SF 2893

1st Unofficial Engrossment - 81st Legislature (1999 - 2000) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to business subsidies; providing 
  1.3             clarification; amending Minnesota Statutes 1999 
  1.4             Supplement, sections 116J.993, subdivision 3; 
  1.5             116J.994, subdivisions 1, 3, 4, 5, 6, 7, 8, and 9; and 
  1.6             116J.995. 
  1.7   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.8      Section 1.  Minnesota Statutes 1999 Supplement, section 
  1.9   116J.993, subdivision 3, is amended to read: 
  1.10     Subd. 3.  [BUSINESS SUBSIDY.] "Business subsidy" or 
  1.11  "subsidy" means a state or local government agency grant, 
  1.12  contribution of personal property, real property, 
  1.13  infrastructure, the principal amount of a loan at rates below 
  1.14  those commercially available to the recipient, any reduction or 
  1.15  deferral of any tax or any fee, any guarantee of any payment 
  1.16  under any loan, lease, or other obligation, or any preferential 
  1.17  use of government facilities given to a business. 
  1.18     The following forms of financial assistance are not a 
  1.19  business subsidy: 
  1.20     (1) a business subsidy of less than $25,000 $100,000; 
  1.21     (2) assistance that is generally available to all 
  1.22  businesses or to a general class of similar businesses, such as 
  1.23  a line of business, size, location, or similar general criteria; 
  1.24     (3) public improvements to buildings or lands owned by the 
  1.25  state or local government that serve a public purpose and do not 
  1.26  principally benefit a single business or defined group of 
  2.1   businesses at the time the improvements are made; 
  2.2      (4) redevelopment property polluted by contaminants as 
  2.3   defined in section 116J.552, subdivision 3; 
  2.4      (5) assistance provided for the sole purpose of renovating 
  2.5   old or decaying building stock or bringing it up to code and 
  2.6   assistance provided for designated historic preservation 
  2.7   districts, provided that the assistance is equal to or less than 
  2.8   50 percent of the total cost; 
  2.9      (6) assistance provided to organizations whose primary 
  2.10  mission is to provide job readiness and training services if the 
  2.11  sole purpose of the assistance is to provide those services; 
  2.12     (7) assistance for housing; 
  2.13     (8) assistance for pollution control or abatement, 
  2.14  including assistance for a tax increment financing hazardous 
  2.15  substance subdistrict as defined under section 469.174, 
  2.16  subdivision 23; 
  2.17     (9) assistance for energy conservation; 
  2.18     (10) tax reductions resulting from conformity with federal 
  2.19  tax law; 
  2.20     (11) workers' compensation and unemployment compensation; 
  2.21     (12) benefits derived from regulation; 
  2.22     (13) indirect benefits derived from assistance to 
  2.23  educational institutions; 
  2.24     (14) funds from bonds allocated under chapter 474A issued 
  2.25  by government agencies on behalf of entities without actual 
  2.26  direct financial assistance being provided by the issuing 
  2.27  authority; 
  2.28     (15) assistance for a collaboration between a Minnesota 
  2.29  higher education institution and a business; 
  2.30     (16) assistance for a tax increment financing soils 
  2.31  condition district as defined under section 469.174, subdivision 
  2.32  19; 
  2.33     (17) redevelopment when the recipient's investment in the 
  2.34  purchase of the site and in site preparation is 70 percent or 
  2.35  more of the assessor's current year's estimated market 
  2.36  value; and 
  3.1      (18) general changes in tax increment financing law and 
  3.2   other general tax law changes of a principally technical nature; 
  3.3      (19) federal assistance until the assistance has been 
  3.4   repaid to, and reinvested by, the state or local government 
  3.5   agency; and 
  3.6      (20) funds from dock and wharf bonds issued by a seaway 
  3.7   port authority. 
  3.8      Sec. 2.  Minnesota Statutes 1999 Supplement, section 
  3.9   116J.994, subdivision 1, is amended to read: 
  3.10     Subdivision 1.  [PUBLIC PURPOSE.] A business subsidy must 
  3.11  meet a public purpose other than which may include, but may not 
  3.12  be limited to, increasing the tax base.  Job retention may only 
  3.13  be used as a public purpose in cases where job loss is imminent 
  3.14  specific and demonstrable. 
  3.15     Sec. 3.  Minnesota Statutes 1999 Supplement, section 
  3.16  116J.994, subdivision 3, is amended to read: 
  3.17     Subd. 3.  [SUBSIDY AGREEMENT.] (a) A recipient must enter 
  3.18  into a subsidy agreement with the grantor of the subsidy that 
  3.19  includes: 
  3.20     (1) a description of the subsidy, including the amount and 
  3.21  type of subsidy, and type of district if the subsidy is tax 
  3.22  increment financing; 
  3.23     (2) a statement of the public purposes for the subsidy; 
  3.24     (3) measurable, specific, and tangible goals for the 
  3.25  subsidy; 
  3.26     (4) a description of the financial obligation of the 
  3.27  recipient if the goals are not met; 
  3.28     (5) a statement of why the subsidy is needed; 
  3.29     (6) a commitment to continue operations at the site where 
  3.30  the subsidy is used for at least five years after the benefit 
  3.31  date; 
  3.32     (7) the name and address of the parent corporation of the 
  3.33  recipient, if any; and 
  3.34     (8) a list of all financial assistance by all grantors for 
  3.35  the project. 
  3.36     (b) Business subsidies in the form of grants must be 
  4.1   structured as forgivable loans.  If a business subsidy is not 
  4.2   structured as a forgivable loan For other types of business 
  4.3   subsidies, the agreement must state the fair market value of the 
  4.4   subsidy to the recipient, including the value of conveying 
  4.5   property at less than a fair market price, or other in-kind 
  4.6   benefits to the recipient. 
  4.7      (c) If a business subsidy benefits more than one recipient, 
  4.8   the grantor must assign a proportion of the business subsidy to 
  4.9   each recipient that signs a subsidy agreement.  The proportion 
  4.10  assessed to each recipient must reflect a reasonable estimate of 
  4.11  the recipient's share of the total benefits of the project. 
  4.12     (d) The state or local government agency and the recipient 
  4.13  must both sign the subsidy agreement and, if the grantor is a 
  4.14  local government agency, the agreement must be approved by the 
  4.15  local elected governing body, except for the St. Paul Port 
  4.16  Authority and a seaway port authority. 
  4.17     (e) Notwithstanding the provision in subdivision 6, a 
  4.18  recipient may be authorized to move from the site where the 
  4.19  subsidy is used within the five-year period after the benefit 
  4.20  date if, after a public hearing, the grantor approves the 
  4.21  recipient's request to move. 
  4.22     Sec. 4.  Minnesota Statutes 1999 Supplement, section 
  4.23  116J.994, subdivision 4, is amended to read: 
  4.24     Subd. 4.  [WAGE AND JOB GOALS.] The subsidy agreement, in 
  4.25  addition to any other goals, must include:  (1) goals for the 
  4.26  number of jobs created, which may include separate goals for the 
  4.27  number of part-time or full-time jobs, or, in cases where job 
  4.28  loss is imminent specific and demonstrable, goals for the number 
  4.29  of jobs retained; and (2) wage goals for the jobs created or 
  4.30  retained.  After a public hearing, if the creation or retention 
  4.31  of jobs is determined not to be a goal, the wage and job goals 
  4.32  may be set at zero. 
  4.33     In addition to other specific goal time frames, the wage 
  4.34  and job goals must contain specific goals to be attained within 
  4.35  two years of the benefit date. 
  4.36     Sec. 5.  Minnesota Statutes 1999 Supplement, section 
  5.1   116J.994, subdivision 5, is amended to read: 
  5.2      Subd. 5.  [PUBLIC NOTICE AND HEARING.] (a) Before granting 
  5.3   a business subsidy that exceeds $500,000 for a state government 
  5.4   grantor and $100,000 for a local government grantor, the grantor 
  5.5   must provide public notice and a hearing on the subsidy.  A 
  5.6   public hearing and notice under this subdivision is not required 
  5.7   if a hearing and notice on the subsidy is otherwise required by 
  5.8   law. 
  5.9      (b) Public notice of a proposed business subsidy under this 
  5.10  subdivision by a state government grantor, other than the iron 
  5.11  range resources and rehabilitation board, must be published in 
  5.12  the State Register.  Public notice of a proposed business 
  5.13  subsidy under this subdivision by a local government grantor or 
  5.14  the iron range resources and rehabilitation board must be 
  5.15  published in a local newspaper of general circulation.  The 
  5.16  public notice must identify the location at which information 
  5.17  about the business subsidy, including a copy summary of 
  5.18  the terms of the subsidy agreement, is available.  Published 
  5.19  notice should be sufficiently conspicuous in size and placement 
  5.20  to distinguish the notice from the surrounding text.  The 
  5.21  grantor must make the information available in printed paper 
  5.22  copies and, if possible, on the Internet.  The government agency 
  5.23  must provide at least a ten-day notice for the public hearing. 
  5.24     (c) The public notice must include the date, time, and 
  5.25  place of the hearing. 
  5.26     (d) The public hearing by a state government grantor other 
  5.27  than the iron range resources and rehabilitation board must be 
  5.28  held in St. Paul. 
  5.29     (e) If more than one nonstate grantor provides a business 
  5.30  subsidy to the same recipient, the nonstate grantors may 
  5.31  designate one nonstate grantor to hold a single public hearing 
  5.32  regarding the business subsidies provided by all nonstate 
  5.33  grantors.  For the purposes of this paragraph, "nonstate 
  5.34  grantor" includes the iron range resources and rehabilitation 
  5.35  board. 
  5.36     Sec. 6.  Minnesota Statutes 1999 Supplement, section 
  6.1   116J.994, subdivision 6, is amended to read: 
  6.2      Subd. 6.  [FAILURE TO MEET GOALS.] The subsidy agreement 
  6.3   must specify the recipient's obligation if the recipient does 
  6.4   not fulfill the agreement.  At a minimum, the agreement must 
  6.5   require a recipient failing to meet subsidy agreement goals to 
  6.6   pay back the assistance plus interest to the grantor or, at the 
  6.7   grantor's option, to the account created under section 116J.551 
  6.8   provided that repayment may be prorated to reflect partial 
  6.9   fulfillment of goals.  The interest rate must be set at no less 
  6.10  than the implicit price deflator as defined under section 
  6.11  275.70, subdivision 2.  The grantor, after a public hearing, may 
  6.12  extend for up to one year the period for meeting the goals 
  6.13  provided in a subsidy agreement. 
  6.14     A recipient that fails to meet the terms of a subsidy 
  6.15  agreement may not receive a business subsidy from any grantor 
  6.16  for a period of five years from the date of failure or until a 
  6.17  recipient satisfies its repayment obligation under this 
  6.18  subdivision, whichever occurs first.  
  6.19     Before a grantor signs a business subsidy agreement, the 
  6.20  grantor must check with the compilation and summary report 
  6.21  required by this section to determine if the recipient is 
  6.22  eligible to receive a business subsidy. 
  6.23     Sec. 7.  Minnesota Statutes 1999 Supplement, section 
  6.24  116J.994, subdivision 7, is amended to read: 
  6.25     Subd. 7.  [REPORTS BY RECIPIENTS TO GRANTORS.] (a) A 
  6.26  business subsidy grantor must monitor the progress by the 
  6.27  recipient in achieving agreement goals. 
  6.28     (b) A recipient must provide information regarding goals 
  6.29  and results for two years after the benefit date or until the 
  6.30  goals are met, whichever is later.  If the goals are not met, 
  6.31  the recipient must continue to provide information on the 
  6.32  subsidy until the subsidy is repaid.  The information must be 
  6.33  filed on forms developed by the commissioner in cooperation with 
  6.34  representatives of local government.  Copies of the completed 
  6.35  forms must be sent to the commissioner and the local government 
  6.36  agency that provided the business subsidy to the local 
  7.1   government agency that provided the subsidy or to the 
  7.2   commissioner if the grantor is a state agency.  The report must 
  7.3   include: 
  7.4      (1) the type, public purpose, and amount of subsidies and 
  7.5   type of district, if the subsidy is tax increment financing; 
  7.6      (2) the hourly wage of each job created with separate bands 
  7.7   of wages; 
  7.8      (3) the sum of the hourly wages and cost of health 
  7.9   insurance provided by the employer with separate bands of wages; 
  7.10     (4) the date the job and wage goals will be reached; 
  7.11     (5) a statement of goals identified in the subsidy 
  7.12  agreement and an update on achievement of those goals; 
  7.13     (6) the location of the recipient prior to receiving the 
  7.14  business subsidy; 
  7.15     (7) why the recipient did not complete the project outlined 
  7.16  in the subsidy agreement at their previous location, if the 
  7.17  recipient was previously located at another site in Minnesota; 
  7.18     (8) the name and address of the parent corporation of the 
  7.19  recipient, if any; 
  7.20     (9) a list of all financial assistance by all grantors for 
  7.21  the project; and 
  7.22     (10) other information the commissioner may request. 
  7.23  A report must be filed no later than March 1 of each year for 
  7.24  the previous year and within 30 days after the deadline for 
  7.25  meeting the job and wage goals.  The local agency must forward 
  7.26  copies of the reports received by recipients to the commissioner 
  7.27  by April 1.  
  7.28     (c) Financial assistance that is excluded from the 
  7.29  definition of "business subsidy" by section 116J.993, 
  7.30  subdivision 3, clauses (4), (5), (8), and (16) is subject to the 
  7.31  reporting requirements of this subdivision, except that the 
  7.32  report of the recipient must include instead:  
  7.33     (1) the type, public purpose, and amount of the financial 
  7.34  assistance, and type of district if the subsidy assistance is 
  7.35  tax increment financing; 
  7.36     (2) progress towards meeting goals stated in the subsidy 
  8.1   assistance agreement and the public purpose of the assistance; 
  8.2      (3) if the agreement includes job creation, the hourly wage 
  8.3   of each job created with separate bands of wages; 
  8.4      (4) if the agreement includes job creation, the sum of the 
  8.5   hourly wages and cost of health insurance provided by the 
  8.6   employer with separate bands of wages; 
  8.7      (5) the location of the recipient prior to receiving the 
  8.8   assistance; and 
  8.9      (6) other information the grantor requests. 
  8.10     (d) If the recipient does not submit its report, the local 
  8.11  government agency must mail the recipient a warning within one 
  8.12  week of the required filing date.  If, after 14 days of the 
  8.13  postmarked date of the warning, the recipient fails to provide a 
  8.14  report, the recipient must pay to the grantor a penalty of $100 
  8.15  for each subsequent day until the report is filed.  The maximum 
  8.16  penalty shall not exceed $1,000.  
  8.17     Sec. 8.  Minnesota Statutes 1999 Supplement, section 
  8.18  116J.994, subdivision 8, is amended to read: 
  8.19     Subd. 8.  [REPORTS BY GRANTORS.] (a) Local government 
  8.20  agencies of a local government with a population of more than 
  8.21  2,500 and state government agencies, regardless of whether or 
  8.22  not they have awarded any business subsidies, must file a report 
  8.23  by April 1 of each year with the commissioner.  Local government 
  8.24  agencies of a local government with a population of 2,500 or 
  8.25  less are exempt from filing this report if they have not awarded 
  8.26  a business subsidy in the past five years.  The local government 
  8.27  agency report must include a list of recipients that did not 
  8.28  complete the recipient report required under subdivision 7 and a 
  8.29  list of recipients that have not met their job and wage goals 
  8.30  within two years and the steps being taken to bring them into 
  8.31  compliance or to recoup the subsidy.  
  8.32     If the commissioner has not received the report by April 1 
  8.33  from an entity required to report, the commissioner shall issue 
  8.34  a warning to the government agency.  If the commissioner has 
  8.35  still not received the report by June 1 of that same year from 
  8.36  an entity required to report, then that government agency may 
  9.1   not award any business subsidies until the report has been filed.
  9.2      (b) The commissioner of trade and economic development must 
  9.3   provide information on reporting requirements to state and local 
  9.4   government agencies. 
  9.5      Sec. 9.  Minnesota Statutes 1999 Supplement, section 
  9.6   116J.994, subdivision 9, is amended to read: 
  9.7      Subd. 9.  [COMPILATION AND SUMMARY REPORT.] The department 
  9.8   of trade and economic development must publish a compilation and 
  9.9   summary of the results of the reports for the previous calendar 
  9.10  year by July August 1 of each year.  The reports of the 
  9.11  government agencies to the department and the compilation and 
  9.12  summary report of the department must be made available to the 
  9.13  public. 
  9.14     The commissioner must coordinate the production of reports 
  9.15  so that useful comparisons across time periods and across 
  9.16  grantors can be made.  The commissioner may add other 
  9.17  information to the report as the commissioner deems necessary to 
  9.18  evaluate business subsidies.  Among the information in the 
  9.19  summary and compilation report, the commissioner must include: 
  9.20     (1) total amount of subsidies awarded in each development 
  9.21  region of the state; 
  9.22     (2) distribution of business subsidy amounts by size of the 
  9.23  business subsidy; 
  9.24     (3) distribution of business subsidy amounts by time 
  9.25  category, such as monthly or quarterly; 
  9.26     (4) distribution of subsidies by type and by public 
  9.27  purpose; 
  9.28     (5) percent of all business subsidies that reached their 
  9.29  goals; 
  9.30     (6) percent of business subsidies that did not reach their 
  9.31  goals by two years from the benefit date; 
  9.32     (7) total dollar amount of business subsidies that did not 
  9.33  meet their goals after two years from the benefit date; 
  9.34     (8) percent of subsidies that did not meet their goals and 
  9.35  that did not receive repayment; 
  9.36     (9) list of recipients that have failed to meet the terms 
 10.1   of a subsidy agreement in the past five years and have not 
 10.2   satisfied their repayment obligations; 
 10.3      (10) number of part-time and full-time jobs within separate 
 10.4   bands of wages; and 
 10.5      (11) benefits paid within separate bands of wages. 
 10.6      Sec. 10.  Minnesota Statutes 1999 Supplement, section 
 10.7   116J.995, is amended to read: 
 10.8      116J.995 [ECONOMIC GRANTS.] 
 10.9      An appropriation rider in an appropriation to the 
 10.10  department of trade and economic development that specifies that 
 10.11  the appropriation be granted to a particular business or class 
 10.12  of businesses must contain a statement of the expected benefits 
 10.13  associated with the grant.  At a minimum, the statement must 
 10.14  include goals for the number of jobs created, wages paid, and 
 10.15  the tax revenue increases due to the grant.  The wage and job 
 10.16  goals must contain specific goals to be attained within two 
 10.17  years of the benefit date.  The statement must specify the 
 10.18  recipient's obligation if the recipient does not attain the 
 10.19  goals.  At a minimum, the statement must require a recipient 
 10.20  failing to meet the job and wage goals to pay back the 
 10.21  assistance plus interest to the department of trade and economic 
 10.22  development provided that repayment may be prorated to reflect 
 10.23  partial fulfillment of goals.  The interest rate must be set at 
 10.24  the implicit price deflator defined under section 275.70, 
 10.25  subdivision 2.  The legislature, after a public hearing, may 
 10.26  extend for up to one year the period for meeting the goals 
 10.27  provided in the statement.