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Item No. 5C <br />Meeting Date: February 240i, 2000 <br />Type of Business: EB <br />EB: EDC Business <br />IN.. Infonwtional Item <br />City of Mounds View Staff Report <br />To: Economic Development Commission <br />From: Aaron Parrish, Economic Development Coordinator <br />Item Title/Subject: Business Subsidy Policy <br />Date of Report: February 15, 2000 <br />Background <br />Last year the Minnesota Legislature and Governor passed the "1999 Business Subsidies Law" (Minnesota Statutes § <br />116J.993 through §116J.995). Asa result, communities are required to develop and adopt a business subsidy policy <br />for all subsidies granted after August 1", 1999. After a policy is developed, business subsidies granted that exceed <br />$25,000 require a local unit of government to enter into a "Business Subsidy Agreement." Additionally, business <br />subsidies in excess of $100,000 require a public hearing. <br />Without getting too detailed, the purpose of a `Business Subsidy Policy" is to guide the development of "Business <br />Subsidy Agreements." Accordingly, the law outlines eight elements that must be incorporated into "Business Subsidy <br />Agreements" including: <br />A description of the subsidy, including the amount and type of subsidy, and the type of district if the subsidy is <br />TIF <br />i • A statement of the public purposes of the subsidy <br />• Goals for the subsidy <br />A description of the financial obligation of the recipient if the goals are not met <br />• A statement of why the subsidy is needed <br />• A commitment to continue operations at the site where the subsidy is used for five years <br />• If applicable, the name and address of the parent corporation of the recipient <br />• A list of all financial assistance by all grantors for the project <br />In addition, all "Business Subsidy Agreements" must include job and wage goals with specific goals to be attained <br />within two years of the benefit date. However, the law does not specify minimum criteria for these goals. On an <br />annual basis, the Department of Trade and Economic Development will require all municipalities and development <br />organizations to submit a "Minnesota Business Assistance Form" to monitor compliance with the legislation. A <br />sample "Business Subsidy Policy" developed by the City's TIF Attorney has been attached for your review. <br />Necessary Actions <br />Review, modify, and subsequently adopt the attached "Business Subsidy Policy." <br />------------ <br />Aaron Parrish, Economic Development Coordinator <br />(612) 717-4029 <br />i <br />N:\DATA\GROUPS\ECONDEV\EDC\Staff Reports\Stafl00\02-2.doc <br />