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Home My WebLink About9B Commercial Assistance Program Gateway Redevelopment eIPRIOt~ 4646 Dakota Street SE Prior Lake,MN 55372 44HNrsolt` CITY COUNCIL AGENDA REPORT MEETING DATE: MAY 11, 2015 AGENDA#: 9B PREPARED BY: CASEY MCCABE, COMMUNITY DEVELOPMENT SPECIALIST PRESENTED BY: DAN ROGNESS, COMMUNITY & ECONOMIC DEVELOPMENT DIRECTOR AGENDA ITEM: CONSIDER APPROVAL OF A RESOLUTION ESTABLISHING A TARGETED COMMERCIAL ASSISTANCE PROGRAM ASSOCIATED WITH THE GATEWAY REDEVELOPMENT PROJECT DISCUSSION: Introduction The purpose of this agenda item is to consider approval of a resolution establishing a targeted commercial assistance program to encourage existing businesses to move to another Prior Lake location as a result of the potential demolition and rede- velopment of the Gateway Center. History During the April 13, 2015 meeting, the City Council directed staff and the EDA to investigate possible assistance to businesses which may need to relocate from the Gateway Center building. On April 20, 2015, the EDA unanimously approved a motion to recommend that the City Council establish a matching grant program, up to $20,000 per business, from the TIF 1-1 account to be used by an existing busi- ness at the Gateway Center, and to be used for hard costs associated with that business moving to another Prior Lake commercial location as a result of displace- ment from the Dominium redevelopment project. Current Circumstances City staff has drafted the attached Targeted Commercial Assistance (TCA) Program Policy to provide financial assistance for commercial businesses moving from the Gateway Center building at 5101-5137 Gateway Street SE to an alternate commer- cial property within the city limits of the City of Prior Lake, Minnesota. Applicants would be eligible to apply for funding, up to a maximum of$20,000 per business, to assist with eligible relocation expenses. The loan funds, from the TIF 1-1 account, (which has a present balance of $77,000) must be matched one to one by the ap- plicant and fund repayment would be deferred for a period of three years and then forgiven if the business remained in Prior Lake after 36 months. Conclusion The attached Targeted Commercial Assistance Program Policy identifies the de- ferred loan fund guidelines, eligible and ineligible project costs, the funding source and the application process. ISSUES: The proposed TCA program would only be made available to businesses who are relocating from the Gateway Center building to another commercial property within the city limits of Prior Lake. FINANCIAL There are potentially three applicants who may be eligible to apply for the Targeted IMPACT: Commercial Assistance Program with a maximum loan amount of$20,000 per busi- ness. Staff believes only one of the three eligible businesses is likely to apply for the funding, although all three existing businesses are able to apply. ALTERNATIVES: 1. Motion and a second to approve a Resolution Adopting the Targeted Commer- cial Assistance Program Policy Associated with the Gateway Redevelopment Project, as proposed or with revisions provided by the City Council. 2. Motion and a second to table action and provide further direction to staff. RECOMMENDED Alternative#1 MOTION: ATTACHMENTS: 1. Targeted Commercial Assistance Program Policy 2 PRlp4? ti U tr1 4646 Dakota Street SE 414Solt` Prior Lake,MN 55372 RESOLUTION 15-xxx A RESOLUTION ESTABLISHING A TARGETED COMMERCIAL ASSISTANCE PROGRAM ASSOCIATED WITH THE GATEWAY REDEVELOPMENT PROJECT Motion By: Second By: WHEREAS, On April 13, 2015 the Prior Lake City Council directed staff and the City of Prior Lake Economic Development Authority(EDA) to investigate possible assistance to businesses which may need to relocate from the Gateway Center building as result of a proposed redevelopment project; and WHEREAS, On April 20, 2015 the City of Prior Lake EDA unanimously approved a motion to recommend that the City Council establish a matching grant program up to $20,000 per business from the TIF 1-1 account to be used by an existing business at the Gateway Center, and to be used for hard costs associated with that business moving to another Prior Lake commercial location as a result of displacement from the Dominium Gateway redevelopment project; and WHEREAS, The purpose of the Targeted Commercial Assistance Program is to provide financial assistance for commercial businesses moving from the Gateway Center building at 5101-5137 Gateway Street SE, as a result of redevelopment activities, to an alternate commercial property within the city limits of the City of Prior Lake, Minnesota; and WHEREAS, The Prior Lake City Council has reviewed the Targeted Commercial Assistance Program Policy which identifies the deferred loan fund guidelines, eligible and ineligible project costs, the funding source and the application process. NOW THEREFORE, BE IT HEREBY RESOLVED BY THE CITY COUNCIL OF PRIOR LAKE, MINNESOTA as follows: 1. The recitals set forth above are incorporated herein. 2. The City Council of the City of Prior Lake hereby adopts the Targeted Commercial Assistance Program Policy. PASSED AND ADOPTED THIS 11th DAY OF MAY, 2015. VOTE Hedberg Keeney McGuire Morton Thompson Aye ❑ ❑ ❑ ❑ ❑ Nay 0 ❑ 0 0 0 Abstain ❑ ❑ 0 ❑ ❑ Absent 0 ❑ ❑ ❑ ❑ Frank Boyles, City Manager CITY OF PRIOR LAKE, MINNESOTA TARGETED COMMERCIAL ASSISTANCE PROGRAM POLICY Adopted May 11,2015 PURPOSE This Targeted Commercial Assistance (TCA) Program has been designed to provide financial assistance related to commercial businesses moving from the Gateway Center building at 5101-5137 Gateway Street SE to an alternate commercial property within the city limits of the City of Prior Lake,Minnesota. DEFINITIONS Terms used in this Policy are intended to have the same meaning as used in the MN Business Subsidy Law. For the purposes of this document,the following definitions apply: Agency-Owner Contract. The"Agency-Owner Contract" is an agreement by and between the City of Prior Lake (Agency)and Recepient(Owner)which jointly identifies for the Agency and the Owner the improvements to the Owner's business to be accomplished with TCA Program funds and the Owner's private financial commitment. Benefit Date. "Benefit Date" means the date that the Recipient and City enter into the Agency-Owner Contract. City. "City" includes the Prior Lake City Council and/or Prior Lake Economic Development Authority. Commitment Period. "Commitment Period" refers to a three year period, beginning on the Benefit Date,which the Recipient commits to keeping their business located in the City of Prior Lake. Eligible Applicant."Eligible Applicant"is a business owner,who as of the date of this policy adoption,was located in the Gateway Center building at 5101-5137 Gateway Street SE. Eligible Project Costs. "Eligible Project Costs" means necessary reestablishment costs which are required due to the moving of the business from the Gateway Center building. Personal Guarantee. "Personal Guarantee" is an agreement whereby Recipient unconditionally personally guarantees the full and faithful performance of all terms and conditions of the Agency-Owner Contract relating to reimbursement of the TCA Program funds in the event Recepient business moves outside of the City of Prior Lake prior to expiration of the Commitment Period. Recipient. "Recipient" means any business which receives a TCA Program loan. Rehabilitation Advisor. For the purposes of the TCA Program, the "Rehabilitation Advisor" shall be the City of Prior Lake Community Development Specialist. TARGETED COMMERCIAL ASSISTANCE DEFERRED LOAN FUND GUIDELINES ➢ TCA Program funds cover 50% of Eligible Project Costs up to a maximum loan amount of$20,000 per Recipient. ➢ TCA Program funds will be provided as a 0.0%interest loan with deferred payments for a period of three years. City of Prior Lake Targeted Commercial Assistance Program Policy 1 it ➢ Recipient will be required to enter into an Agency-Owner Contract, and TCA Program funds will be secured with a Personal Guarantee. ➢ The Agency-Owner Contract will include a due-on-sale or transfer clause, which means all unpaid principal shall become due and payable prior to any Recipient business relocation, sale or transfer of ownership of the Recipient business during the three-year commitment term unless written consent is provided by the City. ➢ If the Recipient remains in Prior Lake for the entire three-year commitment period, the TCA Program loan is forgiven;33.3%of the loan will be forgiven upon the Recipient remaining in Prior Lake for entire year one,66.6%for entire year two,and 100%at the end of entire year three. ➢ All remaining project costs, in excess of the approved Eligible Project Costs, are to be financed through sources other than the City,such as owner cash contributions or conventional financing. ➢ Only Eligible Project Costs which have been approved by the Rehabilitation Advisor prior to the commencement of construction activities,will be eligible for reimbursement. ➢ Recipient must pay the matching fund requirement before TCA Program funds are provided (i.e., $40,000 must be spent first by the Recipient to receive a $20,000 loan from the City). ➢ Recipient must pay all Eligible Project Costs and provide proof of payment to the Rehabilitation Advisor. Following verification of payment,City will reimburse Recipient for approved Eligible Project Costs. ➢ Program participation is based on first come,first served. ➢ The reestablishment work must be completed within 90 days of the Benefit Date unless City provides a written extension. ➢ Inspectors from City will conduct an inspection to verify the Eligible Project Costs have been completed. ➢ If the Recipient completes their own work,the TCA Program funds will cover the cost of materials only. ➢ Eligible Project Costs must be located in a commercial property which is located in a Commercial Use District as designated on the Official City of Prior Lake Zoning Map, or as may further deemed to be a legal nonconforming commercial space. ELIGIBLE PROJECT COSTS All Eligible Project Costs must be approved by the Rehabilitation Advisor prior to construction and include but are not limited to: ➢ Improvements which are physically attached to the property and are considered a permanent improvement. ➢ Alteration, renovation,or repairs which correct defects and deficiencies which directly affect the safety, habitability, energy consumption, or esthetics of the property, correction of code violation, energy related improvements,or accessibility improvements. ➢ Purchase of,or costs related to moving of equipment,which in the opinion of the Rehabilitation Advisor, are necessary for Recipient's use of the premises. ➢ Improvements, which in the opinion of the Rehabilitation Advisor, are necessary for Recipient's use of the premises. ➢ Engineering and Architectural design fees. ➢ Sewer Access Charge and Water Access Charge fees. ➢ City of Prior Lake building permit fees. INELIGIBLE PROJECT COSTS Ineligible project costs include but are not limited to: ➢ Improvements,which in the opinion of the Rehabilitation Advisor,are not necessary for Recipient's use of the premises. ➢ Lease payments. City of Prior Lake Targeted Commercial Assistance Program Policy 2 ➢ Operating expenses. ➢ Property tax or Common Area Maintenance costs. ➢ Costs associated with moving inventory, materials and supplies from the Gateway Center building to another location, with the exception of costs associated with moving equipment as identified under Eligible Project Costs. FUNDING SOURCE The City has dedicated funding from the TIF 1-1 account for this TCA Program. Eligible Applicants may apply for funding until August 1,2015,at which point the City will no longer accept applications for TCA Program funding. SUBSIDY APPLICATION PROCESS AND PROCEDURE ➢ An application shall be made on forms for the particular form of assistance provided by the City of Prior Lake Community&Economic Development Director,or designee. ➢ Following a review by appropriate City staff, the application shall be referred to the Economic Development Authority for review. ➢ The application shall request information including, but not limited to: a detailed description of the project;a preliminary site plan;the amount of business subsidy requested and verifiable funding sources and uses. ➢ The City must approve the program application for funding to be provided. • City of Prior Lake Targeted Commercial Assistance Program Policy 3