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Fact Sheet: 1999 Business Subsidies Law <br />Developing Criteria and Stating Public Purposes <br />for Business Subsidies <br />Under Minn. Stat. §116J.993 through §116J.995, granting agencies must develop criteria for awarding <br />business subsidies after a public hearing. In addition, each business subsidy agreement must indicate a <br />public purpose. The law allows grantors flexibility in stating public purposes appropriate for their <br />communities, but requires that agreements meet a public purpose other than increasing the tax base and that <br />job retention be used as a public purpose only when job loss is imminent and demonstrable. Although the <br />law does not require public purposes to be addressed in the criteria, grantors may want to refer to the public <br />purposes below for criteria ideas. The following public purposes and criteria were recommended by the <br />legislatively established Corporate Subsidy Reform Commission. <br />Enhancing Economic Diversity <br />✓ In what ways does the project improve the mix of businesses in the area so as to: (1) allow the area <br />to participate in fast - growing industries; (2) protect the area from adverse economic consequences <br />caused by slow growth or declining industries that are dominant in the area; and (3) provide essential <br />consumer services, or develop a network of local suppliers to businesses within the community <br />where they otherwise do not exist? <br />Creating High - Quality Job Growth <br />✓ How many new jobs will be created, and what will they pay? <br />✓ How do wages proposed to be paid compare to community wage levels? <br />✓ How many jobs will be created with opportunities for career advancement, educational opportunities, <br />or occupational training? <br />✓ What are the projections for job growth at the project over the nest period of two to five years? <br />✓ What are the fringe benefits that are payable for the jobs (particularly, is there child care, health care, <br />and pension coverage)? <br />Providing for Job Retention, Where Loss is Imminent and Demonstrable <br />Note: Under the 1999 law, job retention can be used as a public purpose only in cases where job loss is <br />imminent and demonstrable. <br />✓ After collecting the necessary documents, is there substantial evidence that the company will have to <br />shut down involuntarily? <br />✓ After collecting the necessary documents, is there substantial evidence that the company has <br />received an offer to move to another state or community that is attractive enough that a reasonable <br />person would seriously consider a move for business reasons? <br />✓ What potential negative effect would the subsidy have on other competing businesses and overall <br />area job quality? <br />Stabilizing the Community <br />✓ How will the project constitute a significant investment in an area that (1) has not historically received <br />similar investments; (2) is a blighted area; or (3) is an economically depressed area? <br />✓ How will the project stimulate other investment or create spinoff businesses and jobs in the area? <br />Increasing the Tax Base <br />Note: The law requires business subsidies to meet a public purpose other than increasing the tax base, but <br />grantors may use increasing the tax base in conjunction with another public purpose. <br />✓ How will the project uniquely affect the property tax base for all taxing jurisdictions, both short term <br />and long term and both directly and indirectly? <br />✓ How will the project affect other local business and individual property tax bills? <br />SOURCE: Corporate Subsidy Reform Commission, 1997 Corporate Subsidy Reform Commission Report, February 6, 1998. <br />Department of Trade and Economic Development <br />Page 90 <br />July 27, 1999 <br />