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Prior to dispersing the MIF grant, the State required Arden Hills to adopt guidelines for the revolving loan fund (attached). The regulations were designed to set parameters on the use of funds development policies. The RLF guidelines were approved by the EDA on August 25, 1997 and by the City Council on May 26, 1998. The CPI loan principal plus accrued interest was paid off entirely as of December 31, 2003. At this point the RLF cash balance was approximately $140,000. This number represents the CPI loan principal, interest payments, and investment interest earnings. The RLF balance was estimated to be $154,969 as of December 31, 2012. Growth in cash reserves in the RLF between 2004 and 2012 was derived entirely from investment interest earnings. The City did administer a second MIF loan through the RLF for Guidant in 2004. However, none of the funds currently in the RLF are associated with this agreement, as the City forgave its portion of the Guidant loan. In April 2004, the City executed an agreement with DEED to provide the company with $250,000 for the purchase of machinery and equipment. The City committed to forgive its $100,000 portion of the loan if the company met certain job creation numbers. Guidant complied with these set terms and its portion of the loan was subsequently forgiven. On April 20, 2005, the City transferred the repaid loan principal and interest ($150,083.30) from the RLF to DEED. Revolving Loan Fund Guidelines The use of the EDA Revolving Loan Fund is regulated by the Minnesota Business Subsidy Law. Loans of less than $75,000, however, are not considered business subsidies. The EDA may want to consider revisions to the RLF guidelines that target loan funds to specific types of economic development projects. At a minimum, the RLF guidelines should be revised to state that the Business Subsidy Law applies to RLF loans. Any revisions made to the RLF guidelines will need to be reviewed by the State Department of Employment and Economic Development prior to EDA and City Council approval. As staff drafts revisions to the RLF guidelines, guidance on the following questions is requested: What are some types of business development projects the City would like to finance using RLF loans? What steps could be taken to educate the local business community about the availability of RLF loans and other public financing tools? Do the existing RLF g regarding the use of RLF loans? Recommended Action Direct staff to draft revisions to the Revolving Loan Fund Guidelines in accordance with EDA discussion on the goals of the RLF. Attachments City of Arden Hills, EDA Revolving Loan Fund Guidelines ______________________________________________________________________________ City of Arden Hills Economic Development Authority Meeting April 29, 2013 22 Page of