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7 Business Subsidy Criteria
CITYOF HASSE 7iq Center Drive, PO Box 147 mhassen, Minnesota 55317 Phone 612.937. I900 'eneral Fax 612.93Z5739 · ineering Fax 612.937.9152 tic SafeO, Fax 612.934.2524 h www. ci. chanhassen, mn. us MEMORANDUM TO: Scott A. Botcher, City Manager FROM: DATE: SUB J: UPDATE Todd Gerhardt, Assistant City Manager September 22, 1999 Business Subsidy Criteria The City Council should be aware that we have six buildings under construction which are waiting for the approval of the Business Subsidy Criteria~ The criteria must be approved before so they can enter into their Private Redevelopment Agreements. If I could be so bold as to ask the City Council to approve the proposed Business Subsidy Criteria Monday. night and schedule additional meetings if the Council feels a need to review the criteria in more detail. We are up against the wall with these six buildings. The Private redevelopment agreements are to be signed before the shell of the buildings are started. The 1999 Minnesota Legislature enacted a new law requiring Cities to establish a set of Business Subsidy Criteria (see Attachment #1). Under this law, cities cannot provide TIF assistance of over $25,000 until a Business Subsidy criteria Plan is 'approved. Mr. Ron Batty, our EDA attorney from Kennedy & Graven, has prepared Business Subsidy Plans for other MinnesOta cities and therefore staff asked him to prepare the attached draft for council consideration (see Attachment #3). The contents of this plan meet the state's minimum requirements as addressed in Mr. Batty's memo dated September 22, 1999 (see Attachment #2): Also attached is a copy of the city's current TIF Policy that already includes most of the criteria required by state law. Mr. Dan Greensweig from Kennedy & Graven will attend Monday night's meeting to present this item as Mr. Batty, Scott and I will all be out oftownJ Monday night's meeting is a public'hearing and therefore the Mayor should open the public hearing, ask Mr. Greensweig to give the staff report, and accept any public comment on the plan. Following that, the public hearingshould be closed and the council has the option to either, approve the plan, amend the plan, or table action to the next meeting. If council members have questions about the document prior to Monday evening, they should feel free to contact Mr. GreenSweig directly at 337-9231. City ofiChanhassen. A erowine communin, with dean.lakes, attatitv s?hools., a &a~v~ine dow~to~ni_th/iv~n~_~usi~esse, si'an~ 'beauti~dq~i.ks. A ~i:eat aia?i to live, Work, _a~d hlag Scott Botcher October 21, 1999 Page 2 ATTACHMENTS 2. 3. 4. 5. Minnesota Statutes Regarding Business Subsidy Plans Memo from Ron Batty dated September 22, 1999 Proposed Business Subsidy Criteria City of Charihassen TIF Policy Notice of' Public Hearing Mr. Greenwweig. g:\admin\tg\business subsidy 1 .doe EDA Director's Comments: I agree with Todd's recommendation, including the recogniti°~of~ CITYOF CHANHAS EN 7iry Center Drive, PO Box I47 ~nhassen, Minnesota 55317 Phone 612.93Z I900 'eneral Fax' 612.937.5739 ineering Fax 612937.9152 /ic Safety Fax 612.934.2524 b wu'u: ci.&anhassen, mn. us MEMORANDUM TO: Scott A. Botcher, City Manager FROM: Todd Gerhardt, Assistant City Manager DATE: September 22, 1999 SUB J: Business Subsidy Criteria The 1999 Minnesota Legislature enacted a new law requiring cities to establish a set of Business Subsidy Criteria (see Attachment # 1). Under this law, cities cannot provide TIF assistance of over $25,000 until a Business Subsidy Criteria Plan is approved. Mr. Ron Batty, our EDA attorney from Kennedy & Graven, has prepared Business Subsidy Plans for other Minnesota cities and therefore staff asked him to prepare the attached draft for council consideration (see Attachment #3). The contents of this plan meet the state's minimum requirements as addressed in Mr. Batty's memo dated September 22, 1999 (see Attachment #2). Also attached is a copy of the city's current TIF Policy that already includes most of the criteria required by state law. Mr. Dan Greensweig from Kennedy & Graven will attend Monday night's meeting to present this item as Mr. Batty, Scott and I will all be out of town. Monday night's meeting is a public hearing and therefore the Mayor should open the public hearing, ask Mr. Greensweig to give the staff report, and accept any public comment on the plan. Following that, the public hearing should be closed and the council has the option to either approve the plan, amend the plan, or table action to the next meeting. If council members have questions about 'the document prior to Monday evening,. they should feel free to contact Mr. Greensweig directly at 337-9231. ATTACHMENTS 2. 3. 4. Minnesota Statutes Regarding Business Subsidy Plans Memo from Ron Batty dated September 22, 1999 Proposed Business Subsidy Criteria City of Chanhassen TIF Policy g:\admin\tg\business subsidy I .doc 5'~, of Chanhassen. A e~vwinf communin, with &an lakes, aualit~, schools, a charming downtown, thriving businesses, and beautiful oarks. A great vlace to live, work, and ola~. Minnesota Session Laws 1999, Chapter 243, Article 12, Business Subsidies Page 1 of 6 [ Ho.me ] [ B_u_si~ness. Ass_is_ta_n_ce_ ] [ !_ntem_atjO~nal_ Trade As_~s_i_s,t_ance ] [ Comm.u.n_ity. Assistanc~e ] [ Explore Mi~eso~ ] [ Minnesota Economy ] [ News & Eyents ] 3The following was excerpted from www.revisor, leg.state.mn.us/slaws/1999/c243.html, July 30, 1999. Minnesota Session Laws - 1999 Key: new language CHAPTER 243-H.F.No. 2420 ARTICLE 12 BUSINESS SUBSIDIES Section 1. [116J.993] [DEFINITIONS.] Su~div.i~sioB ._lt. [SCOPE.] FQ~._t~he p.u__rposes_of _sect%0ns 1 ! 6._J. 993 --to _l~16J~. 9_$_5~ the ter~s de~i~e~. ~ ~his_ section have the mea~iDg~ _~ive~. them, Subd. _~. [BENEFIT DATE.] '~DDn~fit ~at~, means .th~.. date that th~r~ciDient..rece}_ves ~ bu~%ne~s_.subsidy. _.If th~ ~si~ ~pb~ %Dy~_~Yg~9_p~rch~sg~ lease, physiQal~.e_qu%pment thee g. he bengfit date begins, when the recip~.eng p~ts the_ ~qDipmo~t._i¢~o service, If.the business sub~.%~y ~__~0.r ~p~.Qyem~g~ gQ p~opert3, ghen_~th9 benefit date refers ~9 the earliest_da~.Qf (1) .~ben the Smproyg~e~s a.r~__~in, ished for the ent%~e bgsin~D ~W%% } ~%~9_ 99~up~. th~ _ SB~O ...prop~rt~ ..~he grantQr_ may Subd~_}, [BUSINESS SUBSIDY. ] ~[~B~ig.~S.~ ~gh~%~Y[L "DBbsi~.~¢_aBs_g~_g_e Q~iQ~_a} gDyern~ent a_qe. nc~ grant,_ infra~tr3~_gu~_e_, _g~9 D~iD~iP~_kD~og.ng _Q.f a !_O.~D .at .ra~gs _bel0~ unde~ an~_lg~B~ leA~.e~gr_ pthe. A.9~_%igat.!_on, 9~ aD~ p~efer.eBtia% b. us~D~ss (2) assistanG~__ghag_is g~Deral.!y ava}l~bCe t.Q all businesses 9r.~9 ~ .g_eD~r~! ~s~...9~_.~i~l~r .bu~!ne~.SDS such as a line ~f bCDines.s,__~iz.e., !_Q_c~tiQg.~_0r~simi}ar ~9Derg! criter~ia; http://www.dted.state.mn.us~usasst/19991aw.html .......... 09/22/1999 Minnesota Session Laws 1999, Chapter 243, Article 12, Business Subsidies Page 2 of 6 _( 3J__~_ub~l_i__c_ _i_m~provements to buildinqs~Q.r..._._la~nds ow_ne_d__b3r _t_h_e_ stag.~_ or__l__o.c_al q@_v. ernment that serve a public p_u._r, pose and do not p_r.~n_c_ipally benefit a single business or de_fined qrouD of_ b_Bsin_e__sse~s at the time the improvements are made£ _[_.4..) r_edeve_lppment propert¥_~ol__l_ut_e~ bv contamin_a._n__t_~__a~s_ .def_%n~d__in~ s~__c_t_i_ on__~l~l~J_.552, subdivision 3;_ (~)__ ~_..s_i~ta_n_c__e_Drovided for the sole purpose of renovating ol__.d_ o~r_._d~e_c_ayi~ building ~st_o_~k__ or__b_r__iD~qing__i_t_ Bp_to code pr~ov~de~.~ t_h_a._t_ t~he_._a_ ~s_s i s__t_a_n_9_e i_s~_. ~__q_ua~_l t__o _._o_r___!_e_s_s~than~_5 L6) _~ssi_s_tagce_provided to orq_a_nizatiqn__._s__whose primar.ff missi_o_.n__._is__to~_r_Q¥_id_e~_jo~b_r__e_adiness a_.n_d_tr_ai_ni~q services if the ~.Q!~purpose of the assistance is to provide those services£ (7) assistance for housing; (8J.__asD__i_~s_t~.ge fo.~_~pollution control or abatement[ _( 9 ) _~.ssi~_t._an__ce _~f_9__r e~n~_e_r.q¥ conservation). _(10) _ t_ax [e~u__c_t_i_on~s__r_esul_ti._n~ frq_m.__c_o_~[ormigy___w._!th tax la.w_; ( 1 ~) _wQrk.e.r_.s! c_omPen__sa_t..!on~aD_d___u__n~emplo _Yln._e_n__t compe_n.sat~i, onj ~ 120 .bene_f_i_ ~ s de.r.ive_d__f_rpm .rqgu_l_at~io_n3 .QI$) indirect b~e_n_.ef~i~ts__dori~v~e_d~__f__r_p_m a_ss_~s_ta~nce _t~o educational_ ins _t_ i tu~!p~nsl ( 14 ).. fun_ds _fro_m_ ~bon_d_~_ all_oq~_ted un.d_e_r__ ch_a~_t.e__r_. 4_74Aj ( 1.5 ) _.a__s_sistB.nce_ .~_o.r a~ .gQl~labora__t_i_on %ondig_ion~_d__is_tri_qt~ as.. clef in_e j_ .undey._.s__~e_ctiqn_.J~69.17~ ..... ~ubdivisi_o_~ 19;. purchase of the site and in site preparation is 70 percent or mor.e o_f__the_ asses~pr'_s__.¢urre_~_t ff_ear_'_.~, est~_m, Ated ma~_k.et v_alB9 and (1~}_ gene.ral qhan~g_e~__in__t.~ inc.r_._emen_t _f_.iBanci~ng. law and othe_r genora% tax_._ l_a~. ~ban_g_e_s__ of_ _g__pr~_nc~al Su~d.. 4. [GRANTOR.] "Grantor" means any_st_~te qr_._l_oca_l go~ r~gme~n t. gge _n..cy- _~w_i ~_h__ t h_e_.__agghp_r_ %gy~ .t~_o_ Subd. 5_. [LOCAL GOVERNMENT AGENCY.] "Local ~9_v_e~n_ment a. gencY_.'J ._i_n._clu_~d_es_ a_ s_ta_t_u_tpr_y- QK__home_ [_u. le cba. r_t~er_~i_._t.y~ hous_in_g agd u~d_ey_e..~opmD.n~t au_gbority,_ t_@~n, couD~ty~ eqon.om!.G dey_elop~ent_ _a_u_tho_r._i ty~ Co_ _mm~un~.ty_ deve__!op_men¢~, agencff nonprofi~ _en¢.ity .c_reat_ed bff__.a lo_c. gl~. qov~_.r._nm_en~__~ge~ncy_,, or any other._ egt_i_ty_._created bY_. or_~D_tho[%_.ze_d bi; a~loc~.! goyDr_nmeng, with aBthor.!t_y _to p.~Ovi~_.e_, b~us!Dess s__ubsi_Qi_es ._ Subd. ~6_. [RECIPIENT.] '_'_Rec_i_p. ient'~'.__mean_~__._a_nff fo~r_Pro, f~it or nonpr.of i_.~t, b_u._s_!ne .s_s__e_n_t_i~ gha~t~._r__e.c__ei_.v_e_s a _!p~s_ino~.S__sub~i_dy. 0n!y _nonpKofi_t_...e_nt$..t__i_e~s__w_~i_th_a_t__l_e_~s_t_ 1_0_0 fu_ l_l_-_t~im~e __e_quiya~__e__nt p o s_i._~t !o_ .n s~_a.._n_d _ w_i_ ~ h_a_ _that. ex_c.e~ed_s ._ge_n. __t_o_o_ne_, ~.e_ter~m_i.n_ed 9n_.__th__e__b_a_sj s_9__f fu_l.ll_t im_e eqqiva 1 ~g ~t pos i t__i__on_s.~_ a~re__inc 1 u__d___e_d__iD_~th__i s~ d_e.~f in!ti_on .. Subd.~_._7_. [STATE GOVERNMENT AGENCY.] J[_S___tate goyer_g._m, en_t_. agency.!'., moa_ns ~nY__ st__a_t~e_a_g.ency, that has the authorit¥_~p_aw_a_r.d bu.s ine.s._s _s.. ubs i._d.i_ e s_._ sec. 2. [116J.994] [REGULATING LOCAL AND STATE BUSINESS SUBSIDIES. ] S~_b..__d_i_v_i_sjon__!_.;_ [PUBLIC PURPOSE. ] _A__b_u_s__i__n_.e_ss~__s_ub~s_i_._dy me__e t _a_pub_l_. i c_. p.u_rPo~._e ~og_~.e_r_t__h_gn i_n_c_r__ea s i_ng__tbe _t_ _ax r_e~te.n_.~__i 9~n DaY _o_.n_l~y__~%e~u~_e~ a~s_..__a_pu_~_l~_i__c~pu__r_po_s e _~_n_ .__ c_a..~D s _.w._h_ere j_o~ b_ ! o S s__i._s_ ~..rAm~._i~n e_n_t Sub~ ..... 2_. [DEVELOPING A SET OF CRITERIAi] A_b~.s. ines__s sgbs id_y_ m_ay__np.~_~be c/.r__anted._ u__n~!_% ___th~.__.qr.anh_o_r._ ha~_ .adoPted cr.i teKia _a_~.t_er g_pub_l..%_c bearing___f_o_r _a__w_.a_rdigg.__bus&Bess_subs_&dies- that complY_, with_.._t_hi_s .s__e_c_tio__n. The._cr!g..¢_r__~a _m_u.__sg iDclu_d_9_ a~ commi_s s i og.~¥ o f~__ _t37.ade__.~_n_d e c o~n.o_mj, _c 4ox.e! op_ra~D_t m~ay__ a s~s i_s t~.l_oc_a~ 1 http://www.dted.state.mn.us/busasst/19991aw.html 09/22/1999 Minnesota Session Laws 1999, Chapter 243, Article 12, Business Subsidies Page 3 of 6 gover.__nm_eBt a~t~_n__c_i_es i_n dey~el@p.i_ng ..c_rite~ria. Subd. 3. [SUBSIDY AGREEMENT.] .(--al A recipient__mu_s~t_ enter into~ a. s_ubsidy_ gg_r_~.e~ent wit__h __t_he -i_n c_l u d_e_s_..._ (.! L_a _des_.qr_iption_ qf__~.h_e_._s__ub~_s_id¥, in_cluding t_he _.a_._m. pu._n_t__.a_n_d type of subsidyj___a_nd type__of di_st_r~i_c_t_._i_f~ .the~_s_u_b_sidy i_s t_ax~ i n_c r emen~t___f_iD (_2._)__a s__t._ate__m_e_n_g_ _.9_f._ t_he public .pu__r. poae__s_._f_o_r the subsidy (3J_g~oal_s___fp_r thD__s~._u~._sidff2~ 1_4) a descript_iQ_n__p~f the finan_c_iB_!_~Q_bli_qat!on of _the recipient if the goals are not metL i~l a statement of w_hif the subsidy_iD nee.d~e.~3 J 6 ) a commitment to continue _op_e~ra_tions a_t_th_e__s_i_te_wh_e_re t h e_. s_ub s i dy_ _i_s u~s e d_ _f Qr. _a_ t~l e__a s t f_ .i_y9 if ea_r ~s_ a f t e r _t_be _~e_n-e~_i_t _da te3 17_3. the name and address of the pare_nt ¢orpor_a~ion of__t~_e [e.c_ipie__nt~_ ~i.f any3 -an_d .(8_)__._a_ list_, o_f_.all financ.}al as_sist&n.ce_by..a_ll grantQrs__for the proj_e~ct. _(bi Busin~s___s_ subsi~.di~s~. _in_the fQrm..of__grants must be s~tructur__ed_ a.~..~orgivable_!o_a_Ds_._ If a bu$!n_e._ss s_ubs%dy is s.t.r~ctu_r_ed a.s _a forg_i_v, ab_!e. _loan, t.h_.e_..a_gre___e_m~e_nt m~usg, state, the fai_~_-ma~rket .v_alue of the_s..u_b_.s_i_dy to the.._r, eGiPien.t, inq!u_d_i.ng the value_ of. c_.@nveyi_ng_.pr_opertf~ at.,l_e.s_s--than a_ fgi~ .market price, other in-kind ~b.e~efit_s t.o_.t.h__e_. _re_cipien~., .icj I~_.-a._b_usi_nes_s _s~b~s_id~ benef__i__t_s _more than. one._r_ecit2ient, the_ .g_rgB~o_r ~.u_ S_t_ ~s_sign .a pr__opQr_tiQn of the.. _business ~subs_i~y.. go e.a..qh_ ._r_eciRi_en_.t__that signs_ a s_ubsid3A agre_e_men~t ._ .. The !0r_@pQr_t._ion as~es_sed tq._e_ach rec_ipieB~..._mu_st_ref__lec.t____a___rea~@nab_le_.es_%i_mate .of the r_ec__ipie_n._tJ_s__._s_hare of t_he_~tp_t_gl_ b_ene_f_i_t~__O.[.__t_h_e_proj ec_t: (~). _T_h_e sta.t-e_.O%__l_ocal go!~rnm_e_nt agenqy_._a_n~_ the _re_ci~pi.e_n__t mu_st both~.si_gn the su~s_i_~y._agreement._and, .if the g~aDgo~ Js a 1oQa!_.government.agency, the _agreement must Re approved by the %oca!. e!ecte_d governing _body,_ _except f_o.r_, t_h~ .St. Paul port AU thor i t_v__aDd a s eaw~alf_ por_t ._ ~u tho_r i tff~ ~u_b_d_. 4. [WAGE AND JOB GOALS. ] The__sDb._s..~.dl( agre~Dent_,- in add!.~io_n to .a_.ny_ .o_ther goa_!_~..r__~m_ust incl_u_.d¢.'._ _il) goa._ls for the nU~ of_jobs cre_at_~e.d~_, which m~._ i_~D~lD~q ~p~rage_ goa!~.. n_u__m~..e_r of~a~r_t_- time __o.r__~f_u31_-time j__o.b_s_~ pr, in q-a~_es_wher~_.jo~ loss i_s___i~i_nent~_gn_d demonstrabl_e, goals ..f_oK _th9 g_u_.r~_..~ Q~ jobs r_et_ainedL_and (~J__w._a_g_e_ goals _[Or__the jobs cueat_ed or retaine~.? _I__n~additi_~on__t_o other___Sp_e_c_i_fic go.al time fra~es, the_ w_ag_e and j_o_b .go_at._s_.m__u_._st cont~i.n__s_pecific goa__!s_ to be. g~tai_ned within tWO years._of_the ben.e~f_%t date. ~u~d.._ 5. [PUBLIC NOTICE AND HEARING.] (a)~.._Befor~e__granti_ng a busin_e_ss~ sub_s_%..dsi_that ex~9~s_$50~0,QQ0~_for a .s_tate_ gov_ernm~en_t grantor_g_n_d_ ~i_0Q.,_0__0~0 fo_r a ~l__o_.Ga! qove_rn_m_~ent gran.tq_r~ the_ gran¢o..r_ mus_t_provide p_ub~lic n_.o_t__i__c_e ~__nd a be_g_rj_n_q_on the__su~b~_s_.i_dy. A public hearing and_~n_o_t_i_ce under___..t-h!_s_.~subdivi~s.%_o_n i_s__not requi_r_ed if a_he~rin~q..g__n_d .noti_ce_o~n_ the~ sub$&~!f ._i~s_otherw_i_~se ~r_¢_quired ....by __(~) Public notice of a pr_p_p.Q_sed bus~iD.e_s_s__s_ubsid~_ und_e_r_t_hi_s subdiv~i.s_.ioD_ by~_a.._s_t_gte gove_r_n__m_e_n_t-~grantor__m_.~_s_t_~b_e p_ublishe_d in ~h_e_ S_t_a_t_e_Re~i~_s_t_e.r_ .... Pub__l_i._c__ ~n_o_t_ i _c__e_o_f a~ _D .r_._opQsed. bus in..e_s_S s.u_¥__s_i~_y __u_n~de~r_ _t_h_i_s_s__u_bd__i_¥_i_sio_n_ by._~_ l_O_c_al _gOY~rnmeD_t __gra_nt_Qr mu s~t__~_C_u_bl _i_$_h_e_d__ i_n~ a~ l_o¢_a_ %__ .n_ _e_w~p_ap e r. _.p f_.~ en e~r al__9 i r¢~ 1 a t i oB_._ ~b~ Ruhl_-ic nog_i_ce _m~u_st i_de~ng_i_f.y_g_he lo.¢gt_i..0n_.at.~_w.h_ich i__n~.0rmatign__ about_ th__e_.bU_s_ine_ss, sub__~.id_y_, inclu~-i.n~ _a~ cop_y__of_ th9 _subsidy a_qree~D_t_ .... is_ ava%l_a_b_.l_e~ .... Publ__i_.$_h_e_d___n_o. tigD s..h_._0uld suf~f-i .c_ie~nt ly._c_on_~p-i_c_u0n ~s __iD_.s_-i~9_ ~an~j_ P! ac~eme_nt_ So_ ~d-i s_t!_ngui_sh the .B.o_tic__e %rD_re_the sur~r_o__u_.n_~_i_n_g text_;.._ The gr~_nt_or_._mu~s_t_ma_ke_ inf_o~_m_a_t__ipn a~v_a_i,la_b..1.e_ in pri_n_g.9._d .pa_pe~.__c_.Qp_ies_a_nd .... if p0._s.s%ble~ _oD the. __IBt~ernet. _ .T_h_e_ _qoyernme_~n~t_._aqe_ncy__m~u._s__t.. prg_y_i_de~_ at l_egs, t_ a bed ~. d_gy n_o t i G _e_ f~o._r__t he _oub_! i._c.__ke a_r i ng~. http://www.dted.state.mn.us/busasst/19991aw.html 09/22/1999 Minnesota Session Laws 1999, Chapter 243, Article 12, Business Subsidies Page 4 of 6 _(.c J_ _TI!e_ ~pu~b.~!c__n. gti_g_e_mu_s t__inc lg~__ the~_a__t,..e, t ime~ _~n_-d pl_a.~ ~_f.___the __hear_i~g_, .(-d]____T_he_p_u~_l~c hea_r.in_~[~by a state g_over_n_m_e_.n_t_granto__r b e__ he_l_d_ _i n__S_g. P_a__u_l. su_b_d_._~6._ [FAILURE TO MEET GOALS.] T_h_e__s_gbsidy~a.~Lr__ee,_ment _m_.u_~s_t___spe_c_i_f~v the recipie~_t_'_ss o_bl_iga_ti_~_n~if _th_~___r_9_cij~i_e_n~__d__o~_~_ B_o__t__f_u_!._f_i_l_l__~the~a_greement. At a minimum~ the _agreemeng_.m_g_s_t_ re_qui__r..e,__a~r_ecip±ent failing to meet subsidv agreeme~_t_.goals to p_ay_b~_ck__~.h_e__a~s_i_s_tan%e_ plus interest to the 5lr_a._n_t_or_p_rovid_e_d_ tha_g, repa_Yment~m_~¥ b_e_prorated to reflect p_a__rt_ial g.o_ak~_, T__h.e ~n_.g~res_t,_ rat_e _mugt b__e_ se~t _a_t_ t,_h_e impl~_c_i_t _price de_f_la,t__o_._r d__e,_f_in_e_d___un_d_e,_r~s_.e_c__t ±_Qn~ 2 75.70 .... subd_i_y_i_s ion 2 ...... _T._h_e_ g_r_an~_o.__r.~ _a.~_te_r__a__p.u__b_l. i c__h_e~ar~i_nG~ ma_~_e, xt__e_n~__.__f_or up _t~o._gne~ear ,t__h.e~p_e_r_i o__d__fo_r___m_ee~t_i_n_g t_h_e__g_o~_l._s_pr_p_v_i_ded _i_n.__a_ subs i _dAf_..~Gree_men_t_._ ~__r_ec_i_p_ie__n-_t_ tha_.t,_~a_!!_s _to___mee_t___g._he te,~.~_s_~f a_S_U_b_s_i_d~f ag r e~¢_en_t__may_ _.n~ t r_.e,_c e i_v_e_ a_ bu~ i__ne s_s__ _S_Ub s i dirt _f__r_om~anAf__~_r._a_n t o~r for__~ ~q_~r_i_o...d_ o__f._f_i_v_e__y_ear_s__f_.~rom _t_he_ d_a_t,_e_~of f_a__i__l_u_re or___u_n__t__i_l__ a rec_i_p_i_e,_nt s__atisf_i_es i~_ts rejAa__vme_n_t__.gblig__a_¢_i_o_n un__d_e__r_this sub di_ v_!.s i on~_ _wki_ qh eve r_ _o c__c _U.r_s_ f i_r_s__t~. Befo~_e__a_q_rant,.O_r s_iG_n_s a _~usin_e_s_~__s_ub_sidy_a_gre,~_me,nt, the gran_tor _ .m.u_s _t _check _ wi th__ghe ~omp_i l_a_t_ i_ _o _n _a.._n.~.__summ_a. fy_ .re39or__t_ required_, b_v_.~hi~.. ~ectf_o._n tq.~dete_r_~i_B_e _i_f__gh~e re,_e,_~pient elig!ble_..t,_O receive,__a_ SCbd.~ _7~. [REPORTS BY RECIPIENTS TO GRANTORS.] (a)_A re~ilD.ien_t__~_n a_c.~e~_i__n_g~g~ee,m~n~ goal_~.~ (b)_.._A r_e.c_ipi_e,n_t_m_u_s_t_p_r__ov~ide__.i_Dformagio__n _r__e,g_a_r_di.ng__goals_ ~_n_d _r~9~.u_.l._~_f__o~_t_w_p ye~[~ ~_fte~ t__h_e,_be_n_e,_f_i_t d_a_tD__or B_n__t,~l th_e_ g.Q_a_ ~s____a_re _m_e~ ,___whi_G~_e_ver___i_s_ !.~_t_e_r. __I._f__ ~he .ggals _a_r_e no_~___m_et · gh_e_rec_i_pie.n_t _m_u_s.~_co_n_tinu__e__to 20rovide information on__th_e_ ~ubs i dy_ g_n__t_i !.. _t_he _s_ _ub_s_i_d_y _i s~_ r_ep_a_~i d_.__ _T _h_e_ !n~f ~r_m_a t i o_n_ __m_u s t _be. r e,p r9 s_eg t~.t_iv_e s__ 9~ _1_o c a_~ _ gov_e rnm_en_ t_ ~ ~Cpp_i e s forms, must_ be_ se2t. to_ .t2e_ Dommis. s_%DDqr_.an_~.the }oga! gqYe[nmen[ agency.. _gh_.a..g p~_oYide_~_ th_e_ _bu_ s_i_nes s~__subs_i__~y. __Th_e._ r_epg._r t_ mus.g i _n.c!ude_'_. _type _o.f.. -di_s_triqt_,_ i[.~the__subs_}dy~!_s._ta_x_~inc_r_e,_.m_ent___f__i_nan_c__~n_g2 (~.)_ gb_e,_b_o.u_r~y_wa_ge, of each j_9_b c_.r_e,atqd _wig2_separate b__an~d~ of ..v{2g_e.s; (}).__thC_ su_m__o_f _g_he_h_ourly_wage_s an~d__c_os_t_o._f ip_sur_ag.c_e_ pro_y_ided__.b_y~ _t._h_e e,m_ploff..e,r_, w_i.g_h separate_ban~s _(4 [__t_h_e_,~date_the__jpb _a_nd_w_age~_a_l s~w_i (5).. a_ _.s_tat. em_en_g o_f__goals._ i4entifi.ed i.2_...t_he _s.ubsi~y agreem_ent__a_nd_._a.2 upda_t_e._on _a_ghiey¢__.ment__.o_f t!~se ~_o_als; ( 6)__t,he l_oc_~t i0_n_p_f__t__he _.r__ecip_i_e_nt _p.r.~or__~o re,_c_eivinqL th_e_ b_u s_ _i_n. e s_s_. sgb_s_i d_yi _(_7 ) _.~whf~_ t.h_e_..._re _ci_P!en___t_ di_d___not,__c_o~}.e__t_e t_h_e__proj._e~ t_..O_u_t 1 i_n_e~ in__ th_e_ _s_ub_g__i_dy_... _ag_r_e,e__m_e_nt~a~t__t~he_i_~_ pre_y!_ous___l_Qcat, !D_n .... ~ f t~h_e r e _c!p i_~Bt~w._a S_ p ~ e v i_o_u_s 1.if__l~o c_a.g_e_d _.a_._t_ a_n_o_._t,.h e r_ __s_i t, e_ ._i__n (_8_) t_!c_e_ _n_a.m_e__an_d_ ~_dd~r_e~s_s_.__of~_t_h_e__p_a_r_en_t___cprp_o~_ati_Q_n (9_)_.. ~ ._%is_t Qf all-- fi_g_a_nc~i_a..! a~s_i__~.t_anc_e,_b7 a.!__¢_~_r_antq.r_s_ f_or the_ p. rgJ e_c_t; _( 10 )._9 t_h e r~i_n, f o r_m_a_t i__o_n__t h~e __cg_m~a~__i_s_s__i on e r A repqr_t_ mg.s~t._b.e_~f_ile,d_n_9__l~t_e? _tb~_n Mar_ch !._9f _ea_ch_yea~._for g_he_._D r ey_~_o_u s__ffe,ar__and_ wi t,h.i_~ __3__0 .. days__ a_f ter__g_he _ de,ad_.~in~__f o _r. me e__t_i n_q _~t h_e_ j o_b.._ ( c)_ .Fi_n.a_ nGi_a_!. _a_s._s__i__s_t_a_n-c_ _e__tb_at_~ s__ .............. 'f ........... '_'_ definition of business subsidy by section 116J.993~ subd!.v_i.s io_B _3 .... _c_l_a u_ s_ _es _(_.41,__.._(_5) ~[8_) ..... _a_n_d__(_!_6_h ..i_s _s_u bi .e__ _c t _t.o. th.e_ rePo?t_i.Dg _r_equi_r.e..men_t..s__of _.ghi_s_._.s~ubd_i_v_i_si~o.n~ _ e~_x_Ge_p__t__ th_st_ t_h_e r ep0~[_o_._f_ _th.e___ .r_e, c ip_i., en t_.mu_ s_ g_~i _n_c lude .i ..{ ! ) .._~h.e__. tlfpe_.,_ pu_b_l_ic~p_urp9_s_e,_t _an_d_~amo~u.n_t__of__tbe,_ .f iBanci_a_¢ http://www, dted.state.mn.us/busasst/19991aw.html 09/22/1999 Minnesota Session Laws 1999, Chapter 243, Article 12, Business Subsidies Page 5 of 6 assis~DB¢~, and gYl~e of d~s~r!ct if the. s~sid~ iS tax increment (2)_progress tqw~.S meeting, goa3s ~tated in the._.subsidY agreemen~ _and the_pD~ic purpQs9_o~ the assistance; of wagosj {4.[_the s~ of ~. bpurlM W~D~_ ~n~ cost of.%~lth imsuraeq~_proYidD~_b¥ th9_~mplo~er_~.%gk~parate_~g~D_ of_wa~es; (5} ~ %0.Cat__ion 0.[.gbe_~ecip~Dnq prior to Ke~eiving the assistance; ~nd Od) I~_~e req}pient .dQ~D not su~$~g i~s re_Por.kt _the local gove.[__rg~ ~nt _a. gDnc¥ mu~t._ma_i l~bo_.recipi ent ..a._~[ning..wig~iD_9~e ~eek of_t~be ro_qBi~od fi_l_!ng~ate.._ !~,_after ~4._~a_y_s o~ the [~por~_~he uoG}p~9~¢ ~%S_t Da~ ,0.,%9_grantor ~.p¢.nalty of for each sub~Dquen~ ~d~y_until .t~e_re~ort is filed. _The ~aximum SDbd._~. [REPORTS BY GRANTORS.] (a.}._~O~! government agencies Q~__g }9c~ gove[g~n~ ~itb a population o~ more than 2~0Q and D~a~e.gQve~Dt ~go~i~s., rega[d!ess Q~ v~eth~r, or not ~hey ha~e.awgrde~ gny~s}n~s~, sgbsidies, .must file a_report ~y Ap[il ~ Df. e~Qb year wJ~K ~bq Go~iR~iQger.. LO~! government agencies .of _~ _!_Q~goYer~ent ~ith~ popg%~tiog, of 2,500.or less are exempt_from f..iling this.._report _if.¢hey have not awarded a business subsidy. }n the p~g ~i~e years? The loGal gQyernment the reporq add of roci~_ients ~h~_~ ~ave no._meg their Job _and wage ~oa~.within two years and._.the s~eps being taken to bring them ~.tQ_cQmp~Q~ tQ.~oDP ~f_th~ commissione.r has not ~egoiyed the report by from an eggit_y requ.~red to report, the.qo.mrn~issioner shall issue a warning .g~t~e government, agenc3. _ If the commissioner has still not reQeiyed the r~pQ[q by ~ne ! 0~ that .same Y~r from an en~ity.~equired_._¢o_ report, _then that governm~ ageDgy Day not awar~_..any busiD.es~ ~ub~%~%e~ BBti! _%~e rep0ut.has ~en fi%ed, (b) The commissioner of.trade and. economic developmenq must provide ig~0rma%!pB RD reporting..reqBi~ments._tQ state and local gpver~men.¢ ~gq~iqs. S¢~d~ 9. [COMPILATION AND SUMMARY REPORT.] The department of ~r~dD and__economic_development..must pBb!ish a compilation and summary__p~_t~D_~.p¢lts pf the repo~s for .¢he previous calendar year by_.~ul3~ %._@[ ~ach_y.e~r_.___Th~ ~eports O[_¢he gpvexnment agencies g~ the department and the compilation and summary report o~ th9 deparement must be made available_ ~o the.public., The ~ommiss~0Der m~q coQ[d~n~g~..tb~, prodg%t}0n @~ ~opqrt~ sp .that ¢s~[ul comparisons_ ~cross.~imeperiods and. acr@sp gran~pr~ ~a~e ~9., The_Qp_mm~siP~e~ ~y ~d p~her infQrmation._~_o the. ~eport as_.~he co__mmissioner deems necessDry...to evaluat~._b~us%~_~ub~!es. Ara~ongthe ~nf_oumatio~ in {2).d.istribu~!~B of..bDs~n~s~_.~u~idy amounts b~_size.o~ the business_ s~bDidy; {3) d!~tributi. Q¢.of business subsidy amounts, by time category,__su~h~s_~ont~!yor {~) ~ ~i~gri~D.~!9¢ o[_..~u~s!~!e~. ~y ~ype..and by. p~rpose; {5) percent of ~}~ business..subsid.ies_thag, reaQhed their gQals; (6) Pe[c~nt of~.~gsin~s~.__s.ub~idi~__.¢hat__d!~not reac~ their goals ~Y.q~O 17) total dol_%a.r amount, of bu~&ness, subsi4i.qs._.~hat_d}d_not http://www.dted.state.mn.us/busasst/19991aw.html 09/22/1999 Minnesota Session Laws 1999, Chapter 243, Article 12, Business Subsidies Page 6 of 6 l~Q)_ _¢_B~r_ 9~..~art-time and full-time jo~_~ wig_b_iR_~Dparate ~_S ~_ w~_~ sl and Sec. 3. [116J.995] [ECONOMIC G~NTS.] A~Dppropriation rider in an amproRriation to the a s sp.q iB~_ej _~h_gh~ ~r ant. At a_.mi n~m_ g~,~hg_ sga~ emeDg._ ¢D_R~ Sec. 4. [REPEALER.] Miggesg¢.a~tqge~_l~.~8~ section l16j. 991,~_~__K~pe~lg_~ sec. 5. [EFFECTIVE DATE.] Sect%oBs_ l__g_9~B.__.a~q_e_ffeqg~ve _~_9r bu.s_i~ess_ D. ubsidi~es enge.re~i_ggo pr~ggt~ ~pRrop[ia%%DBs aq%bpriz~_ on_ or af_ter E-mail questions or comments to dt~ed~tate, mn, ux, or contact us by ~a:i[ pr phgr~e. © 1999 State of Minnesota Department of Trade and Economic Development. All rights reserved. http://www.dted.state.mn.us/busasst/19991aw.html 09/22/1999 ECTrade & 6fi mic Devdopment FACT SHEET: 1999 Business Subsidies Law Laws of Minnesota 1999, Chapter 243, Article 12; to be codified as Minn. Stat. §116J.993 to §116J.995 What is the 1999 Business Subsidies Law? Minnesota Statutes (Minn. Stat.) §116J.993 through §116J.995 regulate business subsidy agreements signed on or after August 1, 1999, and replace Minn. Stat. §116J.991. Agencies are no longer subject to reporting requirements for agreements signed under Minn. Stat. §116J.991, but businesses must still comply with agreements signed before August 1, 1999. Who does the law apply to, and for what types of subsidies? v' State and local government agencies with the authority to provide business subsidies with state or local government funds, and entities created or authorized by a local government with this authority, are subject to the law. The law gives a complete description of applicable agencies (i.e. "grantors"). ~' The law covers buSiness subsidies to for-profit businesses, and to nonprofits with at least 100 full- time equivalent positions and a ratio of highest to lowest paid employee, determined on the basis of full-time equivalent positions, exceeding 10 to 1. ~' Types of assistance meeting the definition of a "business subsidy" include: · state or local government agency grants; · contributions of personal property, real property, or infrastructure; · the principal amount of a loan at rates below those commercially available; o reductions or deferrals of taxes or fees, including tax increment financing (TIF); · guarantees of any payment under any loan, lease, or other obligation; · and preferential use of government facilities. ~' The law explicitly excludes 18 types of assistance from the definition of business subsidies, including all awards of less than $25,000. ~' Four of the types of financial assistance excluded from the definition of business subsidies are subject to different reporting requirements under Minn. Stat. §116J.994, subdivision 7. These types of assistance include: · property polluted by contaminants as defined in Minn. Stat. §116J.552, subdivision 3 (i.e. brownfields); · assistance provided for the sole purpose of renovating building stock or bringing it up to code, if the assistance is 50 percent or less of the total cost; · assistance for pollution control or abatement; · and assistance for a TIF soils condition district as defined in Minn. Stat. ~469.174, subdivision 19. What is required in order to award a business subsidy? ,/ A business subsidy agreement may not be signed on or after August 1, 1999, until the grantor has held a public hearing on, and adopted criteria for, awarding business subsidies. The criteria must include a wage policy for jobs created by a recipient. V' The law outlines 8 elements that must be included in business subsidy agreements: · a description of the subsidy, including the amount and type of subsidy, and type of district if the subsidy is TIF; · a statement of the public purposes for the subsidy; · goals for the subsidy; · a description of the financial obligation of the recipient if goals are not met; · a statement of why the subsidy is needed; · a commitment to continue operations at the site where the subsidy is used for five years; · the name and address of the parent corporation of the recipient, if any; · and a list of all financial assistance by all grantors for the project. · ~ All business subsidy agreements must include job and wage goals with specific goals to be attained within two years of the benefit date. The law does not specify minimum criteria for these goals. Department of Trade and Economic Development Page 1 of 4 July 27, 1999 Fact Sheet: 1999 Business Subsidies Law Business subsidies must meet a public purpose other than increasing the tax base. The law specifies that job retention may be used as a public purpose only where job loss is imminent and demonstrable, but does not otherwise restrict allowable public purposes (see examples on page 4). Grantors must determine that the recipient is eligible to receive assistance by reviewing DTED's list of past recipients ineligible to receive a business subsidy because they failed to meet the terms of another subsidy agreement. (This will not take effect until DTED makes the first list available after receiving the 1999 reports in 2000.) Before granting a business subsidy that exceeds $500,000 for a state government grantor and $100,000 for a local government grantor, the grantor must provide public notice and hold a hearing on the subsidy unless a headng and notice on the subsidy is otherwise required by law. If a business subsidy benefits more than one recipient, the grantor must assign a proportion of the subsidy to each recipient signing the agreement. If the grantor is a local government agency, the agreement must be approved by the local elected governing body, except for the St. Paul Port Authority and a seaway port authority. Also, subsidies in the form of grants must be structured as forgivable loans, and agreements for other types of business subsidies must state the fair market value of the subsidy or other in-kind benefits. In addition to any criteria developed in compliance with this law, agencies may be subject to additional criteria required by specific assistance programs such as the Community Development Block Grant (HUD) and Minnesota Investment Fund programs. Agencies may or may not choose to address specific program criteria in the criteria developed in compliance with this law. What happens if a recipient does not meet business subsidy goals? Business subsidy agreements must specify the recipient's obligation if the recipient does not fulfill the agreement. At a minimum, a recipient failing to meet goals must pay back the assistance plus interest, although repayment may be prorated to reflect partial fulfillment of goals. The interest rate must be set at the Implicit Price Deflator rate as defined in Minn. Stat. §275.70, subdivision 2. DTED will provide information on the Implicit Price Deflator on its website. Recipients failing to fulfill business subsidy agreements may not receive business subsidies from any grantor for five years or until they have satisfied their repayment obligation, whichever occurs first. Who is required to report business subsidies, and how? Recipients must provide grantors with information on their progress toward goals outlined in the agreement, and will be subject to a penalty as defined in Minn. Stat. §116J.994, subdivision 7(d) for failing to report. Grantors must submit the annual Minnesota Business Assistance Form (MBAF) to DTED for each business subsidy agreement signed on or after August 1, 1999. DTED will ask grantors to file an MBAF each year for each agreement for two years after the benefit date or until all goals outlined in the agreement have been met, whichever is later. Local government agencies in communities with a population of more than 2,500 and state government agencies must submit an MBAF regardless of whether they have awarded business subsidies. The form will ask agencies whether they have awarded any subsidies. Local government agencies in communities with a population of 2,500 or less are exempt from filing the MBAF if they have not awarded a subsidy in the past five years (i.e. those with a population of 2,500 or less who have not signed an agreement after December 31, 1994, will be exempt from reporting in 2000). DTED will develop a new MBAF in fall 1999. This form will ask grantors to report, at a minimum, the information that Minn. Stat. §116J.994, subdivision 7 requires recipients to provide to them, including: · the type, public purpose, and amount of the subsidy, and type of district if the subsidy is TIF; · the houdy wage of each job created with separate bands of wages; · the sum of the hourly wages and cost of health insurance provided by the recipient, broken down by wage level; · the date(s) by which job and wage goals will be met; · a statement of goals identified in the agreement and an update on progress toward them; · the location of the recipient prior to receiving the business subsidy; · information on why the recipient did not complete the project outlined in the subsidy agreement at its previous location, if previously located at another site in Minnesota; · the name and address of the parent corporation of the recipient, if any; · and a list of all financial assistance by all grantors for the project. Department of Trade and Economic Development Page 2 of 4 Julv 27. 1999 Fact Sheet: 1999 Business Subsidies Law With their reports, DTED will ask grantors to include a list of recipients that did not report, as well as a list of those failing to meet any goals outlined in the agreement and a description of the steps being taken to bring them into compliance or recoup the subsidy. DTED will post an MBAF on DTED's website this fall and mail the form in February. If DTED has not received an MBAF by April 1 from an entity required to report, DTED must issue a warning. If DTED has still not received the MBAF by June 1, the agency in default may not award any business subsidies until the report has been filed. State funds passed through local agencies to businesses (e.g. Minnesota Investment Fund awards) are reported by the state grantor. However, local agencies must report on applicable local funds awarded in conjunction with state funds and on state funds which have been repaid to and reinvested by the local agency (e.g. revolving funds). How is non-business subsidy financial assistance reported? Recipients of the four types of financial assistance with different reporting requirements must provide grantors with the information outlined in Minn. Stat. §116J.994, subdivision 7(c), and will be subject to a penalty as defined in Minn. Stat. §116J.994, subdivision 7(d) for failing to report. DTED will ask grantors to report, at a minimum, the information that Minn. Stat. {}116J.994, subdivision 7(c) requires recipients to provide to them on these four types of financial assistance. DTED will determine this fall whether to develop a separate form or ask grantors to use the MBAF for reporting on these agreements. The form(s) will be posted on DTED's website this fall and mailed to agencies in February. As with their business subsidy reports, grantors will have until April 1 to file these reports with DTED. How will information reported by agencies be used? DTED is required to publish a report summarizing information reported through the MBAF each year by July 1. DTED's report must include a list of recipients that have failed to meet the terms of a subsidy agreement in the past five years and have not satisfied their repayment obligations. Copies of the report will be submitted to the Legislature and posted on DTED's website. Where can I find the law? ,/' The business subsidies law can be found on DTED's website at http:llwww.dted.state, mn.uslbusasst /bareport. html and may be printed from your web browser. Clarifications to the law The following clarifications are in response to commonly asked questions about the law: · Regarding Minn. Stat. §116J.994, subdivision 7(b), the statute's author agrees that recipients should continue reporting to the granting agency, not to DTED. The granting agency will be responsible for reporting to DTED. · DTED will be collecting information only on public funds originating in Minnesota; therefore, DTED will not ask agencies to report on federal funds they administer unless the funds have been repaid to the agency and reinvested according to local policies. This fact sheet is intended to help agencies understand the 1999 business subsidies law, and does not serve as a substitute for statute language. Agencies are responsible for complying with the law and should view the law for questions and specific details and requirements that are not outlined in this fact sheet. Questions about the law can be directed to DTED: Minnesota Department of Trade and Economic Development Analysis and Evaluation Office 500 Metro Square 121 7~ Place East St. Paul, MN 55101-2146 Phone: (651)296-3646 I Fax: (651)215-3841 I E-mail: caryn,mohr@state.mn.us www. dted.state.mn.us Department of Trade and Economic Development Page 3 of 4 July 27, 1999 Fact Sheet: 1999 Business Subsidies Law Developing Criteria and Stating Public Purposes for Business Subsidies Under Minn. Stat. {}116J.993 through {}116J.995, granting agencies must develop criteda for awarding business subsidies after a public headng. In addition, each business subsidy agreement must indicate a public purpose. The law allows grantors flexibility in stating public purposes appropriate for their communities, but requires that agreements meet a public purpose other than increasing the tax base and that job retention be used as a public purpose only when job loss is imminent and demonstrable. Although the law does not require public purposes to be addressed in the criteria, grantors may want to refer to the public purposes below for cdteda ideas. The following public purposes and criteria were recommended by the legislatively established Corporate Subsidy Reform Commission. Enhancing Economic Diversity In what ways does the project improve the mix of businesses in the area so as to: (1) allow the area to participate in fast-growing industries; (2) protect the area from adverse economic consequences caused by slow growth or declining industries that are dominant in the area; and (3) provide essential consumer services, or develop a network of local suppliers to businesses within the community where they otherwise do not exist? Creating High-Quality Job Growth How many new jobs will be created, and what will they pay? How do wages proposed to be paid compare to community wage levels? How many jobs will be created with opportunities for career advancement, educational opportunities, or occupational training? What are the projections for job growth at the project over the nest period of two to' five years? What are the fringe benefits that are payable for the jobs (particularly, is there child care, health care, and pension coverage)? Providing for Job Retention, Where Loss is Imminent and Demonstrable Note: Under the 19~_~w, job retention can be used as a public purpose only in cases where job loss is imminent and demon-~fft~ble. After collecting the necessary documents, is there substantial evidence that the company will have to shut down involuntarily? After collecting the necessary documents, is there substantial evidence that the company has received an offer to move to another state or community that is attractive enough that a reasonable person would seriously consider a move for business reasons? What potential negative effect would the subsidy have on other competing businesses and overall area job quality? Stabilizing the Community. How will the project constitute a significant investment in an area that (1) has not historically received similar investments; (2) is a blighted area; or (3) is an economically depressed area? How will the project stimulate other investment or create spinoff businesses and jobs in the area? Increasing the Tax Base Note: The law requires business subsidies to meet a public purpose otherthan increasing the tax base, but grantors may use increasing the tax base in conjunction with another public purpose. How will the project uniquely affect the property tax base for all taxing jurisdictions, both short term and long term and both directly and indirectly? How will the project affect other local business and individual property tax bills? SOURCE: Corporate Subsidy Refbrm Comrhission, f997 Corporate Subsidy Reform Commission Report, February 6, 1998. Department of Trade and Economic Development Paae 4 of 4 Julv 27. 19gg Memorandum From: Date: Re: Chanhassen City Council Ron Batty, EDA Attorney 09/22/1999 Business Subsidy Criteria Enclosed for consideration by the city council at its meeting on September 27, 1999 is proposed criteria for granting business subsidies. The city council must adopt the criteria, following a public hearing, in order to comply with a law that became effective August 1, 1999. After that date, no subsidy may be granted until the criteria have been adopted. The new statute applies to virtually any kind of subsidy that may be granted by govemments. There are, however, significant exceptions. For example, any subsidy of less than $25,000 or involving housing is exempt from the criteria. Every grantor of subsidies must adopt criteria. This includes the EDA and the City if it wishes to be in the position to grant subsidies as well, (for example, tax abatement). The statute gives the grantor broad discretion in establishing its criteria. I have drafted criteria which I think broadly define the types of goals the EDA and City may wish to pursue. These should be reviewed and amended as appropriate. The statute imposes some limitations on the criteria. For example, an increase in tax base cannot be the only basis for granting a subsidy. This may be significant because Chanhassen, like most communities that have used tax increment financing, generally considers an increase in tax base as a significant goal in granting subsidies. Also, it is necessary for the criteria to address jobs and wages. The criteria do so broadly. However, every subsidy must be formalized by an agreement that must include specific job and wage goals. It will also be necessary for the recipient of the subsidy to agree to stay in business at that site for a minimum of five years after receipt of the subsidy. Failure to comply with any of these terms will require a repayment of the subsidy with interest. The repayment may be prorata if there is partial compliance. Any subsidy of over $100,000 will have to be subject to a public heating before the EDA. In addition, all subsidies must be approved by the Chanhassen city council. There are also extensive reporting and monitoring requirements for both the grantor and grantee of the subsidies. RHB-169157 CH 130-66 CITY OF CHANHASSEN BUSINESS SUBSIDY CRITERIA II. Purpose This document includes the criteria to be considered by the Chanhassen City Council to evaluate requests for business subsidies. It is the intent of the council in adopting these criteria is to comply with Minnesota Statutes, Sections 116J.993-116J.995 (the "Act"). The city council hereby adopts the definitions contained in the Act for application in the criteria. Goals and Objectives It is the city's intent to advance the following goals and objectives in granting business subsidies: a) All projects must be consistent with Chanhassen's comprehensive plan and any other similar plan or guide for development of the community. b) Business subsidies must be justified by evidence that the project cannot proceed without the benefit of the subsidy. If tax increment financing is used to grant a subsidy, the grantee must demonstrate compliance with all statutory requirements of the TIF Act, including the "but for" 'test. The grantee will be required to provide all documentation necessary for the city council to make the requisite fundings under the TIF Act and the Act. c) Grantees will be required to enter into an agreement with the city council which is consistent with statutory requirements, including a commitment to remain in business at the site for a minimum of five years after the benefit date and compliance with the specific jobs and wages goals established for the project. III. Business Subsidy Criteria The city council recognizes that every proposal is unique. Nothing in these criteria shall be deemed to be an entitlement or shall establish a contractual right to a subsidy. The city council reserves the right to modify these criteria from time to time and to evaluate each project as a whole. The following criteria shall be utilized in evaluating a request for a business subsidy: a. Increase in tax base. While an increase in the tax base cannot be the sole grounds for granting a subsidy, the city council believes it is a necessary condition for any subsidy. b. Jobs and Wages. It is city council's intent that the grantee create the maximum number of livable wage jobs at the site. This may include jobs to be retained but only if job retention is imminent and demonstrable. c. Economic Development. Projects should promote one or more of the following: RHB-169153 CH 130-66 o o o Encourage economic and commercial diversity within the community; Contribute to the establishment of a critical mass of commercial development within an area; Provide basic goods and services, increase the range of goods and services available or encourage fast-growing businesses; Promote redevelopment objectives and removal of blight, including pollution cleanup; Promote the retention or adaptive reuse of buildings of historical or architectural significance; Promote additional or spin-off development within the community; 2 7. Encourage full utilization of existing or planned infrastructure improvements. IV. Compliance and Reporting Requirements. a) Any subsidy granted by the city council will be subject to the requirement of a public hearing. b) It will be necessary for both the grantee and the city council to comply with the reporting and monitoring requirements of the Act. RHB-169153 3 CH 130-66 CITY OF CHANHASSEN TAX INCREMENT FINANCING POLICY Approved October 26, 1998 CITY OF CHANHASSEN TAX INCREMENT FINANCING POLICY Policy and Criteria Regarding Review of TIF Usage Application GENERAL POLICY The City Council of the City of Chanhassen has the power, should it deem necessary, to use Tax Increment Financing (TIF) based on Minnesota Statutes. The fundamental purpose of TIF in Chanhassen is to encourage desirable and affordable housing, senior housing, and assisted livin.g that would not otherwise occur "but for" the assistance provided through TIF. This policy shall be used as a guide in processing and reviewing applications requesting TIF assistance. PROJECT SELECTION CRITERIA TIF can benefit the community by providing a broad range of housing oppom~nities such as affordable housing, senior housing and assisted living. The Council reserves the right to approve or reject tax increment financing on an individual basis. Highest Priority Shall Be Given to Projects Which Include: 1. Compatibility of the proposed project with the City's overall development plans and objectives. 2. Broad range of housing opportunities such as affordable housing, senior housing and assisted living. 3. Minimal impact on City service needs. 4. High quality of the facility to be built. PROJECT REQUIREMENTS 1. Applicant at all times should retain and be assisted by qualified financial consultants and/or underwriters, and legal counsel. 2. Construction of the project shall not be commenced until the City has given preliminary approval to the application for financing. 3. The City reserves the right to deny any application for financing at any stage of the proceedings prior to adoption of the final approval authorizing issuance of the bonds. 4. The City reserves the right to select a third party administrator to assist in the management of the process. 5. The City will only consider a "pay as you go" plan for high quality industrial developments in existing TIF districts(National Weather, 2-2; Hennepin County, 3-1; Gateway, 6-1; and Entertainment District, 4). 6. Development must be of the highest quality with high quality building materials and landscaping as agreed between the City and the Developer. 7. Developer must pay all costs of establishing the district unless the City agrees to allow costs to come out of the district. 8. Local requirements may be more stringent than State statute as applies to TIF. 9. Project meets "but for" analysis and statutory qualifications (Exhibit A). ACTIVITES TO BE CONSIDERED FOR FINANCING 1. Land write down 2. Costs of streets and utilities 3. Demolition and relocation costs 4. City costs such as trunk utility costs, street costs, and MSA reimbursement 5. Extraordinary landscaping and lighting 6. Soil corrections APPLICATION PROCESS 1. The application process must be completed in accordance with TIF application procedures (Exhibit B). 2. Applicant shall make an application for TIF usage on forms available from the City. 3. The application will include (if appropriate): A. Statement of Public Purposes B. Description of Project C. Plans and Drawings of Project D. Description of Company E. Legal Opinions F. Investment Bank Letter of Feasibility G. Market Analysis H. Pro Fonna Analysis I. Financial Statements J. Zoning and Planning Analysis K. Application Fee L. Demonstration of past successful general development capability as well as specific capability in the type and size of development proposed. M. Other Documentation Requested by the City The City's tax increment financing program will be administered by the City of Chanhassen Economic Development Authority (EDA). The applicant shall submit a completed application and a $2,000 non- refundable application fee. The application fee shall be paid to the Chanhassen EDA at the time a final TIF application is submitted. At the time a final TIF application is submitted, the applicant shall also deliver to the City a deposit in the amount of $10,000. The purpose of this deposit is to reimburse the City for costs and expenses incurred in connection with preparation of the development agreement and the carrying out of all actions necessary in the fulfillment or the City's obligations. Any part of the deposit not needed for those purposes shall be promptly returned to the Redeveloper not later than the date of issuance of the Certificate of Completion, or within 15 days following the termination of the Development Agreement for failure to close. It is understood the deposit is not a limitation on the Redeveloper's obligation to reimburse the City for such costs; and the Redeveloper shall pay the City for any such costs in excess of the deposit within 30 days following a written request to do so. 4. City staffwill review the data and make preliminary recommendations to the City Council as to compliance of the application and proposed project with City objectives and criteria/Strategic Plan. 5. Formal evaluation of the application will include, in addition to items subject to preliminary review, review of applicable credit analysis, credit enhancement and legal compliance. Formal recommendation will then be made to the City Council. 6. After evaluation of the formal recommendation, the City Council will consider final approval of the establishment of the TIF District and hold the appropriate hearings. 7. All applications and supporting materials and documents shall become the property of the City. CITY OF CHANHASSEN APPLICATION FOR TAX INCREMENT FINANCING Business Name: Address: Location of Proposed Development: Type(Partnership, etc.): Telephone: Nature of Business: HISTORY OF APPLICANT 1. Have you ever filed bankruptcy? Yes No If yes, provide details on separate sheet. Have you ever defaulted on any loan commitment? Yes If yes, provide details on separate sheet. No Have you ever applied for conventional financing for the project? Yes If yes, provide details on separate sheet. If no, why not? Project Cost Breakdown: $ $ $ $ Total: $ Date: No 4. List financial references: Name/Address/Contact a. b. ¢. 5. Other information pertinent to your application: 6. Name of Counsel: INFORMATION CONCERNING APPLICANT'S PROPOSED PROJECT FOR EXISTING INDUSTRIAL DEVELOPMENT LOCATED IN TIF DISTRICTS(National Weather, 2-2; Henneoin County. 3-1: Gateway, 6-1; and Entertainment District, 4). 1. Is the proposed project a new facility or rehabilitation and/or expansion of existing facility? 2. Industrial/Commercial: 3. What is the present employment of your finn? 4. What will the employment be at completion of project? 5. Estimated Project Cost? 6. What is the principal business or product of the company? 7. Potential other use of proposed development? 8. Will this development attract other related industries? Yes How? No 9. What are the proposed financing arrangements? INFORMATION CONCERNING APPLICANT'S PROPOSED HOUSING PROJECT 1. Is the proposed housing project a new facility or rehabilitation and/or expansion of existing facility? 2 Housing Type(single family, multi-family, apartments, condominiums, etc.): 3. Number of units: 4. Number of bedrooms in each unit: 5. Sale price of the units: or 6. Rental price of the units: 7. Estimated total project cost and breakdown of overall development costs? 8. Who are you principally marketing your product to? 9. How long do you think it will take to sell or rent your product? 11. Do you have linkages/contacts with Chanhassen businesses? Please explain(Reason: To see if you are meeting the local business needs.) 12. What are the proposed financing arrangements? 13. How are you proposing to meet alternate transportation needs? Mortgage Equity Tax Increment TOTAL SOURCES Land Sitework Soil Correction Demolition Relocation Subtotal Land Costs Construction Finish Manufacturing Subtotal Construction Costs Soft Costs Taxes Finance Fees Project Manager Developer Fee Contingency Subtotal Soft Costs TOTAL USES Rent-Space 1 Rent-Space 2 Rent-Space 3 Other Mortgage Net Income Total Return on Equity EXHIBIT A SAMPLE "BUT-FOR" ANALYSIS WITH NO TAX INCREMENT Sources and Uses SOURCES 9,600,000 2,400,000 0 12,000,000 USES 1,500,000 300,000 468,000 100,000 65,000 2,433,000 6,750,000 250,000 7,000,000 350,000 35,000 850,000 542,000 540,000 250,000 2,567,000 12,ooo,oool Income Statement Sq. Ft. Per Sq. Ft. Sq. Ft. 100,000 $8.00 800,000 I00,000 25,000 $8.00 212,000 25,000 25,000 $9.00 225,000 25,000 0 $0.00 0 0 1,237,500 20 Term 9.00% Interest 9,600,000 1,051,646 185,854I 7.74% WITH TAX INCREMENT Sources and Uses SOURCES 8,667,000 2,400,000 933,000 12,000,000 USES 1,500,000 300,000 468,000 100,000 65,000 2,433,000 6,750,000 250,000 7,000,000 350,000 35,000 85O,OO0 542,000 540,000 250,000 2,567,000 12,000,000 Income Statement Per Sq. Ft $8.00 800,000 $8.00 212,000 $9.00 225,000 $0.00 0 1,237,500 20 Term 9.00% 8,667,000 949,439 288,061 12.00% Mortgage Equity Tax Increment TOTAL SOURCES Land Sitework Soil Correction Demolition Relocation Subtotal Land Costs Construction Finish Manufacturing Subtotal Construction Costs Soft Costs Taxes Finance Fees Project Manager Developer Fee Contingency Subtotal Soft Costs TOTAL USES Rent-Space 1 Rent-Space 2 Rent-Space 3 Other "BUT-FOR" ANALYSIS WORKSHEET WITH NO TAX INCREMENT Sources and Uses SOURCES USES Income Statement Sq. Ft. Per Sq. Ft. WITH TAX INCREMENT Sources and Uses SOURCES USES Income Statement Sq. Ft. Per Sq. Ft Mortgage INet Income Total Return on Equity I hereby certify the above financial information is true and accurate. Signature Title Date EXHIBIT B CITY OF CHANHASSEN APPLICATION PROCEDURES FOR TIF ASSISTANCE 1. Applicant shall meet with City staff to discuss the scope of the project, public assistance being requested, time schedule and other information as may be necessary. 2. Following an initial meeting, applicant shall complete a TIF application. The completed application shall be submitted to the Executive Director of the Economic Development Authority. 3. The application shall be reviewed by City staffon a preliminary basis as to the feasibility of the project. City staff shall prepare a report on the project. 4. The application shall be placed on an EDA agenda for concept review. The applicant may make a presentation of the project at that time. City staff will present its preliminary findings. 5. The following items must accompany the application: a. $2,000 application fee b. Completed "but-for" worksheet c. $10,000 application deposit d. Statement of Public Purpose e. Description of Project f. Plans and Drawing of Project g. Company Background Material h. Letter of Feasibility i. Market Analysis j. Pro Forma Analysis k. Financial Statements 1. Zoning and Comprehensive Plan Analysis m. Other Pertinent Information Following the necessary analysis of the application by City staff, a report shall be prepared and presented to the EDA for formal action. If the application is approved, City staff will be directed to undertake the following steps: a. Prepare a redevelopment agreement between the EDA and the Developer; b. Prepare or modify the redevelopment plan and TIF plan if required. 7. If zoning amendments or Planning Commission action is required as part of the project, the appropriate actions shall be taken prior to final consideration of the redevelopment agreement. 8. Applicant must follow all city development review processes (e,g. site plan, platting, rezoning, PUD, etc.) before final TIF application may be approved. If you have any questions concerning the Tax Increment Financing application process, please contact: City of Chanhassen EDA Executive Director 690 City Center Drive PO Box 147 Chanhassen, MN 55317 (612)937-1900 ext. 119 City Council Meeting - September 27, 1999 Councilman Senn: Okay and ! want to make, again I just want to make my motion very clear that it is to designate and install, and so if the County or somebody else wants to tell us if we can't, then leave it up to them to tell us that we can't but we are taking the action to designate it and install it. Councilman Labatt: Both roads. Councilman Senn: Yes. Mayor Mancino: Okay. The motion has been made and seconded with a couple friendly amendments. All those in favor, any other discussion? Any other friendly amendments? Resolution #99-82: Councilman Senn moved, Councilman Engel seconded that the City Council designate and install signage for a School Speed Zone along Coulter Drive, east to Stone Creek Drive, and Galpin Boulevard, posting it at 20 mph when children are present. Also directing staff to ask for any additional input from the principal from Bluff Creek Elementary School and report that input back to the City Council. All voted in favor and the motion carried unanimously. PUBLIC HEARING: CONSIDER APPROVAL OF BUSINESS SUBSIDY GUIDELINES; JOHN DEAN, KENNEDY & GRAVEN. Mayor Mancino: Is Dan here? Would you like to introduce yourself?. Dan Greensweig: My name is Dan Greensweig. I'm a lawyer with Kennedy and Graven. Our office prepared the draft Business Subsidy Criteria that you see before you. Ron Batty wasn't able to be here tonight. The draft subsidy criteria you see was based on legislation that was adopted during a last legislative session. And essentially what that legislation did was establish a series of requirements that all local government and state government agencies that grant business subsidies must go through in order to grant those subsidies and one of the things they have to go through is adopting a set of criteria. The criteria that this legislation sets out are really pretty vague and all it really says is that among other things it must include some discussion of the job and wage goals that the city or the EDA or the HRA hopes to accomplish through the granting of business subsidies in a general sense. The legislation is much more specific however in that any specific business subsidy agreement, a development contract and the TIF contracts revolving loan fund, if the city's going to operate one, does need to contain certain things. And the statute I think does a pretty good job of laying those out but they include things like specific job and wage goals. A commitment to remain in operation at the site for a minimum of five years. Penalty provisions if the goals aren't met. Repayment requirements. Those sorts of things. But those are really generally handled on a case by case business and that's why what you have before you today is much more general in nature. I do want to make clear that the subsidy criteria that we presented to you tonight are minimums. They comply with the statute but certainly the council has within it's authority to adopt more restrictive criteria. They just can't be less restrictive than what state law has said, and that's really a policy question for you and it would be the same for your EDA and your HRA. Along With that I do want to emphasize however from talking to Mr. Gerhardt before he left last week, that the City cannot grant any further subsidies which would include approval ora tax increment development contract until these criteria have been adopted. I'm not saying that means you need to adopt it tonight, but it just means you can't enter into any other development agreements or provide any other sorts of below market loans or anything like that until these criteria have been handled. Mayor Mancino: But it doesn't pertain to affordable housing. 10 City Council Meeting - September 27, 1999 Dan Greensweig: That's correct Ms. Mayor. The legislature specifically exempted from the definition of business subsidy, housing subsidies. There are some other exemptions that they provided. Some pollution remediation. Subsidies of less than $25,000. That sort of thing. Mayor Mancino: Any questions for Dan at this point? I just have one real quick one. There are two forms now that we need to fill out, and this being I mean obviously one is with OSA. The August 1st date. This is a second form that we now have to fill out on an annual basis. If there legislatively can we charge the applicant for the annual, putting together of these forms and the time that it takes us, etc, out? Dan Greensweig: Well I think that would normally be something that would go into, come out of the administrative expense in a tax increment district, and the 10% that you would keep. Mayor Mancino: Over and above property taxes is what I'm saying. A cost of doing business. Dan Greensweig: It's within the city's authority certainly to ask for that up front. To say it's going to cost us X amount and we'd like that as part of the application process. Mayor Mancino: So the legislature didn't nix that from doing? Dan Greensweig: No. Mayor Mancino: Okay. Dan Greensweig: That's correct. And there has been some talk, I should let you know also that the legislation will be amended somewhat during the next session. There is some language in it that's a little unclear I think to some of the people who practice in this area. I'm not saying the legislation is going to go away but I think it may, you may see it change over the next 6 months to a year. Try and make it a little easier for everyone to work with. Mayor Mancino: Okay. Thank you very much. Any other questions for Dan? Discussion. Any questions? Councilman Labatt? Councilman Labatt: No. Mayor Mancino: Councilman Engel? Councilman Engel: Nothing to add. Mayor Mancino: Councilwoman Jansen? Councilwoman Jansen: No. Mayor Mancino: Councilman Senn? Councilman Senn: I don't have any questions but I'd like to make a motion that the council table this for council action and refer to the EDA for discussion to come back to the council. I think this is in fact minimal and I think we need to spend more time looking at it in relationship to bringing it in line with our TIF policy and so they're in sync and then not just create a minimal, do anything type... 11 City Council Meeting - September 27, 1999 Mayor Mancino: I agree with that. I would just like to add that we do it next month in October. Our next meeting. I'll second that motion. All those in favor. Dan, excuse me. Dan Greensweig: Ms. Mayor, ifI could point out that the law does require that a public hearing be held so if you're going to take that over to next month, you'll need to renotice the public hearing. Mayor Mancino: Thank you. We'll do that for our EDA meeting then. Great. Let's see, what have we done? We've made a motion. We've seconded it to table it. Councilman Senn moved, Mayor Mancino seconded that the City Council table action on the Business Subsidy Guidelines and refer the item to the next EDA meeting for consideration. All voted in favor and the motion carried unanimously. Mayor Mancino: Okay, next on the agenda. Also under public, excuse me. That was a public hearing and I didn't allow anybody to talk. Is there anyone that would like to come up in front of the Council now that we've already passed that. But seriously, you're welcome to come up and make any comments to the council. And we'll also have it again next month at our EDA meeting so seeing none, nobody wants to say anything. Thank you. Sorry about that. PUBLIC HEARING: RUBY TUESDAY RESTAURANT, LOT 1, BLOCK 1, VILLAGES ON THE POND 2N" ADDITION, ALLIANT ENGINEERING, INC: A. CONSIDERATION OF AN ON-SALE INTOXICATING LIQUOR LICENSE. B. CONSIDER SITE PLAN APPROVAL FOR A 5,223 SO. FT. RESTAURANT. Public Present: Name Address Guerrino Ruta, Jr. Scott Nelson Vernelle Clayton 8391 West Lake Drive 212 Second Street S.E., Minneapolis 422 Santa Fe Circle Mayor Mancino: We should probably do 4(a) first. And go ahead and approve that. I mean just a brief overview, thank you. Kate Aanenson: Ruby Tuesdays is requesting a liquor license. We have included as a part of this, just to be clear, that as a part of the approval of the restaurant, their expectation is to get a liquor license. It's the City's policy to put that at the same time as when the City Council is receiving site plan approval. Staff is recommending approval with the conditions outlined in the staff report, and I believe there was one modification and that is clarification of clearance by the managing property owner. Mayor Mancino: Okay, thank you very much. This is a public hearing. Anyone wishing to address the Council on consideration of an on-sale intoxicating liquor license for Ruby Tuesdays Restaurant. Seeing no one, let me bring this back to council. Any questions or discussion on councilmembers? If not, may I please have a motion. 12