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IIa ~1Cr1 N©ESOj\.19 ~' Trade & - ECOriOYri1C FACT SHEET: 2002 Business Subsidies Law Development What is the Business Subsidies Law? / The 2001 Minnesota Legislature amended Minn. Stat. §1167.994, subdivision 6 (Laws of Minnesota 2001, Chapter 7, Section 28) defining the implicit price deflator. No other significant changes were made to the business subsidy law. / Applies to business subsidy agreements signed on or after August 1, 1999. / Under the repealer of no effect section, agencies are subject to reporting requirements for subsidy agreements that were made between July 1, 1995 and July 31, 1999. The requirements under the law aze as follows: • a business receiving state or local government assistance for economic development orjob growth purposes must create a net increase in jobs in Minnesota two yeazs of receiving the assistance; • a government agency providing assistance must establish wage levels and job creation goals to be met by the business receiving assistance; • agencies should use the 1999 MBAF form for subsidy agreements that were made between July 1, 1995 and July 31, 1999; and, • a form should be submitted to DTED each year until the business has achieved all its goals. / For business subsidy agreements signed on or after August 1, 1999, the reporting requirements are more expansive. The law requires that a business subsidy must meet a public purpose and a business subsidy may not be granted until the grantor has adopted criteria after a public hearing. The law also requires [hat a recipient must enter into a subsidy agreement with a grantor that includes specific wage and job goals. / For agreements signed between January 1, 2002 and December 31, 2002 agencies should use the 2003 MBAF form and comply with the reporting requirements outlined in Minn. Stat. §1167.994 to §1167.995. A form should be submitted to DTED each year until the business has achieved all its goals. Copies of the MBAF forms are available on DTED's website. who does the law apply to, and for what types of subsidies? / State and local government agencies with the authority to provide business subsidies with state or local government funds, and entities created or authorized by a local government with this authority, aze subject to the law. The law gives a complete description of applicable agencies (i.e. "grantors"). / The law covers business subsidies to for-profit businesses, and to non-profits with at least 100 full- time equivalent positions and a ratio of highest to lowest paid employee, determined on the basis of full-time equivalent positions, exceeding 10 to 1. / Types of assistance meeting the definition of a'business subsidy' include: • state or local government agency grants; • contributions of personal property, real property, or infrastructure; • the principal amount of a loan at rates below those commercially available; • reductions or deferrals of taxes or fees, including tax increment financing (TIF); and, • guarantees of any payment under any loan, lease, or other obligation. / Under Minn. Stat. §1167.993, Subdivision 3; the law explicitly excludes 22 types of assistance from the definition of business subsidies, including: • 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; Deparuneo[ of Trade and Economic Development Page I of 6 January 22, 2003