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ARDEN HILLS EDA MEETING—APRIL 28, 2014 4 Associate Planner Bachler stated that the EDA discussed the City's Revolving Loan Fund (RLF) at two previous meetings on April 29, 2013, and again on August 26, 2013. At these meetings, staff provided general background information on the history of the RLF and the EDA discussed its goals and priorities for the future use of the funds. Since then, staff has discussed this topic with the Economic Development Commission (EDC) and has met individually with several local bankers to discuss the revisions proposed by the EDA in more detail. Associate Planner Bachler explained that based on the feedback provided by the EDA, staff will work with the EDC to draft revised RLF Guidelines that will be reviewed at a later meeting. Prior to final approval by the EDA and City Council, the revised RLF Guidelines are required to be reviewed by the Minnesota Department of Employment and Economic Development. Associate Planner Bachler reviewed the goals and principles of the RLF program. He indicated that the RLF Guidelines should include a list of goals that clearly define the purpose of the program. Businesses applying for loans should be able to easily evaluate whether their projects would be consistent with the City's objectives. Specific goals might include: • Support projects that encourage redevelopment of and investment in commercial and industrial buildings and properties. • Support projects that will result in property maintenance and aesthetic improvements, such as landscaping or commercial facade improvements. • Focus on projects that will assist in the retention and expansion of established Arden Hills businesses. • Provide affordable financing that could not otherwise be secured in the private capital market. • Support projects that advance other public policy goals adopted by the City Council, including energy conservation and sustainable building practices. Associate Planner Bachler stated that the City should set a maximum loan amount somewhere between $50,000 and $75,000. This number should be set in part based on the type and number of projects that the City sees itself financing. For example, a lower maximum amount would allow the City to support more projects, but the projects being undertaken would likely be at a smaller scale. Associate Planner Bachler commented that if the City were to set the RLF interest rate at two percent, these loans would be very competitive with commercial lending rates. Currently, commercial rates average at least five percent. The EDA could consider setting the interest rate as high as three percent, which would increase the amount being repaid into the RLF while still being competitive with commercial rates. Associate Planner Bachler reported that the private lender should set the term length, but the City could still put a limit on the maximum number of years for a loan term. Terms are determined by the amortization period. Projects requiring less capital investment (equipment acquisition) usually have a shorter amortization and term, while projects with a larger investment