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the designated bank then in turn lends the "new money" to the <br />business at a rate of 7 percent <br />the certificates of deposit which are purchased by the investor <br />are for a term of five years. <br /> <br />The issues which are variable in this example include that the City of Elk <br />River, as an investor in the program, may be called upon to purchase <br />$100,000 in CD's or any amount up to its maximum pledge of $250,000. The <br />amount the city will be called upon to invest relates to the size of project, <br />location of project, and location of designated bank. In other examples, the <br />City of Elk River may not be asked to make its investment at all for a project <br />that other investors wish to participate in and is planned to occur elsewhere <br />in the county. <br /> <br />Conclusion <br /> <br />City staff has encouraged the formation of this interest buy down program at <br />the county level for approximately one year. It is one more valuable tool that <br />Elk River will be able to take advantage of as well as other communities in <br />Sherburne County. This tool will not only help grow businesses in Elk River, <br />but build tax base for the entire county through participation from major <br />stakeholders in Sherburne County. Staff feels Elk River is in a good position <br />to get its share of businesses through this program, and will work hard to do <br />so. Other investors who have committed to the program include Sherburne <br />County, in the amount of $1,000,000, The Bank of Elk River, and First <br />National Bank of Elk River. In staffs view, every investor, taxpayer, and <br />economic development organization in Sherburne County stands to benefit <br />from the results of this program, regardless of the location of the new <br />business or business expansion project. <br /> <br />Recommendation <br /> <br />Staff recommends the Council approve a request from the Economic <br />Development Authority (to be determined at the EDA meeting on November <br />9) regarding the city's participation as an investor in the Sherburne County <br />Business Development Fund Program. <br /> <br />Attachments <br /> <br />· EDA Report - November 9 meeting <br /> <br /> <br />