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REQUEST FOR CITY COUNCIL DISCUSSION DATE: 11/20/2000 ITEM NO: 3 Department Approval: ~ JC11:) Item Description: Manager Approval: Agenda Section: Discussion of Business Loan Policy and IC Services MN Investment Loan 2.0 Background 2. 1 The Minnesota Inves1ment Fund is a grant program provided by the Department of Trade and Economic Development with the specific purposes of creating new and retaining the highest quality jobs possible on a state wide basis with a focus on industrial, manufacturing and technology related industries; increasing the local and state tax base and improving the economic vitality for all Minnesota citizens. 2.2 Under the program guidelines the local unit of government must make the application for the funds specifically for a company that can meet the program criteria. The amount of funds available is based upon the number of head of household jobs provided over a two year period. 2.3. .. The City, by being the applicant under the program, receives the grant and provides the funds to the Roseville Company in the fonn of a loan. The loan payments and interest up to $100,000 come back to the City to revolve into more business loans. The remaining payments go back to DTED. 2.4 IC Services, a Roseville company since 1996 located at 2976 Cleveland Ave N., provides water, die, and component-level processing for semiconductor manufacturers and helps clients market their products faster by functioning as an extension of an internal production line. IC Services has experienced incredible growth over the past five years and have currently reached is production capacity. In order to continue is projected growth and meet it contracts over the next two years, IC Services must expand its manufacturing facility and purchase additional equipment. It is estimated that 48 new jobs will be created within the next two years at IC Services. The wage levels of these jobs (38 pay $12 -$15 per hour and 7 pay over $15) would make IC Services eligible for a loan in the amount of $289,000. 2.5 As part of the program, the City is required to approve a policy regarding the use of the proceeds and interest generated from the Minnesota Inves1ment Fund. 2.6 In addition to the Minnesota Investment Fund dollars, the City also has a small business loan fund which allocated $100,000 in 1999 and $100,000 in 2000 from the Economic Development Project Fund. The city established guidelines for use of the funds that were adopted by the Council on January 25, 1999. There are a total of710ans outstanding for a total amount of$151,055. (list of companies receiving loans is attached). 2.7 The attached draft Business Loan Policy includes the provisions found in the guidelines that were approved previously by the City Council for the Small Business Loan Fund and also incorporates the new provisions required by the State for use of the Minnesota Inves1ment Fund proceeds and interest. RCD MN Investment Fund ILoan Policies- Page 1 of 2