Economic Development Authority - Erik Thorvig, Community Development Director
Title
Title
Approval of Amendments to the Blaine Economic Development Authority Commercial Loan Program
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Executive Summary
Staff is proposing amendments to the current commercial loan program to expand the scope of what is eligible and the maximum loan amount. Amendments would allow for loan funds to be used for fixed assets including machinery and equipment and increase the maximum loan amount to $100,000.
Background
In 2019 the Blaine Economic Development Authority established a commercial loan program. The intent of this program is to provide additional financial assistance to small business owners who are improving an existing building and/or redeveloping a commercial or industrial property. In general projects will increase tax base, improve blighted properties, increase employment, and bring properties into conformance with existing city and state codes.
The program is structured to assist with exterior site improvements, such as parking lots, signs, trash enclosures, fences, and landscaping; exterior building improvements such as additions, windows, awnings, masonry repairs and exterior finishes; and demolition of existing buildings, parking areas or signs. It can be used for existing commercial and industrial buildings and sites, or buildings/improvements that are part of a redevelopment. The program is not intended to be used for interior improvements, machinery/equipment or real estate. The maximum loan amount is $75,000.
The City has been making a concerted effort to attract new restaurants to the city of Blaine. Converting existing space for restaurant use can be very cost prohibitive. One of the restaurants the City has met with several times is looking at leasing the former Radio Shack/Snap Fitness space in the Village of Blaine. The restaurant currently has a location in Stillwater. The restaurant is unique, non-chain-owned and would be a positive addition to the city of Blaine.
The restaurant operator has identified costs of approximately $400,000 to convert the space for a restaurant. The restaurant group has been working with the landlord to identify landlord paid improvements to which the landlord has offered approximately $200,000. The restaurant group would pay approximately $100,000 in improvement costs. The restaurant group inquired about the Blaine commercial loan program, however as currently designed, the loan program would not be a benefit to them since most of the expenses are interior. They would be seeking a $100,000 loan from the Blaine EDA for installation of a hood exhaust fan and other commercial kitchen equipment.
Staff is proposing amendments to the current commercial loan program to expand the scope of what is eligible and the maximum loan amount. Amendments would allow for loan funds to be used for interior improvements including machinery and equipment and increase the maximum loan amount to $100,000. All other components of the program including terms, rates, etc. would remain the same. Expansion of the program will provide the City another tool in attracting targeted business, such as restaurants.
Staff has researched other cities that offer similar programs. Below is a summary of what other city programs offer for interior improvements. These programs also allow for similar exterior upgrades along with similar terms, rates, etc., that Blaine’s program currently offers.
Coon Rapids
• Loans for fixed assets, including land, building, machinery, and equipment.
• Maximum loan amount of $200,000
Brooklyn Park
• Loans for fixed assets and equipment/machinery purchases.
• Maximum loan amount of $300,000
St. Louis Park
• Loans for interior improvements, mechanical systems.
• Maximum loan amount of $75,000.
Brooklyn Center
• Loans for fixed assets, including land, building, machinery, and equipment.
• Maximum loan amount of $100,000
If the Blaine EDA amends the program, the restaurant group would formally apply for the loan. Underwriting of the loan is done through the Central Minnesota Development Corporation (CMDC) who underwrites and does loan servicing for the commercial loan program. The Blaine EDA would then have to formally act on approving the loan application at a future meeting.
Strategic Plan Relationship
Not applicable.
Board/Commission Review
Not applicable.
Financial Impact
The Blaine EDA committed $250,000 to this program when it was established. The program is designed to be revolving, meaning as funds are repaid the fund is replenished. To date, the EDA has issued two loans from this program. Kingdom Baking received a loan in the amount of $75,000 and Fresh Picked Pizza received a loan in the amount of $29,359.
Increasing the maximum loan amount from $75,000 to $100,000 should not drastically impact the program. If there is strong interest in the program, the EDA can increase the amount of funds available.
Public Outreach/Input
Not applicable.
Staff Recommendation
Discuss the proposed changes and adopt the attached resolution.
Attachment List
Blaine Small Business Loan Fund. Amendments proposed to the program with deletions identified in strikethrough and additions in bold/underline.
Body
WHEREAS, the City of Blaine Economic Authority established a commercial loan program in 2019; and
WHEREAS, the intent of this program is to provide additional financial assistance to small business owners who are improving an existing building and/or redeveloping a commercial or industrial property; and
WHEREAS, the program is structured to assist with exterior site improvements such as parking lots, signs, trash enclosures, fences, and landscaping; exterior building improvements such as additions, windows, awnings, masonry repairs and exterior finishes; and demolition of existing buildings, parking areas or signs. It can be used for existing commercial and industrial buildings and sites, or buildings/improvements that are part of a redevelopment.; and
WHEREAS, the maximum loan amount is $75,000; and
WHEREAS, amendments are proposed to expand the program to allow for loan funds to be used on fixed assets including machinery and equipment and to increase the maximum loan amount to $100,000; and
WHEREAS, expanding the program will allow for existing and future Blaine businesses to utilize the program more effectively and meet the original intent of the program.
NOW THEREFORE, BE IT RESOLVED, that the Blaine Economic Development Authority hereby approves amendments to the program to allow for loan funds to be used for fixed assets including machinery and equipment and increase the maximum loan amount to $100,000.
PASSED by the Blaine Economic Development Authority this 18th day of July, 2022.