Agenda - Economic Development Authority - 01/13/2011

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Economic Development Authority (EDA) Date: 01/13/2011 By: Aaron Backman Administrative Services Title: Consider EDA Restaurant Subsidy Policy Information Item #: 4. 4. Background: It has been a long -term goal and desire of the City to attract new, quality sit -down restaurants to the community. To that end, the EDA participated in assistance to the building owner for the addition of Acapulco Mexican Restaurant in the Coborn's anchored retail center in The COR. Recently, the EDA preliminarily approved assistance to the building owner for the relocation of the Well's Catering operation to The Fountains of Ramsey and the addition of The Falls Coffee and Deli in The Ramsey Office Plaza building. The assistance preliminarily approved for The Falls by the EDA is pending City Council approval. In both cases Sewer Access Charges and Water Access Charges (SAC & WAC fees) were tied to a forgivable loan over seven years. Given that restaurant subsidies have been approved by the EDA in the recent past, it is advisable that restaurant subsidy guidelines be established to delineate such development in the City of Ramsey in the future. In October 2010 the Deputy City Administrator /Director of Community Development presented information regarding the restaurant subsidy policy from the City of Champlin and significant background material that includes analysis of utility fee structures in various north metro communities. Taking into account the restaurant subsidy programs that other cities have developed, the Economic Development/Marketing Manager has developed program guidelines utilizing a forgivable loan structure. The draft Full- Service Restaurant Subsidy Program is focused on assisting new restaurants with water connections costs. It is proposed that Ramsey offer a forgivable loan up to 70% of WAC fees with a maximum term of five years. The forgivable loan would be at zero percent interest. Under the proposed guidelines, SAC fees would be fully paid by the businesses. It should be noted that the City of Champlin offers qualified restaurants forgivable loans for up to 70% of WAC fees with terms of 5% interest for five years. Champlin does not provide similar loans for defraying SAC fees. The City of Brooklyn Park provides non - forgivable loans for restaurants to minimize the impact of WAC fees. Loans less than three years carry no interest, loans with terms of 3 to 5 years are charged a one percent interest rate. Loan payments are made with utility payments. The maximum WAC loan in Brooklyn Park is $75,000. Recommendation: Establish a restaurant subsidy policy for the City of Ramsey. Funding Source: Restaurant subsidies would be coming from the EDA Fund Council Action: