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EDA Meeting Minutes February 10, 1997 Page 2 • 3 new employees at the Elk River location in addition to 17 employees who will be moved from Rogers. COMMISSIONER BENDER MOVED THE EDA APPROVE THE LOAN REQUEST BY EASTEY AND JOHNSON, INC. IN THE AMOUNT OF $50,000. COMMISSIONER HOLMGREN SECONDED THE MOTION. THE MOTION CARRIED 7-0. 6. Discuss Business Incubator Project Paul Steinman reviewed issues associated with proposed Business Incubator project as follows: Lease The EDA will lease approximately 13,186 square feet, of which 11,072 square feet is leasable and 2,114 square feet is common area. The base rent is $19,779 ($1.50 per sq. ft. x 13,186), for a term of 2 years (April 1, 1997 to March 31, 1999). The EDA proposes the possibility of extending the term by six years. Paul noted he would expect only a minimal increase in the base rent for each additional two year lease period (approximately 10- 15%). Sublease Paul explained that the sub-lease incorporates all of the responsibilities of the EDA primary lease. The base rent will be negotiated individually with each tenant, and sub-leases will not be longer than the term of the EDA • primary lease or additional renewal terms. Memorandum of Understanding This document describes details of the companies' participation in the Business Incubator program. Paul reviewed financial projections for the Business Incubator as outlined in his report. Discussion followed regarding leasehold improvements and associated costs. Paul noted Larry Hickman has indicated he will pay for the leasehold improvements up front, but would require the EDA to reimburse him prior to occupancy. If the EDA were to vacate the space in two years, Mr. Hickman would reimburse the EDA for the improvements based upon a seven year depreciation schedule. Paul reviewed the requirements for use of the CDBG dollars related to job creation and retention. COMMISSIONER DUITSMAN MOVED TO APPROVE THE BUSINESS INCUBATOR CONCEPTS PROPOSED BY THE ECONOMIC DEVELOPMENT EXECUTIVE DIRECTOR AS PRESENTED IN HIS REPORT TO THE EDA DATED FEBRUARY 6, 1997. COMMISSIONER HOLMGREN SECONDED THE MOTION. In response to Commissioner Bender's questions, Paul explained that the EDA's commitment could be a maximum of$85,000. All the space will be finished off at once for economic reasons, and if a tenant requires more than one bay, two • could be combined.