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CR 99-166 Business Subsidy Criteria CITY OF ~ September 9, 1999 HOPKINS Council Report 99-166 BUSINESS SUBSIDY CRITERIA ProDosed Action Staff recommends adoption of the following motion: approval of the business subsidy criteria. This item has been previously approved by the HRA. Overview In the last session, the Minnesota Legislature adopted a new business subsidy law. One of the requirements of this new law is that before signing any business subsidy agreements on or after August 1, 1999, agencies providing subsidies must first adopt criteria for awarding subsidies. These criteria must include a wage policy for jobs created by a recipient of a subsidy. The business subsidy criteria presently being recommended for approval has been reviewed by Bob Deike of Bradley and Deike. Once adopted, these criteria would be used as the basis for granting subsidies to the various City/HRA financing programs. Issue to Consider · What are the specifics of the business subsidy law? SUDDortios! Documents · Business Subsidy Criteria · Letter from Bob Deike, Bradley & Deike, dated 8/31/99 -, ~~~/.,;<"f" / lopment Director Council Report 99-166, September 9, 1999 - Page 2 Issue to Consider · What are the specifics of the business subsidy law? The following are some of the key points in the new law: . A public subsidy is considered any grant, loan, contribution of property, etc. This would involve any assistance provided through tax increment, a city's economic development fund, commercial rehab. program, etc. . The requirements of this law would not apply in certain situations, including the following: · Subsidies ofless than $25,000 · Assistance for housing or pollution control · Assistance for the sole purpose of renovating older, decaying building stock . No public subsidy can be provided after August 1, 1999, until the city adopts criteria for awarding subsidies. . A public hearing must be held when any public subsidy exceeds $100,000. . A subsidy agreement must be entered into at the time the subsidy is provided. One of the requirements of this agreement is the commitment to continue operations at the site where the subsidy is used for at least five years after the date the subsidy is provided. CITY OF HOPKINS/HRA Business Subsidy Criteria 1. PURPOSE 1.01 The purpose of these criteria is to establish the City/HRA's position as relates to the use of business subsidies, as defmed in Minnesota Statutes 116J.993, Subdivision 3, for private development. These criteria shall be used as a guide in processing and reviewing applications requesting business subsidies. 1.02 The City!HRA shall have the option of amending or waiving sections of these criteria when determined necessary or appropriate. Amendments to the criteria are subject to public hearing requirements pursuant to Minnesota Statutes, Section 116J.993 through 116J.995. No public hearing shall be required to waive any provision of these criteria. 1.03 Existing City/HRA programs that provide business subsidies are hereby revised to reflect the following Business Subsidy Criteria as deemed necessary and appropriate. 2. STATUTORY LIMITATIONS 2.01 In accordance with the Business Subsidy Criteria, business subsidy requests must comply with applicable State Statutes. The City of Hopkins!HRA's ability to grant business subsidies is governed by the limitations established in Minnesota Statutes 116J.993 through 116J.995. 3. PUBLIC POLICY REQUIREMENT 3.01 All business subsidies must meet a public purpose other than increasing the tax base. Job retention may be used as a public purpose only in cases where job loss is imminent and demonstrable. 4. BUSINESS SUBSIDY CRITERIA 4.01 Meet all goals, criteria, or guidelines for the specific business subsidy program for which application is being considered. 5. BUSINESS SUBSIDY CRITERIA--JOBS 5.01 Recipients of business subsidies in instances where creation of jobs is the sole or primary public purpose will be encouraged to create the highest number of jobs at the highest feasible wage. However, the establishment of wage and job goals will take into account prevailing wage rates, local economic conditions, the individual fmancial resources of the recipient and wages paid by the recipient's competitors. 6. SUBSIDY AGREEMENT 6.01 A recipient must enter into a subsidy agreement with the City/HRA, which includes but is not limited to the following: . Description of the subsidy . Statement of public purpose . Goals for the Subsidy . Description of the fmancial obligation of the recipient if the goals are not met . Statement of the reason the subsidy is needed . Commibnent to continue operations at the site where the subsidy is used for at least five years after the receipt of all fmancial assistance . Goals for jobs created, or where job loss is imminent, goals for jobs retained . Reporting requirements to the CitylHRA as detailed in MSI16J.994, Subd. 7 7. EXCEPTIONS TO REQUIREMENTS 7.01 Recipients of business subsidies are not required to meet criteria for job creation or enter into a subsidy agreement if the financial assistance is not a "business subsidy" as defmed in Minnesota Statutes Sec. 116J.993, Subd. 3. WordIbus subsidy criteria.wpd rrmm , BRADLEY & DEIKE, P.A. Attorneys At Law SUITE 300.5]00 EDENAVENUB EDINA, MINNESOTA 55436.2337 ,PATRICK J. aRAOL~ ROBERT J: DEIKE , STEPHEN J. WONTOR CAROL M. WILSON' , (812) 926.5337 FAX (812) 928.5743 August 31. 1999 Mr. James Kerrigan City of Hopkins 1010 First Street South Hopkins, MN 55343 Re: Proposed Business Subsidy Criteria Dear Jim:', . As you requested, I have reviewed the, Business Subsidy; Criteria proposed to be adopted by the City of Hopkins ,and the Hopkins 'Housing and Redevelopment Authority under Minnesota Statutes, sections 116J.,993 through 116J~9~5. . The new business subsidy law requires that a gnintor agency adopt business' subsidy criteria but does not specify the cpntents of the criteria except that ther~ must be an expression of a policy regarding wages to be paid for jobs created. The proposed criteria contains statements regarding wage goals and, therefore, it, is, my opinion that the proposed criteria satisfy the statutory requirement. Please call with any questions. , Sincerely R~J' ~.:'/~ Robert J. Deike .