Laserfiche WebLink
City of <br />Elk .�.-, <br />River <br />TV <br />REQUEST FOR ACTION � O <br />TO <br />ITEM NUMBER <br />Economic Development Authority <br />AGENDA SECTION <br />MEETING DATE <br />PREPARED BY <br />April 8, 2013 <br />Clay Wilfahrt, Assistant Director of <br />Economic Development <br />ITEM DESCRIPTION <br />REVIEWED By <br />Consider Forgivable Loan Application for Orluck Industries <br />Jeremy Barnhart, Deputy Director, <br />Community Operations and <br />Development <br />REVIEWED BY <br />ACTION REQUESTED <br />Consider Forgivable Loan application for Orluck Industries and recommend that City Council approve <br />the Forgivable Loan of $200,000 <br />BACKGROUND /DISCUSSION <br />The attached staff report to the EDA Finance Committee dated March 29, 2013, and committee meeting <br />minutes provide background regarding the Forgivable Loan request. <br />The EDA passed the Forgivable Loan guidelines in February and set an initial application period of <br />February 15 through March 15. The program is designed to stimulate private sector investment, help <br />spur new construction, create and retain employment opportunities, and promote the sale of city <br />property. Staff received three applications for the Forgivable Loan during the initial application period. <br />Orluck Industries currently occupies a 25,000 square foot facility in Elk River. The Forgivable Loan <br />would help them fund a 12,000 square foot expansion that will create six new jobs and induce $1.2million <br />in private investment. <br />The Finance Committee recommends the EDA recommend City Council approval of the Forgivable <br />Loan for Orluck Industries with the following terms and conditions: <br />• $200,000 at 3% interest, 5 year term, 20 year amortization <br />• EDA to secure personal guarantee <br />• EDA to obtain subordinate lien position on building and subordinate lien on machinery financed <br />The loan will be forgiven upon completion of all of the goals and requirements set forth by the Forgivable <br />Loan Policy, and the jobs created as a result of the forgivable loan program are retained for a minimum of one <br />year. In this case, Orluck Industries will need to complete their expansion, create a minimum of six jobs, and <br />retain them for one year. Four of the jobs must be awarded to Low to Moderate Income employees. <br />The Finance Committee also requested that staff determine if the city would become eligible for state <br />grants upon committing the dollars, as well as the ramifications of a situation where the city loaned <br />P R E A R E D R i <br />f4a A ... UR� <br />