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