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The Mounds View Vision <br />A Thriving Desirable Community <br />Item No: 04 <br />Meeting Date: Sep 06, 2022 <br />Type of Business Council <br />Worksession <br />City Administrator Review <br />City of Mounds View Staff Report <br />To: Honorable Mayor and City Council <br />From: Brian Beeman, Assistant City Administrator & Mark Beer, Finance <br />Director <br />Item Title/Subject: Forgivable Loan Origination Fee <br />Introduction: <br />Last year, the City implemented a Forgivable Loan program for start-up businesses in Mounds View as a result <br />of one of the Strategic Plan goals. Finance Director, Mark Beer mentioned that we are being charged $1050 for <br />the origination fee on each Forgivable Loan that is processed by the Center for Energy and Environment (CEE). <br />The current program allows for a business to apply up to $5000 each year for three years for a total of $15,000. <br />However, the City could potentially pay $3150 over three years for that same business in loan origination fees. If <br />staff were to administer the Forgivable Loan program, that $3150 could be redirected back into the Forgivable <br />Loan program. For example, if a business applies for $5000 through the Forgivable Loan program then the City <br />is paying $1050 so that it can give away $5000. The question is, should the City recapture the loan origination fee <br />and redirect it back into the Forgivable Loan program? <br />Since part of Mark Beer’s job is to look out for the City’s finances, he has brought this issue to the attention of staff <br />and staff would like the City Council to review the current situation and consider potentially amending the current <br />contract with CEE to eliminate the Forgivable Loan program from the list of the many loan programs that they <br />administer for the City. <br />In addition, the contract between the City and CEE is up for renewal and expires December 31, 2022. CEE has <br />indicated that with the high increase in their labor and overhead costs, they need to make some adjustments to <br />some of the Administrative costs in the upcoming Amendment. The origination fees will remain the same, however <br />the annual Administration fee will be $5000, up from $2500 and the post inspection fee will be $125, up from $100. <br />Everything else will remain the same. <br />Discussion: <br />Staff is currently reviewing the contract to consider any amendments. The current Forgivable Loan program is <br />categorized under commercial loans. All commercial loans have a standard loan origination fee of $1050. CEE <br />has offered to move the Forgivable Loan program from the commercial loan category to the residential loan <br />category. This would change the loan origination fee for the Forgivable Loan program from $1050 to $750. As, all <br />of the commercial origination fees were lumped into one category in the last Amendment. CEE has updated and <br />moved the New Business Forgivable Loans in with the Residential to be $750 instead of $1,050 for the next <br />update. The updated Exhibit B4, is attached. <br />An EDA resolution will be prepared and presented for EDA consideration in the near future. Staff understands the <br />minor adjustments to the Administrative fees due to inflation and increased overhead costs. However, staff is <br />asking for direction specifically on the Forgivable Loan program. <br />Strategic Plan Strategy/Goal: <br />Create and maintain a positive business climate where businesses want to locate and remain in Mounds View. <br />Financial Impact: <br />Potential costs savings of $1050 per Forgivable Loan.