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ARDEN HILLS EDA MEETING – APRIL 28, 2014 3 Associate Planner Bachler reported that the revolving fund loans should act as gap financing for loans being made by a private lender. For each bank participating in the program, a Lender Agreement would be signed with the City. This agreement would outline the general requirements of the RLF program and what the expectations are of the bank in partnering with the City. A Participation Agreement would also be created for individual loans, providing specific details and responsibilities for each deal. The lender would prepare the note and collateral documents and the City would issue a check from the RLF to purchase a participation in the note. The lender would be responsible for disbursing the loan funds and collecting payments for both the City and private portions of the loan. Monthly payments would then be submitted to the City. Associate Planner Bachler indicated that the bank would also be responsible for doing the necessary underwriting for the entire loan package. Since banks are risk-averse, if an applicant meets a bank’s underwriting requirements the City can be confident about the risk level associated with the loan. The City should primarily rely on the financial criteria used by the participating bank to screen loan applications. Additional recommendations included:  Require that a minimum of 50 percent of the project be privately financed.  Many projects would likely not receive a high score using the City’s Grading and Report Card for public financing proposals, as this tool is largely focused on redevelopment projects. Consider exempting projects receiving financing through the RLF from being reviewed using this evaluation tool.  The job creation requirements in the existing RLF Guidelines should be revised considering that certain projects such as façade improvements and equipment acquisition may not meet this required criteria.  Be willing to take on some risk recognizing that the City will likely see a direct benefit from a completed project regardless of whether the loan is repaid in full (for example, improvements to landscaping or public frontage façades). Associate Planner Bachler explained that the application process for obtaining revolving loan funds should be streamlined and transparent. The City should set a goal of completing the necessary evaluation and deciding on a loan request within 30 to 45 days of receiving a completed application. A long approval process will make the program less attractive to businesses interested in participating. While the City should request financial records from the applicant, if possible these documents should not be included in the public records for meetings. Associate Planner Bachler stated that the City should consider establishing a special committee comprised of members of the EDA, the EDC, and staff that would be responsible for evaluating applications and making recommendations to the City Council. A detailed list of criteria should be created so that businesses have a level of certainty that a project will be approved by the City Council if it successfully makes it through the committee approval process and meets the required criteria. A schedule similar to the one used by the City to process land use applications could be developed so applicants are aware of the loan approval timeline from the beginning. Because the City is unlikely to receive a large number of loan applications, this committee could have a set regular meeting time every month, but only convene on an as needed basis.