6.3 EDSR 12-16-2013 - Laserfiche WebLink

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• Elk Request for Action River To Item Number EDA Finance Committee 4.3 Agenda Section Meeting Date Prepared by General Business November 12, 2013 Jeremy Barnhart, Deputy Director, CODD and Brian Beeman,Director of Economic Development Item Description Reviewed by Sportech Forgivable Loan Reviewed by Action Requested Consider Forgivable Loan application for Sportech and recommend approval to EDA in the amount of $111,155.13. Background/Discussion The EDA established Forgivable Loan guidelines in February 2013. The program is designed to stimulate private sector investment, help spur new construction, create and retain employment opportunities, and promote the sale of city property,using remaining State funds that must be used by the end of 2013. • Sportech is a manufacturing company that produces aftermarket products for sporting vehicles.According to company executives, Sportech has seen a 300%increase in business since last year and has surpassed$64 mill in sales this year. In order to keep up with the increased demand, Sportech has submitted a Forgivable Loan application for the expansion of their design and engineering process with an investment of a Customer Innovation Center. The expansion is a 6,210 sq/ft upper level Customer Innovation Center that overlooks the production floor. While the footprint of the building will not increase, the second level will increase in size. The added space will allow the engineering department to observe how their ideas are being implemented. Sportech is anticipating adding 6-8 design engineers during 2014-2015. They will also be adding new CAD software, computer equipment&display technologies. A drawing of the proposed expansion is included. The total project cost is $263,088 and the project is expected to be completed by the second quarter of 2014.A cursory review by the building department did not yield immediate concerns. In order to avoid having to give the remaining balance of the Forgivable Loan fund back to the State,the city must use the remaining amount of$111,155.13 or have a letter of commitment by an applicant by the end of the year. Staff has been communicating to the State that an application has been received and they are willing to work with the City as long as they know the funds are being used. Since the end of 2013 is near and no other applications have been received, staff recommends the EDA Finance Committee make recommendation to the EDA to approve the Forgivable Loan with the following terms and conditions: • $111,155,13 at 3%interest, 5year term, 10 year amortization • EDA to secure personal guarantee • • EDA to obtain subordinate lien position on building and any machinery financed r / 1 E 1 E 1 I T NAME