04-10-2006 EDA MIN - Laserfiche WebLink

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Economic Development Authority Minutes Page 2 April 10, 2006 6. Discuss Draft Amendments to the City's Business Subsidy Policy Director of Economic Development Catherine Mehelich reviewed the history and purpose of the City's Business Subsidies Polity. She stated that the proposed amendments are not significant, and that the revisions are mostly to "cleanup" the language for consistency with State Statue. She asked for the EDA's direction on whether or not the City should establish a specific employment goal or dollar amount of subsidy per job created. Ms. Mehelich reviewed the current employment criteria. She noted that the wage level set by the City will detemune the types of companies the City wants. Also, the EDA is asked how the City should define a "qualifying job" under the employment goals and whether or not existing jobs are to be included in addition to created jobs in dete~**+in+*+g the level of assistance. President Gongoll asked if it was correct tltaz the Business Subsidy Policy was a requirement of the state. Ms. Mehelich stated yes, that the City is required by State law to have a Business Subsidy policy before granting a subsidy over $25,000. Micro Loans over $75,000 qualify as a business subsidy. Commissioner Klinzing noted that the minimum hourly wage requirement was established by the City in accordance with the Statute, and a dollar amount of subsidy per new job is not required by the state. Cortunissioner Dwyer asked how the amendments to Business Center Policy would impact an application such as the data center, since the benefit was more about tax base than job creation. Ms. Mehelich stated that each application is reviewed on a case-by-case basis. Commissioner Dwyer asked if the City would be limiting their options. Ms. Mehelich stated that language could be written into address this issue. Even though this type of business brings in a significant lower job count, the wages for the jobs created are much higher. Community Development Director Scott Clark explained that the Business Subsidy Polity establishes a specific wage floor, but also gives the City an "out" in Section SD. He stated that they would be allowed to deviate from job policies based upon either valuation or job creation through language in the Tax Abatement or Tax Increment Agreement. Commissioner Farber stated he agreed and did not want to exclude potential businesses based on jobs alone. Ms. Mehelich stated that deviations from city policy are allowed as long as it is reported back to the State Department of Employment and Economic Development why the deviation was made and what other goals were established. Ms. Mehelich reviewed language in the State Statute regarding this issue. Commissioner Tveite suggested that a statement could be included stating that if a certain tax base threshold is exceeded, deviation from the wage and job goals could be considered. Commissioner Klinzing agreed that this type language should be included in the Policy to address this. Commissioner Motin stated that the existing Tax Abatement Policy does not have a job requirement in it. Ms. Mehelich stated that the Tax Increment Finance Polity and Micro-Loan Policy does have a requirement for jobs and wages. She stated that this requirement is lefr out of the Business Subsidy Policy to allow flexibility within the different financing tools. Mr. Clark stated that it is very clear the goal of the current policy was employment, and that if the EDA would like to have both options available, two different types of applications could be generated. Ms. Mehelich asked for comments from the Commission regarding "qualifying jobs". She gave an example of a company moving to Elk River from another community and were not