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Member Hardin left the meeting at 8:46 a.m. 4.05: Request from Ramsey Business for Use of EDA Revolving Loan Fund: Case of Stone Brook Children's Academy Economic Dev. Mgr/Assistant City Administrator Brama presented the staff report. Mike Mulrooney, CMDC, stated that when they reviewed the request they believed that it would be helpful for the owners to reserve as much capital for working purposes. He stated that the borrowers are highly educated with excellent track records and have jobs outside of this endeavor, which lends additional support for the repayment ability for the loan long-term. He explained that this is a start-up business and therefore additional equity is required, moving the line from ten percent to 15 percent. He noted that the revolving loan fund could fill that equity gap. He explained the difference between the note rate and effective rate. Chairperson Steffen asked if the construction costs have risen in the past few months. Michael Johnson, representing the applicant, replied that the construction costs have risen with the comments and requirements of the Planning Commission. He noted that the increased brick and glass will have a positive impact on the aesthetics of the project, but do have a higher cost. Member Riley asked if the landowner and business operated are separate entities or whether the two are one in the same. Mr. Mulrooney replied that the landowner will be separate for the operator but noted that both parties will be signed onto the loan as co -borrowers. Chairperson Steffen asked if it is necessary to go out 15 years on the term of the loan. Mr. Mulrooney stated that he believes that it is necessary because the loan will be secured with the same assets and therefore the SBA policy is to match the same term as the SBA. He stated that the SBA term is 20 years but he feels that they will be able to gain approval from the SBA on the 15-year term to match the requirements of the City. Chairperson Steffen asked for input on the process from the applicant. Mr. Johnson stated that they are in the final stages of the approvals from the City and are awaiting the finishing touches on the loan processes. He stated that once approval is gained from the City, they would finalize the purchase of the property and would hope to break ground soon after. He stated that they are ready and are about three months behind their original schedule. Motion by Chairperson Steffen, seconded by Member Burandt, to recommend to City Council to approve a Ramsey EDA Loan to MK Johnson LLC consistent with the terms and conditions outlined in this case and to direct staff to draft proper loan agreements and loan documents for approval by the City Council. Economic Development Authority/July 13, 2017 Page 7 of 9