City seeks commitment from firm

SANDPOINT — City officials and SURA continue struggling to ensure that a home-grown medical equipment manufacturer remains firmly planted in its native soil.

When international manufacturer Graphic Controls acquired Sandpoint-based Lead-Lok in April 2014 and renamed the firm Biomedical Innovations, the city was still reeling from the bankruptcy of Coldwater Creek, one of the community's major employers. When the clothing retailer closed its doors, the community lost significant revenue along with around 500 jobs.

"Graphic Controls was for us the best choice because they're committed to leaving the company here in Sandpoint," Lead-Lok founders, Chris and Jim Healy, stated at the time of the sale. 

It was not very long, however, before the new owners began making noises about leaving the city. They were dissatisfied with the former Lead-Lok facility, which was in the same complex as the Bonner Business Center, an incubator for small food producers for over two decades.

“As businesses demand special incentives, even small cities like Sandpoint are asked to choose which businesses succeed, at the cost of others. The only way Sandpoint could stop Graphic Controls from moving Lead-Lok was to evict the rest of the center's tenants ... giving Lead-Lok room to expand,” according to a Sept. 3, 2015 Inlander article.

The city, which owned the complex, gave the small business tenants until the end of September to vacate the building, leaving commercial kitchen users without an approved place to make their products, the article said.

City and state administrators also designed a sweetheart incentive package to woo Graphic Controls, including a scalable lease agreement with provisions for diverting a portion of the rent to facility improvement, a state tax reimbursement program and state grants.

A few months later in October, the city of Sandpoint made a bid request for modifying approximately 27,000 square feet at the location, according to BidNet.com. Subsequently, it awarded the nearly $100,000 worth of work to Idagon Homes. The funds would come from an Idaho GEM grant.

After less than a year, Graphic Controls asked the city for more. At an August 2015 SURA meeting, Sandpoint Planning and Economic Development Director Aaron Qualls presented its request for funding a 10,000 square addition to the facility.

Although the total cost of the project would be approximately $1.5 million, Qualls asked SURA to contribute $325,000 to the project, according to the meeting minutes.  

Former city planner and SURA board member Jeremy Grimm recommended the agency do whatever it took to keep the company in Sandpoint.

"Grimm suggested a reduction of funds from the school district project of 50 percent to put toward the Graphic Controls project," the minutes said.

"The board agreed to leave LPOSD at $250,000 ... The 814 Airport Way (Graphic Controls) project would then have a line item of $325,000," according to the minutes.

Fast-forward to the most recent SURA board meeting, which took place April 5, 2016.

"I have bad news and good news," Qualls said.

The bad news was Biomedical Innovation's failure to fulfill the stipulations of its state grant.

"Due to market forces outside our control, they were not able to meet the job requirements, so we lost the funding from the state," he said. "They still want to work with us if SURA will keep its commitment."

The grant reward of $200,000 was contingent upon the company adding 30 jobs to its workforce. Instead, it was only able to add between 15 and 20, he said.

The forfeited funding had been earmarked for facility renovations such as the addition of a clean room. Without the state money, the manufacturer would probably not initiate these improvements, Qualls said.

He also noted that the city is currently negotiating a new lease with Graphic Controls.

"It would tie them to the city for five years and maintain 75 jobs," said Qualls.

"I think our commitment still kind of stands. I think it's in the budget," said Paull. "My point is that the only thing that has changed is the scope of the project. We would have done this anyway."

"It's still on the table, but they need to step up and sign a new lease," he said.