3.13. SR 03-17-1997**ITEM 3.13.**
,ity of
MEMORANDUM
iver
Mayor & City Council
F~ROM:
Paul T. Steinman, Director of Economic
Development
DATE:
March 17, 1997
SUBJECT: Business Incubator Project Financing
Issue
The Business Incubator Project was recently approved by the EDA to proceed
with a two year lease commitment with Larry Hickman starting on April 15,
1997. The source of funds which has been identified for use on this project is
the Tescom DTED loan payments. You will likely recall that the city was
provided a grant of $250,000 from Federal and State Community
Development Block Grant funds, and in turn the city loaned these funds to
Tescom to complete an expansion project in 1994. Payments totaling
approximately $90,000 have been made to date by Tescom. Staff has worked
with the Department of Trade and Economic Development to develop a plan
to utilize these funds for the Business Incubator Project.
The Tescom loan payments are being provided into a fund which is formally
controlled by the city rather than the EDA. Given that the EDA has
approved the financing for this project through the use of these funds, it
would be appropriate at this time for the City Council to agree to allow the
EDA to use the Tescom loan repayment fund for this purpose. Since this
fund can only be used for eligible economic development activities which meet
certain criteria, it would be appropriate for the City Council to authorize the
EDA's use of these funds not only for the Business Incubator Project
financing, but other future economic development related projects as
determined appropriate by the EDA.
Action Requested
Staff recommends the City Council authorize use of the Tescom loan
payments (DTED Loan Fund) for use as a financing mechanism for the
Business Incubator Project and other future economic development projects
which are determined by the EDA to meet the criteria established for reuse of
these funds.
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