5. HRSR 08-07-2007ITEM ~ 5.
t~ver
MEMORANDUM
TO: Housing & Redevelopment Authority
FROM: Catherine Mehelich, Director of Economic Developmentf/~~~
DATE: August 7, 2006
SUBJECT: Downtown Revitalization Project Update
Attachments
• Staff report and draft minutes from Special City Council Meeting, July 24, 2006
• Downtown Redevelopment Team Structure, July 27, 2006
Staff will provide the HRA a verbal update on the Downtown Revitalization Project,
including the following items:
• Status of Jackson Place financing and construction
• Status of Bluffs of Elk River and The Bank of Elk River construction projects
• Status and changes to River's Edge Park
In accordance with the City Council's original decision and confirmation at the July 24`h
special meeting, the contractors for the Bank and Bluffs are prepared to reopen Main Street
to two-way traffic on Friday, August 11th.
In addition staff recently met to confirm the downtown redevelopment team organization
and communications issues. The following activities are a result of that meeting:
• The attached Downtown Redevelopment Team Structure organizational chart
• Began a weekly email to Mayor, City Council and HRA members regarding status of
construction projects and any new issues
• Established weekly meetings between project contractors and related city staff to
coordinate construction schedules, deliveries, street work, etc.
City of Elk River
REQUEST FOR COUNCIL ACTION Item Number
5.2.
Agenda Section Meeting Date Prepared by
Administration May 1, 2006 Scott Clark, Community Development
Director
Item Description Reviewed by
Temporary Changes to Downtown Traffic Flow Plan
Introduction
Staff is in receipt of a letter dated Apri127, 2006 from the Bank of Elk River's contractor (VanMan) to
temporarily re-route a portion of Main Street for a period of three months, starting on or around May 2,
2006. In turn, Metro Plains has submitted a letter dated Apri124, 2006 stating that they will abide by the
construction schedule and traffic plan that was approved by the City on July 18, 2005. These two
positions appear to conflict with each other since the re-routing of a portion of Main Street, coupled with
the MetroPlains approved plan, creates aone-way Jackson Avenue that will create a temporary dead-end
in downtown. Staff is of the opinion that by a series of signage and other changes this situation, although
not ideal, could work and will appear as an option. The work on Main Street will have extensive utility
work for two to four weeks (the majority of this work is driven by Metro Plains) with the additional two
months necessary for the bank's contractor to complete retaining wall work and other improvements on
the front side of the bank. This aforementioned work must be completed with equipment located along a
portion of Main Street between Jackson Ave and Highway 10.
The second factor that complicates the picture is the necessity of MetroPlains to start construction on
Jackson Place. At this time, Metro Plains is of the opinion that their financing will be in place by June and
a June 15, 2006 construction start is a possibility. At this time, MetroPlains has completed all of the
necessary steps in the Development Agreement to accomplish the transfer of Jackson Square and all
building permits have been reviewed and approved. Staff has reviewed with MetroPlains the feasibility of
having their construction limits extend only to the curb line until the re-opening of Main Street (which
keeps Jackson Avenue atwo-way) and then have the construction limit fence extend into Jackson Avenue
(30 ft.) as agreed to by the Council in the summer of 2005. MetroPlains is of the opinion that this
physically does not work and that due to the limited construction area, they need the 30 ft. construction
limit in order to build. It should also be noted that the City's park construction and ERMU's directional
boring summer project should not affect these schedules.
Discussion
Staff has had a series of internal meetings with all departments affected by this request. In addition, staff
has been constantly in contact with the Rivers Edge Downtown Business Association's members (both
by e-mail and in person) to explain the fact situation and the preliminary recommendations. As discussed
with the Association, staff will be having more discussions between the time of the writing of this report
and the Council meeting so additional information may be forthcoming.
Financial Impact
None
Attachments
• MetroPlains approved (2005) construction and traffic flow plan
• Proposed Main Street Re-Route Plan Option 1 )
• Proposed Main Street Re-Route Plan (Option 2 )
• Downtown Traffic Flow after Re-Route
• Draft Signage and Detour Plan
• Letters from VanMan and MetroPlains
• Downtown Business Marketing Plan
• Original City Council discussion memo and minutes July 18, 2005
Action Requested
Staff evaluated and proposes these options based on two priority issues 1) public safety -vehicle,
pedestrian, and construction site and 2) keeping downtown open for business. The following are options
for this proposal:
Option 1:
The first option assumes that the request to xe-route Main Street is approved by the Council but that the
30ft. staging area into Jackson (per the July 18, 2005 action plan) is not given until through traffic resumes
on Main Street. The ability of MetroPlains to actually construct work under this scenario is questionable.
1. The Bank of Elk River's contractor is requesting the temporary re-route of Main Street from
Jackson Avenue to Parrish Ave. for three months (May, June July).
2. Keep Jackson open as a two-way for this period of time. This will require the Jackson Square
project to have a fence along Jackson Ave to be along the curb. Once through traffic resumes on
Main Street they then would go back to the originally agreed upon position of having a fence 30
ft. into the street and having Jackson revert to a one-way south. This scenario is problematic
since MetroPlains has all of the necessary permits to proceed. Equally important, the Jackson
Place site is small and it appears that the 30 ft. staging is critical to the construction.
3. Staff's target date for street re-route is May 8`'' in order for signage to be put into place and have
the motoring public understand the upcoming changes.
4. A street disruption permit will be required to insure who will replace the street (the street will be
effectively removed as part of utility connection work) and to require that when the through
traffic resumes on Main Street, a hard surface lift will be constructed.
5. Permanently eliminate intersection parking that is the northerly extension of the Rivers Edge
Common Park as part of the temporary Main Street re-route.
Ct\Documents and Settings\cmehelich\Local Settings\Temporary Internet Files\OLK79\Request Council Action Temporary Re-Route Main
Sireetdoc
6. When Main Street is re-routed, parking on the south side (between the Cinema Building and the
Law Office) will be converted to ninety-degree parking and then converted back to diagonal
when the street resumes to through traffic. (Striping to be the responsibility of the private
contractors)
7. The City Engineer will be developing a signage and detour plan (installation to be the
responsibility of the City but to be paid for by the applicants).
8. Work with MNDot regarding timing of any traffic signals at intersections along Highway 10 to
accommodate changes in traffic flow.
9. This schedule should not affect ERMU's directional boring project or the park construction
10. City will place will create a Downtown Marketing Plan including ads the Star News, City
newsletter, cable etc to give additional advertisement for downtown businesses (Marketing Plan
enclosed).
Option 2:
The second option assumes that the MetroPlains Traffic Plan is adhered to and that: 1) 30 feet of
Jackson Avenue is taken for the staging and construction area and, 2) Main Street remains
temporarily re-routed for the three months with through traffic resuming sometime between early to
mid August. This option assumes that the narthbound "out of downtown" would then happen on
Lowell Ave and Proctor Ave. The period of time that this scenario would be in place would be up to
55 days, depending on when Jackson Place construction begins (earliest assumed is June 15, 2006
and through traffic resuming on Main Street on or about August 8, 2006).
1) Re-route Main Street per the request of the bank's contractor on a date of or around
May 8, 2006
2) Allow Metro Plains to place a construction limit fence 30 ft. into the easterly portion of
Jackson Avenue per the previously approved July 18, 2005 Plan. Staff would work with
MetroPlains to ensure that this change would not happen until actual construction
begins.
3) Create signage as needed to direct traffic onto Lowell and Proctor and warning the
motoring public that after Lowell there is no outlet back to Highway 10.
4) Items 3 - 10 in Option 1 remain.
Consideration for Main Street Reconfiguration aa~hen Main Street is Re-Routed
During the period of time that Main Street is rerouted per this request, the City has the option to
convert Main Street from Jackson Avenue to Kirlg Avenue from diagonal and parallel parking to 90
degree, head-in parking. This would almost double the amount of parking that is available, but once
Main Street resumes through traffic, parking along Main Street would have to convert back to
existing conditions.
Council
n Motion by Second by Vote
Follow Up
Q\Documents and Settings\cmeheheh\Loeal Settings\Temporazy Internet Files\OLK79\Request Council Action Temporary Re-Route Main
Street.doc
El
River
Police Department
MEMORANDUM
TO: Mayor and City Council
FROM: Jeffrey A. Beahen, Chief of Police
DATE: July 24, 2006
SUBJECT: Downtown Redevelopment Project
There are several issues surrounding the downtown project that directly involve the police
department and have created a litany of problems that the Council should be apprised of.
My hope in conveying this information is to better inform the Council of some of the
factors that have impacted the project as a whole, and what new factors will be impacting the
project in the near future.
First, the traffic plan as approved by the Council last October and revisited in May, was an
accurate document, at the time it was written and when project schedules were tracking as
projected, or were to start on time. Through a variety of issues and complications, outside
my control, projects were delayed, started early, or changed in scope, all having dramatic
impact on the traffic flow directly related to construction delivery, construction traffic and
interrelated business deliveries and customer traffic. We utilized a static traffic control plan,
designed for a dynamic construction process, often with unforeseen results.
Second, we all know that signs and adherence to same has been an unforeseen problem with
far reaching implications. Starting with the "No-left Turn" on Parrish when this first began,
we have been faced with almost zero compliance with traffic control signage. Even today,
we still have people traveling the wrong way on Jackson. Last week, a driver drove past all
the signs on Proctor, up across piles of gravel, and got hung up on the tracks during the
repairs to the crossing. Frankly, if people just obeyed signs, 95% of the issues surrounding
the downtown project would simply go away. Yet enforcement, personalized traffic control
guidance from the downtown officer, and better than ever signs-still result in the majority
not following the traffic control plan at all. I have no answers for compliance, we have tried
everything-we just need to be aware that signage is not the solution.
Last, as we move forward to reopening the road for that 4-week period, we need to
understand that the staff I supply for this project will increase from 1-officer, 9-hours a day,
to 3-officers, 9-hours a day. We estimate that just the one officer will cost the City almost
$40,000 through October. Adding the two additional officers will be another $24,300. I am
still five officers short, so the remaining officers are filling these details by working overtime,
with many staff working 16-hour days.
Added to that will be the chaos that will be created by the start of the busy session for
excavation of Jackson Square and the delivery of large planking to both the Bluff's and to
the Bank of Elk River as well as the brick work on the exterior of the new bank addition.
This will mean that for excavation alone, there will be a dump truck every 3-4 minutes
backing into the Jackson Square site each day. Officers will have to stop traffic constantly to
make this happen. They will also have to stop traffic frequently to get brick and planking
deliveries in as well. The resulting schedule will mean that although the road will be open, it
will be impassable or blocked more than it will be open.
From a last safety concern, we will have the motoring public driving through the middle of
three primary construction areas, with cranes and lifts being operated beside and above
them, as well as equipment operating within the same traffic lanes, lanes that due to the
latest fencing-are no longer straight, but actually angled as the cars get close to coming back
out to the Jackson intersection. Then, four weeks later we close it all down again and have to
reeducate the driving public for the remaining part of the closure-perhaps another 5-6 weeks.
In closure, the purpose of this correspondence is not to deter the Council from standing by
the decision to reopen the road, but to inform the Council of some of the factors that have
changed or continue to impact our traffic situation downtown. I understand the predicament
and pressure from the business community, and know that opening is what was promised. It
may however create a more problematic traffic pattern than what currently exists, so we
need to insure that in this case, we know exactly what associated issues will be created once
the road is opened, so that we can be prepared to deal with those new issues when they arise.
SPECIAL MEETING OF THE ELK RIVER CITY COUNCIL
HELD AT THE ELK RIVER CITY HALL
MONDAY, JULY 24, 2006
Members Present: Mayor Klinzing, Councilmembers Dietz, Farber, Gumphrey, and Motin
Members Absent: None
Staff Present: City Administrator Lori Johnson, Police Chief Jeffrey Beahen, Fire Chief
Bruce West, Community Development Director Scott Clark, Director of
Economic Development Catherine Mehelich, Building Official Bob
Ruprecht, Street Superintendent Phil Hals, Police Captain Bob Kluntz,
Police Captain Brad Rolfe, Assistant Director ofEconomic Development
Heidi Steinmetz, and Recording Secretary JessicaMiller
Call Meeting To Order
Pursuant to due call and notice thereof, the meeting of the'Elk River City Council was called
to order at 6:30 p.m. by Mayor Klinzing.
2. Discuss Construction Areas and Downtown Traffic
Community Development Director Scott Clark explained that since the Council approved a
temporary reroute of Main Street for a three month period with two-way traffic to resume
August 11, 2006, addtional_informationhas been obtained through contractor meetings
indicating that there will be future needs to close the street and that major traffic disruptions
may occur for extended periods of time to allow construction vehicles and equipment to
access the sites. Mr. Clark re~riewed the construction schedules for the Bank of Elk River,
the Bluffs Project, and the Jackson Place project. He stated that from the information
included im the schedules, it appears that a majority of the closures and interferences that
could severely disrupt traffic flow could be completed by October 1. He discussed the
...options with the Council which included resuming two-way traffic on Main Street on
.August 11 as originally approved on May 1 or extending the August 11 deadline in order to
allow contractors sufficient time to complete what they view as major road disruptions and
to allow construction vehicles and equipment access to the sites.
Director of Econornic'Development Catherine Mehelich and Building Official Bob
Ruprecht presented photographs of the downtown construction sites to the Council.
Chief Beahen indicated that there are a number of issues surrounding the downtown project
that directly involve the police department. He explained that there is currently an officer
downtown controlling traffic 9 hours a day. He stated that he is still five officers short which
means that officers are filling this detail by working overtime, many with 16-hour days. He
stated that if Main Street is reopened, staffing will need to be increased from 1 officer, 9
hours a day to 3 officers, 9 hours a day to help traffic navigate through the narrowed road
past the construction sites. Chief Beahen explained that the estimated cost of having
additional officers on traffic control duty downtown is approximately $64,000. He explained
that a more inexpensive option would be to hire non-officers at a minimal wage to provide
traffic control downtown. He noted that anyone hired would have to be trained to deal with
the public and to properly represent the city. Chief Beahen emphasized that simply putting
City Council Minutes Page 2
July 24, 2006
additional downtown signage is not the answer as to date, the police department has
experienced almost zero-compliance on traffic signage downtown.
Councilmember Gumphrey questioned if downtown traffic control would be necessary if
Main Street remained closed until October 1. Chief Beahen stated that it would depend on
the construction traffic patterns. He noted that the traffic patterns downtown change daily
and that he had not originally anticipated having to have an officer downtown daily for
traffic control.
Chief Beahen commended the contractors for adhering to their approved staging areas and
keeping construction traffic off of Main Street. He noted that he has witnessed some of the
construction delays put upon these projects and many of them were beyond the contractor's
control.
Councilmember Gumphrey questioned given the unforeseen delays; what the contractors
are doing to expedite the completion of their projects.
Adam Holmes of VanMan Architects and Builders for the Bank of Elk River Project; Paul
Lyver representing CSS Builders on the Bluff Block Project; and Ken Hinz of Flannery
Construction for the Jackson Block project were present and provided input on their
construction schedules.
Mayor Klinzing stated that she is not interested in extending the August 11 deadline as the
Council promised the downtown business owners that it would be reopened by that date.
She questioned why the city is providing police officers for traffic control and why the
contractors are not providing the traffic. control. Chief Beahen stated that normally traffic
control provisions are included as part of a development agreement but no such provisions
were included into these development agreements.
Marcy VanValkenburg, Elk River Travel and Keith Holme, Kemper Drug property
owner -stated that their businesses are hurting due to the Main Street closure and that they
would rather have itreopened as soon as possible even if it has to be closed periodically
throughout the day to allow construction traffic to pass.
Fred McCoy, McCoy's Pub..,- tated that he would like Main Street to be opened but has
concerns that people may get upset at the condition of the road and be reluctant to travel
Main Street in the future.
Karen Attia, Olde Main Eatery -indicated that it is ridiculous to assume that the
contractors will,remain on schedule if the deadline is extended to October 1.
Councilmember Motin indicated that he agrees with Mr. McCoy. He would like for Main
Street to reopen as soon as possible but that he would rather err on the side of public safety
and doesn't believe reopening it is the best thing to do. He stated that he has concerns about
the road reopening in poor condition and with people traveling so closely though
construction zones. He noted that if the downtown businesses can be legally compensated
he would be interested in looking into that.
Fire Chief Bruce West explained that it will take the cooperation of all three contractors and
the public to ensure that public safety remains the number one concern downtown when
Main Street is reopened and throughout all of the downtown construction.
City Council Minutes
July 24, 200
Page 3
Councilmember Gumphrey stated he has to leave but that he is in favor of adhering to the
original date of August 11 for Main Street to reopen. He noted that he is not in favor of
providing compensation to the downtown business owners.
Councilmember Gumphrey left at this time (7:32 p.m.).
Councilmember Dietz questioned what the condition of Main Street would be if reopened
August 11. Mr. Clark indicated that it would be asphalt with curb and gutter. He questioned
where the additional money to pay the traffic control officers is coming from.
City Administrator Lori Johnson explained that traffic control was not included in the
developer's agreement because traffic control was originally not an issue and it did not
become an issue until these projects came together at the same time. Ms. Johnson indicated
that the money is currently coming from the general fund. but if the Council desires, the city
can request that the developers assist with the cost of the downtown traffic control. She
noted that all road closure requests should go through Director of Economic Development
Catherine Mehelich so they can be forwardedao-the Council.
It was the consensus of the Council to adhere to the original deadline for Main Street to
reopen to two-way traffic on August 11; for any future road closure requests to be
coordinated through Director of Economic Development Catherine Mehelich with as much
lead time as possible; for Chief Beahen to explore the option of hiring non-patrol officers to
direct downtown traffic at a minimal wage;_and for staff tolook into requesting traffic
control payment assistance from the developers.
3. Adjournment
There being no'further business, Mayor I{linzing adjourned the meeting of the Elk River
City Council at 7:42 p.m.
Minutes prepared by Jessica ;vliller.
Joan Schmidt
City Clerk
.o
0
0
N
N
7
C7
2
L
w v
w b
Z J
W
(7 ~
Z v wQ ~ N
wdI- j
O F-
Z ~ U cn
N Z~ N
~ O
U F- a"i
Q
2 ~ j ~
0
I- Z oC ~
ZF F o ~Z
O W
w H m
Z W H O
}~ ~
U F-O
N J Z
UO
W
3
L
u
„~ W Z
(7 ~
Z ~ W
O~ ~ Q
T ~
J
a~
u~
U
OC E E
4 f. N
~ Q O N W
u
U
U J
.Y ~
u Z ~
v m~
~ O
ro W L ~ _ °" Z
J
~
~' f- O
~
U W + V
aL
a~ U U
a
O
d v
v
J
W N
". ~ ~ O
~
V ~;
" ~
~
J
w
~3 ~ O ~
~
~
a °;
m
L
v
b
J
Z
1ui. F- Q
I ~
c U
L LL
td LL
m
N ~
Z
~ O
,;; O U
ZI-nw.
O "'
U Z
ITEM ~ 5.1.
ver
MEMORANDUM
TO: Housing & Redevelopment Authority
FROM: Catherine Mehelich, Director of Economic Development /~~~
DATE: August 7, 2006
SUBJECT: Consider Appointing HRA Commissioner to EDA Finance
Committee
Attachment
• Economic Development Micro Loan Policy & Application
Background
The EDA administers the following different types of micro loan programs:
• Industrial Incentive Program
• Downtown Rehabilitation Financing Program
Typically Industrial Incentive Micro Loan Program applications are reviewed by the EDA
Finance Committee for recommendation of approval or denial to the EDA Board. Per the
attached Micro Loan Policy, Downtown Rehabilitation Financing Program loans are to be
reviewed by an HRA member in conjunction with the EDA Finance Committee.
Issue
Staff recently received a loan application for the Downtown Rehabilitation Financing Micro
Loan Program from Olde Main Eatery.
Action Requested
Staff requests the HRA appoint an HRA Commissioner that may be interested in serving on
the EDA Finance Committee to review Downtown Rehabilitation Financing Program micro
loans.
City of
El:
The Light Industrial Hub of the NorthzvestMetro
Economic Development
Micro Loan Fund Policy & Guidelines
And Application
Amended: May 2006
Amended: June 2004
Adopted: September 1999
City of Elk River
Economic Development Division
13065 Orono Parkway
Elk River, MN 55330
763.635.1040
ELK RIVER ECONOMIC DEVELOPMENT
MICRO LOAN FUND POLICY & GUIDELINES
I. 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.
II. LOAN PROGRAMS
In order to meet the economic and community development objectives of the EDA,
two distinct loan programs exist within the Micro Loan 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 $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 Micro Loan at the end of five years, the loan
may be extended up to two additional years at a market rate of
interest.
Micro Loan Fund Policy & Guidelines Page 2 of 14
Amended May 2006
Criteria: 1. Borrower must be an industrial or high technology firm and create
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 in excess of $75,000 shall meet the attached
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. Micro Loan and Tax Increment Financing) job creation goals shall
not be double-counted.
2. Borrower must comply with the provisions of the city's Industrial
and Business Park zoning ordinances as applicable.
Downtown Rehabilitation Financing Program
Purpose: The Downtown Rehabilitation Financing Program is available to
business and property owners in the Downtown District (DD) for the
rehabilitation and restoration of their buildings.
Amount: Up to $75,000 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 Micro Loan at the end of five years, the loan
may be extended up to two additional years at a market rate of
interest.
Criteria: 1. At a minimum, 20% of Micro Loan dollars must be used for the
improvement of the building facades.
2. Rehabilitation loans in the Downtown District are exempt from
job creation and wage goals since the loan amount does not exceed
$75,000 and does not qualify as a business subsidy by state law.
3. Borrower must be located in the Downtown District (DD)
(see attached map).
Micro Loan Fund Policy & Guidelines Page 3 of 14
Amended May 2006
-_
~~
t
~w~~~ ~
1 r r; ~ a~,~ ~,
J
~~~
~~ ;
~_~ ~~ ` ~ ~ ~~ ~H~
~ -~„ '~~,,,~,I
III. 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 minuzium of 50% of the space pre-leased
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
IV. 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 Micro Loan as further defined herein:
• Business must be a for-profit corporation, partnership, or sole
proprietorship.
• Business must be a small 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 Micro Loan Fund.
V. MICRO LOAN FUND TERMS & CONDITIONS
1. Loan Structure
All Economic Development Micro Loans will be structured as participation loans and
will be serviced by the project's primary lending institution. 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 agreement will include the following
provisions, among others:
If Borrower does not meet the job and wage goals specified in the Subsidy
Agreement, the interest rate will change to 2 points above the participating
bank's rate, effective from the two year anniversary of the loan closing.
Upon subsequent achievement of the jobs and wage goals, the interest rate
will revert back to the rate when the loan was originated, effective from the
date of attainment of the job and wage goals.
Micro Loan Fund Policy & Guidelines Page 4 of 14
Amended May 2006
• If Borrower defaults on the loan, the EDA will collect all further payments
during the default based on a pro-rata basis with the participating bank
excluding the distribution of proceeds resulting from the foreclosure on
collateral.
The EDA may require additional agreements to be signed by the borrower (i.e.
security agreement, personal guarantees, subsidy agreement).
2. Simultaneous Micro Loans
The simultaneous use of different Micro Loan Fund Programs by any one borrower
or for any one project is prohibited.
3. 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.
4. Late Payment Charge
A late payment charge of 8% of the installment amount may be enforced.
VI. 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
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
VII. 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.
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.
Micro Loan Fund Policy & Guidelines Page 5 of 14
Amended May 2006
The applicant will be responsible for all legal, recording, and other fees required for
protection of a security interest in the loan, payable by anon-refundable 1
processing fee, which is paid at the tune of application.
IX. 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 Micro Loan 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 fox conventional financing from the primary
lending institution.
4. 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.
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. Rehabilitation
Loan applications will also be reviewed by an HRA member in conjunction with
the EDA Finance Committee.
They will also 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 Micro Loan funds.
• Sufficient cash flow to cover proposed debt service as
demonstrated by financial statements and projections.
Micro Loan Fund Policy & Guidelines Page 6 of 14
Amended May 2006
• Business must show 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 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.
Program Objectives - In addition to quality job and wage
creation/retention requirements, the applicant must meet all Micro Loan
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.
6. 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.
7. 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.
Micro Loan Fund Policy & Guidelines Page 7 of 14
Amended May 2006
X. LOAN 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.
XI. 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.
XII. COMPLIANCE WITH MN BUSINESS SUBSIDY LAW
Each company receiving assistance in excess of $75,000 from the EDA Micro Loan
Fund shall be subject to the provisions and requirements set forth by Minnesota
State Statute 116J.993 and the attached City of Elk River Business Subsidy Policy.
Micro Loan Fund Policy & Guidelines Page 8 of 14
Amended May 2006
ELK RIVER ECONOMIC DEVELOPMENT
MICRO LOAN FUND APPLICATION
1. CONTACT INFORMATION
Legal Name of Business:
Address:
City /State /Zip
Contact Person(s)
Business Phone
F
Home Phone
Check One: Proprietor Corporation Partnership
Social Security No.
Federal ID #
State ID #
II. NATURE OF LOAN REQUEST
Which Micro-Loan Program are you applying for?
Industrial Incentive Program
Rehabiliation Financing 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
Other
Micro Loan Fund Applicarion Page 9 of 14
Amended May 2006
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:
III. FINANCING
Project Costs
Land
Site improvements
Buildings (attach plans & costs)
Equipment/Machinery/Fixtures
(attach list and estimated costs)
Remodeling
Industrial Inventory/Working Capital
Other (attach description)
Total Costs
Comments:
Micro Loan Fund Application
Amended May 2006
Page 10 of 14
Proposed Sources of Financin
SOURCE NAME TERMS AMOUNT
Bank Loan $
Bank Loan $
Other Private Funds $
Applicant Contribution $
Other $
Fed Grant/Loan $
State Grant/Loan $
EDA Micro Loan $
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 Micro Loan
Micro Loan Fund Application Page 11 of 14
Amended May 2006
Value of Collateral
Book Value Cost Existing Liens
Land $ $ $
Buildings $ $ $
Machinery & Equip. $ $ $
Other $ $ $
Other $ $ $
IV. JOB & WAGE GOALS
Present # of Employees Total Payroll
Jobs To Be Created*
Please provide the following information on iobs you expect to create Within 2-years.
ob Title
Number
of Jobs Average
Hourly
Wage
Annual
Salary Are the Jobs
Permanent or
Temporary? Expected
Hiring
Date
*lf 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.
Micro Loan Fund Application Page 12 of 14
Amended May 2006
IV. PROJECT CONTACTS
Attorney
Name
Address
Phone
Accountant
Name
Address
Phone
Financing Sources (lenders,_partners, etc...
Name
Address
Phone
Name
Address
Phone
Parent Compan
Name
Address
Phone
Others
Name
Address
Phone
Name
Address
Micro Loan Fund Application Page 13 of 14
Amended May 2006
V. ATTACHMENTS CHECK LIST
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
~ 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 ul
Project
H) Fee (1 % of amount of loan request).
VI. 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
Committee.
APPLICANT SIGNA
BY
DATE
Micro Loan Fund Application Page 14 of 14
Amended May 2006