6. EDSR 11-13-2012 El REQUEST FOR ACTION
River
TO ITEM NUMBER
Economic Development Authority 6.
AGENDA SECTION MEETING DATE PREPARED BY
November 13, 2012 Annie Deckert, Director of Economic
Development
ITEM DESCRIPTION REVIEWED By
Department of Trade and Economic Development(DTED) Cal Portner, City Administrator
fund balance REVIEWED BY
ACTION REQUESTED
None.
BACKGROUND/DISCUSSION
At the September 10, 2012,meeting, the EDA authorized a subcommittee consisting of Commissioners
Dwyer,Provo and Tveite to work with staff to put together the framework on how to proceed with the
use of the DTED fund balance,present the framework (guidelines) to the EDA Finance Committee and
for the EDA Finance Committee to recommend guidelines to the EDA by the end of 2012.
Since then, staff has had several conversations with staff from the MN Department of Employment and
Economic Development (MNDEED, formerly DTED) and has met with the subcommittee twice to
discuss the framework. Staff has compiled a draft policy and guidelines and is the process of receiving
final approval from the state. Upon final approval from MNDEED,we will review the policy with the
city attorney, and bring to the EDA Finance Committee for comments.
Despite our most timely efforts,MNDEED approval has taken longer than anticipated. We intend to
bring for the policy to the EDA consideration as soon as we can.
ATTACHMENTS
• Staff report dated 9-10-12
Action Motion by Second by Vote
Follow Up
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I REQUEST FOR ACTION
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TO ITEM NUMBER
Economic Development Authority
AGENDA SECTION MEETING DATE PREPARED BY
September 10, 2012 Annie Deckert, Director of Economic
. Development
ITEM DESCRIPTION REVIEWED By
Discuss use of Department of Trade and Economic Cal Portlier, City Administrator
Development (DTED) fund balance REVIEWED BY
ACTION REQUESTED
Discuss use of Department of Trade and Economic Development (DTED) fund balance
BACKGROUND/DISCUSSION
The EDA currently has a DTED fund balance of$703,679. These funds were originated from three
grants the city received from from DTED under the MN Investment Fund program;Tescom (1992) and
Sportech, Inc. (2003 and 2008). All three loans have since been paid back to the city, and closed by the
state because they met all federal objectives required by the grant guidelines.
Recently, staff met with staff from the MN Department of Employment and Economic Development
(MNDEED, formerly DTED) to discuss the fund balance. It has been brought to our attention that
these funds cannot be comingled with the Micro Loan Fund and any use of these funds must adhere to
the federal guidelines,which include strict job creation/retention requirements for LMI (low and
moderate income). Along with the federal guidelines comes a strict and frequent reporting requirement
which must follow the funds forever. These reporting requirements are extensive and result in a
considerable amount of staff time. MNDEED staff suggested the creation of a grant program,which
may or may not require matching funds. Utilizing the money in this manner would only require the
completion of the reporting requirements once per project;versus a continuing basis should the funds be
provided in the form of a revolving loan.
Additionally,MNDEED staff indicated that it's very likely the city would not be eligible for any funding
from MNDEED until the balance of this fund was utilized.
Staff feels there is an opportunity to create some type of grant program to market with the available lots
in city owned Northstar Business Park and Nature's Edge Business Center. Doing this would not only
increase our competitive advantage,but be an action step to fulfill the city's `Opportunities' goal by
fostering a pro-business atmosphere that provides incentives and other opportunities for new and
existing business growth.
Staff is seeking input on how to proceed with the use of these federal funds. Some options may include,
but are not limited to,the following:
i
rOWEREO RY
NATURE
• Staff to prepare potential grant program(s) to bring forward to the EDA for discussion
• Staff to bring item to EDA Finance Committee for discussion
• Staff to create a temporary `committee' of one or two EDA and EDA Finance Committee
members to discuss options
Once guidelines are established, staff will submit to MNDEED for approval.
FINANCIAL IMPACT
N/A
ATTACHMENTS
• Federal Fund eligible projects and activities
Action Motion by Second by Vote
Follow Up
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III. ELIGIBLE PROJECTS
The grant or loan must be based on the following criteria:
1.) Creation of new jobs or retention of existing jobs
2.) Increase in the tax base;
3.) The project can demonstrate that investment of public dollars induces private funds;
4.) The project can demonstrate an excessive public infrastructure or improvement cost beyond the
means of the affected community and private participants in the project;
5.) The project provides higher wage levels to the community or will add value to current workforce
skills; — — — — — — —6.) Whether assistance is necessary to retain existing business; and
7.) Whether assistance is necessary to attract out-of-state business.
The grant or loan cannot be made based solely on a finding that the conditions in clause 6.)or 7.)exist.
A finding must be made that a condition in clause 1.),2.),3.), 4.),or 5.) also exists.
IV. ELIGIBLE ACTIVITIES
RLF's may be used for the following activities:
1.) Purchase of land
2.) Construct a building or other improvements
3.) Renovate an existing building to accommodate the business
4.) Construct tenant improvements
5) Purchase Capital Equipment
6.) Lease space in or purchase an existing building
7) Purchase Inventory
8.) Use as working capital
9.) Site improvements
10.) Public facilities and improvements and privately owned utilities
11.) Workforce Development including job training and placement
a.)Training low skilled,low-income persons for specific jobs for which they have been hired and
which require skill levels beyond what they now have;
b.)Training a pool of low-income prospective employees for specific jobs being created as a
result of a CDBG-funded industrial expansion,where the employer agrees to give first
consideration to filling the new positions with people from this pool;
c.) Re-training existing employees of a business as part of a project which qualifies as retaining
jobs.
12.) Microenterprise Assistance
A. RLF assistance can be provided to persons owning or developing a microenterprise,which is
defined as a commercial enterprise that has 5 or fewer employees, one or more of whom owns
the enterprise.
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