Minutes - Economic Development Authority - 04/10/2008

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program, which is the program that was used, retail is specifically an ineligible use for loan proceeds. It is also required that the city have Revolving Loan Fund guidelines in place before the grant is issued. The Revolving Loan Fund guidelines that are in place met with the approval of the State of Minnesota for that participating project. After the dollars have been recycled through the EDA can make changes to the loan guidelines. Mr. Mulrooney explained the thought process behind the use of Revolving Loan Funds for retail in Ramsey in particular, as well as other communities throughout the State of Minnesota, is that when loans are made from the fund to a retail business, that business may be competing with another retail business in the community. As such, the City may be providing with government dollars the ability of one business to compete on more favorable terms than the other business that has not received financing. Mr. Mulrooney explained the other thought process regarding excluding retail at the State level relates to job creation, in particular retail businesses do not pay at the same level that manufacturing and industrial businesses do. Given the limited nature of these types of funds the thought is to get the most bang for the buck that you can. There is a tendency to have the guidelines for these types of programs written specifically to attract higher paying jobs to the community. This is not an infinite supply of funds for the City. At the time this grant was received to assist Systematic Refrigeration they received a grant for $300,000, which was later paid in full back to the City to recycle through the community. Chairperson Riley stated his agreement that this would not be a good use of the Revolving Loan Fund due to the retail aspect. He questioned providing assistance to a Cousin's Sub when there is a Quizno's and a Subway near this location, and pointed out that this gets back to the competition factor. Economic Development Coordinator Sullivan stated the current Revolving Loan Fund balance is $191,198. These funds are limited and will not grow unless the EDA injects their funds into the program because the State program does not allow the City to keep the funds any longer. Member Kiefer asked if changing the guidelines to include retail would prevent the EDA from receiving additional dollars from MIF. Economic Development Consultant Mulrooney replied it could be an impact. The State's position is that they do not want to assist one retail business to compete on more favorable terms than another business in the State. When you apply for these dollars the State requests a copy of the EDA's Revolving Loan Fund guidelines to be sure the State will not be injecting funds into a program whereby their dollars could be construed to be assisting businesses against their policies. At this point in time the State considers the dollars from the Systematic Refrigeration loan the City of Ramsey's. He advised the EDA can develop its own program to meet its specific needs. The State program has changed and cities no longer are able to retain these dollars. If the State gets involved through MIF the vast majority of the dollars are recycled back to the State. Member Kiefer commented it seems it could create a logistical accounting nightmare mixing non-retail and retail loans. Economic Development Coordinator Mulrooney replied this would not be a big problem. He has worked in situations where separate Revolving Loan Fund accounts have been set up. Particularly if there are federal dollars used they would not want the funds intermingled with the local program. Economic Development Authority/April 10, 2008 Page 3 of 14