Digi-Key offers to buy city property for expansion

by April Scheinoha

Digi-Key has offered to purchase land from the city of Thief River Falls for the company’s proposed one-million square foot expansion project. The Thief River Falls City Council considered the offer at a special council meeting Wednesday, March 8. Located southwest of Digi-Key, the property is currently home to the city’s Electric Department.
    After meeting in a closed session for about 30 minutes, the council publicly tabled consideration of the offer until it can have an appraiser determine the value of the Electric Department building and property. The offer’s monetary value wasn’t made public at the meeting.
    Digi-Key is planning to build the fulfillment, valued-added manufacturing and warehouse center on the site of its current western parking lot. A skywalk would connect the new building to the current facility. The city property would become the new western parking lot.
    Digi-Key would like the Electric Department to move by July 31 in order to facilitate the start of construction in spring 2018. At the meeting, council members approved hiring Widseth Smith Nolting at a cost of $5,000 to do a space analysis feasibility study.
    Digi-Key’s project is estimated to add an additional 1,000-plus jobs over 10 years at Digi-Key. The building, technology and equipment are expected to be an investment of $300 million in Thief River Falls, according to information provided by the city.
    No one from Digi-Key attended the meeting. Dave Doherty, president and chief operating officer, and Rick Trontvet, vice president of administration and human resources, spoke with the council about the company’s plans at the regularly scheduled council meeting a night earlier. At that time, Trontvet said this is the biggest expansion in the company’s history.
    At Wednesday’s meeting, Mayor Brian Holmer, and Council Members Steve Narverud and Don Sollom were appointed to a city committee to negotiate with Digi-Key for the property.
    The council also approved holding a public hearing regarding proposed economic development tax increment financing for Digi-Key’s project. If approved, TIF would be provided for eight years. The amount hasn’t yet been determined. That hearing will be held Tuesday, April 18.
    Digi-Key formally announced its plans Monday. However, city leaders have been aware of the company’s plans since at least January. At that time, Holmer wrote a letter in support of Digi-Key’s plans.
    City staff have provided Digi-Key representatives with a summary of incentives. Besides the economic development TIF, those proposed incentives include:
    • A reduction in building permit fees if the city approves capping building permit fees at $50 million in construction valuation.
    • Business Development Public Infrastructure grant funding from the Minnesota Department of Employment and Economic Development. If DEED approves, this grant would be $1.6 million to cover the cost of constructing a street on the north side of the proposed site.
    • Pursuing grant funding to reduce or eliminate electric utility costs. Electric infrastructure for the project is estimated to be $280,000.
    • Energy incentive programs (rebates)
    • New Market Tax Credit options
    • Extending Runway 13-31 from 6,300 feet to 7,500 feet, which is currently set for construction at the Thief River Falls Regional Airport in 2025. City leaders noted this project could start earlier.
    • The U.S. Department of Agriculture Rural Economic Development Loan and Grant Program, which provides access to low or no interest loans up to $1 million
    • Revolving loan funds