Agenda - Council Work Session - 05/31/2011

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CC Work Session Meeting Date: 05/31/2011 By: Jo Thieling, Administrative Services Title: Consider EDA Recommendation for Full- Service Restaurant Subsidy Policy 2. 4. Background: It has been a long -term goal and desire of the City to attract new, quality sit -down restaurants to the community. In September 2009, the EDA /City provided $209,863 in assistance to Sophia - Ramsey, the building owner for the addition of Acapulco Mexican Restaurant in the Coborn's anchored retail center in The COR. The financial assistance was set up in two promissory notes (one interest - bearing at 3.0% interest and one non- interest bearing) and was for defraying Sewer Access Charges and Water Access Charges (SAC & WAC fees). In March 2011, the EDA /City approved up to $55,000 for SAC/WAC financial assistance to Ramsey Retail Rental, the developer, and a $68,000 RLF loan to business owner for the relocation of the Well's Catering operation and the addition of The Falls Cafe in The Ramsey Office Plaza building. The Falls Cafe SAC/WAC financial assistance has a term of seven years and an actual cost of $35,579. Given that restaurant subsidies have been approved by the City of Ramsey in the recent past, it is advisable that restaurant subsidy guidelines be established to guide such development in the future. In October 2010 the Deputy City Administrator /Director of Community Development presented information to the EDA regarding the restaurant subsidy policy from the City of Champlin and background material that included analysis of utility fee structures in various north metro communities. It should be noted, for instance, 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, for example, provides non- forgivable loans for restaurants to minimize the impact of WAC fees. It also differentiates loans- -loans less than three years carry no interest, loans with terms of 3 to 5 years are charged a one percent percent interest rate. Loan payments are made with utility payments. The maximum WAC loan in Brooklyn Park is for $75,000. 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 proposed Full- Service Restaurant Subsidy Policy is focused on assisting new sit -down restaurants with water connections costs. It is proposed that Ramsey offer a forgivable loan for 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. At the regular EDA meeting in January, the commissioners revised and recommended approval of the attached Full- Service Restaurant Subsidy Policy. Recommendation: Consider approving the proposed Full- Service Restaurant Subsidy Program Guidelines as recommended by the Ramsey EDA. Funding Source: Restaurant subsidies would be coming from the EDA Fund. Council Action: Review and provide direction to City Staff regarding establishing the proposed Full- Service Restaurant Subsidy Program Guidelines Full- Service Restaurant Policy Attachments