Agenda - Economic Development Authority - 10/14/2010

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CITY OF CHAMPLIN REQUEST FOR COUNCIL. ACTION .AGENDA SECTION ORIGINATING DEPARTMENT MEETING DATE' New Business Community Development :August 23,:2004 ITEM ~: ITEM DESCRIPTION PREPARED BY CONSIDER FINANCE PROGRAM FOR FULL-SERVICE RESTAURANTS John W. Cox BACKGROUND Earlier this month, the Economic Development Authority's (EDA) $oard of Commissioners. recommended. that the City establish a finance. prograrn to reduce water connection fees for full-service restaurants. REVIEW As proposed, the program would provide low interest, deferred loans to eligible full-service restaurants for the puipose o€ financing their water comnection fees. The .maximum loan amount-would be 70% o of a restautant's connection. fee. -The 70% cap would insure that a restaurant would pay a minimum connection fee equal to or greater than "garden variety"retail. businesses. The loan would. carry an interest.rate of 5%, would. be recorded as a subordinated mortgage and the principle would be forgiven if therestaurant remained in good standing with the City for five years. The restaurant would be responsible-for the`interest. In establishing the loan amoimf, the EDA advises that the City consider two factors. The factors are.. (1) size of the restaurant's investment and (2) quality of the restaurant's concept. Restaurants that would not be eligible for the program would be fast food (McDonald's, Wendys), quick delivery service (Culvers, ]?ancheros) and limited service (Buffalo Wild'Wings, 5-8 Club) restaurants. Over the next three years, staff estimates that the City could attract as many as five full service restaurants. Asstuniiig maximum loan amounts of 70% minus interest payments, theloan program could result in lost connection revenues of $150,000 over the next.tl>ree years. RECOMMENDATION It is,recommended thatthe City Council establish a loan progran~ to assist restaurants with water connection charges. Attachments