01-14-2008 EDA MIN - Laserfiche WebLink

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Economic Development Authority Minutes January 14, 2008 Page 3 Commissioner Motin stated that the current criteria of the micro loan requires the applicant to have an existing business in downtown by sometime in 2006. He explained that the EDA Finance Committee felt that the applicant is a reasonable exception to the "existing business" criteria of the program due to the delay encountered in establishing her business downtown due to construction timing of the building. MOVED BY COMMISSIONER MOTIN AND SECONDED BY COMMISSIONER KLINZING TO RECOMMEND APPROVAL TO THE CITY COUNCIL OF THE LOAN REQUEST BY NICOLE'S FINISHING TOUCH SALON WITH THE FOLLOWING TERMS: RATE 3% FIXED TERM 2 YEARS SECURITY PERSONAL GUARANTEE STRUCTURE DIRECT LOAN FROM EDA MOTION CARRIED 7-0. It was noted that applications to the Downtown Business Revitalization Micro Loan Program will no longer be considered since the program's application deadline was December 31, 2007. 8. Consider Finance Committee Recommendation on Micro Loan Policy Amendment Ms. Mehelich reported that she has received inquiries about the possibility of amending the micro loan fund polity to consider applications from new downtown businesses to be used towards leasehold improvements and furniture, fixtures, and equipment. She stated that the current Downtown Rehabilitation Financing Program is targeted toward building rehabilitation and restoration of downtown buildings and requires 20% to be used toward building exterior. Ms. Mehelich indicated that the Finance Committee discussed this issue and a list of comments and concerns raised by the Committee is included in the staff report. She stated that the overall consensus was positive and the Committee favored looking into a short term loan program. Commissioner Tveite reported that the Finance Committee discussed this at length. He stated that the balance in the micro loan fund is substantial and it does not do any good if businesses are not coming to Elk River. He stated this could be a way to kick start the downtown or other retail areas. He acknowledged that a majority of the funding should be reserved for industrial clients and that if a change in the program criteria is considered it should be for a short time or a set dollar amount and reevaluated. He noted that the Committee discussed structuring the program differently than the previous micro loan to be more like traditional loans requiring credit worthiness and possibly bank participation. Commissioner Motin explained that he has concerns that the problems downtown may be market driven and that the building owners could offer reduced rent or other concessions to lure businesses in their buildings. He also expressed concerns with favoring the downtown area versus other areas in the city and believes that this may open the door to increased dependence on government assistance.