06-22-1999 Council Agenda - Laserfiche WebLink

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JUN 18 '99 02:02PM EHLERS & ASSOCIATES P.7 /9 Business Subsidies June 18, 1999 Page 2 tax reduction from conformity with federal tax law. workers and unemployment compensation. • benefits derived from regulations. • funds from bonds allocated under Chapter 474A. • collaboration between Minnesota higher education institution and a business. • soils condition TIF district. • redevelopment when recipient's investment in the purchase of the site is 70% or more of the current assessor's estimated market value. • general changes in TIF law and other general tax law or a principally technical nature. A business subsidy must achieve a public purpose other than increasing the tax base. Job retention may serve as a public purpose only when the loss of jobs is "imminent and demonstrable ". A key term in the statute is "grantor". The grantor is the state or local government agency with the authority to grant the subsidy. For the purposes of this statute applicable local government agencies may include cities, counties, town, housing and redevelopment authorities, economic development authorities, port authorities, and other entities that local governments may create to grant business subsidies. Criteria Business subsidies cannot be granted until the grantor has adopted criteria for awarding business subsidies. This provision seems to impose separate requirements for each potential grantor. While schools are not listed, they have business subsidy power the tax abatement statute. The only statutory requirement for contents of the criteria is a policy for wages on jobs created by the subsidies. A public hearing must be held before adopting the criteria. The statute does not discuss a process for amending the criteria. Subsidy Agreement All business subsidies covered by the statute require a subsidy agreement. The statute describes the minimum contents of the agreement. A potential complicating factor for development projects is the required commitment of the recipient "to continue operations at the site where the subsidy is used for at least five years after the benefit date ". The subsidy agreement must be approved by the local elected governing body. The agreement must describe what happens if the recipient fails to fulfill its obligations. Failure to meet goals requires partial or full repayment of the assistance with interest. PAGE 256