7.2. EDSR 12-21-2020 �J
etyof
ElkRequest for Action
River
To Item Number
Economic Development Authority 7.2
Agenda Section Meeting Date Prepared by
General Business December 21, 2020 Colleen Eddy, Economic Development Specialist
Item Description Reviewed by
COVID-19 Small Business Emergency Microloan Lori Ziemer,Finance Director
Program Reviewed by
Cal Portner, City Administrator
Action Requested
Approve,by motion,a resolution approving the conversion of the COVID-19 Small Business Emergency
Microloan Program from a payable loan to a forgivable loan.
Background/Discussion
At their May 18, 2020, meeting,the EDA established the COVID-19 Small Business Emergency Microloan
Program to assist small businesses and allocated up to $200,000 from the Economic Development Business
Microloan program as the source of funding. The new program featured a $20,000 loan,with a forgivable loan
component of up to $5,000 for property tax relief to assist local, small businesses identified in the Governors
Executive Orders 20-04 and 20-08. The program offered zero interest loans up to $20,000, amortized over 10
years,payments deferred for 6-months.
On November 20, 2020, Governor Walz announced a Four-Week Dial Back of his order which again
impacted the businesses who received EDA microloans. As the Governor is expected to extend the dial back
order,and as loan repayments are expected to start on February 1, 2021, staff is proposing an option to
forgive the remaining balances of$15,000 for those businesses who received these funds.
Four businesses received $15,000 repayment loans for a total forgiveness of$60,000 from the EDA's
COVID-19 Small Business Emergency Microloan.Another option several Elk River businesses took
advantage of were grants (which do not have to be paid back) offered through the Sherburne County's
CARES Act Business Relief Grants.
Financial Impact
The EDA allocated funding of this program of up to $200,000 from the general microloan fund account. The
total funds disbursed as of December 16, 2020 were $97,374.00, of which $37,374 is currently forgivable. The
Microloan fund balance is about$828,000.00.
Attachments
■ Resolution
■ COVID Loan List
The Elk River Vision
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ECONOMIC DEVELOPMENT AUTHORITY
OF THE CITY OF ELK RIVER
COUNTY OF SHERBURNE
STATE OF MINNESOTA
RESOLUTION NO. 20-14
RESOLUTION APPROVING FORGIVENESS FOR COVID-19 SMALL BUSINESS
EMERGENCY MICROLOAN PROGRAM BORROWERS
WHEREAS, the spread of COVID-19 in the United States and Minnesota has raised serious
public health concerns; and
WHEREAS, on March 13, 2020, Governor Tim Walz issued Emergency Executive
Order 20-01 declaring a state of peacetime emergency to address the COVID-19 pandemic in
Minnesota; and
WHEREAS, the Governor subsequently issued additional Executive Orders to combat the
impacts of COV-ID-19 within the State of Minnesota, which include closures of schools, bars,
restaurants, and other places of public accommodation;and
WHEREAS, many businesses within the City of Elk River,Minnesota (the "City") have been
economically impacted by the Governor's Emergency Executive Orders in response to the COVID-
19 pandemic; and
WHEREAS, in order to retain small businesses in the City, on May 18, 2020, the Economic
Development Authority of the City of Elk River (the"EDA") created the COVID-19 Small Business
Emergency Microloan Program (the "Loan Program") to assist area businesses with the expenses
incurred and specifically caused by the impact of the Governor's Emergency Executive Orders by
providing no-interest loans to small business in the City in an amount of up to $20,000, including a
forgivable portion in an amount not to exceed $5,000; and
WHEREAS, the EDA approved and expended $102,374.00 in Program loans to eight
recipients each of whom is listed in Exhibit A (collectively the `Borrowers") in the amounts listed in
Exhibit A; and
WHEREAS, Borrowers each entered into a Loan Agreement with the EDA (the "Loan
Agreement");and
WHEREAS, since the creation of the Loan Program,additional Emergency Executive Orders
have been issued by the Governor that impact local businesses and the costs of current and prior
business interruptions due to the pandemic are likely to prevent many businesses from continuing to
operate; and
WHEREAS,preservation of existing businesses with a physical location in the City is essential
to stabilizing the City's economy and the City therefore desires to provide economic assistance to
businesses within the City that have been impacted by the economic pressures caused by the COVID-
19; and
WHEREAS, due to the continued economic hardship for local businesses resulting from
COVID-19 and the EDA's continued desire to retain existing businesses in the City, the EDA has
determined to forgive all outstanding loans provided to the Borrowers pursuant to the Program
including the portion of the outstanding loans not used for property tax relief and not intended to be
forgiven under the Loan Agreements executed by the Borrowers and the EDA.
NOW THEREFORE BE IT RESOLVED By the Board of Commissioners (the `Board' of
the Economic Development Authority of the City of Elk River (the "EDA'D as follows:
1.01. The EDA hereby authorizes forgiveness of the loans made to the Borrowers, and
authorizes and directs the President and the Executive Director to execute a certificate or letter of
forgiveness on behalf of the EDA to each Borrower,together with all related documents in connection
therewith (the "Forgiveness Documents"); and the President and Executive Director are hereby
authorized and directed to carry out,on behalf of the EDA,the EDA's obligations thereunder and deliver
the cancelled Personal Guaranty(as defined in the Loan Agreement) to the Borrower.
1.02. The approval hereby given to the Forgiveness Documents includes approval of such
details therein as may be necessary and appropriate and approved by legal counsel to the EDA and by
the President and Executive Director prior to executing said documents; and said officers are hereby
authorized to approve said changes on behalf of the EDA. The execution of any instrument by the
President and Executive Director shall be conclusive evidence of the approval of such document in
accordance with the terms hereof. In the event of absence or disability of said officers, any of the
documents authorized by this Resolution to be executed may be executed without further act or
authorization of the Board by any duly designated acting official, or by such other officer or officers
of the Board as,in the opinion of the City Attorney,may act in their behalf.
Approved by the Board of Commissioners of the Economic Development Authority of the City
of Elk River this 21"day of December,2020.
President
ATTEST:
Secretary
EXHIBIT A
BORROWERS
• Pyramid Fitness Group, LLC DBA Anytime Fitness
$20,000 loan and $5,000 forgivable loan for property tax relief
• Daddy-O's Cafe
$5,000 forgivable loan for property tax relief
• Pinnacle Foods, LP
$5,000 forgivable loan for property tax relief
• Elk River Aerie No. 3264, Fraternal Order of Eagles
$2,374 forgivable loan for property tax relief
• Elk River Country Club, Inc.
$5,000 forgivable loan for property tax relief
• InSPIRE Studio, a LLC
$20,000 loan
• CHOW Mixed Grill and BBQ, LLC
$20,000 loan
• Momentum Fitness Endeavor, a LLC DBA Snap Fitness
$20,000 loan
7.2.
COVID Loans
• Pyramid Fitness Group, LLC DBA Anytime Fitness
$20,000 loan and $5,000 forgivable loan for property tax relief
July 8, 2020
• Daddy-O's Cafe a S-Corporation
$5,000 forgivable loan for property tax relief
July 8, 2020
• Pinnacle Foods, LP
$5,000 forgivable loan for property tax relief
July 8, 2020
• Elk River Aerie No. 3264, Fraternal Order of Eagles
$2,374 forgivable loan for property tax relief
July 8, 2020
• Elk River Country Club, Inc.
$5,000 forgivable loan for property tax relief
• InSPIRE Studio, a LLC
$20,000 loan
July 8, 2020
• CHOW Mixed Grill and BBQ, a LLC
$20,000 loan
July 8, 2020
• Momentum Fitness Endeavor, a LLC DBA Snap Fitness
$20,000 loan
August 3, 2020