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Council OKs subsidy for Action Manufacturing

November 27, 2013
By Deb Gau , Marshall Independent

MARSHALL - The Marshall City Council has approved a business subsidy agreement for a local business looking to expand its facilities. However, the proposal to grant a subsidy to Action Manufacturing, Inc., did spark some discussion for the council. Council member Glenn Bayerkohler said he didn't think the city should give subsidies if it was possible for the business to get private financing.

Tim Swenson of Action Manufacturing and Marshall EDA Director Cal Brink presented the proposed subsidy agreement during a public hearing Tuesday night. Action Manufacturing produces the Action Trackchair, an all-terrain motorized wheelchair. The chairs have gotten the attention of veterans groups around the U.S., and have received coverage from national media figures like Bill O'Reilly. Swenson said customer demand has increased sharply in the past year, and his business needed to expand to keep up.

Swenson said currently, Action Manufacturing is able to produce around 18 to 20 chairs a week.

"We need to get it up to about 50," he said.

Brink and Swenson said Action Manufacturing would like to build a 20,000 square-foot manufacturing facility at the Marshall Airpark East development, on Madrid Circle. The facility would include room for fabrication and welding, painting, assembly and shipping for the chairs.

"I have dreamed about doing this over the years," Swenson said.

Brink said the proposed subsidy agreement would give the business a 99-year lease of five acres of land. The subsidy would also waive $325,000 in special assessments on the property for development of public utilities and waive a Water Area Charge of about $18,000.

Brink said Action Manufacturing has also received a $240,000 Minnesota Investment Fund loan for the expansion. He said the loan carries a 2 percent interest rate over seven years, and conditions that the business retain 13 full-time positions and create 10 full-time positions.

Council member Mike Boedigheimer said he had concerns about the city approving a 99-year lease.

Swenson said he understood that concern. The subsidy agreement included conditions for the business if Action Manufacturing should default on its loan, like removing the building, he said.

"All of us are in favor" of Action Manufacturing's continued business, Bayerkohler said. "It's a question of where the money is coming from." He had reservations about the subsidy agreement.

"Government subsidies are for businesses that need financial help," Bayerkohler said. It was the market's place, not the government's, to pick "winners and losers" among local businesses. He asked if it was possible for the Action Manufacturing expansion to move forward with private financing or investment.

Swenson said yes, but many offers had been to buy the company and move it away from Marshall. Swenson said he wanted to keep his business as local as possible. Brink said the potential for economic growth in the city was another reason to consider the subsidy agreement.

Marshall City Administrator Ben Martig said the development of Airpark East was made with state grant funds, and not special assessments, so there would not be a local cost associated with the subsidy agreement.

After the close of the public hearing, council members voted on a resolution to approve the subsidy agreement. The vote was 6-1 in favor of the agreement, with Bayerkohler casting the vote against.

"Thank you for your consideration," Swenson told the council. "I'm looking forward to this project."

 
 

 

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