EDSR INFORMATION #1 06-14-1999 05/16/99 6:21 p.m. [RESDEPT ] JF KB56
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1 ARTICLE 17
2 BUSINESS SUBSIDIES
3 Section 1. [116J.993] [DEFINITIONS.]
4 Subdivision i. [SCOPE.] For the purposes of sections
5 116J.993 to 116J.996, the terms defined in this section have the
Alli6 meanings given them.
7 Subd. 2. [BENEFIT DATE.]• "Benefit date" means the date
8 that the recipient receives the business subsidy. If the
9 business subsidy involves the purchase, lease, or donation of
10 physical equipment, then the benefit date begins when the
11 recipient puts the equipment into service. If the business
12 subsidy is for improvements to property, then the benefit date
13 ' refers to the earliest date of either:
14 ' (1) when the improvements are finished for the entire
15 project; or
16 (2) when a business occupies the property. If a business
17 occupies the property and the subsidy grantor expects that other
18 businesses will also occupy the same property, the grantor may
19 assign a separate benefit date for each business when it first
20 occupies the property.
21 Subd. 3. [BUSINESS SUBSIDY.] "Business subsidy" or
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2 "subsidy" means a state or local government agency grant,
3 contribution of personal property, real property,
24 infrastructure, the principal amount of a loan at rates below
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1 those commercially available to the recipient, any reduction or
2 deferral of any tax or any fee, any guarantee of any payment4111
3 under any loan, lease, or other obligation, or any preferential
4 use of government facilities given to a business.
5 The following forms of financial assistance are not a
6 business subsidy:
7 (1) a business subsidy of less than $25,000.
8 (2) assistance that is generally available to all
9 businesses or to a general class of similar businesses, such as
10 a line of business, size, location, or similar general criteria;
11 (3) public improvements to buildings or lands owned by the
12 state or local•government that serve a public purpose and do not
13 principally benefit a single business or defined group of
14 businesses at the time the improvements are made;
15 (4) redevelopment property polluted by contaminants as
16 defined in section 116J.552, subdivision 3;
17 (5) assistance provided for the sole purpose of renovating
18 old or decaying building stock or bringing it up to code,
19 provided that the assistance is equal to or less than 50 percent
20 of the total cost;
21 (6) assistance provided to organizations whose primary
22 mission is to provide job readiness and training services if the
23 sole purpose of the assistance is to provide those services;
24 (7) assistance for housing;
25 (8) assistance for pollution control or abatement;
26 (9) assistance for energy conservation;
27 (10) tax reductions resulting from conformity with federal
28 tax law;
29 (11) workers' compensation and unemployment compensation;
30 (12) benefits derived from regulation; •
31 (13) indirect benefits derived from assistance to
32 educational institutions;
33 (14) funds from bonds allocated under chapter 474A;
34 (15) assistance for a collaboration between a Minnesota •
35 higher education institution and a business;
36 (16) assistance for a •tax increment financing soils
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1 condition district as defined under section 469.174, subdivision
40 2 1_1
3 (176) redevelopment when the recipient's investment in the
4 purchase of the site and in site preparation is 70 percent or
5 more of the assessor's current year's estimated market value;
6 and
7 (18) general changes in tax increment financing law and
. 8 other general tax law changes of a principally technical nature.
9 Subd. 4. [GRANTOR.] "Grantor" means any state or local
10 •overnment a.enc with the authorit to •rant a business subsid .
11 Subd. 5. [LOCAL GOVERNMENT AGENCY.] "Local government
12 agency" includes a statutory or home rule charter city, housing
13 and redevelopment authority, town, county, port authority,
14 economic development authority, community development agency,
15 nonprofit entity created by a local government agency, or any
16 other entity created by or authorized by a local government with
17 authority to provide business subsidies.
•18 Subd. 6. [RECIPIENT. ] "Recipient" means any for-profit or
19 nonprofit business entity that receives a business subsidy.
20 Only nonprofit entities with at least 100 full-time equivalent
21 positions and with a ratio of highest to lowest paid employee,
22 determined on the basis of full-time equivalent positions,
23 exceeding ten to one, are included in this definition.
24 Subd. 7. [STATE GOVERNMENT AGENCY.] "State government
25 agency" means any state agency that has the authority to award
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26 business subsidies.
27 Sec. 2. [116J.994] [REGULATING LOCAL AND STATE BUSINESS
28 SUBSIDIES.]
29 Subdivision 1. [PUBLIC PURPOSE.] A business subsidy must
30 meet a public purpose other than increasing the tax base. Job
31 retention may only be used as a, public purpose in cases where
32 job loss is imminent and demonstrable.
33 Subd. 2. [DEVELOPING A SET OF CRITERIA. ] A business
.34 subsidy may not be granted until the grantor has adopted
35 criteria after a public hearing for awarding business subsidies
36 that comply with this section. The criteria must include a
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1 policy regarding the wages to be paid for the jobs created. The
2 commissioner of trade and economic development may assist local
3 government agencies in •developin criteria
4 Subd. 3. [SUBSIDY AGREEMENT.] (a) A recipient must enter
5 into a subsidy agreement with the grantor of the subsidy that
6 includes:
7 (1) a description of the subsidy, including the amount and
8 type of subsidy, and type of district if the subsidy is tax
9 increment financing;
10 (2) a statement of the public purposes for the subsidy;
11 (3) goals for the subsidy;
12 (4) a description of the financial obligation of the
13 recipient if the goals are not met;
14 (5) a statement of why the subsidy is needed;
15 (6) a commitment to continue operations at the site where
16 .the subsidy is used for at least five years after the benefit
17 date;
18 (7) the name and address of the parent corporation of the •
19 recipient, if any; and
20 (8) a list of all financial assistance by all grantors for
21 the project.
22 (b) Business subsidies in the form of
grants must be
23 structured as forgivable loans. If a business subsidy is not •
24 structured as a forgivable loan, the agreement must state the
25 fair market value of the subsidy to the recipient, including the
26 value of conveying property at less than a fair market price, or
27 other in-kind benefits to the recipient.
28 (c) If a business subsidy benefits more than one recipient,
29 the grantor must assign a proportion of the business subsidy to
30 each recipient that signs a subsidy agreement. The proportion
31 assessed to each recipient must reflect a reasonable estimate of
' 32 the recipient's share of the total benefits of the project.
33 (d) The state or local government agency and the recipient
34 must both sign the subsidy agreement and, if the grantor is a S
35 local government agency, the agreement must be approved by the
36 local elected governing body, except for the St. Paul Port
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1 Authority and a seaway port authority.
2 Subd. 4. [WAGE AND JOB GOALS.] The subsidy agreement, in
3 addition to any other goals, must include: (1) goals for the
4 number of jobs created, which may include separate goals for the
5 number of part-time or full-time jobs, or, in cases where job
6 loss is imminent and demonstrable, goals for the number of jobs
7 retained; and (2) wage goals for the jobs created or retained.
8 In addition to other specific goal time frames, the wage
9 and job goals must contain specific goals to be attained within
10 two years of the benefit date.
11 Subd. 5. [PUBLIC NOTICE AND HEARING.] (a) Before granting
12 a business subsidy that exceeds $500,000 for a state government
13 .raptor and $100 000 for a local •overnment .raptor the .raptor
14 must provide public notice and a hearing on the subsidy. A
15 public hearing and notice pursuant to this subdivision is not
16 required if a hearing and notice on the subsidy is otherwise
17 required by law.
• 18 (b) Public notice of a proposed business subsidy under this
19 subdivision by a state governmentrantor must be
g published in
20 the State Register. Public notice of a proposed business
21 subsidy under this subdivision by'a local government grantor
22 must be published in a local newspaper of general circulation.
23 The public notice must identify the location at which
24 information about the business subsidy, including a copy of the
25 subsidy agreement, is available. Published notice should be
26 sufficiently conspicuous in size and placement to distinguish
27 the notice from the surrounding text. The grantor must make the
28 information available in printed paper copies and, if possible,
29 on the Internet. The government agency must provide at least a
30 ten-day notice for the public hearing.
31 (c) The public notice must include the date, time, and
32 place of the hearing.
33 (d) The public hearing by a state government grantor must
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34 be held in St. Paul.
35 Subd. 6. [FAILURE TO MEET GOALS.] The subsidy agreement
36 must specify the recipient'sobligation if the recipient does
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1 not fulfill the agreement. At a minimum, the agreement must
2 require a recipient failing to meet subsidy agreement goals to
3 pay back the assistance plus interest to the grantor provided
4 that repayment may be prorated to reflect partial fulfillment of
5 goals. The interest rate must be set at the implicit price
6 deflator defined under section 275.70, subdivision 2. The
7 grantor, after a public hearing, may extend for up to one year
8 the period for meeting the goals provided in a subsidy agreement.
9 A recipient that fails to meet the terms of a subsidy
10 agreement may not receive a business subsidy from any grantor
11 for a period of five years from the date of failure or until a
12 recipient satisfies its repayment obligation under this
13 subdivision, whichever occurs first.
14 Before a grantor signs a business subsidy agreement, the •
15 grantor must check with the compilation and summary report
16 required by this section'.to determine if the recipient is
17 eligible to receive a business subsidy.
18 Subd. 7. [REPORTS BY RECIPIENTS TO GRANTORS.] (a) A •
19 business subsidy grantor must.monitor the progress by the
20 recipient in achieving agreement goals.
21 (b) A recipient must provide information regarding goals
22 and results for two years after the benefit date or until the
23 goals are met, whichever is later. If the goals are not met,
24 the recipient must continue to provide information on the
25' subsidy until the subsidy is repaid. The information must be
26 filed on forms developed by the commissioner in cooperation with
27 representatives of local government. Copies of the completed
28 forms must be sent to the commissioner and the local government
29 agency that provided the business subsidy. The report must
30 include:
31 (1) the type, public purpose, and amount of subsidies and
32 type of district if the subsidy is tax increment financing;
33 (2) the hourly wage of each job created with separate bands
34 of wages; •
35 (3) the sum of the hourly wages and cost of health
36 insurance provided by the employer with separate bands of wages;
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1 (4) the date the job and wage goals will be reached;
• 2 (5) a statement of goals identified in the subsidy
3 agreement and an update on achievement of those goals;
4 (6) the location of the recipient prior to receiving the
5 business subsidy; •
6 (7) why the recipient did not complete the project outlined
7 in the subsidy agreement at their previous location, if the
8 recipient was previously located at another site in Minnesota;
9 (8) the name and address of the parent corporation of the
10 recipient, if any;
11 (9) a list of all financial assistance by all grantors for
12 the project; and
13 (10) other information the commissioner may request.
' 14 A report must be filed no later than March 1 of each year for
15 the previous year and within 30 days after the deadline for
16 meeting the job and wage goals. .
17 (c) Financial assistance that is excluded from the
11118 definition of "business subsidy" by subdivision 3, clauses (4) ,
19 (5) , (8) , and (16) is subject to the reporting requirements of
20 this subdivision, except that the report of the recipient must
21 include: •
22 (1) the type, public purpose, and amount of the financial
23 assistance, and type of district if the subsidy is tax increment .
24 financing;
25 (2) progress towards meeting goals stated in the subsidy
26 agreement and the public purpose of the assistance;
27 (3) the hourly wage of each job created with separate bands
28 of wages;
29 (4) the sum of the hourly wages and cost of health
30 insurance provided by the employer with separate bands of wages;'
31 (5) the location of. the recipient prior to receiving the
32 assistance; and
33 (6) other information the grantor requests.
0 4 (d) If the recipient does not submit its report, the local
5 government agency must mail the recipient a warning within one
36 week of the required filing date. If, after 14 days of the
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1 postmarked date of the warning, the recipient fails to provide a
2 report, the recipient must pay to the grantor a penalty of $100
3 for each subsequent day until the report is filed. The maximum
4 penalty shall not exceed :$1000.
5 Subd. 8. [GOVERNMENT REPORTS.] (a) The commissioner, by
6 July 1 of each year must provide to the legislature a summary
7 of the reports submitted to the department. The commissioner of
. 8 trade and economic development must coordinate the production of
9 reports so that useful comparisons across time periods and
10 across grantors can be made. The commissioner may add other
11 information to the report as the commissioner deems necessary to
12 evaluate business subsidies.
13 (b) Local government agencies of a local
government with a
14 population of more than 2500 and state government agencies,
15 regardless of whether or not they awarded any business
16 subsidies, must file a report by April 1 of each year with the
17 commissioner. Local government agencies of a local government
18 with a population of 2500 or less are exempt from filing this •
19 report if they have not awarded a business subsidy in the past
20 five years. The report, prepared by the commissioner shall
21 contain a summary of the business subsidy reports submitted that
22 year. The local government agency must include a list of
23 recipients that did not complete the report and of recipients
24 that have 'not met their job and wage goals within two years and
25 the steps being taken to bring them into compliance or to recoup
26 the subsidy.
27 If the commissioner has not received the report by April 1
28 from an entity 'required to report, the commissioner shall issue
29 a warning to the government agency. If the commissioner has
30 still not received the report by June 1 of that same year from
31 an entity required to report, then that government agency may
32 not award any business subsidies until the report has been filed.
33 (c) The commissioner of trade and economic development must
34 provide information on reporting requirements to state and local•
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35 government agencies.
36 Subd. 9_ [COMPILATION. AND SUMMARY REPORT.] The department
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1 of trade and economic development must publish a compilation and
• 2 summary of the results of the reports for the previous calendar
3 year by July 1 of each year The reports of the government
4 agencies to the department and the compilation and summary
5 report of the department must be made available to the public.
6 Among the information in the summary and compilation
7 report, the commissioner must include:
8 (1) total amount of subsidies awarded in each development
9 region of the state;
10 (2) distribution of business subsidy amounts by size of the
11 business subsidy; •
12 (3) distribution of business subsidy amounts by time
13 category, such as monthly or quarterly;
14 (4) distribution of subsidies by type and by public
15 purpose;
16 (5) percent of all business subsidies that reached their
17 goals;
18 (6) percent of business subsidies that did not reach their
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19 goals by two years from the benefit date;
20 (7) total dollar amount of business subsidies that did not
21 meet their goals after two years from the benefit date;
22 (8) percent of subsidies that did not meet their goals and
23 that did not receive repayment;
24 (9) list of recipients that have failed to meet the terms
25 of a subsidy. agreement in the past five years;
26 (10) number of part-time and full-time jobs within separate
27 bands of wages; and
28 (11) benefits paid within separate bands of wages.
29 Sec. 3. [116J.995] [ECONOMIC GRANTS. ]
30 An appropriation 'rider in an appropriation to the
31 department of trade and economic development that specifies that
32 the appropriation be granted to a particular business or class
33 of businesses must contain a statement of the expected benefits
• 34 associated with the grant. At a minimum, the statement must
35 include goals for the number of jobs created, wages paid, and
36 the tax revenue increases due to the grant.
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1 Sec. 4. (REPEALER. ]
2 Minnesota Statutes 1998, section 116J.991, is repealed. •
3 Sec. 5. (EFFECTIVE DATE.] .
4 Sections 1 to 4 are effective for business subsidies
5 entered into or state appropriations authorized on or after
6 August 1, 1999.
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