Agenda - Economic Development Authority - 01/14/2021

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Economic Development Authority (EDA) Meeting Date: 01/14/2021 Submitted For: Sean Sullivan, Community Development By: Sean Sullivan, Community Development 4. 2. Title: Consider Loan Application for Restaurant Subsidy Program: Water Availability Charge Program for Pleasant Valley Sunrise Group LLC dba Aurelio's Pizza Purpose/Background: Purpose / Background: The purpose of this case is to review the proposed the request for assistance and to consider extending or amending the current Restaurant Subsidy Program. Feedback from residents, businesses, visitors, and elected/appointed officials states that attracting more restaurants is a priority for Ramsey. On July 24, 2018 the City of Ramsey adopted a WAC Assistance program that is set to sunset on July 31, 2021. This Restaurant Subsidy Program is only for "new for -profit restaurants" but does have the ability to consider exceptions for existing businesses that are relocating or expanding. The city has received an application from Pleasant Valley Sunrise Group LLC dba Aurelio's Pizza for financial assistance relating to SAC and WAC Fees for an expansion. The Covid-19 Pandemic has been very hard on Ramsey restaurant businesses. The fact that we have an existing business willing to take the risk to expand its footprint during these times is amazing. The proposed expansion would add a banquet space and more efficiency to its existing restaurant concept. The SAC Charge (Metropolitan Council) is estimated to be $14,910 and the WAC Charge (City of Ramsey) is estimated to be $8,190. These fees total $23,100. Pleasant Valley Sunrise Group LLC dba Aurelio's Pizza is requesting as much assistance as possible to help mitigate these fees. Staff supports the application and consideration for financial assistance. Notification: N/A Observations/Alternatives: Observations: Project costs for this expansion are $75,000. The owner is securing $50,000 in SBA Financing, an injection of cash and a city SAC and WAC loan. Staff supports approval of a 70%, 0% interest loan, forgivable loan for both the SAC an WAC Fees in the amount of $16,170; subject to satisfactory underwriting. The applicant would also be required to pay $6,930 (30%) for the SAC and WAC charges upfront and closing costs estimated to be $500-$750. The financing of this deal would likely include a loan agreement, and a subordinated UCC filing against collateral owned by the applicant. The applicant leases the space and a real estate mortgage would not be obtainable in this circumstance. Staff will work with the applicant to gather necessary financial information necessary to complete underwriting of the loan. The current Restaurant Subsidy Program would require an amendment or a City Council exception to allow for both the SAC and WAC forgivable loan. The program has been extended and/or modified multiple times in the past to address current economic conditions and City retail/restaurant goals. The current Restaurant Subsidy Program sunsets on 7/31/21. The EDA could also consider an amendment to the program to extend the sunset date or to set aside a specific dollar amount for this program and have it end when funds are spent. Alternatives: