Loading...
HomeMy WebLinkAboutIV.A - Spades HEDRA Memorandum To: HEDRA Commissioners From: Rusty Fifield, Economic Development Coordinator Date: June 4, 2020 Subject: Preliminary Development Agreement with Spades SBC Requested Action Authorize staff to negotiate the terms of a preliminary development agreement (PDA) with Spades SBC, including the option to purchase Block 1, for consideration by the Board at the July HEDRA meeting (simple motion). Background Spades is a newly formed SBC (special benefits corporation) established to use “Strategic Ecosystem Reforestation” as a means of combating climate change. Spades seeks to “cultivate sustainable climate change mitigation by gently engaging human, environmental and economic structures to repeatedly plant billions of trees. In its first 10 years of operation, Spades plans to increase global tree regrowing by 50 times resulting in the mitigation of 180 gigatons of human caused emissions.” A thorough discussion of reforestation, its impact on climate change, and the role of Spades in this process is beyond the scope of this memo. Information about Spades can be found at www.spades.life. Longtime Hastings resident Ray Menard is the CEO of Spades. He will attend the June meeting to make a presentation and answer your questions. I was first contacted by Mr. Menard in July 2019 to discuss the possibility of locating the headquarters building for Spades in Hastings. Over the last 10 months, Spades has been engaged with initial fundraising, recruitment of its management team, and evaluation of site alternatives. The company has targeted Block 1 in Hastings as a site for the headquarters of its global operations. Spades anticipates that 200 people will eventually work in this building. Spades wants to enter into a preliminary development agreement with HEDRA that would give the company the option to purchase Block 1 and evaluate the feasibility of site development. The PDA will help HEDRA retain the Metropolitan Council grant for environmental cleanup of Block 1. This project offers substantial benefits to Hastings:  The project creates a new, large daytime market for Downtown businesses. Spades PDA June 4, 2020 Page 2  The project becomes an important user of lodging and meeting facilities at The Confluence.  Workers in the headquarters building will create new housing demand. This demand may help to attract new developers/builders to Hastings.  Spades will bring visitors to Hastings from across the world.  Spades will enhance the identity of Hastings and create the opportunity for additional business development. In the coming months, staff will be exploring the opportunities and implications of Hastings evolving into a “green city””. The Institute for Housing and Urban Development Studies of Erasmus University Rotterdam recently defined a green city as “a city that promotes energy efficiency and renewable energy in all its activities, extensively promotes green solutions, applies land compactness with mixed land use and social mix practices in its planning systems, and anchors its local development in the principles of green growth and equity”. We believe that these principles may help leverage additional benefits. At a minimum, it demonstrates another element of Hastings’ desirability as a headquarters location for Spades. Given our recent experience with a company possessing a great vision, but lacking the ability to execute that vision, it is important know more about Spades. Here are some things to consider:  Climate change may be the most significant global issue. Reforestation is one of the most effective means of mitigating climate change. Even at this early stage of its development, Spades is at the forefront of this industry. Spades has formed a coalition of organizations that is already regrowing the majority of trees on earth.  Spades 8-person leadership team includes three PhDs, two people that have managed assets exceeding $1 billion, five people that have done multiple startups, five former CEOs, and three people with multiple patents.  Spades currently has staff in Minneapolis, California, Atlanta, London, and Germany.  Spades will use the first technology to determine in advance if a tree can actually thrive in a specific ecosystem.  Spades is well underway with its initial fundraising with an objective of raising $10 million in equity. Mr. Menard will have more information for you at the meeting. I believe that Spades is a significant and unique opportunity for Hastings. Projects like this rarely happen without some type of competitive site selection process that gives Hastings very slim chances of being selected. At this point, we have very little risk and the opportunity for substantial rewards. Financial Impact The only direct expense is the cost of legal services to prepare the PDA. The cost is estimated to be less than $2,500 and will be paid by monies in the 2020 Budget.