04-982Page 1 of 3
�,(,,,,,,,,,,� �c�'13(C�'1
RESOLUTION
CITY Q`F SAINT PATI,, NIINNESOTA
Presented By
Referred To
Council File # V"1'9�Z
Green Sheet # �v � � f � �
�6
Committee: Date:
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RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAINT PAUL
AUTHORIZING THE EXECUTION OF A GUARANTY
TO SUPPORT THE PAYMENT OF DEBT SERVICE ON REVENUE BONDS ISSUED BX THE HRA
IN CONNECTION WITH THE BIOSCIENCE INCUBATOR FACILITY TO BE LOCATED AT 1000 WESTGATE
WHEREAS, pursuant to actions previously taken by the Housing and Redevelopment Authority of the City of
Saint Paul, Minnesota (the "HI2A"), the HRA has acquired the land and an approximately 126,000 square foot
building located at 1000 Westgate in the City of Saint Paul (the "Cit}�� (the "Development Propert}��; and
WHEREAS, in connection with the acquisition of the Development Properiy, and in anticipation that iJniversity
Enterprise Laboratories, a Minnesota nonprofit corporation ("iJEL") would purchase the Development Properiy from
the HRA, and conshuct and aperate a laboratory-based bioscience incubator facility therein, the HRA and UEL
entered into a Development Agreement dated January 28, 2004 (the "Development AgreemenY'), whereby the FI12A
and iJEL agreed to certain temas and conditions regazding the purchase of the Development Froperry by LTEL and the
operation of the bioscience incubator facility; and
WHEREAS, the HRA and iJEL have been in negotiations with Wells Fargo Brokerage Services ("Wells Fargo")
with respect to a fuiancing plan that would result in the purchase of the Development Property firom the FIRA for cash
at closing, in the amount required by the Aevelopment Agreement (the "Financing Pian"), a copy of which is attached
hereto as Exhibit A; and
WI�REAS, under the proposed Financing Plan, a portion of the cash to be paid to the IIRA in connecrion with the
sale of the Development Property is to be derived from debt in the appro�mate principal amount of $15,000,000 (the
"DebY� generated from either the sale by the HRA of its taacabie variable rate revenue bonds (the "Bonds'� pursuant
to Mimi. Stat. §§ 469.152 through 469.1651 (the "AcY') or the sale by L7EL or an affiliate of tasable corporate notes;
and
WHEREAS, by a resolution adopted October 13, 2004, the HRA has requested that the City execute a guaranty of
principal and interest due on the Debt in an amount of $6,000,000 and for a term of up to seven years (the
"Guaranty'�; and
`� '
Page 2 of 3
1 W�REas, in September, 1981 the City adopted a citywide redevelopment prograui that addressed economic
2 development efforts to increase the City's ta�c base, increase the number of available jobs, improve the opporhmities
3 and climate for business ventures and the reestablishment of the City's downtown as a regional center of
4 employmen� shopping, inveshnent and housing (the "1981 Development Prograin"); and
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WHEREns, in addition to the 1981 Development Program, in October, 2003, the City specifically approved efforts
to develop jobs and taY base, cooperation with the State of Minnesota and other partners, through a bioscience
progam, and made application to the State for the creation of a Saint Paul Bioscience Zone, which includes the
Development Properiy (the `Bioscience Prog�am"); and
WHEREAS, both individually and collecrively the 1981 Development Prog•am and the $ioscience Pro°�'alll
consritute citywide economic development programs; and
WHEREAS, pursuant to Muuiesota Laws 1992, Chapter 376, Article 4, and in connection with the nnplementation
of the citywide development plans described in as the 1981 Development Program and the Bioscience Program, the
City was given broad economic development powers, including the power to execute the proposed Guazanty; and
WHEREAS, staff has recommended that the City execute and deliver the Guarauty to support the Debt and the
bioscience incubator facility located at 1000 Westgate.
Now, THEREFORE, BE IT RESOLVED, by the City Council of the City of Saint Paul, Minnesota, as follows:
The 1981 Development Prograin and the Bioscience Prograui are hereby recognized as citywide
development programs within the meaning of the Special L,aw.
2. In support of the bioscience initiative described in the Bioscience Program, the City hereby agrees to execute
and deliver a Guaranty of principal and interest due on the Debt in the principal amount of $6,000,000 and for
a term of up to seven years. The Director, Office of Financial Services is hereby authorized to negoriate the
specific terms of the Guaranty and, upon complerion of such negotiation, and preparation of a Guaranty in
form acceptable to the City Attomey's office, the Mayor, the Director of the DepaYanent of Plamiing and
Economic Development, the Director, Department of Human Rights and the Director, Official of Financing
Services of the City, ar their designees, aze hereby authorized and directed to c�ecute and deliver the
Guaranty, and to provide to the IIRA such certificates and other documents as may be necessary or desirable
to evidence the due and valid authorization, execution and delivery of the Guaranty by the City.
3. In addition to the execution of the Guaranty, and in further support of the Aebt and the bioscience incubator
facility, the City hereby agrees that it will include in its annual legislarive initiative a request to the State £or
�to support the bioscience initiative, and to reduce the City's eaposure under the Guaranty.
financin¢
ON- �`6�-
Page 3 of 3
Yeas � Nays Absent
B�� �
Bostrom ✓
Hanis ./
Helgen ,/
Lan4p ✓
Montgomery ,/
Thune �/
(p (J I
Adopted by Council:
Adoprion Certified by
By: /\
t
Approvedby or:
By:
Date Dc-Iz7{�er 13 3vo�
Date
�
Requesced by Oflice of Planning & Economic Development
By: �� �� �n�? 6���
ApprovedbyFinancialServices �
BY. � �
Form Approved by Ciry Attorney
BY� �J�CGL yf .�
Approved by
to Council
�
LL � Green Sheet Green Sheet Green Sheet Green Sheet Green Sheet Green Sheet �
uepartmentloffice/councif: Date Initiated:
PE — p�an��ing & Econonric Deveiopment � OS-OCT-04
; Contact Person & PpSyn�
' Bob Geurs 'r�
j 6-6653 � L�— j$ 3�7
j Must Be on Council Agenda by (Oate):
i 130CT-04
{�l
Green Sheet NO: 3023102
� � Deuartment SeM To Person Initial/Date
0 !Plamine & Economic Develoo � � /
�;�--
Assign 1 annin &EconomicDevelo De artmen[ irector _
Number 2 inancial Se ' Offi e Fnan 'al
For � Routing 3 � Attorue Lisa �eth/Pete McCat
Order 4 vor's Office MavodAssistant
5 ouncil a Bena av
6 rk G� lerk �_,�__ _
7 lann�& c000mic Develop . Bob Geurs _.. —.
Total # of Signature Pages _(Clip All Locations for Signature)
Action Requested:
Approval of Finance Plan and City Guaranty for HRA to sell 1000 Westgate Drive to UEL for Biotech incubator.
�tlatlons: Approve (A) or R
Planning Commission
CIB Committee
Civil Service Commission
Must Answer the Following Questions:
1. Has this personffirm ever worked under a contract for this departmenY?
Yes No
2. Has this person/firm ever been a city employee?
Yes No
3. Does this personlfirm possess a skill not normally passessed by any
cuRent city emPloyee?
Yes No
Explain all yes answers on separete sheet and attach to green sheet
Initiating Problem, Issues, Opportunity (Who, What, When, Where, Why): �
City priority to foster development of biotech in State approved Biotech corridor. Assist HItA with the sale of property to University
Enteiprise Laboxatories ("UEL") foz a biotech incubatoi� Tota1 development cost is $21 AM.
AdvantapeslfApproved:
Supports growing biotech incubator industry in St. Paul.
Disadvantaaes If Approved:
Requires City guaranty of $6M to sell debt for sale and improvements.
Disadvantaqes If Not Approved:
IIItA must maiutain a partial vacant buIlding.
oxa� samouni or Cit
Transaction: 6000000 Y CostlRevemle BudgMed:
Guaranty
Fundinp Source: Activity Number:
Financial I nformation:
(Explain)
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� TO�AL
UEL Projett
Czsh Plow from �or,;tions
U of M(52,0 million) 2,OOO,CJD
U af M roundz5on (9�) _3i ;Zg
Gry o` Si. Pzul (£:GOk) �00,000
Xc_I �nergy (52.0 �;;4or.} 2,00O
3M (5?.0 miifion) 1,CDQ000
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Ecolzb (SSOOk) 500,000
Medtronic ($SOOk) 500,000
St. Mthony Park 8znk (S?k) <,000
Dorsey & Whifiey (SSOOk) 500,000
Boston Sdenri5c (5500k) 5��,00�
Surrrodics(j750k) 250,000
New donor (51.0 million committed) 1,000,000
9,385.529
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Nw,, �1 3, s wt
Ta� Gw�t�tlS
(�,3� K'l
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131,529
500,000
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- i25,600 ?2�,000 225,000
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166,667 166,067 ?66,667
so,000 so,000 so,000
2D0,000 2Q�,p40 200,006
"1,635,529 3.29'1,667 7,341,667 # 7,341,667
'1,635,529 4,927,196 6,268,863 7,610,529
m
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2007 Zp
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12>,000
i25,000
1�0,000
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'1,200,000
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12�,000
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so,000
2D0,000
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9,385,529
------_.
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PrewnsYruction
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Attachment 4 [Reuised]
Conditions for Citu Guarantv
Backgronnd on N�nancing
HRA or UEL Corporate Notes issued up to $15 M, final size detennined by Wells Fargo Term
Sheet of taYable floating rate debt ("HRA UEL Notes") in one or more series of debt secured by
Wells Fazgo I.etter of Credit and a$b M dollar guaranty ("City Guarant}�'). UEL or affiliate will
purchase an Interest Rate Cap. Term will be up to 7 years from date of service if New Market
Taa�es credits are part of transacfion as currently anticipated by Closing.
HRA paid at closing approxixnately $7,650,000 ($ 5,780,000 M plus closing and canyiug costs
expenses estimated at $1,870,000) and will deliver fee simple title to LTEL or an affiliate Real
Estate LLC.
U of M Foundation wili provide sepazate working capital loanlguaranty of at least $SOOK and
subordinate to City Guazanty and assist in masimizing interest earnings for Project funds.
Citv Guaranty
City will provide full faith and credit guaranty (City Guaranty) which will be used for debt
service short fall, if any, and principal to reimburse a Wells Fargo Letter of Credit which secures
the first lien debt. The City Guaranty which starts at $6M will decline prorate as the debt is
repaid.
City guaranty requirements will include:
Lenders (City and Wells Fargo) Terms:
1)Pledges reworked as necessary to satisfy Wells Fargo (LOC provider) and City as
guarantor
2} Continue fund raising of $3.5 M(it is assumed New Mazkets T� Credits cover the
entire amount by closing anticipated around December 1) while the UEL Notes and City
Guaranty aze outstanding.
3) Annual City Guaranty fee - 30 BPTS - paid on same schedule as Wells Fargo.
4) Agreement between Wells Fargo and the City on the amount of Working Capital loan
and priority of repayment relative to drawing under the City Guazanty. LTEL will be
obligated to repay any draws under the City Guaranty. Request U Foundation to assist
UEL in maicimizing interest earnings of construction proceeds, equity contributions and
pzoject cashflow while debt is outstanding and is subject to Lender approval.
5) LTEL purchase an interest rate cap agreeable to Lender and City.
LTEL, City and U:
1) Susan Kimberly PBD Director and Mayor on UEL Board.
2) U agrees to close Snyder Hall and move all remaining tenants to incubator by a date
certain. (L,etter has been sent)
3) City agree will include annually begnuing on 200� to seeking State legislation to
reduce and /or replace the City guaranty for tTEL Project during the term of the UEL
Notes.
Conshucrion/ Leasing/Compliance(�po�
1) Guaranteed Fixed Price Contract for remaining construction from Closing on.
2) Co - approved Inspecting Architect for construction improvements (City and WF).
3) �ndepen� City consultant ( Port Authority - Bill Morin) during entire Guazanty
phase (review of construction, and leasing). Biweekly during construction and monthly
(fi2st;tv�ro years) anfl as �iecessary lhereafter till Guazanty released.
4) Outside professional leasing agent acceptable to the City ,Wells Fargo and independent
City consuitant to assist UEL in fiiling space faster than the projected.
5) L,ease between IJEL and LJEL Real Estate LLC.
6) Designated funds in project budget for above market commissions to fill building as
soon as reasonably possible consistent with the IJEL missaon, unless a default exists.
Suggested amount of $245,000. ($7.00 psf x 35,000 s fl.
7) Compliance w Business Subsidy Law and Living Wage (if applicable), Prevailing
Wage, Ch 84 (Vendor Outreach Program) and Ch 183 (Affirmative Action) for balance
Director of Financial Services, Director of Planning Economic Development and City Attorney
or designees will negotiate the final City Guazanty with Wells Fargo and LTEL assuming
approval by City Council Resolution authorizing the City Guaranty.
10/�'�/04
Attachment 4
Conditions for Citv Guarantv
Background on N�nancing
HRA or I7EL Corporate Notes issued up to $15 M, final size determined by Wells Fargo Term
Sheet of taYable floating rate debt ("HRA LJEL 13otes") in one or more series of debt secured by
Wells Fargo Letter of Credit and a$6 M dollar guaranty ("City Guarant}�'). UEL or affiliate will
purchase an Interest Rate Cap. Term will be up to 7 years from date of service if New Market
Taxes credits are part of transaction as currentiy anticipated by Closing.
F3RA paid at closing approximately $7,650,000 ($ 5,780,000 M plus closing and catryiug costs
expenses estimated at $1,870,000) and will deliver fee simple title to UEL or an affiliate Real
Estate LLC.
U of M Foundarion will provide separate working capital loan/guazanty of at least $SOOK and
subordinate to City Guaranty and assist in maximizing interest eaxuings for Project funds.
Citv Guarantv
City will provide full faith and credit guaranty (City Guazanty) which will be used for debt
service short fall, if any, and principal to reimburse a Weils Fargo Letter of Credit which secures
the first lien debt. The City Guaranty which starts at $6M will decline prorate as the debt is
repaid.
City guaranty requirements will include:
Lenders (City and Wells Fargo) Terms:
1)Pledges reworked as necessary to satisfy Wells Fargo (LOC provider) and City as
guarantor
2) Continue fund raising of $3.5 M(it is assumed New Markets T� Credits cover the
entire amount by closing anticipated azound December 1) while the LTEL Notes and City
Guaranty aze outstanding.
3) Annual City Guazanty fee - 30 BPTS - paid on same schedule as Wells Fargo.
4) Agreement between Wells Fargo and the City on the amount of Working Capital loan
and priority of repayxnent relative to drawing under the City Guazanty. iTEL will be
obligated to repay any draws under the City Guaranty. Request U Foundation to assist
UEL in maYimizing interest eainings of conshuction proceeds, equity contributions and
project cashflow while debt is outstanding and is subject to Lender approval.
5) LTEL purchase an interest rate cap agreeable to Lender and City.
UEL, City and U:
1) Susan Kimberly PED Director and Mayor on ITEL Board.
2) U agrees to close Snyder Hall and move all remaining tenants to incubator by a date
�'
certain. (I,etter has been sent)
3) City agree will include annually begiuning on 2005 to seeking State legislation to
reduce and /or replace the City guazanty for UEL Proj ect during the term of the UEL
Notes.
Construction/ LeasingJCompliance:
1) Guaranteed Fixed Price Contract for remaiuing construcrion from Closing on.
2) Co - approved Inspecting Architect for construcfion improvements (City and WF).
3) Independent City consultant ( Port Authority - Bill Morin) during entire Guaranty
phase (review of construction, and leasing). Biweekly during construction and monthly
thereafter till Guaranty released.
4) Outside professional leasing agent acceptable to the City ,Wells Fargo and independent
City consultant to assist ITEL in fiiling space faster than the projected.
5) Lease between UEL and UEL Real Estate LLC.
6) Designated funds in project budget for above market commissions to fill building as
soon as reasonably possible consistent with the IJEL missaon, unless a default exists.
Suggested amount of $245,000. ($7.00 psf x 35,000 s fl.
7) Compliance w Business Subsidy Law and Living Wage (if applicable), Prevailing
Wage, Ch 84 (Vendor Outreach Program) and Ch 183 (Affirmative Action) for balance
of construction by LTEL Contractors from Closing if applicable.
Director of Financial Services, Director of Plamznig Economic Development and City Attorney
or designees will negotiate fmal City Guazanty with Wells Fargo and ITEL assuxning approval by
City Council Resolution authorizing the City Guaranty.
10/6/04
�
�+�a� �,f S
„
Wetls Fargo Bank, NA is pleased to yresent the fo(lowing proposal. This praposal is for
discussior, purposes onty and shoultl not be conskrued as a lending commitmenL A
commitrnent wn oniy be made afrer comple!ion of our underwrifing process, review and
approval af ali :hird parly reparks and completion of documenfation acceptab{e to Welis
Fargo and the Bortower.
SORROWER:
BOND AMOONT:
1SSUE:
UN�ERWRITER:
SOND PURPOSE:
BoNO MaruRiTr:
BOND TRUSTEE:
LEiTER OF CREDIT
(LOC) AMOUNT:
ISSUER OF LOC:
TERM OF LOC:
osed Terms 8 Conditi<
Enterprise Labora�#ory
University Enterprise Laboratories (UEL) or a single asset LLC
Up to $15,000,OOO.QO
Variabie Rate Revenue Bonds to be issued in three (3) series of $5MM
increments
Welis Fargo Brokerage Services
Proceeds used to acquire and renovate the Westgate Property fo� Bio-Tech
incubator space in coordination with the University of Minnesota. Property is
currently owned by the HRA of the City of St. Paul
20 years-interest onfy with ability to prepay
TBD
Direct pay letter of credit in favor of the Bond Trustee, covering 100% of
principai amount of bonds plus 180 days interest at 12%
Weils Fargo Bank, NationatAssociation (WF)
Initlal term of 3 years. The reimbursement agreement will contemplate 4
successive 1 year terms provided UEL is in compliance with al! existing
agreements
SecuRirr FoR LOC: 1) First Real Estate mortgage on subject property. Total Bank exposure wili
be limited to 65 of apprafsed va(ue.
2) Assignment of corporate piedges in form acceptabfe to WF
3) Security interest in undistributed bond proceeds
GUARANTY:
BOND REPAYMENT:
re wre . The final form and amount of these guarantees to be negotiated.
They will, however, cover the full amount outstanding under the Bank's Letter
ofi Credit exposure and �nay also include, but not be limited to a debt
Service/Cash flow shortfali guaranty. All guarantees to be from credit worthy
borrowers accepta6le to the Bank
The City of St. Paul has indicated a wi(fingness fo provide a principal and p
interesi guaranfy of $6MM. Additional eauity and/or ouarantees will be �(�(, go�
' d
AIE availabte cash flow from the UEL operation wil4 be paid to a sinking fund.
The bonds will be repaid as follows: -
1) from Net Operating Income of the subject properfy
2) alI capitai campaign contributions {corporate pledges)
37 a minimum of 80% of free cash flow on an annual basis. The paymenf
terms on subordinate financing, ff any, requires bank approvai
Univer5ity Enterprise Laboratories September 16, 2004
�LUn
u �3'S��
� �� �'�
7
BOND AMORTIZATIOM: A R!aR.�'iafD!v rgdgrtly��iOP. SChPds1IB W!II DB 9cTghlichgrj. p3(ILlrB t0 COma�y yyiil
result i� an increase in the LOC fee of 150 basis points
FEES Non-refundabie due diligence iee of $25,000 payable at term sheet
acceptance. Annual LQC fiee of 1.50% on ihe face amounf of LOC. First year
to be paid af closing. Quarterly in advance thereafter. Amounts drewn under
the LOG, if any, would be priced at WF Prime pius 2.00°la. A reduction in the
LOC.fee will be considered with addition�al equity/piedges
Interest rate risk (hedge) product shouid be considered for this transaction,
which expense wouid be paid by the borrower
CoveNaNrs: Wells Fargo believes financial covenants are important berause they articulate
a common be{ief about the future financial condition of the borrower.
Covenar�ts wiil be mutually agreed upon and subject to review and approval by
ai! parties
CONDITIONS PRECEDENT Usuaf and cusfomary for an interim construction faciiity — see construction
To Dai,ws: requirements
CONDIT10N5T0 1) University committed to closing Snyder Hal! (existing lab space) and all
C�ostNC future activities wii! be directed to UEL as the University's lab.
2) Leases should be in a torm acceptable io the Sank
3) Operating budget of UEL
CONSTRUCTION General contractor, general contract and pians and specifications need fo be
REQUIREMENTS reviewed and accepted by Weifs Fargo Bank and should inciude a guaranteed
maximum price consistent with project pro-formas. Construction draws wil! be
processed through an acceptabte title company with approval of an inspecting
architect mutuafly agreed upon
OTHER REAL ESTATE
REQUIREMENTS:
FtNANCIAL REPORTING:
See Attached Exhibit A
�,
Annual audited financial statement of the borrower. Quarterly intemally
prepared statements, quarterly rent rolls, annual compiiance certificate
OTHER TERMS AND . Insurance The Bank will require evidence of insurance on the Property so
CoNOirioNS long as the LOC is outstanding. Weiis Fargo Bank, National Association
shall be named as Mortgagee and Lender Loss Payee on the hazard
insurance and as Additional Insured on the comprehensive generai liability
insurance
• No additionaf debt may be incurred with out the prior written consent of
WF
• Lease: Copy of any lease(s), which must be subordinated to the Bank's
mortgage
DocuMeNTanoN: Documentation for Bond pprtion of transactio� to be completed by Bond
Counsel acceptable fo WF and would,include usual and customary resolutions.
Reimbursement agreeme�t and related LOC documents to be prepared by WF
Legal Counsel
COSTS:
Aif out oi pocket expenses incurred to provide the proposed financing,
University Enterprise Laboretories September 16, 2004
CI
including Iegal fees and exper.ses, appr2isal/survey ;ees, tftle insurance
r. ^r°��_:^s =cd search fees, UGC searches, 2nd 0m;irpnmgnt?t a�ggSytne,r
�..
fees incurred by Wells Fargo Bank in connec6on with the transaction
contemplated herein are to be paid by Borrower whether or not fhe facilify
herein is funded. This obligation wili survive the expiration or termination of
any approval and will be for actuai expenses incurred
EVENTS OFOEFAULT:
GOVERNING I�iW:
Those usual and customary for fhis type of financing
Minnesota
This proposal is not a commitment to lend, and is not intended to be ail-inclusive, but serves as a basis for
working towards a mutually acceptabie agreement. A commitment to lend wiil onty be made after compleUon
of our underwriting process, which includes a review of the then current fnancial condi6on of the borrower,
management approval, and completion ofi acceptabie documentation. If you have any questions or require
additional intormation, please feel free to contact me at 612-667-2601.
If you are i�terested in proceeding, piease countersign below and return a copy of this sigaed proposaS along
with the due diligence fee of $25,000 by October 1�`, 2004.
Thank you for the opportunity to present this proposat. We iook forward to working with you on this exciting
project.
Very truly yours,
eli Fargo Ba
P ul G. Reb olz
Vlce President
The undersigned hereby accepts the provisions of this proposai:
University Enterprise Laboratories
By:
- Its:
Date:
tJniversity Enterprise Laboratories September 1b, 2004
���
i�t �'a��' �
For more information contact:
Rober# P. Elde, Ph.TD. ,
Chairn�an, University Enterprise Laboratories &
Dean, College of Biological Sciences
University of Mimlesota
123 Snyder Ha11
St. Paul, MN 55108
612-624-2244telephone
elde@wnn.edu
Jon G. Freeland
Partner, The M&A Group, LLC
3918Il7S Center
80 South Eighth Street
Minneapolis, MN 55402
612-375-1283 telephone
j on@themergergroup. com
October 2003
�./
Page 1
October 2003
Introducrio�
There are at least ten eariy-stage bioscience sfart-up companies in Minnesota strng-
�I;ng to survive because of the scarcity of wet laboratory space. A modest investment
now r��ill ensure these companies will have che opportunity fo thrive and remain in
A4innesota.
Research in tne biosciences is prog:essing faster than computei technoIogy did in the past decade,
leading to predictions that advznces in biology and biotechnology wiIi dominate the 21st Century. As
with any industry, the future of the biosciences industry in Minnesota is, to a lazge degree, shaped by
the infrastructure available to support it. EazIy-stage bioscience companies in Minnesota aze strug-
gling to commercialize technology due in lazge part tp the serious lack of available laboratory space.
In response to dze need, University Enterprise Laboratories, Inc. (IJEL) is a newly created nonp;ofit
organization that was established as a public-private partnership beiween the University of Minne-
sota's College of Biological Sciences and the Carlson Venture Enterprise (ofthe Cazlson School of
Management), the University of Minnesota Foundafion, the City of St. Paul, Xcel Energy, 3M, and
several other corporate partners. Our goal is to provide the eazly-stage bioscience companies, some of
which aze being launched by faculty, access to the infzashvciure and resources they need to flourish
in Minnesota. Specifically, UEL is developing a collaborative reseazch center by acquiring and reno-
vating a 125,000 squaze foot facility in St. Paul that will include a 50,000 s.f. laboratory incubator
facil ity to meet the needs of these emerging companies. The remaining space wIlllikely be leased to
an anchor bioscience company and four to flve other bioscience-related research goups/companies.
VJith over $500 million in annual research, the U;riversity ofMinnesota (U ofP� is drivingthe estab-
lishment of a growing number of emerging bioscience companies. While this is a tremendous accom-
plishment, flie growth of these emerging companies is being severely hampered by the scarcity of
leasable lab space for complex R&D activities. This shortage is evidenced by the fact that at least 10
emerging companies are currently seeking flexible lab space and the U of M has more than 60 tech-
nologies to be commercialized in the next few yeazs.
These bioscience companies are different from other start-up companies in that they require lab space
and access to costly equipment. However, investors and private reai estate developers are not able to
assmne the significant risk inherent in building labs for these companies. UEL will make laborafory
space available to all bioscience companies desiring to be in Minnesota, thereby providing the infry_
structure and foundation for the growth of a new industry with great economic pmmise.
Aefinition of Che PrE>UIem
During the past several years, growing nuxnbers of eazly-stage bioscience companies in Minnesota
have had technology commercialization efforts severely hatnpered by the lack of available laboratory
space where the applied reseazch and product development activities can be conducted. This is espe-
cially true at the U of M where a majority of the $500 million of annual research is conducted with
the Uiosciences.
This reseazch is driving the establishment of a gowing number of emezging bioscience companies.
Howeves, the growth of these co�npanies is being hindered by a shortage of leasable lab space. This
problem is demonstrated by the following facts:
• At Ieast 10 emerging companies aze currently seeking flexible lab space—five aze ter lo-
cated on the U of M campus and five have been unable to find a home.
�
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��
Page 2
October 2003
• ��vestcrs ase not wi;lin� m�se �eir cza- ai ;o
bniid 12boratories and fzcilities. Similasly,
cor:unercizl reai estate companies aze not
wi;li�g to buld oLt laUs due to the risky na-
ture oi these emer�in� companies.
• The U of M has identined over 60 technolo-
gies that aze or could be the basis for start-up
companies in ihe next several yeazs. Many of
these newly formed cornpanies will require
lab space neaz the U of M in tl�e neaz future.
• Equipment requirements for bioscience com-
panies aze extensive and expensive. There-
fore, shazed access to equipment within both
the incubator facility and the U of M is criti-
ca] to the growth of these companies.
• 'I`he University of Minnesota's technology
commercialization efforts tl�rough bioscience
start-up companies appeaz to be lagging be-
hind neazby academic institutions with simi-
]ar research capabilities. For example, fhe
Univessity of Wisconsin-Madison's Univer-
sity Reseazch Pazk has 88 tenazlts (70 percent
have direct Llniversity connection) and em-
ploys over 2,500 people.' The Iowa State Re-
search Park hzs 50 terants with neazly 800
employees �
Fncubafor Pragram
The role of a laboratory-oased incubator is to be
a key facilitator in affording eazly staae conpa-
nies a better chance to succeed by providing
significwi benefits to �e emerging companies,
including:
• Flexible znd short-term ieasing of lab space;
• Reduced costs through shared sesources;
• Elinvnauon of lab build-out costs up front;
• Syneigy with other incubator companies and
academic reseazchers;
• Geegaphic proxi.*ai±y te the :esa*ch i+�stifi-
tion; and
• Access to business development assistance.
UEL will facilitate key linkages between the U
of M and these emerging companies. Biodale, a
collections of six bioscience-oriented reseazch
facilities, has over $40 million of instrumenta-
tion and equipment with fully trained techni-
cians that are available to companies at afford-
abie hourly rates. This exiensive collection of
resources, available to scientists, students and
compazues, aze not auailable at any university
in the United States.
UEL First Level Pl�n
' Buger, Mazk, Dsector, Unrversiry nf\�'isconsin-Madison University Reseazch Park. Personal Interview. 24 7uly 2001.
� Carter, Steve, Director, Iowa State UuiversiryReseazch Pazk Personal Interview. 2 A bwst 2001.
��av�rs� �n���c��g ����a�§s��ie�, �sr�;
-� ��tT;�uTior�tory=Sased�ricubatnr : ;�.`.;
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Page 3
October 2003
li�L wi�1 p;ovide :;ew cpport�ties fo: i�cuiiy,
researche.s ztd students at t'�e u of M. Re-
searchers will have the necessasy infras�uctwe
in place fo coinmercia! ize technologies devel-
oped in iheir laboraiories. The ti of M must
have this resource in place ia order to a��ract
and retain outstanding faculty and students.
Siuden�s will have increased opportunities for
intemships and part-iime j obs with companies
]ocated in a faciiity near the University. Fur-
thermore, these new life science companies will
hire our graduates, aJlowing them to stay in
Minnesota.
Many laboratory based incubator programs are
eartremely successful and have facilitate sub-
sfantial gowth of bioscience companies. The
University of Wisconsin-Madison' MG&E In-
novation center is a recently expanded 116,000-
squaze-foot facility that has incuUated 43 new
companies and has been the key factor in the
success of the University Reseaz ch Park. Iowa
State University's University Reseazch Center
helped create 78 new companies and the pri-
mary source of the research park's 50 tenants
(8� percent aze incubated companies)' We an-
ricipate this labaratory facility will in zhe short-
term facilitate the generation ofapproximately
150 new, high payingjobs and wili be the foun-
dation of a new industry in Minnesota.
UEL plans to initiate construction of this facil-
ity u� summer of2004 and open the faciiity 9
months later. In anticipation oftLe incubator
reaching full occupancy in 2007, UEL's long-
tenn vision includes bmlding additional facili-
fies as required to meet the needs of this bux-
geoning industry: Additionally, tlie gaduates of
the incubator program vdil l be strong candidates
for several bioscience reseazch packs cuRenfly
under development in the State of Minnesota.
Funding Reqnirements
UEL must secure $9 mi Ilion in charitable dona-
rions and $10.75 million in long-term financing
in order to provide a firm foundation for the
long-term success of this program. These funds
will ailow flie laboratory incubator facility to be
built and leased to emerging companies at af-
3 lbid
=�rdabLe W�rket-�zsed rates �d w;;l be used 2s
iollows:
� �, .v��.��� ���i��
��� � „ �� i ,� i ��
� � .,.
_ c ,
' n ii
You can be a founding Pariner in this exciting
and important project by making a financial
contribution to University Enterprise Laborato-
ries. Private su�port will be used to secure the
e�sting proper[y, initiate redevelopment of this
125,000-sq��aze-foot buil3ing, and provide the
necessary operating capital to ensure the long-
ferm financial viability of this program.
I'he future of the biosciences indus�y in Min-
nesota will be shaped by the infrastructure
available to support it. Currently, that infra-
structure in insufFicient. Eazly-stage companies
in Minnesota are struggling to commercialize
teclmology due in part to the serious lack of
available laboratory space where applied re-
seazch and product development acrivates can
be conducted.
A laboratory-based incubator focused on bio-
sciences is a viable mechanism for resolving
the shortage of available lab space and acceler-
ating small business development for the Uni-
versity of Minnesota, the Minneapolis-St. Pau1
metropolitan area, and the State of Minnesota.
For a minimal investment, a laboratoxy-based
incubator can provide bioscience companies
with access to sbazed resources such as lab
space, business development services, valuable
relationships, and much more.
As the biosciences become increasingly essen-
fial to everyday life, Minnesota cannot afford to
be pooily prepazed to support this industry seg-
ment. A properly funded, well managed, and
focused laboratory-based incubator program
will act as a catalyst and a critical factor to
growing this industry in Minnesota. Founders
will piay a rale in shaping this long-term vision
with assarance that your investrnent wi11 be faz
reaching.
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Current Lease Sfatus of University Enterprise Laboratories Facility
Phasel
Phase II
Phase !II
Renfable Area (s.f.)
UEL, OBD, Common 21,575
Summary; As of October 4, 2004, UEL has commitments for 59 percent
7otal Buifding Area 125,000 of fhe renfable area of the facili
(gross s.f.) tY (60,794 of 103,425 square feet).
1�
ius,4ts 27,462 26°Jo 17,452 17°/a �5,940 �5%
42,775 4'1%
University Enterprise Laboratory tenant profiles
Front of building [40,000 square feet of o�ce space]
80 percent of space is leased; the remaining 20 percent will not be leased at this time to
allow for expansion.
University of Minnesota Office of Business Development
The Office of Business Development (OBD) is a new unit within the Office of the Vice
President for Research at the University of Minnesota. OBD nurtures business
opportunities based on University research by connecting and serving researchers,
investors, and the business community. The four main functions of OBD include assisting
University of Minnesota start-up companies, serving as a single point-of-entry for
businesses wanting access to University faculty and staff, providing faculty educational
opportunities on the nature of entrepreneurship and the commercialization process, and
managing funds to help promising discoveries take the next step on their way to the
marketpiace.
Carlson Ventures Enter�rise
Carlson Ventures Enterprise was founded with an endowment from 3M.
Modeled after early-stage venture capital funds, the Carlson Ventures Enterprise teaches
top, second-year MBA students the due diligence process. New business analysis is a
critical skill for career success in consulting, venture capitaf, investment banking, new
venture start-ups, and new divisional startups within larger companies.
The Carison Ventures Enterprise executive staff and MBA student associates work with
entrepreneurs, researchers, and business experts to assess new technology and ventures
opportunities. The students develop business plans, financial projections, and conduct
market analysis. They a{so assist in raising capital and hiring management personnel for
new companies formed to commercialize University technologies. New companies formed
outside the University are also eligible for Carlson Ventures Enterprise assistance.
Ewald Consultina
Ewald Consulting is an association management company based in St. Paui, MN. The firm
is chartered and accredited with the lnternational Association of Association Management
Companies (IAAMC) and the American Society.ofAssociation Executives (ASAE). In
addition to membership in IAAMC and ASAE, staff members are active members of the
Midwest Society of Association Executives. Services include communications, events,
financial management, government relations, strategic planning, and technology/data
management.
��
MNBIO
MNBIO, which is managed by Ewald Consulting, is a partnership of industry, finance,
academia and government dedicated to growing Minnesota's life sciences industry. For
more fhan a decade, MNBIO has advocated the value and vision of Minnesota's biotech
communify. Their efforts have strengthened the region's economic and social quality of life.
MN810 serves as the eyes, ears and voice of biotechnology in Minnesota. As the state's
chapter of the nationai Biotechnology Industry Organization (BIO), MNBIO offers valuable
connections to other organizations across the country.
Minnesota Research Fund
The mission of the Minnesota Research Fund, formerly the SOTA TEC fund, is to foster
economic growth by funding development and commercialization of technology from
Minnesota educational institutions. SOTA TEC was created in 1993 through an agreement
between the Blandin Foundation and the University of Minnesota. Accomplishments since
then include:
• Funding to date of $16.2 million
• 12 Portfolio Companies
• Seven License Agreements
• Funding 53 projects at the University of Minnesota and Mayo Clinic
• Providing support for more than 60 faculty and 100 students.
Cima Nanotech
Cima NanoTech is an advanced materials company specializing in the production of
nanometal-based dispersions for inkjet compatible conductive inks and transparent
conductive coatings. The company's core group of researchers have developed patented
methods for consistently manufacturing a wide range of nanometal and nanometal alloy
particles which form the innovative technology platform for its electronics-focused product
development. Cima NanoTech corporate headquarters are in St. Paul, Minnesota with a
wholly owned research, development, and pilot scale manufacturing subsidiary in Israel.
Cima NanoTech is the result of the merger between the nanotechnology division of Aveka,
Inc. of St. Paul (a 1994 spin off of 3M) and NanoPowders Industries of Caesarea, Israel.
Both companies have a five-year history of nanotechnology-based materials development.
Gel Del Technologies
Gel-Dei produces biomatrix-based materials using purified proteins that can be molded or
shaped into almost any form — including tubular, wafer, particle or sheet. It can then be
engineered to mimic the body's own tissue. With this proprietary technology, Gel-Del can
design biomaterial that is rigid or pliable, biodegrades rapidly or slowly, incorporates other
molecules such as drugs, objects such as stents or lead wires, or acts as a structure for
growing new body parts, such as b(ood vessels.
�7
ANDX
ANDX uses genomic information to develop diagnostic tests for the pet and agricultural
animal sectors. The company, founded in 2002 by Sagarkia Kanjilal and Vivek Kapur, who
are professors at the University of Minnesota Medical Schooi, has received USDA
accreditation for its first diagnostic test, which is for an infectious disease that afFects 40
percent of dairy herds worldwide.
StenTech
information unavailable.
M.D. Biosciences
M.D. Biosciences is a rapidly growing, globally active company providing time and cost
efficient solutions to help clients in the pharma biotech sector.reach their goals. Services
include managing multi-component studies by providing experimental design, execution of
experiments, delivery and analysis of results, GLP work, and next steps. Solutions are
tailored to meet needs of individual companies.
Back of building (80,000 square feet to be converted into wet labs and adjacent
offices/cubicles) 40 percent of this space is already leased.
• 15,000 square feet for major drug testing company: Construction on this space
scheduled to begin October 1 for March occupancy.
• Gel Del wet labs
• Andx wet labs
%
Uni
Ente�p�ise Labo�ato�ies, Inc.
Leasing Information Sheef
This injarmation is providedjor d'ucussion and rejerence purposes only.
Facility: The Universify Enterprise Laboratories (U facility is located in St. Paul,
Minnesota, neaz the intersection of Highway 2$0 and University Avenue and
adjacent to the University of Minnesota transit way. The property address is 1000
Westgate Drive, St. Paul, MN SS114. '
The goal of this laboratory-based incubator is to be a key facilitator in
affording early-stage companies a better chance to succeed by providing
significanf benefits to these emergir.g compzr�:es, i;,cludirg:
• Flexible and short-term leasing of lab space,
� Reduced costs through shared resources,
• Elimination of lab build-out costs up front,
� Synergy with other incubator companies and academic
reseazchers,
• Geographic proximity to the U of NI, and
� Access to business development assistance.
Laboratories: The labs range in size from 750 to 1,050 rentable squaze feet and are equipped
with lab-grade casework and tops on the two exterior wails, a six foot fume
hood and one sii�It.
Office Space: Office space is available in the facility to accommodate your needs, from singJe
offices up to 10,000 squaze feef. UEL has furniture available for all tenants at
reasonable terms and rates.
Lease Rates
& Terms: Office space: $18 per rentable square foot*
Lab space: $30 per rentable square foot (typical 925 s.f. lab cost is $2,313 per
mondi) *
Lease term: Minimum lease tenn is one yeaz.
* Rent rates include all operatnig costs (i.e. utilities, taxes, maintenance,
cleaning, trash removal, etc.)
Shared
Amenities: Tenants will shaze a wide array of amenities: loading docks, tenant storage,
shazed equipn�ent labs (autoclave, dishwashing equipment, etc.), conference
rooms (including executive conference room that seats 15 people), a cafe, and
standazd business equipinent (fax and copy machines, printers, etc.)
For additionai information, cali Jon Freeland, The M&A Group I,LC, 612-375-1283.
200 Oak Street SE, Suite 500, Minneapolis, MN 55455-2010 1 612-624-2854 phone � 612-625-4305 faY
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