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Item # 6 <br /> • <br /> City of <br /> Elk -�-� <br /> River <br /> MEMORANDUM <br /> TO: Economic Development Authority <br /> FROM: Catherine Mehelich, Director of Economic Development <br /> DATE: March 10, 2003 <br /> SUBJECT: Sportech, Inc. Expansion <br /> Attachment <br /> • Staff Report to City Council regarding Sportech, Inc. Expansion, dated 2-18-03. <br /> Issue <br /> Staff has been working with local manufacturer, Sportech, Inc. on the company's proposed <br /> expansion project. Sportech, Inc. wishes to expand with an additional 20,000-square foot <br /> freestanding building. The attached staff report dated February 18, 2003 to the City Council <br /> • provides details of the project costs. <br /> Staff presented the proposed project to the City Council on February 18, 2003. The City <br /> Council unanimously approved authorizing staff to proceed with an application to the MN <br /> Department of Trade &Economic Development MN Investment Fund grant in the amount <br /> of$200,000. The grant to the City will be used to provide a sub-prime loan to Sportech, Inc. <br /> for the purchase of equipment. Staff requests the EDA provide a recommendation on the <br /> financing terms for the City Council's public hearing regarding the grant application <br /> scheduled for March 24, 2003 at 6:30 p.m. <br /> The terms of the loan are negotiable between the City and the company. DTED officials <br /> advised staff that typically the interest rate and term is reflective of the community's micro <br /> loan program. The City Micro Loan program includes a program to provide industrial <br /> financing up to $100,000 at an interest rate of 4 points below prime. The Finance <br /> Committee has recently discussed recommending that the EDA establish an interest rate <br /> floor of 2% for all micro loan programs. <br /> Recommendation <br /> Staff recommends that the EDA consider recommending the following loan terms to the <br /> City Council for the purpose of providing a loan to Sportech, Inc. with funds from the MN <br /> Investment Fund grant: <br /> Loan Amount: $200,000 <br /> • Loan Purpose: Equipment Financing <br /> Term: 7-year amortization at an interest rate of 2% <br /> Security: 1st lien position on the new equipment <br /> F:\SHRDOC\Industrial Siting\Sportech Expansion\3-10-03EDA.doc <br />