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HomeMy WebLinkAboutResolution 8509 RESOLUTION NO. 8509 CITY OF MOUNDS VIEW COUNTY OF RAMSEY STATE OF MINNESOTA RESOLUTION ADOPTING BUSINESS SUBSIDY POLICY WHEREAS, Minnesota Statutes, Sections 116J.993 through 116J.995 (the "Statutes") require the adoption of criteria for the granting of business subsidies as defined in the Statutes; and, WHEREAS,the Mounds View City Council (the"City") has determined that it is necessary and appropriate to amend and adopt a business subsidy policy pursuant to the Statutes; and, WHEREAS, the City has performed all the actions required by law to be performed prior to the adoption and the approval of the proposed business subsidies, including the holding of a public hearing upon published notice as required by law on January 25,2016. NOW,THEREFORE,BE IT RESOLVED, by the Mounds View City Council, Mounds View, Minnesota, that the business subsidy policy, contained in Exhibit A of this resolution is hereby approved, ratified, established, amended, and adopted and shall be placed on file at City Hall. NOW, THEREFORE, BE IT FINALLY RESOLVED, City staff is authorized to transmit a copy of the amended and restated business subsidy policy to the Minnesota Department of Employment and Economic Development in accordance with the Statutes. Adopted this 25th day of January, 2016. •e Flah- , ayor ATTEST: j1A11(1/1424 James Ericson, City Administrator (SEAL) 473187v3 AMB MU205-13 MouNi)s 1 VIEW Business Subsidy Policy Amended: (Expected) January, 2016 City Council Adopted: (Expected) January, 2016 EDA Adopted: (Expected) January, 2016 Original Adopted: City Council May, 2003 Economic Development Authority May, 2003 City of Mounds View 2401 County Road 10 Mounds View, MN 55112 763.717.4029 City of Mounds View Business Subsidy Policy Amended(Expected)January 2016 Page 1 of 8 Table of Contents I. Purpose 3 II. Definition of"Business Subsidy" 3 III. Public Purpose Objectives of Business Subsidies 5 IV. General Policies for the Use of Business Subsidies 5 V. Guidelines for Commercial/Industrial Business Subsidies 6 VI. Subsidy Agreement and Reporting Requirements 7 VII. Subsidy Application Process and Procedure 8 City of Mounds View Business Subsidy Policy Amended(Expected)January 2016 Page 2 of 8 CITY OF MOUNDS VIEW POLICY AND PROCEDURES RELATING TO THE USE OF BUSINESS SUBSIDIES I. PURPOSE For the purposes of this document, the term "City"shall include the Mounds View Economic Development Authority (EDA). The original Business Subsidies Policy was adopted at a joint meeting of the EDA/City Council on May 12, 2003. The purpose of this policy is to establish guidelines and criteria regarding the use of business subsidies, such as tax increment financing (TIF), tax abatement, and other business subsidies for private development projects within the City of Mounds View. This policy shall be used as criteria for providing subsidies, in addition to the requirements and limitations set forth by provisions of Minnesota State Statute 116J.993 to 116J.995 (Minnesota Business Subsidy Law), and by the City's Public Financing Policy and Application and any other policies and guidelines of the particular form of subsidy. These guidelines shall be used in processing and reviewing applications requesting business subsidies assistance. The fundamental purpose of business subsidies in the City is to encourage desirable development or redevelopment that would not otherwise occur "but for" the assistance provided through business subsidies. It is the intent of the City to provide a minimum amount of business subsidies, as well as other incentives that the City may deem appropriate, at the shortest term required for the project to proceed. The City reserves the right to approve or reject projects on a case-by- case basis, taking into account established policies, specific project criteria, and demand on city services in relation to the potential benefits to be received from a proposed project. Meeting policy guidelines or other criteria does not guarantee the award of business subsidies. Furthermore, the approval or denial of one project is not intended to set precedent for approval or denial of another project. Whenever possible it is the City's intent to coordinate the use of business subsidies with other applicable taxing jurisdictions. II. DEFINITION OF "BUSINESS SUBSIDY" The definition of a "business subsidy" is in compliance with the current Minnesota Business Subsidy Law and is subject to any law changes that may occur. As defined by Minnesota Statutes, a "Business subsidy" means a 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. Mounds View Business Subsidy of Polic Y Amended(Expected)January 2016 Page 3 of 8 1 The following forms of financial assistance are not considered a business subsidy: 1. A business subsidy of less than $150,000; 2. 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; 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; 4. Redevelopment property polluted by contaminants as defined in section 116J.552, subdivision 3; 5. Assistance provided for the sole purpose of renovating old or decaying building stock or bringing it up to code and assistance provided for designated historic preservation districts, provided that the assistance is equal to or less than 50 percent of the total cost; 6. Assistance to provide job readiness and training services if the sole purpose of the assistance is to provide those services; 7. Assistance for housing; 8. Assistance for pollution control or abatement, including assistance for a tax increment financing hazardous substance sub district as defined under section 469.74, subdivision 23; 9. Assistance for energy conservation; 10.Tax reductions resulting from conformity with federal tax law; 11.Workers' compensation and unemployment insurance; 12. Benefits derived from regulation; 13. Indirect benefits derived from assistance to educational institutions; 14. Funds from bonds allocated under chapter 474A, bonds issued to refund outstanding bonds, and bonds issued for the benefit of an organization described in section 501(c)(3) of the Internal Revenue Code of 1986, as amended through December 31, 1999; 15.Assistance for a collaboration between a Minnesota higher education institution and a business; 16.Assistance for a tax increment financing soils condition district as defined under section 469.174, subdivision 19; 17. 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; 18. General changes in tax increment financing law and other general tax law changes of a principally technical nature; 19. Federal assistance until the assistance has been repaid to, and reinvested by,the state or local government agency; 20. Funds from dock and wharf bonds issued by a seaway port authority; 21. Business loans and loan guarantees of$150,000 or less; 22. Federal loan funds provided through the United States Department of City of Mounds View Business Subsidy Policy Amended (Expected)January 2016 Page 4 of 8 Commerce, Economic Development Administration; and 23. Property tax abatements granted under section 469.1813 to property that is subject to valuation under Minnesota Rules, chapter 8100. Notwithstanding the definitions listed above under 1 and 21, "business subsidies" as defined also includes the following forms of financial assistance and is subject to this policy, with the exception of a public hearing as the amount of assistance is less than $150,000, with limited reporting forms required: 1. A business subsidy of$25,000 or more; and 2. Business loans and guarantees of$75,000 or more. III. PUBLIC PURPOSE OBJECTIVES OF BUSINESS SUBSIDIES In accordance with the Minnesota Business Subsidy Law, the City will consider using business subsidies to assist private development projects to achieve one or more of the following public purpose objectives: • To retain local jobs and/or increase the number and diversity of jobs that offer stable employment and/or attractive wages and benefits. • To enhance and diversify the City of Mounds View's economic base and to increase the tax base. • To achieve development on sites which would not be developed without business subsidies assistance. • To remove blight and/or encourage development of commercial, industrial or high priority areas in the city that result in higher quality redevelopment and private investment. • To encourage the revitalization and redevelopment of the County Road 10 corridor. • To encourage additional unsubsidized private development in the area, either directly or indirectly through "spin off' development. • To offset increased costs of redevelopment (i.e. contaminated site cleanup, demolition expenses, etc.) over and above the costs normally incurred in development and when the unique physical characteristics of the site may otherwise preclude private investment. • To finance the costs associated with public infrastructure and public facilities. IV. GENERAL POLICIES FOR THE USE OF BUSINESS SUBSIDIES A. Business subsidy assistance will be provided from the City, by a "pay-as-you-go" note method, to the developer if the business subsidy is tax increment financing or tax abatement. Requests for up front financing will be considered on a case-by- case basis. City of Mounds View Business Subsidy Policy Amended (Expected)January 2016 Page 5 of 8 B. It is the intent of the City to provide the minimum financing, as well as other incentives, at the shortest term required for the project to proceed. C. A developer requesting business subsidy assistance must demonstrate, to the satisfaction of the City, sufficient cash equity investment in the project as required within the City's policy for the particular form of subsidy. D. Business subsidy assistance may not be provided in circumstances where land/or property price is demonstrated by the County Assessor to be in excess of fair market value. This would normally be where the acquisition price is more than 10% in excess of market value. Determination will be provided on a case-by-case basis. E. Developer must be able to demonstrate to the City, or, if applicable, to the underwriting authority, a market-demand for a proposed project. F. Business subsidy will not be used in cases where the subsidy would create an unfair and significant competitive financial advantage over other similar projects in the area. G. Business subsidy will not be used for projects that would place extraordinary demands on city infrastructure and services. the developer shallprovide adequate financial guarantees H. If requested by the City, p q to ensure completion of the project, including, but not limited to: minimum assessment agreements, letters of credit, cash escrows, and personal guaranties. I. Each developer must be able to demonstrate to the City's satisfaction, an ability to construct, operate, and maintain the proposed project based on past experience, general reputation, and credit history. J. If requested by the City, or its consultants, the developer shall provide sufficient market,financial, environmental, or other data relative to the successful operation of the project. The requested information will be used to evaluate the necessity of the requested assistance, and/or establish the "but for" test. K. Projects receiving business subsidy approval from other affected taxing jurisdictions i.e. (County, School District) will be more favorably received by the City. V. GUIDELINES FOR COMMERCIAL/INDUSTRIAL/RETAIL BUSINESS SUBSIDIES A. Business subsidies may be considered for retail or service businesses if it will result in satisfying a clear strategic goal of the City, including, but not limited to substantial City of Mounds View Business Subsidy Policy Amended(Expected)January 2016 Page 6 of 8 increase in tax base and a significant improvement in a redevelopment project, and quality employment. B. The project must be consistent with the City's Comprehensive Plan, Land Use Plan, and Zoning Ordinances. C. The project must result in the retention of existing jobs that would be lost "but for" the proposed development or result in an increased and diversification in local jobs. Business retention jobs will be considered on a one-for-one match to job creation only in cases where job loss is specific and demonstrable in accordance with the Minnesota Business Subsidy Law. D. Specific wage and job goals will be determined by the City giving consideration to the particular form of the subsidy, nature of the development, the purpose of the subsidy, local economic conditions and similar factors. The recipient will have up to two years from the benefit date,which is the date the recipient receives the subsidy, to meet the job and wage goals established by the City. The City may, at its discretion, extend the deadline for up to one additional year if the job and wage goals have not been met within two years as per State Statutes. E. The minimum wage for a job to be considered a new or retained job shall be the greater of$15.00 per hour or 150% of state or federal minimum wage, exclusive of benefits required by law. Deviations from the job and wage goal may be considered for projects that will result in a significant increase in tax base. Deviations less than the wage floor will be considered on a case-by-case basis and in accordance with the requirements of the Minnesota Business Subsidy Law. F. Business subsidies will not be used for commercial/industrial/retail projects that have a history of inconsistent compliance with applicable environmental rules and regulations. VI. SUBSIDY AGREEMENT AND REPORTING REQUIREMENTS Each company receiving a business subsidy shall be subject to the subsidy agreement and reporting provisions and requirements set forth by the Minnesota Business Subsidy Law and summarized below: A. Progress Reports The recipient shall file a report annually for two years after receiving the subsidy or until all goals set forth in the subsidy agreement have been met, which ever is later. Reports shall be completed using the format drafted by the State of Minnesota and shall be filed with the City no later than March 1 of each year for the progress made the previous year. City of Mounds View Business Subsidy Policy Amended(Expected)January 2016 Page 7 of 8 B. Maintain Facility The recipient agrees to maintain and operate its facility at the site where the subsidy is used for a period of five years after the date the subsidy is provided. C. Failure to Comply Businesses failing to comply with the subsidy agreement will be subject to the terms of the individual agreement, repayment requirements at the rate established within the Minnesota Business Subsidy Law, and be deemed ineligible by the State to receive any loans or grants from public entities for a period of five years. VII. SUBSIDY APPLICATION PROCESS AND PROCEDURE A. Application for business subsidies shall be made using the Public Assistance Application provided by the City of Mounds View Economic Development Coordinator, or designee. B. The Public Assistance Application shall request information required within the City's policies including but not limited to; a detailed description of the project; a preliminary site plan;the amount of business subsidy requested;the public purpose of the project; the number and types of jobs to be created; the wages and benefits to be paid new employees; a detailed project budget with verifiable funding sources and uses; and a detailed operating pro forma, if applicable. C. The applicant agrees and acknowledges to pay a non-refundable $3,000 Public Assistance Application Fee. D. At the time of acceptance by staff of the Public Financing Application, the applicant shall deposit$10,000 with the City to cover attorney and consultant costs incurred as part of establishing a TIF district or abatement, drafting and negotiating a development agreement, and conducting any fiscal analysis that may be required to meet the requirements of utilizing any public financing. If additional expenses are incurred beyond the $10,000, prior to the execution of a development agreement, the City shall notify the applicant in writing and the applicant will be required to deposit additional funds upon notice. E. Following a review by appropriate City Staff/Consultants the application shall be referred to the Economic Development Authority for further action. F. Before granting a business subsidy that exceeds $150,000, the City shall provide public notice and hold a hearing on the subsidy unless a hearing and notice on the subsidy is otherwise required by law. City of Mounds View Business Subsidy Policy Amended(Expected)January 2016 Page 8 of 8