05-10-2004 EDA MIN - Laserfiche WebLink

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Economic Development Authority Minutes Page 2 May 10, 2004 6. Tax Rebate Financing Request -Badger Ventures LLC (Gradient Technology Director of Economic Development Catherine Mehelich reported that at the March 8, 2004, meeting the EDA and later the City Council approved the Revised Preliminary Expansion Siting Proposal for Gradient Technology. At its April meeting the City Council held a public hearing on the tax abatement request and business subsidy. The EDA and City Council didn't take any action on the request due to the following unresolved issues related to the abatement application: • Identification of a bank lender and proposed project financing terms • The possibility of a City Micro Loan request of up to $100,000 • Identification of the amount and source of eligible equity • Completion and review of a but for analysis. Since that time the company has selected a bank lender. The financing terms includes that the company would apply for an EDA Micro Loan up to $100,000 to supplement sources of private and public financing. Ms. Mehelich explained that this amount is out of the range of our typical program. The EDA does have a program for this purpose but the borrower must locate in the West Business Park according to the City's Micro Loan policy. The applicant is currently applying for this program and completing the Micro Loan application. Staff is recommending that the application go before the EDA Finance Committee with their recommendation to come back to the EDA at the June 14 meeting along with a recommendation to the City Council for final approval on the tax rebate-financing request. Staff is requesting EDA feedback on the concept to open up the $100,000 Micro Loan Program on a citywide basis. Commissioner Motin asked about providing the loan for $50,000, would this be acceptable, or do they need the full $100,000. Ms. Mehelich replied that the bank lender due to maximizing its loan on the project proposes the City consider a $100,000 loan. Commissioner Dwyer abstained from discussion because his place of employment, The Elk River Bank, is currently involved in this transaction. Commissioner Tveite asked if the company would still be meeting the 10 percent equity requirement. He stated that the cash balance is being built up in the Micro Loan account to around $800,000. Gradient Technology Vice President/CFO Eric Haehn answered yes they will meet the City's equity requirement.