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