Consider Implementation of  Metropolitan Council Sewer Availability Charge (SAC) Deferral and Financing Program

The purpose of this case is to determine if the EDA is supportive of adding an additional business assistance tool to finance Metropolitan Council Sewer Availability Charge (SAC).

The City of Ramsey has recently put in place a revised SAC and Water Availability Charges (WAC) Deferral program for for-profit restaurants.  The program provides for a 5 year, forgivable 0% interest loan for up to 70% of the charges due. This program is limited to restaurants only as they have been identified by the EDA as a targeted industry for recruitment and development.

All new construction that results in the creation of new space, expansion of existing space or increase in intensity of use of existing space is required to pay SAC and WAC fees at time of Building Permit. SAC and WAC fees are based on the size and use of the business. For existing spaces, additional charges are only due if the intensity of the use is expanded based on a clearly defined formula.

The Metropolitan Council has a SAC Deferral and Financing Program that can be used for any type of business. They will allow a maximum of 80% of 25 SAC units to be deferred/financed from a period of up to 10 years. Cities have the ability to modify or otherwise restrict up until the maximum amount to tailor their own local program. The City must commit to making the SAC Payment to MCES once an agreement is put into place.  It is up to the City to enter into a separate agreement with the participating business to ensure the business pays on time. The arrangement for SAC 

Staff would like to know if the EDA would like to explore this program further and to potentially develop a draft policy for consideration.  A draft application from the City of Rosemount has been supplied for reference.

N/A

Staff understands that implementation of a program of this type will create more administrative work for both Economic Development, Building and Finance, but something that is completely manageable. This is simply another tool for the toolbox to help recruit and retain businesses. The purpose of this case is to get some feedback from the EDA on whether adding a program like this would be beneficial to businesses and efficient to operate and to explore further. In addition, discussion on the scope of a potential program would be helpful in the the event that Staff is directed to do more research and to put together a sample policy or application. A few items to consider for a draft policy are:

1. What is the maximum percent of SAC that would be deferred (capped at 80% of the fee)?
2. What is the maximum length of repayment timeframe (capped at 10 years)? 
3. Should this be limited to certain business types?
4. What is the maximum amount of SAC units to be deferred (capped at 25 SAC Units - approximately $2,500 per SAC unit for a total of $62,500? 
5. Are there any other qualifying criteria the EDA would like to consider?

Alternatives:

1. Direct Staff to conduct further research and to bring back a draft policy for future EDA review
2. Direct Staff to expand our current Restaurant Subsidy Program (forgivable loan - internal processes) to include more business types
3. Do nothing. Current programs are sufficient.
4. Something else.

This would be covered under normal staff duties.  EDA could be a potential funding source in the event that a business is in default.

Staff is open to the idea of exploring the SAC Deferral program further if the EDA deems it worthwhile. If a decision to explore this further is made, Staff would like some EDA consensus on some general parameters of a proposed policy or program.

Motion to direct Staff/not direct Staff to conduct further research and to bring back a draft SAC Deferral Policy for future EDA review.