8.2. SR 11-18-2013 City of
Elk - Request for Action
River O.
To Item Number
Mayor and City Council 8.2
Agenda Section Meeting Date Prepared by
General Business November 18, 2013 Brian Beeman,Director of Economic
Development
Item Description Reviewed by
Amend Economic Development NEcroloan Fund Jeremy Barnhart,Deputy Director CODD
Policy Reviewed by
Cal Portner, City Administrator
Action Requested
Adopt by motion the amended Economic Development Microloan Policy.
Background/Discussion
Microloan Fund applications are reviewed, acted upon, and administered by the EDA Finance
Committee and EDA Commission.
The EDA Finance Committee is proposing amendments to the Microloan Policy as attached.
The EDA will consider the amendment at their November 18, 2013, meeting,which precedes the
Council meeting. If approved, the EDA will recommend the City Council to amend Microloan Fund
Policy by motion.
The Attached policy includes the amendments noted from the EDA Finance Committee meeting held
November 5, 2013.
Financial Impact
N/A
Attachments
■ EDA Microloan Policy-Tracked changes, Staff Report,&Supporting Material
P a w E A E U s r
NaA f RE]
Cicv 4of Request for Action
Qk .-,
RiVer
To ITEM NUMBER
Economic Development Authori 6.1
AGENDA SECTION MEETING DATE PREPARED BY
General Business November 18, Brain Beeman,Director of Economic
2013 Development
ITEM DESCRIPTION REVIEWED By
Update Microloan policy Jeremy Barnhart,Deputy Director CODD
Action Requested
Approve, by motion the updates to the Microloan policy including the updated downtown district map as
recommended by the EDA Finance Committee.
Background/Discussion
At its November 5, 2013 meeting, the EDA Finance Committee reviewed proposed changes to the
Microloan policy. Among those changes were the inclusion of non-profits,the non-eligibility of working
capital, defining energy efficiency and setting a threshold of improvements requited to be energy efficient
in order to qualify, and defining borders of downtown.
The Finance Committee discussed each of the recommendations, and by general consensus, the
proposed changes were approved as a recommendation to the EDA.
Attached is a draft of the proposed nicroloan policy and application that includes all of the decisions that
the Finance Committee made. Also attached is a map of the downtown. The draft policy is written to
include all areas in the red bordered area on the map in the Downtown Revitalization Microloan
eligibility.
The Finance Committee is recommending to the EDA the draft policy as is, or with any changes the
EDA desires.
Attachments
• Draft Microloan policy and guidelines-Tracked changes
• Downtown Map
• Map Narrative
=Xi
City of
El
er
Powered by Nature
Economic Development
icroloan Fund Policy & Guidelines
And licaion
Amended: May 2011 _
EDA Am tlde : oyein'betr 18,20 � - Formatted:Font:14 pt,Bold
..... ..... .... .._.._ .._..... ._.. ........... ._.
,kk Cc)itncP Aaj a7 eCLN-k qg e3 !-' 2( � Formatked:Font:14 pt,Bold
..' _ ,_ _-
City of Ilk River
Economic Development Division
13065 Orono Parkway
Elk River,MN 55330
763.635.1040
<cw_ellirivermn.,aY �anomicdei=elghrnf[/tgml
ELK RIVER ECONOMIC EYED °T
MICROLOAN FUND LILY & GUIDELINES
,t,1. PURPOSE
The Economic Development Authority for the city of Elk River(EDA)recognizes
the need to stimulate private sector investment into manufacturing facilities and
equipment in order to create new jobs,boost productivity and retain existing jobs for
local residents.Additionally,the need exists to encourage investment in the
expansion and/or rehabilitation of commercial and retail buildings in order to
maintain the economic viability of Elk River's Downtown District. Subsequently,
the purpose of this program is to provide low interest,long-term(i.e.greater than
one year)loans as incentives for industrial development within the city of Elk River
and to encourage commercial and retail business owners in the Downtown District
to rehabilitate their existing buildings.
214. LOAN PROGRAMS
In order to meet the economic and community development objectives of the EDA,
three distinct loan programs exist within the Microloan Fund to promote business
growth in Elk River.
Industrial Incentive Program
Purpose: The purpose of the Industrial Incentive Program is to encourage
industrial and high technology business development that supports
the tax base and brings quality jobs to the city.
Amount: Up to x$100,000 of secondary financing not to exceed 20%of the
project cost.
Equity: Must have private-sector commitments for 50%of the project cost.
Borrower must provide 10%or more of project financing.
Rate: Fixed;2 points below the lowest prime rate published in
the Wall Street Journal the day the loan is closed,or 3%,whichever is
greater.
Term: Financing with a balloon payment in 5-years. The balloon payment
must not be longer than the balloon payment of the participating
bank. Loans may be amortized up to the following limits:
20-years on real estate uses;
10-years on equipment uses.
Extension: In the event that the Borrower is unable to obtain conventional
financing to replace the Microloan at the end of five years,the loan
may be extended up to two additional years at a market rate of
Page 2of16 P 0 W E O E 0 0 Y '
interest.
Criteria: Borrower must be an industrial or high technology firm and create or
retain one new full-time job for each$20,000 loaned within 2 years.
Said jobs must pay a minimum wage of$10.00 per hour excluding
benefits required by law. Loans of$75,000 or more shall meet the city
of Elk River Business Subsidy Policy for the creation of new jobs at a
minimum wage of$15.00 per hour excluding benefits required by law,
as well as a 5-year location requirement.
In the case where the multiple sources of public financing are requested
(e.g.Microloan and Tax Increment Financing)job creation goals shall
not be double-counted.
Borrower must comply with the provisions of the city's Industrial and
Business Park zoning ordinances as applicable.
Downtown Revitalization Financing Program
Purpose: The Downtown Revitalization Financing Program is available to
business and property owners in the Downtown District(DD)-�,
defined by d `<�. not
primarily for the rehabilitation and restoration of older buildings,
as well as new business development.Nola profit:organizations may be
considered. The Downtown area shall be defined as that area zoned
............................................�_ _
Downtown District in the Zoning Ordinance, The EDA may consider
the Core area of the 2012 Mississ l-.) .i Connections Development
Framework as the Downtown.District.
The downtown_trea or district is the area shown by the attached rrrp
g1.r.,i..:nar ati�,e_ofthr`...I,.�c�lndaries,..
Amount: Up to$74,999 of secondary financing not to exceed 40%of the
project cost.
Equity: Must have private-sector commitments for 50%of the project cost.
Borrower must provide 10%or more of project financing.
Rate: Fixed at 2%.
Term: Financing with a balloon payment in up to 5-years.Loans may be
amortized up to the following limits:
20-years on real estate uses;
10-years on equipment uses.
Extension: In the event that the Borrower is unable to obtain conventional
financing to replace the Microloan at the end of five years,the loan
Page 3of16 P 0 W E R E R R Y
may be extended up to two additional years at a market rate of
interest.
Criteria: At a minimum,20%of Microloan dollars must be used for the
improvement of the building facades,with exceptions to be
considered when it appears the facade improvements are not
necessary.Financing of leasehold improvements will be considered at a
limit of$25,000.
Borrower must be located in the Downtown District(DD).
Loans must be supported by sufficient collateral,which may include
personal assets and guarantees.
Energy Efficiency Improvement Program
Purpose: The Energy Efficiency Improvements Program is available to
property owners of commercial or industrial buildings in Elk River to
provide capital to businesses to invest in energy efficiency and
improve their profitability through reduced energy costs and enhance
their ability to retain and create jobs. In addition,the program helps
the city of Elk River use energy conservation as an economic
development tool. \ca rn
niza ) 111 l ..nS r ,1V be c si cred
Amount: Applicants may apply for the cost of improvements up to$74,999
Eligible Uses: Energy efficiency measures installed in or on a building include:
• Facility systems optimization(commissioning/re-commissioning)
• Facility systems control improvements
• Process efficiency improvements(CenterPoint Energy)
• Lighting efficiency improvements
• Heating,ventilation and air conditioning system modifications
• Exterior envelope improvements
• Motor and pump efficiency improvements
• Ground-source heat pump systems used to heat or cool a facility
• Installation of equipment or devices that use renewable energy
sources to generate electricity or heat or cool a building including
solar electricity(photovoltaic),wind turbine or solar thermal.
Equity: Must have a minimum of 10%equity provided by the borrower.
Rate: Fixed;2 points below the lowest prime rate published in the Wall
Street journal the day the loan is closed,or 3%,whichever is greater.
Term: The maximum maturity date will be determined by the useful life of
the improvement and the energy payback achieved. For projects that
Pagc 4 of 16 P 0 W Eli E P 0 Y
INATUREI
have a shorter length of payback(2-5)years as calculated according
to energy savings,the loans will have an initial maturity of up to 5
years from the date of closing. Longer life improvements(6-15
years)may apply for a longer maturity of up to 10 years.
Criteria: AS.least..50`14)of microtoan furl.dr slioul.d.Inc:pent on every
efficiency improvements-€o -eai f€ittc. ..1I.—I
Applicant must agree to energy audits conducted under the utility ,- ) Formatted:Indent:First line: 0"
company's Conservation Improvement Program(CIP). If warranted,
engineering studies then are performed on facilities with conservation
opportunities under the utility company's CIP Program.
jium— eft iciencti•is defined as iim nrovemenrs that are rebatable b_y
the l?U Rives i1\ icip it Utilities .'RM1_I)or tlix utility provider for
the 2ro_Bert if not RIM] Proposed energy efficiency improvements
that do not qualify for the utility's prescriptive rebate program will be
reviewed and approved by the utility company servicing the upgrade
measures (e.g.Elk River Municipal Utilities,Connexus,CenterPoint)
along with a letter indicating eligible utility rebates.
Utility rebates as applicable will be assigned to the Elk River EDA
and applied toward principal repayment of the loan.
An Elk River Energy City Commission member will be asked to
participate in the EDA Finance Committee review and
recommendation of the application.
The loans will be secured by personal and corporate guarantees,and
if applicable alien on equipment financed and subordinate mortgage
on the property. Loans are not transferrable.
Installation must be certified through a licensed contractor and
electrician.New construction is eligible when participating with a
utility company rebate program. Eligible costs shall include only
incremental costs over industry design standards.
3 . USES
1.Permitted Fund Uses:
a. Building construction
b. Land acquisition
c. Machinery
d. Furniture,fixtures,and equipment(FF&E)
e. Renovation and modernization of buildings
f. Exterior renovation of retail,commercial and industrial buildings
g. Public infrastructure needed for economic development expansions
h. Investment real estate with a minimum of 50%of the space pre-leased
Page 5of16 p 1 E 6 E 0 0 q
2.Ineligible Fund Uses:
a. Expenditures for the construction and/or renovation of residential units
b. Working capital
c. Refinancing of existing debt
d. Inventory
. BUSINESSES ELIGIBILITY
Any project meeting the above criteria,and located or proposed to be located within
the city limits of Elk River as defined by this program,may be eligible for an
Economic Development Microloan as further defined herein:
• LJrnless otherwise stated.il_-)usiness must be a for-profit corporation,
partnership,or sole proprietorship;;. ......................... -fFormatted:Font:Garamond
• Business must be a s1vall business as defined by the Small Business
Administration(SBA).
• Business must have a positive net worth.
• Religious,political,and pornographic enterprises are not eligible to use
the Economic Development Microloan Fund.
Y. MICROLOAN FUND TERMS & CONDITIONS
Loan Structure
All Economic Development Microloans shall be structured as participation loans and
serviced by the project's primary lending institution,rather than as a direct loan,
unless otherwise approved by the EDA Finance Committee.Such an arrangement
allows for the central distribution and collection of funds and simplifies the financing
process for all parties involved.A participation agreement will be signed by the
borrower,primary lender and the EDA.
The FDA may require additional agreements to be signed by the borrower
(i.e.security agreement,personal guarantees,business subsidy agreement).
Simultaneous Microloans
The simultaneous use of different Microloan Fund Programs by any one borrower or
for any one project is prohibited,
Call of Loan
A loan shall become due and payable in full if a business relocates outside of the city
of Elk River prior to the maturity date of the loan.
Late Payment Charge
A late payment charge of 8%of the installment amount may be enforced.
6 I. REGULATION FOR NEW CONSTRUCTION AND IMPROVEMENTS
All buildings which public funds will be used for construction or renovation are to
be brought into conformance with city ordinances and state building codes. Repairs
Page 6of16 P 0 O E 0 E 9 0 Y
INATURrE
may include the following systems and portions of real property:
a. Mechanical heating,plumbing,and electrical
b. Structural;including the facade of the structure and energy related
improvements.
c. Hook-up to city services(i.e.water,sewer)
d. ADA(Americans with Disabilities Act)improvements
V . LOAN SECURITY AND GUARANTEES
Applicant must be able to secure the loan by providing the EDA with a minimum of
a subordinate mortgage upon the building and/or assets or other approved collateral.
Applicant must demonstrate the financial means to repay the loans,as determined by
the Economic Development authority.
Whenever possible,personal guarantees will be made part of any loan agreement.
Key person life insurance may be required as determined by the EDA Finance
Committee based on loan amount and company ownership partners.
VIII. TIMING OF PROJECT EXPENSES
No project should commence until the Elk River Economic Development Authority
has approved the loan application. Any costs incurred prior to the approval of the
loan application are generally not eligible expenditures.
No building construction should commence until the required city permits are
secured.
The applicant will be responsible for all legal,recording,and other fees required for
protection of a security interest in the loan,payable by a non-refundable 1%
processing fee,which is paid at the time of application. In addition to the
non-refundable 1%processing fee,all legal and filing fees shall be paid by the
borrower at loan closing.
4IX. PROCEDURAL GUIDELINES FOR APPLICATION AND APPROVAL
1. All applicants shall first contact a primary lending institution to determine if
additional equity is needed,and if so,how much.
2. The applicant and the primary lender shall then meet with city staff to obtain
information about the Microloan program,discuss the project,and obtain
application forms.
3. The applicant shall complete and submit an application form to the city,along
with a processing fee of 1%of the loan request. (The fee is used to cover
processing expenses and will be returned only if application is denied.) The
applicant must provide evidence of their ability to meet the equity requirements
or provide a letter of commitment for conventional financing from the primary
Page 7of16 P 0 O E O E O O Y
lending institution.
4. The EDA is a governmental entity and as such must provide public access to
public data it receives. Data deemed by Applicant to be nonpublic data under
State law should be so designated or marked by Applicant. See Minn.Sat.
Sections 13.59,Subd. 1,respectively.
5. The application will be reviewed by the city staff to determine if it conforms to
all city policies and ordinances and to consider the following:
a. The availability and applicability of other governmental grants and/or
loan programs.
b. Whether the proposed project will result in conformance with building
and zoning codes.
c. Whether it is desirous and in the best interests of the public to provide
funding for the project.
6. With written permission granted by the applicant,the application will be
submitted by city Staff to the Small Business Development Center(SBDC)as
advisory consult for staff and EDA Finance Committee. Applicant will be asked
to execute a Release of Information form with SBDC. To make an appointment
with the SBDC,call 320.308.4842.
7. The EDA Finance Committee and EDA Commissioners will review each
application in terms of its consistency with the goals of the city's Comprehensive
Plan and Economic Development Strategic Plan and in relation to the project's
overall impact on the community's economy. Downtown Revitalization
Program applications will also be reviewed by a Housing&Redevelopment
Authority Commissioner in conjunction with the EDA Finance Committee.
Energy Efficiency Improvement Program applications will also be reviewed by
an Energy City Commissioner in conjunction with the EDA Finance Committee,
The EDA Finance Committee will evaluate the project application in terms of
the following:
a. Project Design-Evaluation of project design will include
review of proposed activities,time lines and a capacity to implement.
b. Financial Feasibility-Availability of funds,private involvement,financial
packaging and cost effectiveness.
• Appropriate ratio of private funds to Microloan funds.
• Sufficient cash flow to cover proposed debt service as demonstrated
by financial statements and projections.
• Ability to demonstrate a positive net worth.
• Letter of Commitment from applicant pledging to complete the
project during proposed project duration,if the loan application is
approved.
• Letter of Commitment from other financing sources stating terms
Page 8 of 16 PAN E R E A A Y
INFATUREI
and conditions of their participation in the project if applicable.
® Sufficient collateral.
c. All other information as required in the application and/or additional
information as may be requested by the Economic Development
Authority.
d. Project compliance with all city codes and policies.
e. Program Objectives-In addition to quality job and wage
creation/retention requirements,the applicant must meet all Microloan
Fund criteria and demonstrate how the proposed activities will meet at
least one of the following objectives:
• The project contributes to the fulfillment of the city's approved and
adopted economic development and/or redevelopment plans.
• The project prevents or eliminates slums and blight.
• The project increases the local tax base.
• The project brings a structure into compliance with an existing
building code violation.
8. A written request for an extension shall be accompanied by a copy of current
financial statements and a$500 upfront processing fee. The processing fee is
used to cover processing expenses and will be returned if request is denied. The
application for an extension beyond the original term should include a letter of
denial from a conventional lender. Refinancing will not be allowed solely for the
purpose of reducing the interest rate due to lower market interest rates.
9. The EDA Finance Committee will recommend the approval,denial,or request a
resubmission. A recommendation from the Finance Committee will be
forwarded to the EDA for final action.
1l Q . LOAD POLICY REVIEW
The above criteria will be reviewed on an annual basis to ensure that the policies
reflected in this document are consistent with the economic development goals set
forth by the city.
-UX4. RIGHT OF REFUSAL
The Elk River Economic Development Authority may deny any project which it
deems inappropriate according to the guidelines established in this document.
12.-,X4#.COMPLIANCE WITH MN BUSINESS SUBSIDY LAW
Page 9of16 p0 � E6EU 8Y
Each company receiving assistance in the principal amount of$75,000 or more from
the EDA Microloan Fund shall be subject to the provisions and requirements set
forth by Minnesota Business Subsidy Law Statute 116J.993 and the city of Elk River
Business Subsidy Policy.
Page 10 of 16 p p . t g E p g y
ELK RIVER ECONOMIC DEVELOPMENT
MICROLOAN FUND APPLICATION
14. CONTACT INFORMATION
Legal Name of Business:
Project Site Address:
City/State/Zip
Contact Person(s)
Business Phone Fax
Home Phone Email
Check One: Proprietor Corporation Partnership
Social Security No.
Federal ID# State ID#
NATURE OF LOAN REQUEST
Which Micro-Loan Program are you applying for?
Industrial Incentive Program
Downtown Revitalization Financing Program
Energy Efficiency Improvement Program
Amount Requested:$ Total Project Cost:$
Type of project:
New construction for a start-up business.
New construction for an existing business.
On site expansion
Equipment purchase
Remodeling: (circle one)Commercial/Retail/Industrial
Refinancing existing debt
Other
Page 10 of 1G P 0 w E R E 0 R Y INATURE
Please give a brief summary of your business and its products or service:
Please give a brief summary of the project:
Please describe how this loan will impact your project:
344. FINANCING
Project Costs
Land $
Site improvements $
Buildings(attach plans&costs) $
Equipment/Machinery/Fixtures
(attach list and estimated costs) $
Remodeling $
Industrial Inventory/Worlung Capital $
Other(attach description) $
Total Costs $
Continents:
Page 11 of 16 P OY1 E Ii E A 8 Y
i
Proposed Sources of Financing
SOURCE NAME TERMS AMOUNT
Bank Loan $
Bank Loan $
Other Private Funds $
Applicant Contribution $
Other $
Fed Grant/Loan $
State Grant/Loan $
EDA Microloan $
Tax Increment Financing $
Tax Abatement $
Total Financing $
Collateral Assignments
Lien
Description of Collateral Position
To Bank 1
To Bank 2
To Private Sources
To Other Sources
To Federal Govt
To State
To EDA Microloan
Page 12 of 16 p 0 W E O 1 O 0 Y
Value of Collateral
Book Value Cost Existing Liens
Land $ $ $
Buildings $ $ $
Machinery&Equip. $ $ $
Other $ $ $
Other $ $ $
41M. JOB &WAGE GOALS
Present#of Employees Total Payroll
Jobs To Be Created*
Please 2rovid e the following information on jobs you ex Sect to create Within 2-years.
Average Are the jobs Expected
Number Hourly .Annual Permanent or Hiring
job Title of obs Wa e Salm Tem oral:? Date
*If loan is for job retention only,please explain in Business Plan.
Program Objectives
(Check all that apply)
The project contributes to the fulfillment of the city's approved and adopted
economic development and/or redevelopment plans.
The project prevents or eliminates slums and blight.
The project increases the local tax base.
The project brings a structure into compliance with an existing building code
violation.
Page 13of16 IP 00w E 0 E 0 [( Y
RE
NA TU
!jV. PROJECT CONTACTS
Attorney
Name
Address
Phone
Accountant
Name
Address
Phone
Financing Sources (lenders,partners,etc...)
Name
Address
Phone
Name
Address
Phone
Parent Company
Name
Address
Phone
Others
Name
Address
Phone
Name
Address
Phone
Page 14of16 P 0 W E 0 E 0 0 Y
T
hV1. ATTACHMENTS ECK MIST
Please attach the following:
A) Written Business Plan:
1. Description of Business
2. Ownership
3. Management
4. Date Established
5. Products/Services
6. Future Plans
B) Financial Statements for Past Two Years
C) Financial Projections for Two Years
D) Resume of Owner/Management
E) Personal Financial Statements of Proprietor,Partners,
Guarantors
F) Letter of Commitment from Applicant Pledging to Complete
During the Proposed Project Duration
G) Letter of Commitment from the Other Sources of Financing,
Stating Terms and Conditions of their Participation in
Project
H) Fee of 1%of amount of loan request
-V4. AGREEMENT
I/We certify that all information provided in this application is true and correct to the best
of my/our knowledge. I/We authorize the city of Elk River and the Finance Committee to
check credit references and verify financial and other information. I/We agree to provide
any additional information as may be requested by the city and the Finance Conunittee.
.APPLICANT SIGNATURE
BY
DATE
Page 15 of 16 P O E 6 E U Y
INATURE
....... TE
I
r ' `• ' I ' r •'14 1 �. `� I— ) I vii T. 19,s r, I.
,
t
190th
\, ,ost A
,\r
V. ..... _ ......—. .-.._............ .. ..L l4 r L ...... ...
,
— ..... 9y
{
PARK'A � 10\��� . ' t�
LINCOLN
Utyl} " VANDENBERGE ELK RIVER o' ELEMENTARY ELEMENTARY
IVAN SAND MIDDLE SCHOOL HIGH SCHOOL `' SCHOOL SCHOOL -
r _
{ - �•• ELK HILLS 0R
�'S,CHOOL � t
Ja
if i
�I,,fft ��� BIN STS
¢ r't ..
L......._ ......-- ...... - -
T o
J
aT'vl`jnn w R6Pfiif rs Itx i,C:,
� t x _ l
�I
,
C•I,IP(h,DO �C
PARK
m
A-
< y
ki�z >
---
y\\„ s j
i ...�_..I
..' ,E Imo"—,... £ No a AI UI
...,,, hA'�3i7KE
GARY
J
�y
3�
4
A q y
{ vY
� E f
....._ _ .........—. .. ..T
i �j
It
v is i
�`x S
' 1 i; 1H o
�:
1 :1r(i
]ELK RIV-rr-_-.'R
Mississippi Connections Downtown Area
Downtown Core
DOWNTOWNAREAS
IN Downtown Zoning District
Downtown Mississippi Connections boundaries:
Start following the south side of School Street to Freeport,west border of Freeport to north lot line of
parcel 75-401-0445. North corner of lot 75-401-0445 follow east lot line south along east lot lines of
parcels 75-401-0445,75-401-0435, 75-401-0430, 75-401-425, 75-401-0420, 75-401-0415 to 3rd Street.
Continue along the south side of 3rd street to Evans Ave; continue along the north side of parcel 75-544-
0004 to the eastern property line. Continue along the east property lines of parcels 75-544-0004 and 75-
551-0110 to Main St. Continue East along the south side of Main Street approximately 75 feet to the
eastern edge of parcel 75-670-0105. Continue south along the east property line of parcels 75-670-0105
and 75-430-0135 to the southeast corner of parcel 75-430-0135. Continue along the south side of parcel
75-430-0135 to 2nd Street and Follow north side of 2nd street to railroad drive. Continue northwest along
the eastern edge of railroad drive to the north side of Main Street. Continue along the north side of
Main Street to the Western Edge of Parish Avenue and follow the west side of Parrish Avenue to the
high-water mark of the Mississippi River. Continue west along the high water line of the Mississippi River
to the confluence of the Elk River and Mississippi Rivers. Continue along the generally northern high
water mark side of the EII< River to the east side of Main Street,just below the Lake Orono Dam.
Continue north east along the south east border of Main Street to the intersection of Tipton Ave and
Main Street. Continue in a generally easterly direction to west side of parcel 75-409-0415. Continue
north along the western property line of parcel 75-410-0540 to the south edge of Hwy 10. Follow the
south side of Hwy 10 to the east edge of Quinn Ave. Follow the east edge of Quinn Ave north, across
Hwy 10,to the northwest corner of parcel 75-403-0070. From this line continue east to the south side of
the rail road tracks; continue to the east side of Proctor Ave. Continue north along the east side of
Proctor Avenue to the south corner of School Street.
Inside these boundaries consist of the Downtown Mississippi Connections area.
�f
010 cf
El Request for Action
To ITEM NUMBER
EDA Finance Committee 2.3
AGENDA SECTION MEETING DATE PREPARED BY
November 5, Brian Beeman, Director of Economic
2013 Development
ITEM DESCRIPTION REVIEWED By
Update Microloan policy Jeremy Barnhart,Deputy Director CODD
Action Requested
Recommend to the EDA an updated version of the Microloan policy
Background/Discussion
At its June 20 meeting, the EDA Finance Committee discussed possible changes to the Microloan policy.
Among those changes were the inclusion of non-profits, the eligibility of working capital, defining energy
efficiency and setting a threshold of improvements required to be energy efficient in order to qualify, and
defining borders of downtown.
The Finance Committee discussed each of the recommendations, and came to the following conclusions:
• Non-profits should be included
• Microloan dollars should not be used for working capital
• Energy efficiency should be defined as improvements rebatable by Elk River Municipal Utilities
(ERMU) or the utility provider for the property if not ERMU
• At least 50% of microloan funds should be spent on energy efficiency improvements for energy
efficiency loans
• A map should be provided comparing the current downtown district to the downtown area as
defined by the Mississippi Connections Redevelopment Framework
Attached is a draft of the Microloan policy and application that includes all of the decisions that the
Finance Committee made. Also attached is a map of the downtown. The purple portion labeled the
"core downtown"is what is currently considered by the policy to be the Downtown District. The draft
policy is written to include all areas in the red bordered area on the map in the Downtown Revitalization
Microloan eligibility.
The Finance Committee should recommend to the EDA the draft policy as is, or with any changes the
committee desires. The EDA will consider the item at is November 18 meeting.
Attachments
• Updated Microloan policy and guidelines
• Downtown Map Mississippi Connections
• Downtown Map DD
r
Qev�i REQUEST FOR ACTION
,1
TO ITEM NUMBER
Economic Develo went Authori Finance Committee
AGENDA SECTION MEETING DATE PREPARED BY
June 20, 2013 Clay Wilfahrt,Assistant Director of
Economic Development
ITEM DESCRIPTION REVIEWED By
Discuss the Microloan Policy and recommend changes Brian Beeman, Director of Economic
Develo ment
REVIEWED 13Y
Jeremy Barnhart,Deputy Director
Community Operations and
Development
ACTION REQUESTED
Discuss the Microloan Policy and recommend changes.
BACKGROUND/DISCUSSION
The stated purpose of the microloan policy is to encourage private sector investment, create jobs, and
rehabilitate buildings. The Microloan is broken down into three categories,an Industrial Incentive Program,
Downtown Revitalization Program, and Energy Efficiency Program. The attached policy has details on each
of the programs.
In the past several months, staff has become aware of several issues with the Microloan Program including:
eligibility of non-profits, funding workng capital and other expenses,percent of the loan to be used for
energy efficiency, and defining energy efficiency. Staff has conducted research via surveys and discussions at
meetings in order to gather input and information to help direct the future of the policy. In December of
2012, staff collected 30 surveys asking a variety of questions regarding the microloan policy.
73% of the respondents were aware of the program, and only 27 were not. 50% of all respondents said that
they would be willing to make energy efficiency improvements in order to get a microloan. 40% of
respondents said that there were ineligible expenses that would prevent them from seeking a microloan.
Several people listed working capital and residential improvements as ineligible expenses that they would
consider financing if they were eligible.
27% of the respondents said that they were excluded because of business eligibility. Exclusion of non-profits
was mentioned a couple of tunes, as was the geographic restriction to downtown.
Of the 30 respondents, 14 said that they have no concerns working with the city on a microloan. Several
noted that the approval process seemed longer than necessary, several noted eligibility concerns, and a few
more feared that changes in administration could affect their loan.
Staff presented information about the Microloan to the Energy City Commission (E CC) and asked for input
on the program and any recommendations for changes. The ECC brought up that non-profits are not
eligible, there is no way to distinguish how much energy efficiency must be tied into a project, and the fact
that non-energy efficiency costs are tied into energy efficiency loans. The commission came to the consensus
that it was appropriate to use eligibility to the ERMU rebate program as a measure of what was energy
efficient and that tying in non-energy efficiency costs to fund a larger project is appropriate.
The most common ideas and concerns that have been brought up and that staff would like the input of the
Finance Committee on are the following:
1. Should non-profits be allowed to apply for microloans?
2. Can Microloan dollars be used for working capital or residential improvements?
3. What constitutes energy efficiency?
4. Should there be a threshold percentage of dollars of the loan that are used for energy efficiency?
Staff is seeking input from the finance committee on these issues. Following input from the finance
committee, staff will update the Microloan Policy, bring to the Finance Committee for filial review and
approval, and take it to the EDA in late summer of 2013.
ATTACHMENTS
• Microloan Policy and Guidelines
• Draft Minutes of the April 17, 2013 Energy City Commission meeting
® Survey Results
N:\DepartmentsWommunity Development\Economic Development\EDA\Adininstra6vc\Agenda\EDA Agenda\Year2013\11-18-2013\G.1 at 3.
2.3 at 2 Microloan Policy EDA Finance RFA 6-20-2013(2).docx
MEETING OF THE EDA FINANCE COMMITTEE
HELD AT THE ELK 1V CITY HALL
THURSDAY, JUNE 2 , 2013
Members Present: Paul Motin, Cliff Lundberg, Dan Tveite, Chad Vitzham
Members Absent: Larry Toth, Nate Ovall
Staff Present: Assistant Director of Economic Development, Clay Wilfahrt,Tom Sagstetter, ERMU
Others Present: Annie Deckert,Decldan Group
1. Call Meeting to Order
Assistant Director of Economic Development Clay Wilfahrt called the meeting to order at
7:30am
2. Consider Industrial Incentive Microloan for Preferred Powder Coating
Mr. Wilfahrt reviewed the staff report.
Mr. Lundberg asked if the jobs required as part of the other subsidy projects would verlap with the jobs
required for the microloan. Mr. Wilfahrt explained that Preferred Powder would be required to create a
certain amount of jobs for each that wa's easily covered by the number they plan to create. Mr. Lundberg
also asked if our subsidy policy requires that the business have a public hearing at Council, but Mr.
Wilfahrt stated that it was tied to statute.
MOVED BY LUNDBERG AND SECO ED BY TVE TE`TO RECOMMEND APPROVAL
OF TFIE APPLICATION FOR AN INDUSTRIAL INCENTIVE MICROLOAN FOR
PREFERRED POWDER COATING MOTION FAILED 3-0, COMMISSIONER VITZFIAM
ABSTAINED.
9
3. Discuss the Microloan Policy and Recommend Changes
Mr. Wilfahrt reviewed the staff report.
The committee discussed how much of the energy efficiency microloan should have to be used for
etiergy efficiency improvements. The consensus of the committee was that 50% of the loan should be
used for energy efficiency. The definition of energy efficiency is to be the same as what ERMU and
other area utilities use.
The corn nittee discussed using microloan fiends for working capital,and the consensus of the committee
was to not fund working capital. The committee also came to a consensus that non-profits should not
be excluded as long as they meet the other requirements of the policy.
The committee requested that staff compare the current downtown area with the downtown area as
defined by the Downtown Plan.
Staff will draft revisions to the policy and bring to the next Finance Committee meeting for review.
4. Closin
The EDA Finance Committee meeting ended at 8:17 a.m.
EDA Finance Committee Minutes Page 2
January,30,2013
Page 2 of 2
Respectfully submitted by,
Clay Wilfahrt
Assistant Director of Economic Development
4N
NADepartmentACommunity Development\Economic Development\EDA\Adminstrative\Agenda\EDA Agenda\Year2013\11-18-2013\6.1 at 4,2.3 at 4 Finance
Committee Minutes 6 20 2013(2).doc
MEETING OF THE IC RIVER
ENERGY CITIY COMMISSION
SION
HELD AT THE ELK RIVER CITY HALL
WEDNESDAY, APRIL 17, 2013
Members Present: Chaim Setala,Commissioners Dennis Chuba,Bruce Sayler,Ryan Setterholm,
This Steirabeck,Matt Westgaard,'T'im Rybak,'T'om Sagstetter and Scott
Hagen
i
Members Absent: Steve Rohlf
Staff Present: Environmental Administrator Rebecca Hang,L•;conomic Development:
Assistant Clay Wilfarht,Economic Development Director Brian Beeman,
Planner/Park Planner Chris Leeseberg,Cable Coordinator Jacob Pace
Others Present: Philipp Muessig,MPCA N1N GrcenStep Cities Coordinator
1. Call Meeting To Qj:der
Pursuant to due call and notice thereof, the meeting of the Elk River Energy City
Commission was called to order at 8:33 a,m. by Chair Setala,
2, Considg ft it 17,2013 Ene�I!City Comma"ion Agenda
MOVED BY COMMISSIONER SAYLER AND SECONDED BY
COMMISSIONER STEINBECK TO APPROVE THE AGENDA. MOTION
CARRIED.
3. Consider March 20,2013 Minutes
MOVED BY COMMISSIONER CI- UBAAND SECONDED BY
COMMISSIONER SAYLER TO APPROVE THE MARCH 20,2013 MIN111'ES.
MOTION CARRIED.
4. General Buskgmg
4.1 Nerewaim Lflrt iU er Ge)r,Park.1'l inaerL.T'lusr�rer°
Mr.Leeseberg gave an overview of the city's new website with a focus on tic I,ner:gy City
section and pertinent information for the commissioners,
i
4.2 ,Pr escrr/qtrorr l2v Phrilibb Muerrag,AQ?C-f AIN,GtxynStep Qlie,r Coprzly r
Mr:,Muessig discussed the history of the MN GreenStep Cities program and informed the
commission that 54 cities in MN are participants in the program which was launched in
2010. 'The program is similar to°free City'USA but loops at environmental sustainability.
The program encourages civic engagement and is built around 5 categories. There are 6
partners in the program:League of MN Cities (LMC),Clean Energy Resource Team
(CERl's),Great Plains Institute,Izaak Walton League,Urban Land Institute,and Division
of Energy Resources. W.ithiii the 5 categories,there are 28 best practices. Depending on the
size of a community determines what category it fits into, :Elk River is classified as an"A"
category city and has completed enough actions to be recognized as a."Step 3" city which is
rM.lp q.
the highest level at this titne. Cities can participate in the Regional Indicators Initiative for
$$1,000/year. 'Phis program will track the city for four years and utilize Elie B3 Benchmarking
database to see how public buildings are performing.
4.3 Pmseretrdiou by C'lra�r Etyl atht,Reonowic Develgfw) it_fl��r tc{!af
Mr.Wilfarht:presented on this city's Microloan Fund Policy specifically on the Energy
Efficiency Improvement roan section. He explained that it is low interest rate loan and P.S.
Dance Studio tools advantage of the loan. There are challenges with determining what
constitutes energy efficiency and that the cost of the improvements can outweigh the interest
rate. A possible solution is to make a portion of the loan forgivable. This could be done by
using the'Energy City Tligh Five scale and forgiving portions of the loan based on the level.
achieved. Comtissioner Chiba asked about non-profits being eligible and Mr.Wilfarht
explained that if there is job creation and it is promoting the downtown,non-profits may be
eligible. Commissioner Settcrliolm asked where the money conies from and the inaximum
term. Mr.Wilfarht explained that the money conies from the ED.t1 balance through a levy
and the germ is a minimum of 10 yr,up to 20 yr. Chair Setala asked how the energy
efficiency will be measured and how to make a distinction between standard energy
efficiency and high energy efficiency. Commissioner Sagstetter explained that rebates vary
depending on the efficiency and the rebates buy down the initial cost, Mr,Wilfarht stated
that the program is aligned with the rebates, Mr.Sagstetter questioned where the baseline
gets set and how tnucli loan amount can be used for build out, Commissioner Setterholm
explained that in commercial/industrial businesses the train driver is payback, Mr.Wilf arllt
asked in the ECC approves of tying the loan into the entire cost. Consensus of the
commissions stated it was appropriate.
4.4 F-oc;f -,J2g!11r1NZ0/4
Ms.Haug announced that Elk River will be the host of hockey Day MN 2014 on January
18,2014 in the Handke Stadium. This event has a lot of media coverage and tnay be a good
opportunity for Energy City to have a demonstration and have an electric and natural gas
vehicle displayed, The event is promoted for the entire week, Commissioner Westgaard will
keep the BCC informed of how the ECC can participate in the event.
4.5 Subconlnuttc >Ipci
® F,_.`.�TdG'CTt$O11.Sj�lcOP7TT172ttee
o 'J lie Education Subcommittee met on Tuesday,April 9 via conference call
between Ms,I Iaug and Commissioner Setterhohn. During the call,discussion
focused on partnering with the schools and determining what opportunities are
available, Commissioner Rybak indicated that the subcommittee should nieet
with the principles and discuss making Energy City tout a.recluirenient for
students far science and technology, Commissioner Rybak explained that j
bussing is a major factor in where schools go. Commissioner Rybak offered to
speak with Janna about settitig up a meeting with all of the principles,
] sTa� �e� _Sul?c�rr�zttcc '
o Mr.Sagstetter and Commissioner Chuba informed the ECC that the flier in the
packet is being revised to look similar to other handouts from the city.
® ll�rosa,rti_r�toT�_.Sttl�k:�ttT?n��fee
U The subcommittee is meeting immediately after the ECC meeting.
Commissioner Setterhohn suggested looking at the Natural Gas fueling station
in South Minneapolis as a demonstration,
i
r
i
® Ijisiotutty Sin
c�otrzr�rittee
o Chair Setala discussed the subcommittee's plan of using the city of Vancouver's
"Greenest:City Action Plan"to develop goals for the city and commission. 'File
Energy City Plan will be presented to the city council to receive feedback.
5. C7ther
' E
e v TJcgzro c'ller�el nervzt 12&�btor—.Brian Beeman
Mr.Wilfarht introduced the city's new Econonuc Development Director,Briat-Beeman.
Mt.Beeman introduced himself and discussed his previous work experience.
I�rntl?��moeetidl5.r
Counciltn.ember Westgaard asked Ms.Haug to ask the commission if the I-?CC meetings
should be reduced due to the number of subcommittee meetings. The consensus of the
ECC is that the subconunittee meetings ate getting close to the point where they could be
every other month but the ECC tneetings should remain monthly.
6. Schedule Next ECC Meeting find-Identify-Agenda Itans,
The next meeting will be held May 15,2013 at the}slk River City Hall in the Upper'rown
Conference Root at 8:30 a,m.Items for the agenda include:
® Approval of the April 17,209.3 Minutes
e Presentations by Connexus,EM River Municipal Utilities and Centetpoint
Energy
e Subcommittee Updates
7. 1 clj_oa:nLrient
There being no further business,Chair Setala adjourned the meeting of the Elk River Energy
City Conm�ission at 9.0:33 a.m.
Minutes Prepared by Rebecca Haug.
John Setala,Chair
Tina Allard,City Clerk
i
3
t
r
i
ETOR 191 1/ A E
D 9 2 0 19
191 t A E ELY{ 2
pa PARK
a CENTER 1915
J o° 19
3 T
190 h Cl
28
O�Fq 89t A
3 34 At
oll `� R TE
III c ARENA 3
P N
z
M o LINCOLN PARKER d IN
00/y OAKE YANDENBERGE ELK RNER ELEMENTARY ELEMENTARY
w A
VAN SAND MIDDLE SCHOOL SCHOOL
HIGH SCHOOL ¢ SCHOOL
D Ra
MMUNITY
HOOL SCHOOL ST E K HI LS R
p
> A
z z� ~ R UAS H
> s� o R�ER th ST I
> z S PA
C
FIT ¢ t T o
UDITOR ON uoHtruuc 7th p c� IN0
UgDIVt T 6 > CENRiR pLA
$LF L0 9 YG
� a h I. RIVER
TA 6th ST 6 5 LIONS 6th 1 S EL p1,p,Z pD
I
PO AVE � > PARK 5 C IV R L I Z,O,d A
> 1I CI Imo, 00 R ER
o / 0 ¢ 5h ST >I Sh S P AZD
4 -a
5th ST 1Q ti z 0 AUD 1SI0N I 0 S N
Q o Fl Q SU6 D 44th ST SU$NOI I0 R6 ARDIAN
S 0 TO GU
R �lh T N AD Y 4t S a15 A ITI
Q N
JAIAJ ST E ENTARY p o \
L 2 r S N
0
z ST R HUD FAIRTTION
ILE
2
d 9 zo OKOUT P A
t& 2 a E
0 o ST
N MANOR MISSISSIPPI RIVER
a
z, PLACE 2 � >
� U
_ N o
c
+ U
yFO ,p91
q �'o
O� ya
9
O
9�
�2
yi
91
y�
178TH
177TH
ELK RIVER Mississippi Connections Downtown Area
Downtown Core
DOWNTOWN AREAS
�iVer Downtown Zoning District