MANKATO — The Mankato Economic Development Authority will see a 62% jump in its budget to help pay for rising costs, beef up funding for commercial and residential building rehabilitation and to pay for work Greater Mankato Growth does to market the area to businesses.
The City Council, meeting as the EDA Monday night, approved hiking the property tax levy for the EDA by $140,000 to $360,000. The higher levy, which is included in the overall tax levy, will kick in next year.
City Manager Pat Hentges said that rising expenses over time has led to deficits in the EDA fund the past couple of years.
The EDA levy was started in 2007 and funds a variety of groups and programs including the City Center Association, Southern Minnesota Initiative Foundation, funds for parking lot development and funding for the arts and culture through Twin Rivers.
It also funds the city’s membership in GMG’s Regional Economic Development Alliance, or REDA. Nicollet and Blue Earth counties and the communities in them pay a fee to GMG for the work it does on promoting the area to prospective new businesses and to assist existing businesses.
The biggest cost increase in the EDA budget has been for the GMG marketing services, which went from $99,700 in 2009 to nearly $191,000 next year.
Under state law, Mankato could levy as much as $830,000 a year for the EDA, based on the city’s property tax value.
The Council also heard of a proposal for a new low interest revolving loan program to target commercial properties throughout the city that are valued at or below $500,000.
“It’s an attempt to address rehabilitation of small commercial properties,” Hentges said.
If approved by the council as part of the annual budget, the program would provide up to $20,000 in the form of a 3% interest loan over 10 years. Eligible costs could include improvements related to the building code and exterior and interior improvements, but not furnishings or equipment.
In addition, a building owner could request a $5,000 deferred loan to be used solely for exterior improvements. The $5,000 would be forgiven over five years. Hentges said the deferred loan is an incentive to bring exterior improvements to older commercial properties.
The loans would be secured by a second mortgage on the property.
Hentges said the loan program could be started by allocating between $140,000 and $200,000 from the EDA fund.
While no votes were taken, the City Council was supportive of the idea.
“I think this is a great program to help small businesses,” said Council Member Jessica Hatanpa.