052200 EDAOfficial File Copy
CITY OF NEW HOPE
EDA MEETING
City Hall, 4401 Xylon Avenue North
May 22, 2000
President W. Peter Enck
Commissioner Sharon Cassen
Commissioner Don Collier
Commissioner Pat LaVine Norby
Commissioner Mark Thompson
1
2.
3.
4.
Call to Order
Roll Call
Approval of Regular Meeting Minutes of May 8, 2000
Resolution Calling for a Public Hearing on the Proposed Adoption of Business SubsidY
Criteria
5. Adjournment
CITY OF NEW HOPE
4401 XYLON AVENUE NORTH
NEW HOPE, MINNESOTA 55428
Approved EDA Minutes
Regular Meeting
May 8, 2000
City Hall
CALL TO ORDER
ROLLCALL
APPROVE MINUTES
IMP. PROJECT 669
Item 4
MOTION
Item 4
3601 WINNETKA
item 5
President Enck called the meeting of the Economic Development Authority to order
at 8:36 p.m.
Present:
W. Peter Enck, President
Sharon Cassen, Commissioner
Don Collier, Commissioner
Pat LaVine Norby, Commissioner
Mark Thompson, Commissioner
Motion was made by Commissioner Thompson, seconded by Colnmissioner
Collier, to approve the Regular Meeting Minutes of April 10, 2000. Voting in
favor: Enck, Cassen, Collier, Thompson; Abstained: Norby. Motion carried.
President Enck introduced for discussion Item 4, Motion Authorizing Staff to
Proceed with Activities to Prepare for Demolition of City-owned Commercial
Building at 5550 Winnetka Avenue North (Improvement Project No. 669).
Mr. Kirk McDonald, Director of Community Development, indicated the closing on
the property took place on April 28. Staff is seeking permission to demolish the
structure. The EDA authorized staff to obtain demolition quotes and expedite the
process by not requiring the quotes to be brought back to the EDA. Commissioner
Collier suggested contacting West Metro Fire-Rescue regarding possible training
opportunities at the site prior to demolition. President Enck recommended staff
contact the owner of 7809 Bass Lake Road regarding potential purchase.
Motion was made by Commissioner Collier, seconded by Commissioner
Thompson, authorizing staff to proceed with demolition of City-owned
commercial building at 5550 Winnetka Avenue North (Improvement Project
No. 669); allowing West Metro to use the structure as a training opportunity if
desired; and to directing staff to inquire of potential purchase of property at
7809 Bass Lake Road. Ail present voted in favor. Motion carried.
President Enck introduced for discussion Item 5, Discussion Regarding Potential
Redevelopment at 3601 Winnetka Avenue and Request for Financial Assistance for
Demolition Activities.
Mr. Kirk McDonald, Director of Community Development, inquired whether the
EDA would be interested in becoming involved with redevelopment of 3601
Winnetka Avenue North.
He stated the City has recently been contacted by a developer from the Acacia Real
Estate Group, LLC who has indicated they have purchased the property. They are
interested in constructing a new 8,000 square foot commercial building that would
accommodate several tenants, potentially including a Star Bucks Coffee with
New Hope EDA
Page 1
May 8, 2000
CONSENSUS
Item 5
ADJOURNMENT
sidewalk caf6 and a Pilgrim Cleaners. They have inquired regarding the City's
interest in assisting with the project and have requested $25,000 fi.om the City for
building demolition/site clearance costs. The developer has indicated that if a new
building is not possible, they may re-use the existing building.
Issues discussed by the EDA included: demolition estimate appears high,
inadequate plan for development or tenants, lack of City funding since property is
not located in a TIF area, and whether subsidy would be appropriate for the project.
The consensus of the Commission was not to become involved with the potential
redevelopment at 3601 Winnetka Avenue at this time.
Motion was made by Commissioner Collier, seconded by Commissioner
Thompson, to adjourn the meeting. All present voted in favor. Motion carried. The
New Hope EDA adjourned at 8:45 p.m.
Respectfully submitted,
Valerie Leone
City Clerk
New Hope EDA
Page 2
May 8,2000
EDA
R.E T FOR ACTION
Originating Depa~ent Approved for Agenda Agenda Section
EDA
Community Development
5-22-00 Item No.
By:Kirk McDonald ~ 4
RESOLUTION CALLING FOR A PUBLIC HEARING ON THE PROPOSED ADOPTION OF BUSINESS
SUBSIDY CRITERIA
REQUESTED ACTION
Staff recommends that the EDA approve the enclosed resolution which establishes a public hearing date
of June 12 to consider the proposed adoption of a Business Subsidy Criteria Policy.
BACKGROUND
The 1999 Minnesota Legislature enacted a new law regulating business subsidies entered into or
authorized after August 1, 1999. All Minnesota cities with populations of more than 2,500 are required to
hold a public hearing on and adopt criteria for awarding certain business subsidies and must report to the
state on an annual basis. City staff has been coordinating with the City Manager and City Attorney on the
drafting of such a policy for New Hope and a draft of the policy is attached. The purpose of this action is
to schedule a public hearing for June 26, at which time the proposed policy will be discussed and
reviewed with the EDA in detail.
ATTACHMENTS
· EDA Resolution
· City Attorney Correspondence
· Proposed Policy for Business Subsidies
· Department of Trade & Economic Development Information
· Minnesota Statutes
MOTION BY SECOND BY
I
EDA RESOLUTION NO. 2000-
RESOLUTION CALLING FOR A PUBLIC HEARING ON THE
PROPOSED ADOPTION OF BUSINESS SUBSIDY CRITERIA
BE IT RESOLVED by the Board of Commissioners of the Economic Development
Authority in and for the City of New Hope as follows:
WHEREAS, the State Legislature has adopted Minnesota Statutes, Sections 116J.993 to
116J.995 (the "Statutes") governing business subsidies granted by units of government; and
WHEREAS, the New Hope Economic Development Authority is an economic
development authority and fits the definition of "grantor" in the Statutes; and
WHEREAS, the New Hope Economic Development Authority is required to adopt a set
of criteria for awarding business subsidies after a public hearing to consider the criteria; and
WHEREAS, the City staffhas prepared a proposed Policy For Business Subsidies attached
hereto as Exhibit A.
NOW, THEREFORE, BE IT RESOLVED by the Board of Commissioners of the
Economic Development Authority in and for the City of New Hope, as follows:
Section 1. Public Hearing. The Board of Commissioners shall meet on June 26., 2000 at
7:00 p.m. to hold a public hearing on the proposed adoption of criteria as set forth in Exhibit A
for awarding business subsidies in accordance with the Statutes; and
Section 2. Notice of Public Hearing. The City Clerk is authorized and directed to cause
notice of the hearing to be published at least once in the offical newspaper of the City of New
Hope not later than 10 days prior to June 26, 2000 and to place a copy of the proposed criteria on
file and to make Such copy available for inspection by the public.
Dated: May 22, 2000
W. Peter Enck, President
Attest:
Daniel J. Donahue, Executive Director
P:X, Atmrney\Cnh Resolutions\Business Subsidy Resolution - EDA .wlxl
-1-
EXHIBIT A
NEW HOPE ECONOMIC DEVELOPMENT AUTHORITY
POLICY FOR BUSINESS SUBSIDIES
Purpose: The purpose of this policy is to set guidelines that would enable the New Hope
Economic Development Authority to comply with Minnesota Statutes 116J.993, et seq.
Objective: The objective of the New Hope EDA is to attract and enhance commercial and
industrial development thereby increasing employment opportunities for New Hope residents and
developing the job base and tax base of the City.
Definition Of Business Subsidy: A business subsidy means a state or local government agency
grant, contribution of personal property, real property, infrastructure, the principal amount of a
loan at rates below those commercially available to the recipient, any reduction or deferral of any
tax or any fee, any guarantee of any payment under any loan, lease, or other obligation, or any
preferential use of government facilities given to a business.
This policy will be used for business subsidies that equal or exceed $25,000.
A proposed subsidy shall be considered to offset land costs, site development costs, building costs
and design specifications that exceed New Hope's maximum requirements.
Policy Guidelines:
The EDA shall evaluate each request for a business subsidy based on the best interest of the City
and its residents. In determining whether to provide a subsidy, the EDA shall consider factors it
deems appropriate, which may include the following:
Proposed number and type of jobs created. Job and wage goals will be sensitive
to prevailing wage rates, economic and market forces over which neither the
developer or community have control and the financial resources of the developer.
Estimated taxable value of the proposed development.
The commitment of the proposed development to continue operations at the site
where the subsidy is used for at least five years after the benefit date.
The ability of the proposed development to fulfill or provide a desired amenity,
facility or service that is not provided by the City.
-2-
The EDA recognizes that each proposed development is unique and has specific characteristics that
make the proposed development desirable to the City and in making its determination, the EDA
may use some or all of the foregoing factors. The Board of Commissioners will make a
determination as to whether the proposed subsidy is in the best interests of the City; provided that
if the subsidy is in excess of $100,000 the determination shall be preceded by a public hearing.
Consistent with Minnesota Statutes 116J.993, Subdivision 3, the following forms of £mancial
assistance are not a business subsidy, and recipients will not typically be required to meet the
criteria for business subsidies set forth in this policy statement:
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
Business subsidy of less than $25,000;
Assistance that is generally available to all businesses or to a general class of similar
businesses, such as a line of business, size, location, or similar general criteria;
Public improvements to buildings or lands owned by the state or local government that
serve a public purpose and do not principally benefit a single business or defined group of
businesses at the time the improvements are made;
Redevelopment property polluted by contaminants as defined in Minnesota Statutes,
Section 116J.552, Subdivision 3;
Assistance provided for the sole purpose of renovating old or decaying building stock or
bringing it up to code, provided that the assistance is equal to or less than 50 percent of the
total cost;
Assistance provided to organizations whose primary mission is to provide job readiness
and training services if the sole purpose of the assistance is to provide those services;
Assistance for housing;
Assistance for pollution control or abatement;
Assistance for energy conservation;
Tax reductions resulting from conformity with federal tax law;
Worker's compensation and unemployment compensation;
Benefits derived from regulation;
Indirect benefits derived from assistance to educational institutions;
Funds from bonds allocated under Minnesota Statutes, Chapter 474A;
Assistance for a collaboration between a Minnesota higher education institution and a
business;
Assistance for a tax increment financing soils condition district as defined under Minnesota
Statutes, Section 469.174, Subdivision 19;
Redevelopment when the recipient's investment in the purchase of the site and in site
preparation is 70 percent or more of the assessor's current year's estimated market value;
and
General changes in tax increment financing law and other generated tax law changes of a
principally technical nature; and
Any other forms of assistance that may be defined by law as not constituting a business
subsidy under Minnesota Statutes, Section 116J.993, Subdivision 3.
-3-
05/16/00 14:21 FAX 7634935193 d S & S, A/TORNEYS ~002
OP COUNSEL
LOR~NS Q. BRY~'rAO
JENSEN SWANSON & SONDRAI,L, P.A.
Attorneys At L~w
8525 EDLNBROOK CROSSING, STE. 201
BROOKLYN PARK, ~ES~A 55443-1999
TE~PHO~ (763) 4~-8811 · TELEF~ (763) 493-5193
~ jss~jsspa.com
May 16, 2000
Kirk McDonald
Community Development Director
City of New Hope
4401 Xylon Avenue North
New Hope, MN 55425
Re:
Proposed New Hope Business Subsidy Policy
Our File No.: 99,10049
Dear Kirk:
Enclosed are City Council and EDA resolutions calling for a public hearing on thc
proposed adoption of business subsidy criteria we discussed in our recent meeting. The
adoption of this criteria by the City and the EDA is required by Minn. Stat., §§116J.993
to 116J.995. These resolutions can be adopted at the May 22~ meeting. They call for a
public hearing at the June 26,a meeting on the proposed business subsidy criteria.
I have also enclosed our proposed criteria. This is basic and standard language being used
by other cities. The enclosed information is a combination of language taken from the
Crystal and Maple Grove policies.
Basically, I don't see this policy impacting the financial assistance New Hope provides
developers. This is due to the fact New Hope's assistance is geared towards providing
housing assistance or site redevelopment where a recipient's investment in purchase or site
preparation is 70% or more of the assessor's current estimated market value. These
circumstances are exceptions to the business subsidy requirements of thi,q statute. These
exceptions could be said to "swallow the rule" as it relates to New Hope's financial
assistance programs.
05/16/00 14:21 FAX 7634935193 J S & S, ATTORNEYS ~003
May 15, 2000
Page 2
I will take responsibility for publishing notice of the public hearings before both the City Council and EDA
at the June 12~ meeting. I will also provide you with another resolution adopting the business subsidy
criteria for the June 26' m~fing. The proposed criteria enclosed satisfies the statutory requirements for
the criteria, however both staff and Council should feel free to make any additions to this criteria as seen
fit. Please contact me if you have any questions or comments concerning the enclosed material.
V~_~ yours,
Steven A. Sondrall
SWANSON & SONDKALL, P.A.
Enclosures
cc: Dan Donahue
Daryl Sulander
Phil Kern
Valerie Leone
EC Trade &
on mic
Deve_lopment
February22,2000
To all Minnesota state and local government agencies:
The 1999 Minnesota Legislature enacted a new law (Laws of Minnesota 1999, Chapter 243,
Article 12; codified as Minn. Stat. § 116J.993 to § 116J.995)regulating business subsidies entered
into or authorized on or after August 1, 1999. This law repeals its predecessor, Minn. Stat.
§ 116J.991, and/ntroduces new operating and reporting requirements.
Agencies sig'ning agreements to award business subsidies or qualifying financial assistance must
provide annual reports to DTED for each agreement. Please note that agencies no longer need to
report on agreements signed prior to August 1, 1999. The law also requires local government
agencies representing a population of more than 2,500 and all state government agencies to file a
report even if they have not awarded any business subsidies. Local government agencies
representing 2,500 or fewer people are exempt from reporting unless they have awarded a
business subsidy in the past five years.
The department has developed a new Minnesota Business Assistance Form to collect information
from business subsidy and/or financial assistance agreements. If you are required to report but
have not signed a business subsidy or financial assistance agreement during the period August 1,
1999 through December 31, 1999, please answer questions 1 through 13 on the form and follow
the directions. Please submit a separate form for each agreement. All forms must be received or
postmarked by April 1, 2000. Only forms meeting this deadline will be included in the
department's summary analysis provided to the legislature. If forms are not received or
postmarked by June 1, the responsible government agency may not award business subsidies
until a report has been filed. Please make copies of the enclosed form or download additional
forms from DTED's website (www.dted.state.mn.us, click on News and Information, then
Business and Economic Development, then Business Subsidies). The web site also includes
additional information related to the law including a fact sheet and answers to frequently asked
questions.
Please understand that it is the grantor's responsibility to report to DTED. We do not want to
interfere with grantor/recipient relationships and expect that recipients will report directly to
grantors, not to DTED. Legislative leaders agree with this approach and have introduced bills
this session designed to confirm this process.
Kind regards,
Bob Isaacson
Director, Analysis and Evaluation Office
--Trade &
Econorrnc
Development
2000 Minnesota Business Assistance Form
The 2000 Minnesota Business Assistance Form (MBAF) is used to report each business subsidy and financial
assistance agreements signed from August 1, 1999 through December 31, 1999 per Minn. Stat. § I 16J.993 to
§116J.995. Please use a separate form to report each agreement.
The following government agencies must subnUt a 2000 MBAF even if an agreement was not signed during the
period August 1, 1999 through December 31, 1999: I) any local government/agency that signed a business
subsidy agreement since January 1, 1995, or represents a population of more than 2,500; 2) all state government
agencies. If the local/state government agency does not have any subsidies or assistance to report, please
answer questions I through 13 and follow directions.
Ifa local or state government agency that is required to report has not done so by April 1, DTED will mail a
warning. If it fails to report by June 1, it may not award any business subsidies until a report has been filed.
· Questions? Call (651) 297-2335. Information on where to mail or fax your completed MBAF(sl in on page 4.
Section 1 Information About Grantor
1. Name of grantor (funding entity) 2. Name of person completing this form
3. Street address 4. City 5. ZIP code
6. County 7. Phone number 8. Fax number 9. E-mail address
10. Please indicate who in your organization should receive the 2001 MBAF if different from the person in Question 2.
Name/Title Phone number Street address City ZIP code
I I. Classification of grantor (Mark one. If grantor is entiO' 12. Has your organization held a public hearing on and
created by gov 't ageno,, please indicate affiliation. For adopted criteria for awarding business subsidies in
example, a ctO' EDA ,,ould check "City government. ") compliance with Minn. Stat. §116J.9947 (Mark one )
-I City government ~ Yes (Indicate hearing date - and attach crttertaJ
Zl County government ~ No
LI Regional government ~ We held a public hearing but have not yet adopted
T] State government criteria rlndicate date of initial hearing - )
Z] Other (Please specify.) ~ Other (Please attach explanation.)
13. Has your organization signed any agreements to award a business subsidy or financial assistance from August I, 1999
through December 31, 1999 that is required to be reported under Minn. Stat. §I 16J.993 and §116J.9947 (Mark one ~
T.I Yes (Complete the remainder of the form ~ -I No (Stop here, go to section 5 on page 4.)
Section 2 Information About Recipient
Name of business or organization
rece~v,ng subsidy or financial ass/stance
15. Address where business subsidy or financial assistance
will be used
Street address City ZIP code
16. Does the recipient have a parent corporatton? (Mark one. j
~ Yes (Indicate name and address of parent corporation below. If more than one, indicate ultimate owner. J
~ No
Name of parent corporation Street address City State
ZIP code
2000 Minnesota Business Assistance Form Page I of 4 Department of Trade and Economic Development
17.
Industry of recipient's facility (Mark one.):
~ Manufacturing ~ Services
~ Retail Trade D Wholesale Trade
Finance, Insurance, Real Estate
Construction ~ Other (please specify)
8. Did the recipient relocate as a result of signing this agreement? (Mark one.)
Yes (Indicate city and state of previous address and reason recipient did not complete this prOject at that address.
No (Go to Question 19.)
City/State of previous address Reason project not completed at previous address
19. Would the recipient have remained m previous location or relocated elsewhere if not awarded this business subsidy or
financial assistance? (Mark one)
~ Remained at previous location i-I Relocated to different Minnesota location ~1 Relocated outside Minnesota
;ection 3 General Information About the Agreement
20. Total dollar value of business subsidy or financial 21. Date agreement signed (In addition to the agreement
assistance (Please separate by type - see Questions 24 date. indicate any dates the agreement was antended 9
and 25 - and indicate only princtPal amount for loans.)
22. Benefit date (Indicate the date the recipient will benefit from the business subsidy or financial assistance. For exantple,
indicate the date improvements wereJ~nished, equipment was placed Into service, or the recipient occupied the property,
whichever is earlier.)
23. Does the agreement provide a business subsidy or one of the four types of financial assistance (see Question 25) required to
be reported? (Mark one.)
D business subsidy [] financial assistance
24. If the agreement provided a business subsidy, please
indicate the type(s).
El not applicable, agreement provided financial assistance
loan
grant (i.e., forgivable loan)
tax abatement
TIF or other tax reduction or deferral
guarantee of payment
contribution of property or infrastructure
preferential use of governmental facilities
land contribution
other (Speci~. subsidy type.)
26. If the assistance included tax increment financing, please
indicate the type of TIF district? (Mark one.)
not applicable, assistance was not in the form of TIF
~ redevelopment
D renewal and renovation
El soils condition
El economic development
[3 mined underground space
El hazardous substance subdistrict
25. If the assistance was one of the four types of financial
assistance, please indicate the type(s).
not applicable, agreement provided a business subsidy
assistance for property polluted by contaminants
assistance for renovating building stock or bringing it up
to code, when 50% or less of total cost
assistance for pollution control or abatement
assistance for a TIF soils condition district
27. Are any other grantors providing a business subsidy or
financial assistance to the same project? (Mark one )
Yes (Specify each grantor and the value of their
assistance below: attach an additional sheet tf necessar3' )
D No
Grantor(s) and value of the agreement(s):
Grantor Value ($)
Grantor Value ($)
2000 Minnesota Business Assistance Form Page 2 of 4 Department of Trade and Economic Development
32.
Section 4 Goals and Public Purpose Identified in the Agreement
28. Minn. Stat. § I 16J.994 requires that business subsidy and financial assistance agreements state a public purpose. Which
of the following public purposes were stated in the agreement? (Mark all that apply.)
D Enhancing economic diversity CI Increasing tax base (cannot be only purpose)
~ Creating high-quality job growth ~ Other (please speci)5,)
['-i Job retention ~ Other (please specify)
r-! Stabilizing the community ~l Other (please speci, tj,).
29. Indicate whether the agreement included the following types of goals, and whether the recipient had attained those goals
at the time of this report. (Fill in the boxes and attainment date(s) for each goal..)
A) Specific wage and job goals to be attained within 2 years
B) Other job-creation and/or retention goals
C) Other wage goals
D) Other goals other than wage andjob goals
Goals Target attainment All goals
established? dates (month & year) attained?
~3Yes ONo ~Yes ~No
~Yes ~No ~Yes dNo
~Yes ~No ~Yes ~No
vi Yes [-'1 No ~ Yes ..3 No
(Please attach descriptions of goals and progress toward
attainment if not documented in Question 30.)
30. For each of the following wage categories, indicate the job creation and/or retention goals stated in the
agreement and the average hourly value of any employer-provided health insurance goals for those jobs. (Only Indicate
./ob creation goals in full-time equivalents if you are unable to separate goals by full- and part-ttme positions.)
Full-time Part-time/ FTE (only if goals not
Hourly Wage Job Seasonal/Temp. stated as FT/PT) Job tlourly Value of
(excluding benefits) Creation Job Creation Job Creation Retention itealth Insurance
no hourly wage-level goal S
less than $7.00 $
$7.00 to $8.99 $
$9.00 to $10.99 s
$11.00 to $12.99 $ __
$13.00 to $14.99 $ ....
$15.00 and higher
For each of the following wage categories, ~nd~cate the number of actual jobs created and~or retained s~ncc thc benefit
date and the actual hourly value of any employer-provided health insurance for those jobs. (Only mdtcate./ob crealtOn
full-ttme equivalents if you are unable to separate.lob creatton into full- and part-time posmons
Full-time Part-time/ FTE o(~q~ if unable to
Hourly Wage Job Seasonal/Temp. separate leT/PT) Job ttouriy Value of
(excluding benefits) Creation Job Creation Job Creation Retention Health Insurance
less than $700
5700 to $8.99
....
$9 00 to $1099
$11 00 to $12 99
$13.00 to $14.99
$15.00 and higher
Has the recipient achieved all goals (see Questions 29, 30 and 31 ) and fulfilled all oblil~ations stipulated in the agreement'.,
(Mark one.) -
Yes ~ No
2000 M~nnesota Business Assistance Form Page 3 of 4 Department of Trade and Economic Developmcnl
Section 5 Recipients Failing to Fulfill Obligations
rDo not complete this section if,you completed it on another 2000 MB,4F submitted to DTED.)
33. During the period August I through December 3 l, 1999, did your organization have any recipients who failed to report as
required by Minn. Stat. §116J.993 and §I 16J.9947 (Mark one.)
~ Yes (Indicate the name of each recipient failing to report and the value of subsidy orfinancial assistance awarded to that
recipient. ,4ttac!~ additional pages if necessary.)
'~ No
Name of recipient
Type of subsidy or assistance (See Questions 24 and 25.) Value of subsidy or assistance
3a. Did your organization have any recipients who failed to achieve any goals or fulfill any other obligauons under an
agreement signed on or after August 1, 1999, that were required to be fulfilled by the time of this report? (Mark one.)
Yes (Complete the remainder of this section.) yl No (Stop here and submit form to DTED )
35. - 39. Provide the following information for each recipient failing to fulfill goals or any other terms of an agreement that
were to be atxained by the time of reporting. (Attach additionalpages if necessary.)
35. Information on recipient and agreement:
Name of recipient in default
Type of subsidy or assistance
Initial value of
subsidy or assistance
Street address of recipient
City/ZIP code of recipient
Outstanding value of
subsidy or assistance
36. Reason(s) for default (Mark all that apply.).
,21 recipient ceased operation
LI recipient was unable to fill vacant positions
El recipient relocated to a different community
El other (Spect~. reason.)
37. To date, has the recipient fulfilled ~ts repayment obhgat~on? (Mark one)
LI Yes Q No, recipient has begun to repay the assistance. El No, recipient has not begun to repay the assistance.
38 Has the agreement been amended to extend the reclp~ent's deadline for fulfilling its obligations? (Mark one.)
El Yes El No
39 Describe the steps being taken to bring recipient into compliance or recoup the subsidy:
Return your completed MBAF(s) by April 1, 2000, to:
2000 Minnesota Business Assistance Form
Minnesota Department of Trade and Econormc Development - AEO
500 Metro Square, 121 East 7a' Place
St. Paul, MN 55101-2146
Or fax to: (651) 215-3841
2000 M~nnesota Business Assistance Form Page 4 of 4 Depan'ment of Trade and Economic Development
'- Business Subsidies
Business Subsidies
Minnesota Statutes, Section 116J.993 - 116J.995
The Business Subsidies Statutes (the "Statutes") have broad implications for the relationship be-
tween local government and business activity. The Statutes apply to more than the typical forms of
local economic assistance. All projects involving local funds and non-governmental activities
should undergo a review in the planning process to determine the potential application of business
subsidies.
The left column contains the Statutes enacted in the 1999 Legislative Session. The right column
contains comments that provide basic guidance on the application of the Statutes. The comments are
for reference only. Application of the Statutes on projects should be done in conjunction with quali-
fied legal assistance.
STATUTE
COMMENTS
116J.993 - Definitions
Subd. 1. Scope.
For the purposes of sections 116J.993 to 116J.995, the
terms defined in this section have the meanings given
them.
Subd. 2. Benefit Date.
"Benefit date" means the date that the recipient
receives the business subsidy. If the business subsidy
involves the purchase, lease, or donation of physical
equipment, then the benefit date begins when the
recipient puts the equipment into service. If the
business subsidy is for improvements to the property,
then the benefit date refers to the earliest date of
either:
The benefit date is important for wage
and job goals, 5-year location commit-
ment and duration of reporting. |
(1)
(2)
when the improvements are finished for the
entire project; or
when the business occupies the property. If a
business occupies the property and the subsidy
grantor expects that other businesses will also
occupy the same property, the grantor rna3'
assign a separate benefit date for each busi-
ness when it first occupies the property.
The ability to assign separate benefit
dates may help to meet goals for a
project that consists of multiple phases. I
2000 Put~l/corp Tax Increment Seminar - Page
~ · Business SuDsidm$
The following forms of financial assistance are not a
business subsidy:
(1)
(2)
a business subsidy of less than $25,000;
assistance that is generally available to all
businesses or to a general class of similar
businesses, such as a line of business, size,
location, or similar general criteria;
Not all financial assistance is a business
subsidy. More than one exception may
apply to a project.
Use a conservative approach to deter-
mining if the assistance is generally
available. ~
(3)
public improvements to buildings or lands
owned by the state or local government that
serve a public purpose and do not principally
benefit a single business or defined group of
businesses at the time the improvements are
made;
The term "defined group of businesses"
is not defined. This definition may have
implications for industrial parks, down-
towns or other commercial areas.
(4)
redevelopment property polluted by contami-
nants as defined in section 116J.552, subdivi-
sion 3;
oP~ ;~gd reavPe~osp4~ eSr,t a;doj el cTts.eXempt a va~
(5)
(6)
assistance provided for the sole purpose of
renovating old or decaying building stock or
bringing it up to code, provided that the
assistance is equal to or less than 50% of the
total cost;
assistance provided to organizations whose
primary mission is to provide job readiness
and training services if the sole purpose of the
assistance is to provide those services;
Paragraph 5 restricted to rehabilitation
of existing structures.
Total cost of renovation is not defined,
creating flexibility in calculating the total
cost and 50% threshold.
(7)
(8)
(9)
10)
assistance for housing:
assistance for pollution control or abatement:
assistance for energy conservation:
tax reductions resulting from conforrmtv with
federal tax law;
Paragraphs 4, 5, 8, and 16 are subiect
to reporting requirements and may
require subsidy agreement even though
exempt from other subsidies regulations
(see 116.994, Subd. 8).
11)
workers' compensation and unemployment
compensation;
(12) benefits derived from regulation:
2000 Publtcorp Tax Increment Seminar - Page 3
Business Subsidies
Subd. 7. State Government Agency.
"State government agency" means any state agency
that has the authority to award business subsidies.
116J.994- REGULATING LOCAL AND
STATE BUSINESS SUBSIDIES
Subd. 1. Public Purpose.
A business subsidy must meet a public purpose other
than increasing the tax base. Job retention may only
be used as a public purpose in cases where job loss is
imminent and demonstrable.
Subd. 2. Developing a Set of Criteria.
A business subsidy may not be granted until the
grantor has adopted criteria after a public hearing for
awarding business subsidies that comply with this
section. The criteria must include a policy regarding
the wages to be paid for the jobs created. The com-
missioner of trade and economic development may
assist local government agencies in developing crite-
ria.
What public purpose(s) is achieved by
granting the subsidy? Simply increasing
the tax base is not sufficient. Retention
of existing jobs requires demonstration
that loss is imminient.
!
A stated public purpose not related toI
jobs may allow wage and job goals t
"zero".
Criteria for business subsidies must be
adopted before subsidies can be
granted.
Wage policy for job creation is the only
specific statutory requirement for crite-
ria.
Criteria can provide means of clarifying
application of the Statutes
i A public hearing on the criteria is re-
quired, but there are no stated require-
m ~_nts. for publicatir~n ......... ~--
Every grantor must develop and adopt
criteria. The city cannot adopt for all
subordinate units. The city and subordi-
nate units should have identical or
compatible policies.
2000 Put~licorp Tax Increment Seminar - Page 5
Business Subsidies
(d) the state or local government agency and the
recipient must both sign the subsidy agreement and, if
the grantor is a local government agency, the agree-
ment must be approved by the local elected governing
body, except for the St. Paul Port Authority and a
seaway port authority.
Subd. 4 Wage and Job Goals.
The subsidy agreement, in addition to any other goals,
must include:
(1) goals for the number of jobs created,
which may include separate goals for the number of
part-time and full-time jobs, or, in cases where job
loss is imminent and demonstrable, goals for the
number of jobs retained; and
(2) wage goals for the jobs created or
retained. In addition to other specific goal time
frames, the wage and job goals must contain specific
goals to be attained within two years of the benefit
date.
Subd. 5. Public Notice and Hearing.
(a) Before granting a business subsidy that ex-
ceeds $500,000 for a state government grantor and
S 100,000 for a local government grantor, the grantor
must provide public notice and a hearing on the
subsidy. A public hearing and notice under the
subdivision is not required if a hearing and notice on
the subsidy is otherwise required by law.
(b) Public notice of a proposed business subsidv
under this subdivision by a state government grantor
must be published in the State Register. Publm notice
of a proposed business subsidy under this subdivision
by a local government grantor must be pubhshed m a
local newspaper of general circulation. The public
notice must identify the location at which information
about the business subsidy, including a copy of the
subsidy agreement, is available. Published notice
should be sufficiently conspicuous in size and place-
ment to distinguish the notice from surrounding text.
The grantor must make the information available in
printed paper copies and, if possible, on the Internet.
All subsidy agreements must be ap-
proved by the local elected governing
body (i.e. - city council). ~
wageThe grantOrand jobhaSgoals.flexibility over specfic
Creating new jobs may not be required if
the subsidy achieves another substantial
public purpose. ,~
Net increase in jobs is not required byI
the Statutes.
A two year threshold is key for purposes
of the agreement. The Statutes do not
mention the retention of jobs after the
two year period.
Potential for multiple benefit dates may I
help to achieve the job goals.
A hearing required only if subsidy
exceeds $100,000.
Negotiations should be concluded befoi~-
the hearing notice is published, tnfor-
marion about the subsidy and a copy of
the agreement must be available after
publication of the notice.
Information about the subsidy and the
hearing must be made available on the
Internet, if possible.
2000 Pubhcorp Tax Increment Seminar - Page 7
Business Subsidies
Subd. 7. Reports by Recipients to Grantors.
(a) A business subsidy grantor must monitor the
progress by the recipient in achieving agreement
goals.
(b) A recipient must provide information regard-
ing goals and results for two years after the benefit
date or until the goals are met, whichever is later. If
the goals are not met. the recipient must continue to
provide information on the subsidy until the subsidy
is repaid. The information must be filed on forms
developed by the commissioner in cooperation with
the representatives of local government. Copies of
the completed forms must be sent to the commis-
sioner and the local government agency that provided
the business subsidy. The report must include:
(1)
the type, public purpose, and amount
of subsidies and type of district, if the
subsidy is tax increment financing;
(2)
the hourly wage of each job created
with separate bands of wages:
(3)
the sum of the hourly wages and cost
of health insurance provided by the
employer with the separate bands of
wages;
(4)
the date the job and wage goals were
reached;
(5)
a statement of goals identified in the
subsidy agreement and an update on
achievement of those goals:
(6)
the location of the recipient prior to
receiving the subsidy:
(7)
why the recipient did not complete the
project outlined in the subsidy agree-
ment at the previous location, if the
recipient was previously located at
another site in Minnesota:
"monitor progress" in achieving goals.
Grantors need to consider how to
DTED assumes that ~ will
submit the forms in Subd. 7(b) DTED
refers to the forms as the Minnesota
Business Assistance Form (MBAF).
Copies of the MBAF can be obtained at
the DTED website. ~
The recipient should be required to file
report on DTED forms in the subsidy
and/or development agreement as a
means of enforcing compliance. ~
Describing this information in the
agreement will facilitate the preparation
and filing of reports. ~
2000 Put.)licorp Tax Increment Seminar - Page 9
Bus/ness Subsidies
(d) If the recipient does not submit its report, the
local government agency must mail the recipient a
warning within one week of the required fling date.
If, after 14 days of the postmarked date of the warn-
ing, the recipient falls to provide a report, the recipi-
ents must pay to the grantor a penalty of $100 for
each subsequent day until the report is filed. The
maximum penalty shall not exceed $1,000.
Subd. 8. Reports by Grantors.
(a) Local Government agencies of a local govern-
ment with a population of more than 2.500 and state
government agencies, regardless of whether or not
they have awarded business subsidies, must file a
report by April 1 of each year with the commissioner.
Local government agencies of a local government
with a population of 2,500 or less are exempt from
filing this report if they have not awarded a business
subsidy in the past five years. The local government
agency must include a list of recipients that did not
complete the report and of recipients that have not
met their job and wage goals within two vears and
steps being taken to bring them into compliance or to
recoup the subsidy.
If the commissioner has not received the report by
April 1 from an entity required to report, the commis-
sioner shall issue a warning to the government
agency. If the commissioner has still not received the
report by June 1 of that same year from an entity
required to report, then that government agency may
not award any business subsidies until the report has
been filed.
The maximum fine for reporting failure
by the recipient of is $1,000. Grantors
may want to add other consequences in
subsidy and/or development agreement.
ALL local government agencies (see
116J.993, Subd. 5) with a population
of 2,500 or more must file a report with
DTED by April 1 of each year.
The reporting requirement is not depen-
dent on the actual granting of business
subsidies. ~
Grantor report includes:
· list of recipients that did not com-
plete reporting
· list of recipients that have not met
job and wage goals
· steps being taken for compliance or
subsidy recapture ~
Failure to comply with the grantor
reporting requirements results in loss of
ability to grant subsidies until the reports
are filed.
(b) The commissioner of trade and economic
development must provide information on reporting
requirements to state and local government ag_cnc]es.
Subd. 9. Compilation and Summary Report.
The department of trade and economic development
must publish a compilation and summarw of the
results of the reports for the previous calendar year by
July 1 of each year. The reports of the government
agencies to the department and the compilation and
summary report of the department must be made
available to the public.
2000 Pubhcor~ Tax Increment Seminar - Page 11
Business Subsidies -
(10)
number of part-ti~ne and full-time jobs
within separate bands of wages; and
(11)
benefits paid within separate bands of
wages.
116J.995 - ECONOMIC GRANTS.
An appropriate rider in an appropriation to the depart-
ment of trade and economic development that speci-
fies that the appropriation be granted to a particular
business or class of businesses must contain a state-
ment of the expected benefits associated with the
grant. At a minimum, the statement must include
goals for the number of jobs created, wages paid, and
the tax revenue increase due to the grant.
Repealer. Minnesota Statutes 1998, Section
116J.991, is repealed.
Effective Date. Sections 1 to 4 are effective for
business subsidies entered into or state appropriations
authorized on or after August 1, 1999.
The Business Subsidy Statutes replace
the previous wage and job goal require-
ments. ~J
These requirements apply to all business
subsidies "entered into" after August 1,
1999. The Statutes do not define what
constitutes "entering into" a business
subsidy.
2000 Pubhcorp Tax Increment Seminar - Page ]3