6.1.A. SR 05-16-2011 - Laserfiche WebLink

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El REQUEST FOR ACTION ..... River TO ITEM NUMBER Ci Council 6.1.A. AGENDA SECTION MEETING DATE PREPARED BY Community Development May 16, 2011 Catherine Mehelich, Director of Economic Develo ment ITEM DESCRIPTION REVIEWED By Consider Loan Agreement for Elk River Pizza Ranch Project Tim Simon, Finance Director REVIEWED BY ACTION REQUESTED The City Council is asked to approve the business subsidy provision of the attached Loan Agreement for the Elk River Pizza Ranch project. This is in accordance with the MN Business Subsidy Law, in which the elected body has final approval of any business subsidies. BACKGROUND/DISCUSSION Attached are the Apri14, 2011 and May 2, 2011 HRA memos which provide background on the request. At its May meeting, the HRA approved a resolution authorizing the HRA interfund loan and providing up to $90,000 loan to the project with the conditions outlined in the attached loan agreement. Business Subsidy Provision The Spending Plan adopted by the City requires the assistance is subject to the "Business Subsidy Law" and that the recipient create or retain at least 1 full-time equivalent job (including construction jobs) for every $25,000 of assistance provided. The applicant is proposing to create 4 full time jobs ($25,000-$70,000 salary) in addition to approximately 70 part-time jobs at wages $7-$11 /hr. The Section 6 Business Subsidies Act of the attached Loan Agreement requires the creation of 4 full-time jobs at a minimum of $12 per hour wage within 2 years of occupancy. The original loan agreement that went to the HRA was amended to reflect the commercial- service nature of the jobs and wages, from $15/hour wage. In addition, the Loan Agreement requires that construction commence before July 1, 2011 as required by the Spending Plan and statute authorizing use of the TIF funds. FINANCIAL IMPACT Statutory deadline for commencement of construction and use of funds is June 30, 2011 unless otherwise extended this legislative session. If no requests axe approved prior to the deadline, the HRA would be required to use the TIF 16 funds to reimburse the HRA $39,671.78 balance due, decertify the TIF district, and distribute the balance and future taxes to the city, county and school district. RECOMMENDATION The HRA is recommending the City Council's approval of the business subsidy provision of the Loan Agreement. The addition of the restaurant is anticipated to boost the economic activity of the Freeport Street and Highway 169 retail area, which may not otherwise occur without the assistance. N:\Public Bodies\Ciry Council\Council RCA\Agenda Packet\OS-16-2011\5.16.11 CC T'IF16 Action Requested.doc