05-12-2003 - Laserfiche WebLink

Home Browse Search

M:\MasterFiles\1999 thru 2010\2003\EDA\EDA Packets\05-12-03\Item 06A Continuation fo Public Hearing and Consideration of EDA Reso 03- EDA-173 and City Council Reso 6004, Resos Approv. REvisions to City's Business Subsidy Policy.doc Item No. 6A Staff Report No. Meeting Date: 5-12-03 Type of Business: EDA WK: Work Session; PH: Public Hearing; CA: Consent Agenda; CB: Council Business City of Mounds View Staff Report To: EDA President and Commissioners From: Aaron Backman, Economic Development Coordinator Item Title/Subject: Consideration of Resolution No. 03-EDA-173 Adopting the EDA’s Business Subsidy Policy Date of Report: May 8, 2003 Background: In 1999, the State Legislature adopted new regulations for the granting of business subsidies by state and local government. The Business Subsidies Statutes are codified as Minnesota Statutes § 116J.993 through §116J.995. The business subsidy law requires each “grantor” (i.e. state or local government agency or public entity) of a “business subsidy” to adopt criteria for awarding business subsidies. After a policy is developed, business subsidies granted that equal or exceed $25,000 require a local unit of government to enter into a “Business Subsidy Agreement.” In short, the policy guides the development of “Business Subsidy Agreements.” A business subsidy is defined as 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. The Statutes exclude 22 items from the definition of subsidies, including a subsidy of less than $25,000; business loans or guarantees of $75,000 or less; assistance that is available to all businesses or class of businesses; public improvements; housing assistance; and redevelopment when the recipient’s investment in the site acquisition and site development is 70% or more of the property’s market value. In response, a number of cities adopted fairly general business subsidy policies. That upset the proponents of the original legislation and in 2000 they persuaded the Legislature to adopt several amendments to the law, including requirements that the criteria “may not be adopted on a case-by- case basis” and “must set specific minimum requirements that recipients must meet in order to be eligible to receive business subsidies.” These 2000 changes also specified that the criteria must include a “specific wage floor” for the wages to be paid for the jobs to be created but that the wage floor “may be stated as a specific dollar amount or may be stated as a formula that will generate a specific dollar amount”. The 2000 changes also allowed a grantor to deviate from its criteria by documenting in writing the reasons for the deviation and attaching a copy of that document to its next annual report to DTED. The 2000 changes also allowed, after a public hearing on this question, the grantor to set the wage and job goals at zero if the creation or retention was determined by the grantor not to be a specific goal of the subsidy. Communities need bring their business subsidies criteria into compliance with Statutes by May 1, 2003.