6.9 EDSR 01-19-2016 - Laserfiche WebLink

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Purpose: To assist existing businesses with expansion and attract new businesses to the city whose local operations will expand the city's economy through job retention and creation and maintain / grow the city's tax base. The purpose of the Jobs Incentive Program is to encourage the creation of quality, high paying jobs within the city. Patriot Converting will retain and relocate 22 FTE jobs to Elk River, paying between $15430 per hour, exclusive of benefits. Amount: Up to $200,000 of secondary financing not to exceed 20% of the project cost. The total project cost is $3,981,340. The $200,000 requested is 5% of the total project cost. Equity: Must have private -sector commitments for 50% of the project cost. Borrower must provide 10% or more of project financing. The applicant indicated they will provide $173,890 as equity contribution to the project in addition to the seller carryback of $200,000 structured as unsecured debt with a 60 -month payback, and the applicant will infuse $110,000 to cover the relocation costs associated with moving their equipment from their existing facility in Anoka to Elk River. The total contribution of $483,890 represents over 12% of equity in the project. This is more than the 10% required in borrower equity as part of the program policy. Assuming receipt of the full microloan requested amount of $200,000 (5% of project cost), private -sector financing provides the remaining 83% through debt. Criteria: Borrower must create one new full-time job for each ,$20,000 loaned, retain one new full-time job for each $10,000 loaned, or combination of retainage and creation to meet the requirements. All new jobs must be created within two years and retained for the period of the loan. Said jobs must pay greater of $15.00 per hour or 150% of state or federal minimum wage, exclusive of benefits required by law. Any loans shall meet the city of Elk liver Business Subsidy Policy for the creation of new jobs, as well as a 5year location requirement. A combination of 22 FTE retained jobs provides up to $220,000 as qualifying maximum loan amount, subject to other requirements being met. If approved, the loan agreement will reflect the requirement to provide 22 retained jobs (22 * $10,000 = $220,000). Summary For the $200,000 requested, the application meets the minimum job retention and wage. Uses of the funds as proposed are eligible expenses. The applicant meets the financial equity contribution of 10% as required by the Policy. Ultimately, the EDA Finance committee and EDA Commissioners have the discretion to consider each application in terms of its consistency with the goals of the city's Comprehensive Plan and Economic Development Strategic Plan and in relation to the project's overall impact on the community's economy. Financial Impact Previously, the Jobs Incentive Microloan program has been funded through the EDA Job Incentive Microloan Fund account. The remaining balance of the Job Incentive Microloan Fund cash account is 95,403.58. It would be an option to fund the microloan through this account, with the remaining balance of $104,596.42 funded by the regular Microloan Fund account. The full request of $200,000 could also be funded by the regular Microloan Fund account. As of December 22, 2015, the balance of the Microloan Fund cash account is $956,647.43. The EDA Finance Committee recommend the EDA K\Departments\Community Development\Economic Development\EDA\Administrative\Agenda\EDA Agenda Packets\2016\January 19 2016\6.9 sr Patriot Converting EDA Job Incentive N icroloan Request.docx