Gahanna's planning and development leaders are continuing to press council to establish an economic-development fund as an incentive to bring more business to the city.

Gahanna's planning and development leaders are continuing to press council to establish an economic-development fund as an incentive to bring more business to the city.

Sadicka White, director of planning and development, brought additional information to council July 26, continuing a discussion from early June, when the viability of an economic-development fund was questioned.

"If you're not more progressive with what we know and see, we'll see a deterioration of the (tax) base," she said. "Sixty-four percent of our income tax is from people working in Gahanna."

The development department recommends contracting with the nonprofit Economic and Community Development Institute (ECDI) to establish a $375,000 revolving-loan fund to assist existing small businesses' expansion efforts and to attract other small businesses.

About 90 percent of Gahanna's entire business base consists of small businesses, according to White.

Anthony Jones, deputy development director, said the city could use revenue generated through the city's industrial zone, and the ECDI would commit $450,000 of its investments in the city to create the revolving-loan fund.

Terms of the proposed Gahanna-ECDI contract include the following:

The city would compensate ECDI a one-time amount of $3,500 per loan that is successfully closed in order to cover its entire servicing cost. There would be no upfront lump-sum payment to ECDI, and the costs incurred by the fund would be completely dependent upon successful loan closings.

Both ECDI and the city would be able to terminate the contract at any time by providing a 90-day written notice.

Loan recipients would be required to contribute at least 10 percent of the total project cost in order to receive a loan.

To recoup the expense of processing a loan ($3,500), Gahanna would require each loan recipient to have at least $47,000 in total payroll for the business.

This amount would allow the city to receive enough income tax over the average five-year loan term to pay back the initial loan-processing expense, according to White.

Jones said the two cost components of the economic-development fund would be financing for Gahanna small businesses, and administrative costs.

The total amount of financing for Gahanna small businesses is $300,000, he said. The administrative costs include loan-servicing costs totaling $51,678 and business technical-assistance/training costs in the amount of $23,321.

During council's Aug. 2 meeting, the development department is expected to request authorization to creation the development fund and appropriate $51,678 for loan-servicing costs, $23,321 for business technical-assistance/training costs and $300,000 in financing for small businesses.

Councilman Brian Larick questioned putting "money on the table" for a five-year loan with no return.

"If we bring 15 businesses in the first two years and they're successful in creating jobs and filling up retail space, that's a return," White said. "That's measurable in terms of business investment during the five years."

She said business prospects that currently drive through Gahanna might be discouraged because of vacant business space.

She said the return on investment comes from the dollars generated from the income tax of people working in the city.

"That's our return," she said. "That's the return on our investment. Hopefully, business grows."

Mayor Becky Stinchcomb reminded council that the proposed fund is the result of council leaders seeking a way to fill empty business space.

"We'll do council's pleasure," she said. "We invest a lot of money in the city for economic development. This isn't the first or last tool."

Council president Tom Kneeland said the proposal offers a high value, and it's at the low end, from a funding perspective.

"It's about competition," he said. "We have to have something to keep businesses. I support this."