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______________________________________________________________________________ <br />City of Arden Hills <br />Economic Development Authority Meeting April 28, 2014 <br /> <br />Page 2 of 4 <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 /> <br />Loan Amount and Terms <br />The City should set a maximum loan amount somewhere between $50,000 and $75,000. This <br />number should be set in part based on the type and number of projects that the City sees itself <br />financing. For example, a lower maximum amount would allow the City to support more <br />projects, but the projects being undertaken would likely be at a smaller scale. <br /> <br />If the City were to set the RLF interest rate at two percent, these loans would be very competitive <br />with commercial lending rates. Currently, commercial rates average at least five percent. The <br />EDA could consider setting the interest rate as high as three percent, which would increase the <br />amount being repaid into the RLF while still being competitive with commercial rates. <br /> <br />The private lender should set the term length, but the City could still put a limit on the maximum <br />number of years for a loan term. Terms are determined by the amortization period. Projects <br />requiring less capital investment (equipment acquisition) usually have a shorter amortization and <br />term, while projects with a larger investment (real estate acquisition) have a longer amortization <br />and term. If the goal is to see a quicker return of loan repayments, the City should focus on <br />projects with short-term amortization periods of ten years or less. <br /> <br /> <br />Eligibility <br />The following types of projects should be eligible for loans issued through the RLF: <br /> Real property improvements <br />- Internal fixed improvements (walls, ceilings, floors, lighting, windows, doors) <br />- Streetscape and landscaping improvements <br />- Plumbing, electrical, and mechanical systems <br />- Air conditioning <br />- Roofing <br />- Parking lot surfacing and lighting <br />- Accessibility improvements <br />- Energy conservation and energy retrofits <br /> <br /> Commercial façade improvements <br />- Cleaning and painting of exterior surfaces