4.3. SR 11-09-1998 - Laserfiche WebLink

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EDA Agenda Memo November 9, 1998 Page 3 · Manufacturing business approved for $500,000 loan · 10 investors are called upon to purchase $50,000 each in CDs with the designated bank · The designated bank then in turn lends the "new money" to the business at a rate of 7% · The CDs which are purchased by the investor are for a minimum term of 5 years. There are several issues in this example which are variable, including that the City of Elk River, as an investor in the program, may be called upon to purchase any dollar amount of CDs at a designated bank up to its pledge of $250,000. There may be other instances where the City of Elk River, as an investor, is not called upon at all to purchase CDs for a specific project. In that instance, the specific project may be entirely funded by the city in which it will locate its operations. Conclusion City staff has encouraged the formation of this interest buy-down program at the county level for approximately one year. It is one more valuable tool that Elk River will be able to take advantage of as well as other communities in Sherburne County. This tool will not only help grow businesses in Elk River, but build tax base for the entire county through participation from major stakeholders in Sherburne County. Staff feels Elk River is in a good position to get its share of businesses through this program, and will work hard to do so. Other investors who have committed to the program include Sherburne County, in the amount of $1 million, The Bank of Elk River, and First National Bank of Elk River. In staffs view, every investor, taxpayer, and economic development organization in Sherburne County stands to benefit from the results of this program, regardless of the location of the new business or business expansion project. Recommendation Staff recommends the EDA request the City Council to participate as an investor in the Sherburne County Business Development program by pledging to commit $250,000.