HomeMy WebLinkAboutIV.C - Resolution No. 2018-05 - Financial Assistance and Business Subsidy Criteria
HASTINGS ECONOMIC DEVELOPMENT & REDEVELOPMENT AUTHORITY
RESOLUTION NO. 2018-05
Dated: October 11, 2018
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 Minnesota Statutes Chapter 469; and
WHERAS: HEDRA is a local government agency with the authority to grant financial
assistance (grantor) to businesses (developer or recipient) under MS 116J.993 and Minnesota
Statutes Chapter 469; and
WHEREAS: Minnesota Statutes Sections 116J.993 through 116J.995 (the Statute), as it may be
amended, establishes regulations on the use of business subsidies, including the adoption of
criteria for awarding business subsidies; 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;
WHEREAS: HEDRA adopted Financial Assistance and Business Subsidy Criteria via the
adoption of Resolution No. 2-2009 on February 12, 2009; and
WHEREAS: HEDRA seeks to modify the existing Financial Assistance and Business Subsidy
Criteria as further described herein. Additions have been underlined and deletions have been
stricken.
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 pay at least federal minimum wage per hour, exclusive of benefits
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. The minimum
wages specified above will be reviewed annually.
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. Whenever possible, the business subsidy agreement will
be part of a broader development agreement for a project.
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 on this 11th day of October, 2018
_______________________________
Scott Sinclair, Vice President
ATTEST:
_______________________
John Hinzman, Director
This instrument drafted by:
City of Hastings (JH)
101 4th St. E.
Hastings, MN 55033