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>I.*Elk REQUEST FOR ACTION <br /> River <br /> To ITEM NUMBER <br /> Economic Development Authority 7. <br /> AGENDA SECTION MEETING DATE PREPARED BY <br /> April 8, 2013 Clay Wilfahrt,Assistant Director of <br /> Economic Development <br /> ITEM DESCRIPTION REVIEWED By <br /> Consider Forgivable Loan Application for Orluck Industries Jeremy Barnhart,Deputy Director, <br /> Community Operations and <br /> Development <br /> REVIEWED BY <br /> ACTION REQUESTED <br /> Consider Forgivable Loan application for Orluck Industries and recommend that City Council approve <br /> the Forgivable Loan of$200,000 <br /> BACKGROUND/DISCUSSION <br /> The attached staff report to the EDA Finance Committee dated March 29, 2013, and committee meeting <br /> minutes provide background regarding the Forgivable Loan request. <br /> The EDA passed the Forgivable Loan guidelines in February and set an initial application period of <br /> February 15 through March 15. The program is designed to stimulate private sector investment,help <br /> spur new construction, create and retain employment opportunities, and promote the sale of city <br /> property. Staff received three applications for the Forgivable Loan during the initial application period. <br /> Orluck Industries currently occupies a 25,000 square foot facility in Elk River. The Forgivable Loan <br /> would help them fund a 12,000 square foot expansion that will create six new jobs and induce $1.2million <br /> in private investment. <br /> The Finance Committee recommends the EDA recommend City Council approval of the Forgivable <br /> Loan for Orluck Industries with the following terms and conditions: <br /> • $200,000 at 3%interest, 5 year term,20 year amortization <br /> • EDA to secure personal guarantee <br /> • EDA to obtain subordinate lien position on building and subordinate lien on machinery financed <br /> The loan will be forgiven upon completion of all of the goals and requirements set forth by the Forgivable <br /> Loan Policy,and the jobs created as a result of the forgivable loan program are retained for a minimum of one <br /> year. In this case, Orluck Industries will need to complete their expansion,create a minimum of six jobs,and <br /> retain them for one year. Four of the jobs must be awarded to Low to Moderate Income employees. <br /> The Finance Committee also requested that staff determine if the city would become eligible for state <br /> grants upon committing the dollars, as well as the ramifications of a situation where the city loaned <br /> ' OVEAE . 11 <br /> NATURE <br />