5. HRSR 05-02-2011 - Laserfiche WebLink

Home Browse Search

,// City of Elk_ River REQUEST FOR ACTION TO ITEM NUMBER Housin & Redevelo ment Authori 5. AGENDA SECTION MEETING DATE PREPARED BY May 2, 2011 Catherine Mehelich, Director of Economic Develo ment ITEM DESCRIPTION REVIEWED By Consider HRA Resolution Authorizing an Interfund Loan for Tim Simon, Finance Director Advance of Certain Costs in Connection with TIF 16 Spending REVIEWED BY Plan and Authorizing a Loan to Elk River Pizza Ranch Project ACTION REQUESTED The HRA is asked to consider approval of the attached Resolution Authorizing an Interfund Loan for Advance of Certain Costs in Connection with TIF 16 Spending Plan and Authorizing a Loan to Elk River Pizza Ranch Project. The resolution provides for the authorization of an interfund loan between the HRA general fund and the TIF 16 fund in order to provide the $90,000 loan to the project. In addition the resolution authorizes the HRA President, Vice President and Executive Director to execute the Loan Agreement in substantially the form attached. Following the HRA's approval, the City Council will consider approval of the final Loan Agreement as required under the MN Business Subsidy Law at its May 9, 2011 meeting. BACKGROUND/DISCUSSION In June 2010 the HRA and City Council amended the HRA's TIF District No. 16 (King & Main) and adopted a Spending Plan, under new legislation that allowed the temporary utilization of existing TIF revenues in order to stimulate construction or substantial rehabilitation of private development and stimulate job creation. The Spending Plan adopted by the City Council identified the statutory requirements as well as the City's criteria for use of the funds. At its April 2011 meeting the HRA considered an application request from Robert McDonald, Elk River Pizza Ranch. The project includes the acquisition and substantial rehabilitation of the former Movie Gallery building located at 19141 Freeport St. NW, Elk River. The proposed project is considered a Class I restaurant in which food is served to the customer at a table. Total estimated private investment in the proposed project is $1,500,000. Proposed construction rehabilitation costs are estimated at $559,150. The application was found to meet the minimum requirements as established by statute, the HRA and City Council in the Spending Plan. The HRA directed staff to work with the applicant on aloes-interest loan from the TIF 16 Fund to assist the project. Loan Agreement The Loan Agreement and Promissory Note describes the project and specifies the assistance to be provided and conditions, including job and wage goals under the business subsidy requirements. A loan up to $90,000 from TIF 16 is proposed to be provided at a fixed interest rate of 2%, with a 10- year amortization and 5-year balloon payment. These terms are consistent with the EDA's Micro Loan Fund. The loan is secured by a Mortgage and Personal Guarantee of the owners. C:\Users\jjohnson\AppData\Local\Microsoft\Windows\Temporary Internet Files\Content.0utlook\SFWAYSNS\5 2 11 HRA TIF16 Action Requested.doc