Faribault’s Economic Development Authority has voted unanimously to extend a $100,000 forgivable loan to a hometown company looking to expand.
The EDA’s March meeting was the first city government meeting held since the City Council declared a State of Emergency over the coronavirus Sunday. It made history as the first city meeting in recent memory to be conducted over telephone.
At Sunday’s meeting, City Administrator Tim Murray promised that in accordance with CDC guidelines, future government meetings would be held online or over the phone, as Minnesota law allows in the case of a health pandemic or declared emergency.
Founded in 1992 by Rick Dahl, Trystar, employs 150 full time employees at its Faribault plant, manufactures temporary electrical power units for commercial and emergency services purposes. Its products are particularly in demand when natural disasters like floods, fires, hurricanes or tornadoes hit. The company has enjoyed rapid growth over the last decade, winning over devoted customers from all over the world. After more than 25 years as CEO, Dahl sold the company to a Twin Cities-based equity firm last year.
Trystar’s employee base, which often expands to 200 with the addition of part-time workers during peak times, is composed of a mixture of local residents and commuters from the Twin Cities, according to CEO AJ Smith.
Smith was hired to run Trystar last year by its new owners, after a decade as an executive at Honeywell International. One of Smith’s first moves as CEO was to open a new office in Burnsville.
Smith said that the new location has proven to be a recruiting tool for Twin Cities-based workers, and is convenient for customers. However, he has maintained that all things being equal, he would prefer for the company’s main operations to remain in Faribault.
As the business has grown, the company’s space has become increasingly inadequate. Currently, the company has 140,000 square feet of space in north Faribault’s industrial park, but it’s inconveniently spread out across four buildings.
“We have been hindered by our four building setup,” Smith told the EDA Thursday morning. “We have seen some really great opportunities for our offerings, but for a number of months we have not been able to produce as many products as have been ordered.”
Initially, Trystar and its longtime construction partner, Met-Con, looked into the possibility of expanding one of those facilities to meet its needs. However, they discovered that under the current building code, none could be expanded sufficiently. TryStar then expanded its search to include potential sites in Burnsville and Lakeville. There, the company found several sites that it said could accommodate current needs and future growth for an affordable price.
In an effort to stay in Faribault, Trystar inquired about a 100,000-square foot warehouse recently constructed by Met-Con for the Cheese Cave, Faribault Foods and SageGlass. In exchange, those companies could move into Trystar’s old facilities.
However Trystar, found that such a plan would cost about $550,000 more than comparable options in the south metro. About $400,000 of this would be due to higher rent over a period of time, and $150,000 to accommodate needed building modifications.
As the project wouldn’t be tied to a new company or new jobs, it won’t be easy to get funding from it from traditional economic development agencies. However, Faribault’s City Council has signaled its approval for using tax abatement to help cover the funding gap and keep Trystar in town.
Now, the EDA has chipped in its piece. The $100,000 loan agreed to by the EDA is set to be forgiven after five years, provided that Trystar stays in town and invests at least $1.5 million of its own cash in the associated project.
The rest of the funding gap would be covered by a yet-to-be-finalized deal from the city and county. Community and Economic Development Director Deanna Kuennen said an agreement would most likely abate taxes on the additional value of the property post-improvement.
Smith offered praise for the Kuennen and the EDA for helping to provide a flexible solution for the company he leads.
“We’re on a path to get to where we wanted to be,” he said. “We really appreciate everybody who helped to put this effort together.”