Article published Mar 30, 2008

Local industrial park plan at funding stage

By ERIN MADISON

Tribune Business Writer

The absence of an industrial park puts Great Falls at a disadvantage when it comes to attracting industrial businesses.

It's a void Great Falls Development Authority Executive Director Brett Doney points to frequently. John Kramer, the executive director before Doney, pushed for an industrial park as well.

The GFDA is moving closer to filling the gap. About a year ago, developer Joe Stanek partnered with the development authority to turn 1,100 acres he bought north of Great Falls into an industrial park.

With the land in place, the GFDA is now turning its attention to obtaining financing to extend infrastructure to the park.

The development authority is seeking approval from the city Commission to place a $2 million general obligation bond on the November ballot.

The GFDA also submitted a request to the congressional delegation for a $2.5 million earmark.

Doney isn't counting on that earmark coming through. The GFDA also plans to submit grant applications for Community Development Block Grant funds and Economic Development Administration funds.

He thinks between those three sources he'll be able to come up with about $3 million of funding. However, the federal earmark or any of the other federal funds would require a community match.

That's where the $2 million bond issue comes in.

With federal money being tighter than in the past, it's nearly impossible to get federal funds to cover an entire project, Doney said. The funding agencies want to see communities step up to invest in these sorts of projects as well.

A $5 million project

Doney estimates that the first phase of the industrial park will be at least $5 million to develop.

It's possible that the $2 million bond could be paid back from funds from a tax increment financing district, but rather than promise that to voters, Doney would like that to be a nice surprise if it works out that way.

The roughly $5 million estimated costs would include paving a portion of Black Eagle Road and building an access road from Highway 87. It would also cover extending water, sewer, power and other utilities to the park.

After the first phase is up and running, the GFDA plans to expand infrastructure to additional phases.

There is already some land in the park that is ready to build on without any infrastructure expansions, Doney said.

Rail access is available via the rail spur that's owned by the Archer Daniel Midlands malt plant. The city made an offer to buy that rail spur from the malt plant for $2 million, Doney said. If ADM doesn't accept the offer, industrial park tenants will have to pay their proportional share of annual track maintenance, which should be low since the spur is new.

A competitive edge

The GFDA is not yet marketing the area as an industrial park.

Earlier this month, a German wind turbine manufacturer chose to locate to Butte over Great Falls.

Doney blamed it on Great Falls' lack of an industrial park with shovel-ready sites.

Great Falls doesn't have a single 10-acre site with rail, water, sewer and gas that's available for purchase, Doney told the GFDA Board of Directors at a meeting earlier this week.

"That puts us at a disadvantage," he said.

Great Falls does have what some consider an industrial park at the airport. However, it doesn't have access to rail lines, said airport director Cynthia Schultz.

"We're more light industrial," she said.

The airport's industrial park does have easy access to Interstate 15.

Great Falls hasn't built a true industrial park since the North Park was developed near the Northwest Bypass in the 1970s, Doney said.

That park is mostly full now.

Butte's industrial park

Butte's industrial park, which will be the new home of Fuhrlander AG, the wind turbine manufacturer that looked at moving to Great Falls, consists of about 1,300 acres seven miles west of Butte at the intersection of Interstates 90 and 15. Union Pacific and BNSF railroads also intersect there.

The industrial park was built in the early 1990s, said Jim Smitham, executive director of the Butte Local Development Corporation. A tax increment financing district was established for the area around 1994. Those TIF funds enable the local government, which owns the land, to assist businesses that want to locate to the industrial park with extending infrastructure to their locations. TIF money can help extend roads, build parking lots, hook up utilities and even help with building expenses.

REC Silicon, which used to be ASiMI, is the largest tenant in the park. That company has been there since 1998.

When Doney talks about having shovel-ready sites in Great Falls, the Butte industrial park is a good example of what that means.

"It's all set to go," Smitham said.

A company wants limited risks when it's developing a site, he said. Assembling a parcel of land from multiple owners or going through a zoning process all pose risks to a company.

"The worst thing you can do for a company is show them a field and say, 'this would make a good site if we can get if from the owner, get it zoned,'" he said. "All the company is hearing is, 'delays, delays, delays.'"

Fuhrlander said that one of the major factors in choosing Butte was the access to transportation. A large piece of land being available was also a plus, Smitham said.

An industrial area

The GFDA is focusing on more than the 1,100 acres owned by Stanek to make up an industrial park. It's looking at a larger area north of Great Falls, which consists of about 1,600 acres, Doney said.

Montana Milling is already constructing a 30-acre site in that area. The city of Great Falls plans to move its recycling center to a spot just east of Highway 87. The malt plant is already located in the area, and Montgomery Energy is building a gas-fired power plant there. NorthWestern Energy has a sub station south of the proposed park.

Montana Specialty Mills is considering a 15-acre location inside the 1,100 acre main park, Doney said. A final decision will be made this spring.

The GFDA quoted sites in the park to a biodiesel company who is looking for 15 acres, an agri-processing plant to go on 30 acres, a local company that wants a 100-acre site and a 30-acre site for a Canadian company.

"We have considerable interest in the park already," Doney said.

A couple times a month, Doney has prospects looking for an industrial park in which to locate.

The park has the potential to bring in hundreds of millions of dollars in investments, Doney said.

The industrial park is a good situation for the city to invest in because a private developer already took the risk on buying the land, he said. That lessens the tax payer risk, which will only be on the infrastructure.

'Montana has been discovered'

The GFDA is working to outline a developer agreement for the park. The most recent version stipulates that the developer can sell land for a maximum of $7,000 per acre. That price would be adjusted annually for inflation, and is designed to keep land costs low to keep the industrial park competitive.

If voters pass the bond in November, the designing and permitting process could start in 2009, Doney said. Construction on the park probably won't begin until 2010.

Smitham is seeing more interest in the industrial park in Butte. He hears the same from his counterparts in other Montana cities.

"I think Montana has been discovered," he said. "Montana is being looked upon as a lower cost state to do business in."

Companies are realizing they can relocate here from downtown Seattle, for example, and still serve west cost and other markets.

Reach Erin Madison at 791-1466, 800-438-6600 or emadison@greatfallstribune.com.