5.0. EDSR 08-19-2002 - Laserfiche WebLink

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iESTABLISHING CRITERIA, PUBLIC PURPOSES AND WAGE AND JOB GOALS 4 Q: What are requirements for awarding business subsidies by grantors who signed business subsidy agreements on or after August 1, 1999. A: Under the law, a business subsidy can not be granted until the grantor has adopted criteria after a public hearing in compliance with Minn. Stat. §116J.994, Section 3, Subdivision 2. The criteria may not be adopted on a case by case basis and must set specific minimum requirements that recipients must meet in order to be eligible to receive business subsidies. The criteria must include specific wage floor for the wages to be paid for the jobs created. The wage floor may be stated as a specific dollar amount i.e., $10.00 per hour or may be stated as a formula that will generate a specific dollar amount i.e., 1.5 X the federal minimum wage rate. A copy of the criteria must be submitted to DTED along with the first annual report after the agency has adopted the criteria. Also note that a granting agency that adopted criteria prior to May 1,2000,that complied with Minn. Stat. 1999 Supplement§116J.994, Section 3, Subdivision 2, has until May 1, 2003,to comply with the criteria requirements. Q: What kind of assistance can DTED provide to agencies in developing their criteria? A: DTED does not have the resources to work on a one-on-one basis with agencies to help them develop criteria that are appropriate for their community. However,the law allows for local flexibility, and though the public hearing process, encourages communities to discuss locally appropriate criteria(see DTED's 2000 Business Assistance Report for examples of criteria submitted by local government agencies). Q: How should grantors demonstrate that job loss is specific and demonstrable? A: DTED suggests that grantors use the following three criteria(excerpted from the 1997 Corporate Subsidy Reform Commission Report)to determine whether job loss is specific and demonstrable and to provide documentation of that determination: 1)After collecting the necessary documents, is there substantial evidence that the company will have to shut down involuntarily?; 2)After collecting the necessary documents, is there substantial evidence that the company has received an offer to move to another state or community that is attractive enough that a reasonable person would seriously consider a move for business reasons?; and 3)What potential negative effect would the subsidy have on other competing businesses and overall area job quality? APPROVAL BY ELECTED OFFICIALS Q: Are all economic development authorities and housing redevelopment authorities required to have all agreements approved by the full city council? A: Yes, even if representatives from the local elected governing body are appointed to the organization,the organization must have all business subsidy agreements approved by the full elected body. FAILURE TO FULFILL AGREEMENTS Q: If a recipient fulfills some but not all wage and job goals by the time they are to be attained and has not yet received the entire subsidy award, can assistance not yet received still go to that recipient if prorated to reflect partial goal attainment(e.g. could a business continue to receive some assistance under pay-as-you-go tax increment financing)? A: No, upon defaulting on an agreement,a recipient must fulfill repayment obligations and should not receive any additional assistance awarded under the agreement that has not yet been administered. • Department of Trade and Economic Development Page 4 of 5 February 20,2001