail security issues. After conducting an international search, the company expanded its operations from the Chicago area and constructed a 200,000 square foot facility in Manhattan s Corporate Technology Park in early Manhattan Economic Development Funding: Grant in the amount of $781,483 (special assessment payments on four lots in the Manhattan Corporate Technology Park), and forgivable loan in the amount of $80,000 was approved by the City Commission in February In addition, the City provided a total of four lots in the TecPark for the company to locate its facility (Lots 13, 14, 22A and 23) at approximately 25 total acres. All incentives, including a tax abatement, payment of the City of special assessments, and the forgiveness of the loan is tied to the company s compliance with four general performance areas: capital investment, job creation, wage structure, and benefits for employees. CURRENT STATUS: All major lines are in full production. The company was successful in winning a competitive contract with the U.S. Postal Service. The company is producing and shipping vertical mail boxes, cluster box units, and door chimes in Manhattan. In 2007, the Florence Corporation was acquired by Gibraltar Industries, a publicly traded company. GIBRALTAR is a leading manufacturer, processor, and distributor of products for the building, industrial, and vehicular markets.

7 Auth-Florence Report for Year Ending June 30, 2007 Review Date August 2007 Page 2 PRIVATE OR OTHER CAPITAL INVESTMENTS: Actual Capital Investment Expenditures and Time Period: Has the cumulate target expenditures been met? Actual Expenditure = $19,058,360 Target Expenditure = $8,000,000 = 238.2% Compliance Percentage Cumulative Target Expenditures Subsection 12(b) Time Periods $4,000, the Agreement Date to June 30, 2004 $6,000, July 1, 2004 to June 30, 2005 $8,000, July 1, 2005 to June 30, 2006 $9,000, July 1, 2006 to June 30, 2007 $9,000, July 1, 2007 to June 30, 2008 $9,000, July 1, 2008 to June 30, 2009 $9,000, July 1, 2009 to June 30, 2010 $9,000, July 1, 2010 to June 30, 2011 $9,000, July 1, 2011 to June 30, 2012 $9,000, July 1, 2012 to June 30, 2013 JOB CREATION: Actual Job Creation and Time Period: Total hours worked 897,214 = FTE 1800* Actual FTE/Target FTE = 249.2% Job Creation Compliance Targets: Number Subsection 12(c) Time Periods FTEs 1 the Agreement Date to June 30, July 1, 2004 to June 30, July 1, 2005 to June 30, July 1, 2006 to June 30, July 1, 2007 to June 30, July 1, 2008 to June 30, July 1, 2009 to June 30, July 1, 2010 to June 30, July 1, 2011 to June 30, July 1, 2012 to June 30, *Note: An FTE is an employee of the Corporation who has worked 1,800 actual hours for the Corporation (inclusive of overtime hours) during the applicable period.

8 Auth-Florence Report for Year Ending June 30, 2007 Review Date August 2007 Page 3 Wage Structure: Targets: Total Hours Worked (non-probationary) = 897,214 Category A: 95% at $8 or more per hour Actual: 897,214 Category B: 15% at $10 or more per hour Actual: 538,157 Category A total hours worked Total hours worked Category B total hours worked Total hours worked = 100%/95% = 105% actual A compliance = 60%/15% = 399.9% actual B compliance Average of A & B =252.6% Employee Benefits: Auth-Florence will provide benefits to all trained, non-probationary FTEs to include participation by the company in the cost of medical insurance, life insurance, and paid vacation and holidays. Company to certify compliance. If such certification is provided, compliance is deemed at 100% in this category. Certification Provided: health insurance, life insurance, accidental death and dismemberment insurance; and short-term disability provided Comments: Sick and vacation leave offered to all trained, non-probationary FTEs Compliance Percentage: 100% Total Compliance: Capital Investment: 238.2% Job Creation: 249.2% Wage Structure: 252.6% Benefits: 100% Average of above determines blended % of compliance: 210 % = 100% of incentives Blended Percentage Range Portion of each of the Incentives to be Received Equal to or greater than 85% 100% Equal to or greater than 80% and less than 85% 80% Equal to or greater than 70% and less than 80% 70% Equal to or greater than 50% and less than 70% 50% Less than 50% 0%

9 Auth-Florence Report for Year Ending June 30, 2007 Review Date August 2007 Page 4 DEMOGRAPHICS: (Percentage of employees who live in Manhattan compared to Riley County, Pottawatomie County, etc.) Manhattan 42% Riley County 54% Geary County 27% Pottawatomie County 6% All other counties 13% GENERAL COMMENTS: 500 individuals on the payroll were noted as of June 30, 2007 NEEDED ACTIONS: None.

10 Full Time Equivalent Employees As of 6/30/2007 Work Hours Paid July 1, 2006 through June 30, ,214 Equivalent Individual Annual Hours 1,800 Equivalent Headcount as of 6/30/ Goal Compliance 249.2% Non-Probationary Hours paid at $8 or more per Hour 897,214 Non-Probationary hours paid at $10 or more per hour 538,157 % paid at $8 or more per Hour (Goal 95%) 100% % paid at $10 or more per hour (Goal 15%) 60% Compliance Category A - >$ % Category B - > $ % Compliance 252.6% Capital Investment $ 19,058,360 Goal $ 8,000,000 Compliance 238.2% Employee Benefits Compliance 100% Summary Total Compliance Job Creation 249.2% Wage Structure 252.6% Capital Investment 238.2% Benefits 100.0% Blended % of Compliance 169.1%

11 Manhattan Economic Development Annual Report and Update 2006 Funds Allocated: $350,000 Loan $350,000 Forgivable Loan Manhattan economic development opportunity fund Annual Accountability Review City of Manhattan 4th Street Downtown Manhattan Collegiate Marketing Services 27

12 MANHATTAN ECONOMIC DEVELOPMENT OPPORTUNITY FUND ACCOUNTABILITY CHECKLIST Company: Collegiate Marketing Services Date of Review: October 2007 Report for year ending: June 30, 2007 Review Team: Brian Williams & Nick Arena Company Representatives: Steve Ballard, CEO GOAL OF COMPANY: Collegiate Marketing Services (CMS) specializes in the development and management of Retail, Online, Catalog and Gameday merchandise sales for major Collegiate Athletic Departments. Current clients include the University of Oklahoma, the University of Nebraska and the University of Texas. CMS was founded in 1996 in Manhattan, KS by two longtime Manhattan residents Steve Ballard and Jeff Grantham. CMS relocated to Overland Park, KS in Sales have grown from $200,000 in 1998 to $8,800,000 in CMS currently employees over 30 people at its 25,000 square feet Overland Park headquarters and over 100 people across the nation. CMS has been developing a plan to return its headquarters to the Manhattan, KS area. After evaluating several alternatives, CMS is excited about the opportunity that exists to purchase, re-develop and re-vitalize two buildings located along the Downtown 4th street corridor. The plan would maintain the retail/commercial viability of the fronts of these 4th street corridor buildings, while fully utilizing the rest of these large buildings potential. Manhattan Economic Development Funding: A $350,000 forgivable loan to be paid to the company in two installments, with $250,000 being paid the first year and $100,000 being paid in year three. A conventional loan totaling $350,000, to be paid out in two installments of $250,000 the first year and $100,000 the second year. All of the incentives provided to the Company will be tied to meeting annual performance requirements, including capital investment, job creation, wage structure and benefit package targets. Failure to perform will require the Company to forfeit a portion or the entire incentive package. CURRENT STATUS: There are no requirements for compliance reporting until August of Thus, a more extensive report will be provided for the 2007 calendar year.

13 Manhattan Economic Development Annual Report and Update 2006 Funds Allocated: $100,000 (maximum) Performance Grant Manhattan economic development opportunity fund Annual Accountability Review City of Manhattan 5925 Corporate Drive, Manhattan Corporate Technology Park covan world-wide moving, inc. 29

14 MANHATTAN ECONOMIC DEVELOPMENT OPPORTUNITY FUND ACCOUNTABILITY CHECKLIST Company: Covan World-Wide Moving, Inc. Date of Review: August 2007 Report for year ending: June 30, 2007 Review Team: Diane Stoddard and Nick Arena Company Representatives: Lacy Brakefield President Paul Hansen Regional Vice President Mike Tatum General Manager (Manhattan) GOAL OF COMPANY: With the growth of the surrounding area s military and commercial markets, Covan World-Wide Moving, Inc., plans to expand its operations and capacities to meet the needs and demands of its customers. The company plans to continue its commitment to the Manhattan community that it has had since the 1960 s and further strengthen its relationship within the Manhattan area by constructing a larger and more modern facility. Covan s primary focus is Fort Riley, and their intent is to reposition their operation closer to the military base entrance at the Manhattan Corporate Technology Park. Manhattan Economic Development Funding: A performance grant of $10,000 per full-time job created that pays at least $10 hourly and is provided benefits. A maximum of $100,000 will be provided. CURRENT STATUS: Covan World-Wide Moving, Inc. experienced a non-growing year in the area of job creation. Therefore, the criterion was not met in order to trigger the $10,000 per full-time job created performance grant. GENERAL COMMENTS: NEEDED ACTIONS: None.

15 Manhattan Economic Development Annual Report and Update 2006 Funds Allocated: $1,100,000 Participatory Loan Manhattan economic development opportunity fund Annual Accountability Review City of Manhattan 301 Levee Drive, Manhattan Industrial Park Farrar corporation 31

16 MANHATTAN ECONOMIC DEVELOPMENT OPPORTUNITY FUND ACCOUNTABILITY CHECKLIST Company: Farrar Corporation Date of Review: October 2007 Report for year ending: December 31, 2006 Review Team: Diane Stoddard and Nick Arena Company Representative(s): Joe Farrar, President GOAL OF COMPANY: Farrar Corporation is a family and employee owned manufacturing company dedicated to providing the highest quality iron products to its manufacturing customers throughout the United States. As a customer focused organization, Farrar is dedicated to its internal and ultimate customers and will strive to meet or exceed their expectations through continuous improvement in product, services, and processes. Its operating philosophy is to obsessively serve existing customers and markets while searching for new opportunities. Internally, it will embrace progressive operational methods, moderate fiscal policy, and employee involvement culture. Farrar will actively support safety, the protection of the environment, and the improvement of its stakeholders quality of life and the local community. Farrar Corporation opened a 37,000 square foot machining facility in Manhattan in the spring of MEDOFAB FUNDING: $1.1 million Participatory Loan Final amended agreement approved and dated March 4, GENERAL 1. Annual financial statements, audits, or reports. Submitted Reviewed Conclusion X X Balance sheet as of September 30, 2006, shows total assets of $14.9 million and current and long-term liabilities, minus stockholder equity, of $4.6 million. Net income for 2006 was $836,000, up from $755,000 in In 2006, overall company sales were up 10.4% from Sales from the Manhattan facility were up 19.3% from the previous year. Overall company sales are expected to continue to increase in 2007 and 2008.

17 Farrar Corporation Report for Fiscal Year Ending September 30, 2006 Review Date October 2007 Page 2 Submitted Reviewed Conclusion 2. Any corporate stock redemption or X X None. sales during year? 3. Total jobs created as of June 1, 2007? X X 27 FTE 5. Number of new direct jobs created during year? X X 9 FTE 6. Median wage X X $33,000 in Manhattan 8. Company s total payroll for 2006 X X $796,194 in Manhattan 9. Any potential paybacks due to any defaults in original agreements? X X No. PARTICIPATORY LOAN 1. Review firm s business plan. X X The business plan is to grow the company to $30 million in sales in the next 3-4 years. Construction has been completed on the 18,000 sq ft addition to the original building in the past year. An additional $3.2 million has been invested in new equipment for the Manhattan facility during the past year. The January 2007 Manhattan IRB issue provided most of the funding for this expansion for Farrar Corporation. Farrar Corporation expects the current economic conditions to continue for the next few years and expects increased sales, additional investment in equipment, and the creation of new jobs to continue for at least the next 2 years. The company has made every payment on the $1.1 million economic development loan as scheduled.

18 Farrar Corporation Report for Fiscal Year Ending September 30, 2006 Review Date October 2007 Page 3 LOCAL COMMUNITY INVOLVEMENT: Active in Chamber of Commerce, the United Way, and will match employee contributions for charitable contributions. Farrar Corporation is also a key investor in the Advantage Manhattan program. Also, Joe Farrar is active with Kansas State University. DEMOGRAPHICS: (Percentage of employees who live in Manhattan compared to Riley County, Pottawatomie County, etc.) Manhattan 55% Pottawatomie County 22% Riley County (outside of Manhattan) 8% Wabaunsee County 7% Geary County 4% Clay County 4% GENERAL COMMENTS: Company recognized in 2003 and 2007 in the manufacturing division of the Business Achievement Award by the Kansas Department of Housing and Commerce Company received a national award for Excellence in Marketing from the American Foundryman Society in 2003 Achieved ISO 9002:2000 Certification in 2003 Achieved SHARP (Safety and Health Awareness Recognition) from OSHA and KDHE. Farrar is one of only 27 companies in Kansas to achieve this award Farrar Corporation is the only company in the United States which produces assembly-line ready ductile iron components for machines such as lawnmowers, race cars, the heavy truck industry, etc. Farrar is operating under a 10-year plan to provide future growth for the company in Manhattan Farrar Corporation has been operating in Manhattan 24 hours a day, 6 days a week in Manhattan Construction has been completed on the 18,000 sq. ft. expansion to the building An additional $3.2 million has been invested in new equipment for the Manhattan facility during the past year The company has long-range plans for the development of the rest of the company-owned land in the east industrial park for additional manufacturing facilities NEEDED ACTION(S): No action needed.

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21 Manhattan Economic Development Annual Report and Update 2006 Funds Allocated: $40,000 Grant $164,647 Special Assessments Manhattan economic development opportunity fund Annual Accountability Review City of Manhattan 5900 Corporate Drive flint hills beverage, llc 37

22 MANHATTAN ECONOMIC DEVELOPMENT OPPORTUNITY FUND ACCOUNTABILITY CHECKLIST Company: Flint Hills Beverage Date of Review: October 2007 Report for year ending: December 31, 2006 Review Team: Diane Stoddard and Nick Arena Company Representative: Terry Dow, Manager/Owner GOAL OF COMPANY: Flint Hills Beverage is a distributor for Anheuser-Busch products throughout the region, serving Geary, Riley, and Clay Counties, and 2/3 of Washington County and Pottawatomie County from St. George westward. The company has a very solid customer base and is expecting growth as a result of the Fort Riley expansion. The company moved into a newly constructed 40,000 square foot building on December 15, The project yielded immediate cash to the City as a result of the land sale and immediate tax revenue for the taxing jurisdictions since no tax abatement is involved. While job creation is low, the jobs are quality jobs which include benefits. Manhattan Economic Development Funding: Grant in the amount of $40,000 to be paid out over a four year period at $10,000 per year and payment of special assessments on two lots in the Manhattan Corporate Technology Park for a total of $164,647 over 16 years. In addition, the City sold the company two lots in the TecPark for the company to locate its facility (Lots 19 and 20 at approximately 5.99 total acres). All incentives, including payment of the City of special assessments, and the performance grant is tied to the company s compliance with four general performance areas: capital investment, job creation, wage structure, and benefits for employees. PRIVATE OR OTHER CAPITAL INVESTMENTS: Actual Capital Investment Expenditures and Time Period: Has the cumulate target expenditures been met? Actual Expenditure = $3,058, Target Expenditure = $2,675, = 114 % Compliance Percentage Cumulative Target Expenditures Time Periods $600,000 by December 31, 2005 $2,675,000 by December 31, 2006

23 Flint Hills Beverage Report for Year Ending December 31, 2006 Review Date October 2007 Page 2 NET NEW JOB CREATION: Base jobs as of December 31, 2004 was 19.5 FTEs Actual Job Creation and Time Period: 21 FTEs as of December 31, 2005 created over base of 19.5 FTEs as of December 31, FTE 19.5 base = 2.5 new FTE Actual FTE 2.5/Target FTE 2 = 125% Job Creation Compliance Targets: Time Periods FTEs Jan. 1, 2005 December 31, Jan 1, 2006 December 31, Jan 1, 2006 December 31, Jan 1, 2006 December 31, Jan 1, 2006 December 31, Annually from : Maintain 5 *Note: An FTE is an employee of the Corporation who has worked 1,900 actual hours for the Corporation (inclusive of overtime hours) during the applicable period. Wage Structure: 95% of employees hired after January 1, 2005 must receive wages in excess of the target below. The new FTE was paid a wage of $12.05 hourly Targets: Year Average Wage Targets for all New FTE 2006 $ $ $ $ $ thru 2020 Maintain $12 Actual average wage for 2007 target, Jan 1, Dec. 31, 2006= $14.40 Compliance= 127.6%

24 Flint Hills Beverage Report for Year Ending December 31, 2006 Review Date October 2007 Page 3 Employee Benefits: Flint Hills Beverage will provide benefits to all FTEs hired after January 1, 2005 to include participation by the company in the cost of medical insurance, life insurance, and paid vacation and holidays. Company to certify compliance. If such certification is provided, compliance is deemed at 100% in this category. Certification Provided: Letter provided dated January 2007 indicates that the company participated in a benefits package that included medical insurance, life insurance, paid vacation and holidays. Compliance Percentage: 100% Total Compliance: Capital Investment: 114% Job Creation: 125% Wage Structure: 127.6% Benefits: 100% Average of above determines blended % of compliance: 116.7% = 100% of incentives Blended Percentage Range Portion of each of the Incentives to be Received Equal to or greater than 85% 100% Equal to or greater than 80% and less than 85% 80% Equal to or greater than 70% and less than 80% 70% Equal to or greater than 50% and less than 70% 50% Less than 50% 0% GENERAL COMMENTS: Moved into a new 40,000 square foot building on December 15, 2006 NEEDED ACTIONS: None.

25 Manhattan Economic Development Annual Report and Update 2006 Funds Allocated: $800,000 Forgivable Loan Manhattan economic development opportunity fund Annual Accountability Review City of Manhattan 520 McCall Road, Manhattan Industrial Park gtm sportswear 41

26 MANHATTAN ECONOMIC DEVELOPMENT OPPORTUNITY FUND ACCOUNTABILITY CHECKLIST Company: GTM Sportswear Date of Review: October 2007 Report for year ending: December 31, 2006 Review Team: Diane Stoddard and Nick Arena Company Representatives: Dave Dreiling, President GOAL OF COMPANY: GTM Sportswear, located at 520 McCall Road, sells custom embroidered and screen-printed sportswear and related goods. The company s diverse markets include a national presence in K-12 schools (boosters, staff apparel, and team wear), corporate apparel and promotional products, collegiate retail, and chair back stadium sales. Within these markets are dozens of subset markets in which the company has developed specialized niches. GTM s Custom Goods Division is both their largest, and fastest growing. Growth in this division has averaged 30% over the last 3 years and is projected at this same level for the next several years, GTM has unlimited growth potential and an aggressive, yet manageable growth plan. Over the last 13 years GTM has experienced a compound annual revenue growth rate of 19.1%. GTM is in the planning process of an expansion that will add an additional 20,000 square feet to be used as warehouse space and add an additional 6,000 feet of completed office space. GTM plans to spend between $1-1.2 million on the upcoming project. GTM has dedicated itself to creating 500 new FTE positions. More than 25% of these new positions will pay starting wages of greater than $12.50 per hour, and all positions will offer excellent prospects for upward mobility within the company. GTM currently has 38 KSU graduates working at their facility. Manhattan Economic Development Funding: Forgivable loan in the amount of $800,000 to be paid out over a four year period at $200,000 per year. All incentives are tied to the company s compliance with four general performance areas: Job Creation, Capital Investment, Wage Targets, and Employee Benefits. CURRENT STATUS: The Company continues to have very high growth and is planning additional physical expansion in the near future.

27 GTM Sportswear Report for Year Ending December 31, 2006 Review Date September 2007 Page 2 PRIVATE OR OTHER CAPITAL INVESTMENTS: Actual Capital Investment Expenditures and Time Period: Has the cumulate target expenditures been met? Actual Expenditure = $3,220, Target Expenditure = $2,500, Cumulative Capital Expenditures = % Compliance Percentage Subsection 5(b) Time Periods $2,500,000 Jan. 1, 2006 to Dec. 31, 2006 $3,250,000 Jan. 1, 2007 to Dec. 31, 2007 $4,350,000 Jan. 1, 2008 to Dec. 31, 2008 $5,650,000 Jan. 1, 2009 to Dec. 31, 2009 $8,150,000 Jan. 1, 2010 to Dec. 31, 2010 $10,350,000 Jan. 1, 2011 to Dec. 31, 2011 $11,850,000 Jan. 1, 2012 to Dec. 31, 2012 $13,750,000 Jan. 1, 2013 to Dec. 31, 2013 $15,650,000 Jan. 1, 2014 to Dec. 31, 2014 $17,950,000 Jan. 1, 2015 to Dec. 31, 2015 NET NEW JOB CREATION: Work Hours paid January 1, 2005 through December 31, ,579 Equivalent Individual Annual Hours 2,000 Equivalent Headcount as of 12/31/ Goal 201 Compliance= Equivalent Headcount as of 12/31/2006=246.3 Goal= 201 =122.5% Targets: Year FTEs *Note: An FTE is an employee of the Corporation who has worked 2,000 actual hours for the Corporation (inclusive of overtime hours) during the applicable period.

28 GTM Sportswear Report for Year Ending December 31, 2006 Review Date September 2007 Page 3 Wage Structure: As stated in subsection 5(d) of the contract: No less than 75% of its FTE's, hired subsequent to October 1, 2005, are in a wage category receiving gross before tax and other deduction wages in excess of $8.55 per hour and no less than 25% of its New FTE's are in a wage category receiving gross before tax and other deduction wages in excess of $10.50 per hour. All full time employees will receive at least $8 hourly. The required wages set forth herein shall increase by 2.5% annually. Total New FTE from 10/1/05 through 12/31/06= 89 Hours paid at $8.55= 120,795 Equivalent Headcount= Hours paid at $10.50= 42,932 Equivalent Headcount= % paid at $8.55 or more (Category A)= 68% % paid at $10.55 or more (Category B) = 24% Compliance= Category A 68% 75% = 90.6% Category B 24% 25% = 96% Total Compliance = 93.3%

29 GTM Sportswear Report for Year Ending December 31, 2006 Review Date September 2007 Page 4 Employee Benefits: will provide benefits to all FTEs hired after January 1, 2005 to include participation by the company in the cost of medical insurance, life insurance, and paid vacation and holidays. Company to certify compliance. If such certification is provided, compliance is deemed at 100% in this category. Certification Provided: Letter provided dated January 2007 indicates that the company participated in a benefits package that included medical insurance, life insurance, paid vacation and holidays. Compliance Percentage: 100% Total Compliance: Capital Investment: 128.8% Job Creation: 122.5% Wage Structure: 93.3% Benefits: 100% Average of above determines blended % of compliance: 111.2% = 100% of incentives GENERAL COMMENTS: Anticipated spending of $1-1.2 million to expand and remodel current facilities Dave Dreiling, CEO & Founder, was the recipient of the 2007 Ernest & Young Entrepreneur of the Year award for the Central Midwest Region NEEDED ACTIONS: None.

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31 Manhattan Economic Development Annual Report and Update 2006 Funds Allocated: $600,000 Seed and Venture Capital Funds Manhattan economic development opportunity fund Annual Accountability Review City of Manhattan 1500 Hayes Drive, Manhattan Industrial Park Manhattan holdings, llc 47

32 MANHATTAN ECONOMIC DEVELOPMENT OPPORTUNITY FUND ACCOUNTABILITY CHECKLIST Company: Manhattan Holdings, LLC Date of Review: August 2007 Report for year ending: December 31, 2006 Review Team: Diane Stoddard and Nick Arena Company Representatives: Kent Glasscock, President and CEO; Vicki Appelhans, Vice President, Finance; and Tammy Bueker Assistant to the President and Facilities Manager Note: Manhattan Holdings, LLC s, fiscal year runs from July 1 - June 30 MEDOFAB Funding History: Manhattan Holdings, LLC, was approved for $600,000 in Seed and Venture Capital Funds to be paid in $200,000 increments on July 1 of 1996, 1997, and GOAL OF COMPANY: To provide early stage risk capital for the commercialization of new products and technologies with apparent high growth potential. The funds will be highly leveraged and invested in companies where Mid-America Commercialization Corporation invests management time and expertise. PRIMARY GOAL (5-10 YEARS): Generate compounded annual returns of 12 to 22% through investment strategies. SECONDARY GOALS (10 YEARS): Leverage Manhattan Holdings s investments in ventures by at least three-fold by facilitating access to other sources of risk capital, grants, and financing. Create, within the region of Manhattan Holding s focus, at least 50 new direct, technology-based jobs, leveraged to about 200 total new jobs through direct and indirect multiplier effects. REPRESENTATION: The City of Manhattan will appoint a minimum of three (3) persons proportional to the City s investment to represent the City on the Board of Members or other governing board of Manhattan Holdings, in order to facilitate communication between the parties. In addition, one of these members shall serve on the Investment Committee of the board, or any other committee constituted to review, recommend, or approve investments by Manhattan Holdings. The City s representative on the Investment Committee should be able to contribute financial, legal, or other relative expertise to the investment process.

33 Manhattan Holdings, LLC Report for Year Ending December 31, 2006 Review Dated August 2007 Page 2 GENERAL 1. Total jobs created as of December 31, 2006? 2. Number of new direct jobs created during year per business venture? 5. Median annual income of these new direct jobs created during year? Submitted Reviewed Conclusion X X NISTAC and Manhattan Holdings report their job creation figures together. Cumulatively, they have created FTE jobs by Dec 31, X X Cumulatively, they have created a total of new FTEs by Dec 31, X X Average annual MH/KEC salary is over $49,200 with a median of approximately $38, Company s total payroll for 2006 and the portion of that total payroll that corresponds to jobs created by funds received from the City? X KEC/MH total gross aggregate payroll for 2006 exceeded $5 million. The entire payroll has been created by funds from the City (cash and/or in-kind) and other investors in Manhattan Holdings. SEED AND VENTURE CAPITAL FUNDS 1. Review firm s business plan. X X Continues positive investment of funds. During 2000, the City received its first financial return in the amount of $137, This disbursement represented the City s share of returns from liquidations of a MHL investment in FoodLabs, Inc. This return reduced the basis for the City s investment in MHL from $600,000 to $462,

34 Manhattan Holdings, LLC Report for Year Ending December 31, 2006 Review Dated August 2007 Page 3 Submitted Reviewed Conclusion 2. Investment reports. X X MHL held equity interest (at cost) in the following entities at the end of 2006: Nanoscale Materials, Inc.- $250,000 AgRenew, Inc. - $25,000 Four Fish Productions, LLC- $40,559 ICE Corporation - $192,421 NutriJoy - $320,750 Ventria - $200,000 The City s fund represents 1/3 of the overall investment funds. 3. Distribution of profits. X X See details above regarding City s return in City funds expended. X X To date, $1,330,750 has been invested in seven different companies by all 3 investors. 5. Financial balance sheet. X X Balance sheet from December 31, 2006 was provided and is on file. 6. Two (2) year projection of investment funds needed. X X It is anticipated that approximately $200,000-$600,000 will be required within the next two years to invest in two to four new ventures. 7. Any pending legal actions? X None. PRIVATE OR OTHER COMMUNITY INVESTMENTS: $1.2 million investment from Kansas State University Foundation and KTEC Holdings. These companies brought over $9.5 million of new revenues, including product and service sales, investment funds and non-local governmental grants, into the Manhattan community during its fiscal year ending June 30, Additionally, the companies secured nearly $4 million in new research contract awards in the last fiscal year. Since 1998, companies have generated $70 million in new revenues to Manhattan. These companies generate $5 million in payroll annually. LOCAL COMMUNITY INVOLVEMENT: Kent Glasscock is involved in the following community activities: Advantage Manhattan, Rotary, Chamber of Commerce Board of Directors, Manhattan Public Affairs Committee, Downtown Redevelopment

35 Manhattan Holdings, LLC Report for Year Ending December 31, 2006 Review Dated August 2007 Page 4 DEMOGRAPHICS: (Percentage of employees who live in Manhattan compared to Riley County, Pottawatomie County, etc.) 69% of employees reside in the City of Manhattan 77% of employees reside in Riley County 10% of employees reside in Pottawatomie County 13% of employees reside outside the Riley/Pottawatomie County area GENERAL COMMENTS: NEEDED ACTION: None.

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37 Manhattan Economic Development Annual Report and Update 2006 Funds Allocated: $1,000,000 Grant Manhattan economic development opportunity fund Annual Accountability Review City of Manhattan 1829 College Avenue mercy health foundation 53

38 MANHATTAN ECONOMIC DEVELOPMENT OPPORTUNITY FUND ACCOUNTABILITY CHECKLIST Company: Mercy Community Health Foundation Date of Review: September 2007 Report for year ending: December 31, 2006 Review Team: Diane Stoddard and Nick Arena Company Representative(s): Jim Murguia, Chief Operating Officer, Mercy Health Center; and Dr. Charles Hughes, Mercy Community Health Foundation GOAL OF COMPANY: Mercy Community Health Foundation is a non-profit corporation which exists solely to support Mercy Health Center, a non-profit community hospital. The Foundation has been active in seeking grants and pledges in support of its capital campaign for the expansion of the hospital. The Foundation indicated in its application that the renovation and expansion of the hospital would generate a total of 187 employees, including Mercy Regional Health Center employees, physicians, employees of physicians and support staff. As of October 2007, the capital campaign is nearly complete. However, it has been determined that very specific goals for future fundraising definitely fall under the umbrella of the capital campaign. One of the specific goals is to create and design the Molly M. Rickel Research Library and Training Center, to be housed in the Mercy Regional Health Center, which will be used by patients, auxiliary staff, and physicians for research and educational training. Another goal under this umbrella is the creation of a physician auditorium which will also be used by physicians for educational training and seminars. Both of these additional initiatives will help to attract physicians and support staff to our region, which will in turn greatly improve the quality of health care in the Manhattan community. With the addition of specialties to our area, the need for more training of support staff is essential; this will be the challenge in the very near future. MEDOFAB FUNDING: $1,000,000 Grant to be paid out at $200,000 per year for five years beginning in December of 2001 for the purpose of assisting the Foundation to reach its capital campaign goal for the renovation and expansion of Mercy Health Center. GENERAL 1. Annual financial statements, audits, or reports. 2. Total jobs created as of June 30, 2007 Submitted Reviewed Conclusion X X On file. Pledges received as of July 31, 2006, total $4,825,738. X X The Foundation s report indicates that as of July 2007, the hospital is up FTE s from 2001.

39 Mercy Community Health Foundation Report for Year Ending December 31, 2005 Review Date October 2006 Page 2 3. Company s total payroll for 2006 and the portion of that total payroll that corresponds to jobs created by funds received from the City? X X Total payroll associated with the new positions created since 2001 equals $10,006,772. SPECIAL PROJECTS GRANT 1. Review firm s business plan X X Hospital expansion continues as planned. The Lobby Courtyard was completed Summer, Review firm s employment benchmarking study 3. Firm in compliance with all other terms of original agreements? X X On file for physicians. Mercy Regional Health Center has continually tracked its employment since December 2001 (date MEDOFAB grant was awarded). X X Yes. PRIVATE OR OTHER CAPITAL INVESTMENT: $4.825 million in community investment raised for Foundation capital campaign. (Does not include monies raised for entire expansion.) LOCAL COMMUNITY INVOLVEMENT: See attached report provided by Mercy Regional Health Center. GENERAL COMMENTS: Mercy Health Foundation continues to raise funds towards its goal of $7.35 million. If this target is not met, the project will be scaled back. Mercy Health Center continues to expand with the Heart Institute that will allow residents of Manhattan to receive interventional cardiac services closer to their homes and loved ones. These new advancements will save lives and improve the quality of life for many heart patients. NEEDED ACTION(S): No action needed. The final payment on the $1 million pledged by the City of Manhattan was paid in 2005.

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51 Manhattan Economic Development Annual Report and Update 2006 Funds Allocated: $300,000 Special Projects Grant $250,000 Loan Manhattan economic development opportunity fund Annual Accountability Review City of Manhattan Kansas State Research Park National institute for strategic technology acquisition and commercialization (nistac) 67

52 MANHATTAN ECONOMIC DEVELOPMENT OPPORTUNITY FUND ACCOUNTABILITY CHECKLIST Company: NISTAC (National Institute for Strategic Technology Acquisition and Commercialization) formerly Mid-America Commercialization Corporation (MACC) and Kansas Entrepreneurial Center, Inc. (KEC) Date of Review: August 2007 Report for year ending: December 31, 2006 Review Team: Diane Stoddard and Nick Arena Company Representatives: Kent Glasscock, President/CEO; Vicki Appelhans, Vice President, Finance, and Tammy Bueker, Assistant to the President and Facilities Manager MEDOFAB Funding History and Overview: $300,000 Special Projects Grant 1996 $250,000 Loan 2000 $450,000 Loan 2007 Kansas Entrepreneurial Center, Inc., received a $300,000 Special Projects Grant. The City used the grant to purchase the former Big Lakes Developmental Center at 1500 Hayes Drive. KEC renovated the building at its expense to relocate its incubator business center there along with the offices of Mid-America Commercialization Corporation (MACC). The primary purpose of the facility is to incubate high-growth businesses that create high-value jobs. Originally, KEC targeted the creation of 60 new FTE jobs in the Manhattan area between December 1, 1996 and November 30, KEC originally had a five (5) year lease at $1.00 per year and had an option to extend this lease for five (5) more years through November 30, (Lease signed in 1996.) In 2000, KEC signed a new lease with the City to extend the lease through November 30, 2006 for $1.00 per year. The lease agreement signed November 7, 2000 requires KEC to create a total of 100 full-time equivalent jobs in the period beginning December 1, 1996 through November 30, The City issued a $250,000 loan to KEC for the purposes of increasing the capacity and adding other improvements to the facility owned by the City. The loan was re-paid in full in October NISTAC Building Project: $5.65 million In December 2004, the City approved an agreement with NISTAC to operate a cityowned facility in the K-State Research Park at a cost not to exceed $5.65 million. With the completion of the building in March 2007, NISTAC has pledged to create 200 new jobs within a ten year period. Accountability for this requirement will begin with the 2007 calendar year.

53 NISTAC Report for Year Ending December 31, 2006 Review Dated August 2007 Page 2 GENERAL 1. Total jobs created as of December 31, Number of new direct jobs created during year? 3. Median annual income of these new direct jobs created during year? Submitted Reviewed Conclusion X X NISTAC and Manhattan Holdings report their job creation figures together. Cumulatively, they have created FTE jobs through December Per November 7, 2000 agreement with the City, job target is 100 jobs created by KEC by November 30, Once the new building has been completed, 200 jobs will be created within 10 years of occupancy. X X The FTE count is up 14.5 FTE from the last report. There were small gains across all client companies, but two companies in particular contributed to the growth. X X Average annual MH/NISTAC salary is $49,200 with a median of approximately $38, Company s total payroll for 2006 and the portion of that total payroll that corresponds to jobs created by funds received from the City PRIVATE OR OTHER CAPITAL INVESTMENTS: X X NISTAC/MH total gross aggregate payroll for 2006 exceeded $5.0 million. The entire payroll has been created by funds from the City (cash and/or in-kind) and other investors in Manhattan Holdings. City s $300,000 investment enabled the expenditure of over $1.1 million in delivering economic development services (capital building improvements and operational expenses). LOCAL COMMUNITY INVOLVEMENT: Kent Glasscock is involved in the following community activities: Advantage Manhattan, Rotary, Chamber of Commerce Board of Directors, Manhattan Public Affairs Committee, Downtown Redevelopment.

54 NISTAC Report for Year Ending December 31, 2006 Review Dated August 2007 Page 3 DEMOGRAPHICS: (Percentage of employees who live in Manhattan compared to Riley County, Pottawatomie County, etc.) 69% of employees reside in the City of Manhattan 77% of employees reside in Riley County 10% of employees reside in Pottawatomie County 13% of employees reside outside the Riley/Pottawatomie County area GENERAL COMMENTS: The following relates to both NISTAC and MHL: These companies brought over $9.5 million of new revenues, including product and service sales, investment funds and non-local governmental grants, into the Manhattan community during its fiscal year ending June 30, Additionally, the companies secured nearly $4 million in new research contract awards in the last fiscal year. Since 1998, companies have generated $70 million in new revenues to Manhattan. These companies generate $5 million in payroll annually. NISTAC continues to incubate companies with high-growth potential. Companies who have worked with NISTAC include: ICE, AgRenew, Four Fish, NutriJoy, KSURF, Nacelle Therapeutics, AgRenew, TopJobz, Compact Engine Company, Mid-America Technology Management, KATS LLC, ASPERA, Food Safety Systems, PharmCAT, and KCAT/CS, KDAS/VDL, Global Lipidomics, Scavengetech, LLC. Professional Mentoring, NRG (Network Research Group) and NanoScale Materials, Inc. are graduates of NISTAC. NEEDED ACTION: None.