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/i <br /> ECly l Request for Action <br /> River - <br /> To Item Number <br /> Mayor& City Council 4.12 <br /> Agenda Section Meeting Date Prepared by <br /> Consent Agenda April 21, 2014 Brian Beeman,Director of Economic <br /> Development <br /> Item Description Reviewed by <br /> Orluck Industries Forgivable Loan Extension Jeremy Barnhart,Deputy Director, CODD <br /> Reviewed by <br /> Cal Portner, City Administrator <br /> Action Requested <br /> Approve,by motion,a forgivable loan extension for Orluck Industries. <br /> Background/Discussion <br /> On April 8, 2013, the Economic Development Authority (FDA) and City Council approved a Forgivable <br /> Loan for Orluck Industries to help fund a 12,000 sq. ft. expansion that will create six new jobs and induce <br /> $1.2 million in private investment. The loan was for$200,000 at 3%interest, 5-year term,20-year <br /> amortization,with the EDA to secure a personal guarantee and subordinate lien position on the building <br /> and machinery financed. <br /> The loan is to be forgiven upon completion of all 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 <br /> one year. The initial expansion project was to be completed in 2014. <br /> Due to the Federal Sequestration and the announcement of military cutbacks, Orluck Industries has <br /> experienced some contract reductions. This has caused Orluck to reconsider its options and has decided <br /> not to pursue the expected 2014 expansion project. Instead, Orluck is requesting that the City Council <br /> extend the approved Forgivable Loan to allow the project to begin in 2015. A new letter of commitment <br /> will be provided at the meeting. <br /> The Department of Employment and Economic Development (DEED) has confirmed that an extension <br /> is permissible. If the City Council considers an extension beyond 2015,DEED has requested that they <br /> be notified before proceeding. <br /> Financial Impact <br /> The Forgivable Loan fund balance is $311,155.13. With $111,155.13 allocated to Sportech.The financial <br /> impact of approving the loan extension would be $200,000 with the applicant paying all legal and filing <br /> fees at closing.This would close out the account in 2015 as requested by DEED. <br /> Attachments <br /> • March 29, 2013, EDA Finance Committee Minutes <br /> • April 8, 2013, EDA Staff Report and Minutes <br /> • May 6, 2013, excerpt from City Council Minutes <br /> • April 21, 2014, EDA Report <br /> P a w E n E o A Y <br /> UREJ <br />