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Developing Criteria and Stating Public Purposes <br /> for Business Subsidies <br /> <br />Under Minn. Stat. §116J.993 through §116J.995, granting agencies must develop criteria for awarding <br />busir~ess subsidies after a public hearing. In addition, each business subsidy agreement must indicate a <br />public purpose. The law allows grantors flexibility in stating public purposes appropriate for their <br />communities, but requires that agreements meet a public purpose which may include, but may not be <br />limited to, increasing the tax base and that job retention be used as a public purpose only when job loss is <br />specific and demonstrable. Although the law does not require public purposes to be addressed in the <br />criteria, grantors may want to refer to the public purposes below for criteria ideas. The following public <br />purposes and criteria were recommended by the legislatively established Corporate Subsidy Reform <br />Commission. <br /> <br />Enhancing Economic Diversity <br /> In what ways does the project improve the mix of businesses in the area so as to: (1) allow the area <br /> to participate in fast-growing industries; (2) protect the area from adverse economic consequences <br /> caused by slow growth or declining industries that are dominant in the area; and (3) provide <br /> essential consumer services, or develop a network of local suppliers to businesses within the <br /> community where they otherwise do not exist? <br /> <br />Creating High-Quality Job Growth <br />,/' How many new jobs will be created, and what will they pay? <br /> How do wages proposed to be paid compare to community wage levels? <br /> How many jobs will be created with opportunities for career advancement, educational <br /> opportunities, or occupational training? <br />,/ What are the projections for job growth at the project over the nest period of two to five years? <br />/ What are the fringe benefits that are payable for the jobs (particularly, is there child care, health <br /> care, and pension coverage)? <br /> <br />Providing for Job Retention, Where Loss is Imminent and Demonstrable <br /> After collecting the necessaq/documents, is there substantial evidence that the company will have <br /> to shut down involuntarily? <br /> After collecting the necessary documents, is there substantial evidence that the company has <br /> received an offer to move to another state or community that is attractive enough that a reasonable <br /> person would seriously consider a move for business reasons? <br /> What potential negative effect would the subsidy have on other competing businesses and overall <br /> area job quality? <br /> <br />Stabilizing the Community <br />,/ How will the project constitute a significant investment in an area that (1) has not historically <br /> received similar investments; (2) is a blighted area; or (3) is an economically depressed area? <br /> How will the project stimulate other investment or create spinoff businesses and jobs in the area? <br /> <br />Increasing the Tax Base <br />Note: The law requires business subsidies to meet a public purpose which may include, but may not be <br />limited to, increasing the tax base, but grantors may use increasing the tax base in conjunction with another <br />public purpose. <br /> How will the project uniquely affect the property tax base for all taxing jurisdictions, both short term <br /> and long term and both directly and indirectly? <br />/ How will the proj~ect affect other local business and individual property tax bills? <br /> <br />SOURCE: Corporate Subsidy Reform Commission, 1997 Corporate Subsidy Reform Commission Report, February 6, 1998. <br /> <br />Department of Trade and Economic Development Page 5 of 5 February 15, 2001 <br /> <br /> <br />