The State of Minnesota through DEED has made Minnesota Investment Fund Awards (MIF) loans using the city as a conduit financing mechanism.  Some of these loans have defaulted over the years and the city has received the repayment of some of the funds.

DEED has issued operating guidelines for loans seeded by the State through MIF Awards.  The State is reviewing a proposal that all funds if not committed to local projects will be returned to the State. Future MIF loans will be made directly by the State to the companies and the cities will no longer be conduits or have approvals.

We have worked with our State loan officer on how we could use the city's current balance to benefit a local small business that is non retail.  The State's guidance is as follows:

• Leverage private investment
• Increase local tax base
• Improve employment and economic opportunities and create a reasonable standard of living

The State guidelines allow for the leverage of private investment to purchase equipment that the city can hold a security interest.

The State's requirements are aimed at creation or retention of jobs while assisting in attracting private financing to a project and the need for additional assistance, especially for small businesses to grow and expand. Doggie Doo's will be investing more than $1 million in their project through a combination of equity and private financing. 

This city loan will assist with the closing on their larger construction loan by removing equipment costs from the larger loan.

The State wage requirement for these funds is that the average minimum wage at the business  must currently be $13.00 per hour and indexed annually and the note becomes due and payable if that average wage is not maintained.

Doggie Doo's has agreed to that requirement and has been raising its wages.

Because of the size of the loan and the small business aspect, the project will be exempt from prevailing wage and other federal requirements and is exempt from business subsidy requirements.

The borrower will pay a loan origination fee and the legal costs of the loan closing out of the proceeds.