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HomeMy WebLinkAbout02-12-09 IV a. Resulution on Subsidy Criteria HASTINGS ECONOMIC DEVELOPMENT & REDEVELOPMENT AUTHORITY RESOLUTION NO. 2-2009 Dated_________________ Financial Assistance and Business Subsidy Criteria After a public hearing, Commissioner ________________introduced the following Resolution and moved its adoption. BE IT RESOLVED by the Board of Commissioners of the Hastings Economic Development and Redevelopment Authority (HEDRA) as follows: WHEREAS: The Hastings Economic Development and Redevelopment Authority is a local government agency with the authority to grant financial assistance (grantor) to businesses (developer or recipient) under MS 116J.993; and WHEREAS: The power to grant financial assistance (business subsidies) is limited by Minnesota Statutes 116J.993 through 116J.995 (the statute) and as it may be amended; and WHEREAS: The statute requires that a business subsidy must meet a public purpose and the grantor must adopt criteria, after a public hearing, for the consideration of business subsidies; NOW THEREFORE BE IT RESOLVED: 1. PURPOSE AND DEFINITION 1.01 The purpose of these criteria is to establish the policy of the grantor for the use of business subsidies for private development and redevelopment. 1.02 The grantor shall have the option of amending, or waiving sections of the criteria when determined necessary or appropriate. Waivers of criteria are not subject to a public hearing. 1.03 The statute?s definition of a subsidy and exceptions to the law (116J.993) are attached. Terms used in this criteria policy statement are intended to have the same meanings as used in the law, and these criteria shall apply only with respect to subsidies granted under the law if and to the extent required thereby. 2. PUBLIC PURPOSES 2.01 A business subsidy must meet a public purpose. For HEDRA projects, public purposes include but are not limited to the following: a.Increase the tax base. This is not a sufficient public purpose by itself; a subsidized project must have an additional public purpose; b. Retain existing jobs, provided that job loss is specific and demonstrable; c.Create quality jobs. Subsidized projects are expected to add new jobs at competitive wages, unless specifically waived (see 2.02); d.Enhance economic stability and address changes in the economy: by facilitating the development of new types of businesses, by facilitating the adjustment of existing businesses to meet new conditions and by encouraging vocational training and retraining; e.Encourage redevelopment and development investment in city-designated areas; f.Encourage the re-use and rehabilitation of historic properties and of sound, safe buildings, commercial and residential; g.Enhance clean air, water and soil by facilitating the cleanup of environmental problems or assisting improvements in the treatment and management of contaminants; h.Eliminate substandard buildings or blighting conditions; i.Encourage the relocation of uses that are non-conforming with the comprehensive plan, zoning ordinance, Shore Lands and Critical Areas ordinances, or contribute to unsafe conditions in their present location; j.Encourage the sustainable use of energy, resources and materials. 2.02 Not all projects assisted with subsidies must derive their public purpose and importance solely by job creation. Worthwhile projects that do not involve job creation may be approved for a subsidy given that they compensate with other public purposes. 3. BUSINESS SUBSIDY CRITERIA 3 .01 GENERAL. All new projects should meet the following minimum criteria. Meeting these criteria does not imply that the project will automatically be approved. Meeting these criteria creates no contractual rights on the part of any potential developer. Tenants of buildings owned by the recipient are not responsible for meeting the goals and conditions of the subsidy unless they are a party to the agreements. The grantor reserves the right to waive any provisions of these criteria. 3.02 JOB AND WAGE GOALS. When creation of jobs is the sole or primary public purpose of the project, the recipient should create the highest realistic number of jobs on the site at competitive wages. The recipient will commit to a goal of a number of new jobs and minimum rate of their wages and benefits for each project, taking into consideration the regional prevailing wage rates, wages paid for the types of jobs by competitors, regional and local economic and employment conditions, external economic forces beyond local control and the individual financial resources of the recipient. Gross wages for jobs retained or created will not be less than $10.00 per hour, for manufacturing, trades and professional services, or $7.00 an hour for retail, restaurant, hospitality and similar customer services, not including benefits. Benefits will be documented separately from wages. 3.03 PLANS AND CODES. The project must contribute or conform to plans, goals, guidelines and program requirements in the area for which the potential project is being considered. The project must conform to Hastings Comprehensive Plan, Land Use, Subdivision and other applicable ordinances. Required amendments, variances or special use permits must be approved or under consideration by the City or grantor at the time of project approval. 3.04 FIVE YEAR COMMITMENT. A recipient of a business subsidy must make a commitment to continue operations in the City limits for at least five years after the benefit date unless an exception is authorized by the grantor following a public hearing. The recipient must retain ownership of the project at least long enough to complete it, to stabilize its occupancy, to establish the project management, and to guarantee repayment of the business subsidy as required by law. 3.05 MARKET AND FINANCIAL FEASIBILITY. As a condition of approval of a business subsidy request, the grantor may undertake an independent underwriting of the project to help ensure that the request for assistance is valid and that the proposal is financially sound. The recipient shall provide market and financial feasibility studies, appraisals, site and building plans and cost estimates, regulatory reports, business records and information provided to private lenders for the project, and other information required by the grantor. 3.06 COMMUNITY COSTS. Each project shall be evaluated against the following costs and risks to the community before approval. The recipient shall provide any information or data that the grantor or its financial consultants may require in order to proceed with evaluation. a.Business subsidies will not normally be provided to a project that has the financial feasibility to proceed without the benefit of the subsidy. Consideration will be given to projects in which public purposes and community benefits of the project and the subsidy are clearly desirable and compensating. b.All business subsidy requests should optimize the development potential of a site. The amount of land provided as a subsidy will be appropriate for the size of the proposed building and reasonable needs of the business. c.The value of subsidy should be reduced to the lowest possible level and least amount of time by first maximizing the use of private debt and equity financing, other funding sources and income producing vehicles that can be structured into the project. d.Business subsidies should normally not be used for projects which reduce the property taxes, over the long term, for the site below the amount paid before the project. Consideration will be given for remediation, redevelopment, rehabilitation and historic preservation projects with benefits in addition to property taxes. e.Business subsidies should normally not be used to support speculative industrial, commercial, and office projects. In general, speculative projects are defined as those projects which do not have letters of intent or pre-leasing agreements for an acceptable amount of the available leaseable space. This may not be applicable if the developer recipient is the tenant of a majority of the space. f.Business subsidies will not be granted when the credentials and record of the developer or recipient, in the sole judgment of the grantor, are inadequate. g.Business subsidies will not be used to support projects that place unusual or excessive demands on City services, capital or operating expenditures such as reducing the capacity of existing services or exceed the average city expenditures in comparison to similar facilities. Consideration will be given to the total public costs that are required to support the project, including offsite facilities costs and infrastructure requirements. h.Business subsidies will not be used for projects that would generate significant environmental problems in the opinion of the local, state, or federal governments. i.Business subsidies will not be used for projects involving heritage preservation sites without the approval of the Heritage Preservation Commission. j.Business subsidies should normally not be used for projects which are likely to create a situation which would require additional public assistance in other areas of the community unless the resources are made available for the remedy. k.The grantor?s costs related to providing a business subsidy, including but not limited to financial analysis consultants, tax increment documents, legal, title, survey, recording and closing costs will be paid by the recipient of the subsidy unless specifically waived. 5. SUBSIDY AGREEMENT. The recipient must enter into a business subsidy agreement with the grantor which will include, but not be limited to the following: 1) Description of the subsidy; 2) Statement of the public purpose; 3) Statement of the reason why the subsidy is needed; 4) Goals for subsidy including the number of jobs created or retained and the wages and benefits; 5) Description of the financial obligation of the recipient if the goals are not met and conditions under which the subsidy must be repaid in all or part; 6) Commitment to continue operations in the City for a minimum of five years after the benefit date, as defined in the statute; 7) Provisions securing repayment of the subsidy in the event of default or failure to meet goals; 8) Reporting requirements of the recipient to the grantor and the State as detailed in MS116J.994, Sub. 7. Commissioner ___________________made a second and upon being put to a vote, the following board members voted in favor of the resolution: Ayes: Nays: Absent: Whereupon the President declared the resolution duly adopted by the Board of the Hastings Economic Development & Redevelopment Authority. _______________________________ Pamela Holzem, President ATTEST: _______________________ John Grossman, Director MINNESOTA STATUTES 2008 116J.993 116J.993 DEFINITIONS. Subdivision 1. Scope. For the purposes of sections 116J.993 to 116J.995, the terms defined in this section have the meanings given them. Subd. 2. Benefit date. "Benefit date" means the date that the recipient receives the business subsidy. If the business subsidy involves the purchase, lease, or donation of physical equipment, then the benefit date begins when the recipient puts the equipment into service. If the business subsidy is for improvements to property, then the benefit date refers to the earliest date of either: (1) when the improvements are finished for the entire project; or (2) when a business occupies the property. If a business occupies the property and the subsidy grantor expects that other businesses will also occupy the same property, the grantor may assign a separate benefit date for each business when it first occupies the property. Subd. 3. Business subsidy. "Business subsidy" or "subsidy" means a state or 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. The following forms of financial assistance are not 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; Copyright ©2008 by the Revisor of Statutes, State of Minnesota.. All Rights Reserved. 2 MINNESOTA STATUTES 2008 116J.993 (8) assistance for pollution control or abatement, including assistance for a tax increment financing hazardous substance subdistrict as defined under section 469.174, 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 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. Subd. 4. Grantor. "Grantor" means any state or local government agency with the authority to grant a business subsidy. Subd. 5. Local government agency. "Local government agency" includes a statutory or home rule charter city, housing and redevelopment authority, town, county, port authority, Copyright ©2008 by the Revisor of Statutes, State of Minnesota.. All Rights Reserved. 3 MINNESOTA STATUTES 2008 ll6J.993 economic development authority, community development agency, nonprofit entity created by a local government agency, or any other entity created by or authorized by a local government with authority to provide business subsidies. Subd. 6. Recipient. "Recipient" means any for-profit or nonprofit business entity that receives a business subsidy. Only nonprofit entities with at least 100 full-time equivalent positions and with a ratio of highest to lowest paid employee, that exceeds ten to one, determined on the basis of full-time equivalent positions, are included in this definition. Subd. 6a. Residence. "Residence" means the place where an individual has established a permanent home from which the individual has no present intention of moving. Subd. 7. State government agency. "State government agency" means any state agency that has the authority to award business subsidies. History: 1999 c 243 art 12 s 1; 2000 c 482 s 1; 2004 c 206 s 52; ISp2005 c 3 art 7 s 1; 2006 c259art4sl; 2008c366art5s2 Copyright ©2008 by the Revisor of Statutes, State of Minnesota.. All Rights Reserved.