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EDA 3 <br /> Business Incubator Program <br /> Sept.9, 1996 <br /> • cover the EDA lease, then the EDA would be required to pay "out of <br /> pocket" to cover these expenses. <br /> In the event that the EDA was required to subsidize a business's rent, <br /> we would be provided a certain number of shares in the business in <br /> return for that subsidized amount. Another option discussed would be <br /> to provide that subsidy in,the form of a loan to the business. Such a <br /> loan could be converted to stock at any time at a pre-negotiated price, <br /> or "called" if the business were to move from Elk River to another <br /> community. <br /> With the private property scenario, the property owner would be <br /> brought in as a participant in the "stock barter". The EDA would <br /> again attempt to negotiate a lease which would be equal to the amount <br /> of operating costs in the facility. For the property owner's profit <br /> margin, he would be offered stock in each of the businesses in the <br /> facility, rather than cash (rent) in a typical leasing arrangement. <br /> Attached to this memo is an outline of the two scenarios which <br /> indicates specific square foot costs and projected expenses which the <br /> EDA and Genesis Business Centers, as a partner in the project, may <br /> be obligated. <br /> i <br /> • What would be the responsibilities of the EDA in this project? <br /> Responsibilities of the EDA would likely include the following: <br /> 1. To guarantee coverage of operating costs,including taxes on a <br /> facility throughout the period of the two year lease. <br /> 2. To assume all responsibilities associated with leasing and <br /> managing the facility. <br /> 3. To show an on-going creation of 15-25 jobs in the facility. <br /> 4. To provide on-going technical expertise and services to the <br /> tenants of the facility, including locating venture capital and <br /> other sources of financing for their business. <br /> 5. To provide sufficient guarantees so that the growth of the <br /> incubator businesses occurs within Elk River and, in the case of <br /> utilization of the former administration building, that the <br /> growth also be allowed to occur elsewhere within Sherburne <br /> County. <br />