HF 791

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

  1.1                          A bill for an act
  1.2             relating to community development; regulating business 
  1.3             subsidies; proposing coding for new law in Minnesota 
  1.4             Statutes, chapter 116J; repealing Minnesota Statutes 
  1.5             1998, section 116J.991. 
  1.6   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.7      Section 1.  [116J.993] [DEFINITIONS.] 
  1.8      Subdivision 1.  [SCOPE.] For the purposes of sections 
  1.9   116J.993 to 116J.996, the terms defined in this section have the 
  1.10  meanings given them. 
  1.11     Subd. 2.  [BENEFIT DATE.] "Benefit date" means the date 
  1.12  that the recipient receives the business subsidy.  If the 
  1.13  business subsidy involves the purchase, lease, or donation of 
  1.14  physical equipment, then the benefit date begins when the 
  1.15  recipient puts the equipment into service.  If the business 
  1.16  subsidy is for improvements to property, then the benefit date 
  1.17  refers to the earliest date of either: 
  1.18     (1) when the improvements are finished for the entire 
  1.19  project; or 
  1.20     (2) when a business occupies the property.  If a business 
  1.21  occupies the property and the subsidy grantor expects that other 
  1.22  businesses will also occupy the same property, the grantor may 
  1.23  assign a separate benefit date for each business when it first 
  1.24  occupies the property. 
  1.25     Subd. 3.  [BUSINESS SUBSIDY.] "Business subsidy" or 
  2.1   "subsidy" means a state or local government agency grant, 
  2.2   contribution of personal property, real property, 
  2.3   infrastructure, the principal amount of a loan at rates below 
  2.4   those commercially available to the recipient, any reduction or 
  2.5   deferral of any tax or any fee, any guarantee of any payment 
  2.6   under any loan, lease, or other obligation, or any preferential 
  2.7   use of government facilities given to a business. 
  2.8      The following forms of financial assistance are not a 
  2.9   business subsidy: 
  2.10     (1) assistance that is generally available to all 
  2.11  businesses or to a general class of similar businesses, such as 
  2.12  a line of business, size, location, or similar general criteria; 
  2.13     (2) public improvements to buildings or lands owned by the 
  2.14  state or local government that serve a public purpose and do not 
  2.15  principally benefit a single business or defined group of 
  2.16  businesses at the time the improvements are made; 
  2.17     (3) redevelopment of blighted buildings or property 
  2.18  polluted by contaminants as defined in section 116J.552, 
  2.19  subdivision 3; 
  2.20     (4) assistance provided for the sole purpose of renovating 
  2.21  or bringing up to code old or decaying building stock and when 
  2.22  the assistance is matched by the business using private sources; 
  2.23     (5) assistance provided to organizations whose primary 
  2.24  mission is to provide job readiness and training services if the 
  2.25  sole purpose of the assistance is to provide those services; 
  2.26     (6) assistance for housing; 
  2.27     (7) assistance for pollution control or abatement; 
  2.28     (8) assistance for energy conservation; 
  2.29     (9) assistance awarded through direct and specific 
  2.30  legislation; 
  2.31     (10) tax reductions resulting from conformity with federal 
  2.32  tax law; 
  2.33     (11) workers' compensation and unemployment compensation; 
  2.34     (12) benefits derived from regulation; 
  2.35     (13) indirect benefits derived from assistance to 
  2.36  educational institutions; 
  3.1      (14) funds from bonds allocated under chapter 474A; 
  3.2      (15) assistance for a collaboration between a Minnesota 
  3.3   higher education institution and a business; and 
  3.4      (16) a business subsidy of less than $25,000. 
  3.5      Subd. 4.  [GRANTOR.] "Grantor" means any state or local 
  3.6   government agency with the authority to grant a business subsidy.
  3.7      Subd. 5.  [LOCAL GOVERNMENT AGENCY.] "Local government 
  3.8   agency" includes a statutory or home rule charter city, housing 
  3.9   and redevelopment authority, town, county, port authority, 
  3.10  economic development authority, community development agency, 
  3.11  nonprofit entity created by a local government agency, or any 
  3.12  other entity created by or authorized by a local government with 
  3.13  authority to provide business subsidies.  "Local government 
  3.14  agency" does not include the St. Paul port authority or a seaway 
  3.15  port authority. 
  3.16     Subd. 6.  [RECIPIENT.] "Recipient" means any for-profit or 
  3.17  nonprofit business entity that receives a business subsidy.  
  3.18  Only nonprofit entities with a ratio of highest to lowest paid 
  3.19  employee, determined on the basis of full-time equivalent 
  3.20  positions, exceeding ten to one are included in this definition. 
  3.21     Subd. 7.  [STATE GOVERNMENT AGENCY.] "State government 
  3.22  agency" means any state agency that has the authority to award 
  3.23  business subsidies.  State government agency includes the St. 
  3.24  Paul port authority and a seaway port authority.  
  3.25     Sec. 2.  [116J.994] [REGULATING LOCAL AND STATE BUSINESS 
  3.26  SUBSIDIES.] 
  3.27     Subdivision 1.  [PUBLIC PURPOSE.] A business subsidy must 
  3.28  meet a public purpose other than increasing the tax base.  Job 
  3.29  retention may only be used as a public purpose in cases where 
  3.30  job loss is imminent and demonstrable. 
  3.31     Subd. 2.  [DEVELOPING A SET OF CRITERIA.] A business 
  3.32  subsidy may not be granted until the grantor has adopted 
  3.33  criteria after a public hearing for awarding business subsidies 
  3.34  that comply with this section.  The criteria must include a 
  3.35  policy regarding the wages to be paid for the jobs created.  The 
  3.36  commissioner of trade and economic development may assist local 
  4.1   government agencies in developing criteria. 
  4.2      Subd. 3.  [SUBSIDY AGREEMENT.] (a) A recipient must enter 
  4.3   into a subsidy agreement with the grantor of the subsidy that 
  4.4   includes: 
  4.5      (1) a description of the subsidy, including the amount and 
  4.6   type of subsidy; 
  4.7      (2) a statement of the public purposes for the subsidy; 
  4.8      (3) goals for the subsidy; 
  4.9      (4) a description of the financial obligation of the 
  4.10  recipient if the goals are not met; 
  4.11     (5) a statement of why the subsidy is needed; 
  4.12     (6) a commitment to continue operations at the site where 
  4.13  the subsidy is used for at least five years after the benefit 
  4.14  date; 
  4.15     (7) the name and address of the parent corporation of the 
  4.16  recipient, if any; and 
  4.17     (8) a list of all financial assistance by all grantors for 
  4.18  the project. 
  4.19     (b) Business subsidies in the form of grants must be 
  4.20  structured as forgivable loans.  If a business subsidy is not 
  4.21  structured as a forgivable loan, the agreement must state the 
  4.22  fair market value of the subsidy to the recipient, including the 
  4.23  value of conveying property at less than a fair market price, or 
  4.24  other in-kind benefits to the recipient. 
  4.25     (c) If a business subsidy benefits more than one recipient, 
  4.26  the grantor must assign a proportion of the business subsidy to 
  4.27  each recipient that signs a subsidy agreement.  The proportion 
  4.28  assessed to each recipient must reflect a reasonable estimate of 
  4.29  the recipient's share of the total benefits of the project. 
  4.30     (d) The state or local government agency and the recipient 
  4.31  must both sign the subsidy agreement and, if the grantor is a 
  4.32  local government agency, the agreement must be approved by the 
  4.33  local elected governing body. 
  4.34     Subd. 4.  [WAGE AND JOB GOALS.] The subsidy agreement, in 
  4.35  addition to any other goals, must include goals for the number 
  4.36  of jobs created, which may include:  (1) separate goals for the 
  5.1   number of part-time or full-time jobs, or, in cases where job 
  5.2   loss is imminent and demonstrable, goals for the number of jobs 
  5.3   retained; and (2) wage goals for the jobs created or retained. 
  5.4      In addition to other specific goal time frames, the wage 
  5.5   and job goals must contain specific goals to be attained within 
  5.6   two years of the benefit date. 
  5.7      Subd. 5.  [PUBLIC NOTICE AND HEARING.] (a) Before granting 
  5.8   a business subsidy that exceeds $500,000 for a state government 
  5.9   grantor and $100,000 for a local government grantor, the grantor 
  5.10  must provide public notice and a hearing on the subsidy.  A 
  5.11  public hearing and notice pursuant to this subdivision is not 
  5.12  required if a hearing and notice on the subsidy is otherwise 
  5.13  required by law. 
  5.14     (b) Public notice of a proposed subsidy must be published 
  5.15  in a local newspaper of general circulation and must identify 
  5.16  the location at which information about the business subsidy, 
  5.17  including a copy of the subsidy agreement, is available.  
  5.18  Published notice should be sufficiently conspicuous in size and 
  5.19  placement to distinguish the notice from the surrounding text.  
  5.20  The grantor must make the information available in printed paper 
  5.21  copies and, if possible, on the Internet.  The government agency 
  5.22  must provide at least a ten-day notice for the public hearing. 
  5.23     (c) The public notice must include the date, time, and 
  5.24  place of the hearing. 
  5.25     Subd. 6.  [FAILURE TO MEET GOALS.] The subsidy agreement 
  5.26  must specify the recipient's obligation if the recipient does 
  5.27  not fulfill the agreement.  At a minimum, the agreement must 
  5.28  require a recipient failing to meet subsidy agreement goals to 
  5.29  pay back the assistance plus interest provided that repayment 
  5.30  may be prorated to reflect partial fulfillment of goals.  The 
  5.31  interest rate must be set at the implicit price deflator defined 
  5.32  under section 275.70, subdivision 2.  The grantor, after a 
  5.33  public hearing, may extend for up to one year the period for 
  5.34  meeting the goals provided in a subsidy agreement. 
  5.35     A recipient that fails to meet the terms of a subsidy 
  5.36  agreement may not receive a business subsidy from any grantor 
  6.1   for a period of five years from the date of failure or until a 
  6.2   recipient satisfies its repayment obligation under this 
  6.3   subdivision, whichever occurs first.  
  6.4      The commissioner of economic security must maintain a list 
  6.5   of recipients forwarded to the commissioner by the commissioner 
  6.6   of trade and economic development that are ineligible to receive 
  6.7   business subsidies.  Before a grantor signs a business subsidy 
  6.8   agreement, the grantor must check with the commissioner of 
  6.9   economic security to determine if the recipient is eligible to 
  6.10  receive a business subsidy. 
  6.11     Subd. 7.  [REPORTS BY RECIPIENTS TO GRANTORS.] (a) A 
  6.12  business subsidy grantor must monitor the progress by the 
  6.13  recipient in achieving agreement goals. 
  6.14     (b) A recipient must provide information regarding goals 
  6.15  and results for two years after the benefit date or until the 
  6.16  goals are met, whichever is later.  If the goals are not met, 
  6.17  the recipient must continue to provide information on the 
  6.18  subsidy until the subsidy is repaid.  The information must be 
  6.19  filed on forms developed by the commissioner in cooperation with 
  6.20  representatives of local government.  Copies of the completed 
  6.21  forms must be sent to the commissioner and the local government 
  6.22  agency that provided the business subsidy.  The report must 
  6.23  include: 
  6.24     (1) the type, public purpose, and amount of subsidies; 
  6.25     (2) the hourly wage of each job created with separate bands 
  6.26  of wages; 
  6.27     (3) the sum of the hourly wages and cost of health 
  6.28  insurance provided by the employer with separate bands of wages; 
  6.29     (4) the date the job and wage goals will be reached; 
  6.30     (5) a statement of goals identified in the subsidy 
  6.31  agreement and an update on achievement of those goals; 
  6.32     (6) the location of the recipient prior to receiving the 
  6.33  business subsidy; 
  6.34     (7) why the recipient did not complete the project outlined 
  6.35  in the subsidy agreement at their previous location, if the 
  6.36  recipient was previously located at another site in Minnesota; 
  7.1      (8) the name and address of the parent corporation of the 
  7.2   recipient, if any; 
  7.3      (9) a list of all financial assistance by all grantors for 
  7.4   the project; and 
  7.5      (10) other information the commissioner may request. 
  7.6   A report must be filed no later than March 1 of each year for 
  7.7   the previous year and within 30 days after the deadline for 
  7.8   meeting the job and wage goals.  A local government agency must, 
  7.9   by March 1 of each year, report in a form approved by the 
  7.10  commissioner a summary of the business subsidy reports submitted 
  7.11  that year.  The local government agency must include a list of 
  7.12  recipients that did not complete the report and of recipients 
  7.13  that have not met their job and wage goals within two years and 
  7.14  what steps are being taken to bring them into compliance or to 
  7.15  recoup the subsidy.  The commissioner, by July 1 of each year, 
  7.16  must provide to the legislature a summary of the reports 
  7.17  submitted to the department. 
  7.18     (c) Financial assistance that is excluded from the 
  7.19  definition of "business subsidy" by subdivision 3, clauses (3), 
  7.20  (4), (7), and (9), is subject to the reporting requirements of 
  7.21  this subdivision, except that the report of the recipient must 
  7.22  include: 
  7.23     (1) the type, public purpose, and amount of the financial 
  7.24  assistance; 
  7.25     (2) progress towards meeting goals stated in the subsidy 
  7.26  agreement and the public purpose of the assistance; 
  7.27     (3) the hourly wage of each job created with separate bands 
  7.28  of wages; 
  7.29     (4) the sum of the hourly wages and cost of health 
  7.30  insurance provided by the employer with separate bands of wages; 
  7.31     (5) the location of the recipient prior to receiving the 
  7.32  assistance; and 
  7.33     (6) other information the grantor requests. 
  7.34     (d) If the recipient does not submit its report, the local 
  7.35  government agency must mail the recipient a warning within one 
  7.36  week of the required filing date.  If, after 14 days of the 
  8.1   postmarked day of the warning, the recipient fails to provide a 
  8.2   report, then a penalty of $100 per day, payable to the grantor, 
  8.3   applies until the report is filed. 
  8.4      Subd. 8.  [GOVERNMENT REPORTS.] (a) The commissioner of 
  8.5   trade and economic development must coordinate the production of 
  8.6   reports so that useful comparisons across time periods and 
  8.7   across grantors can be made.  The commissioner may add other 
  8.8   information to the report as the commissioner deems necessary to 
  8.9   evaluate business subsidies. 
  8.10     (b) State and local government agencies, regardless of 
  8.11  whether they awarded any business subsidies, must file the 
  8.12  report required by this subdivision by March 1 of each year with 
  8.13  the commissioner.  If the commissioner has not received the 
  8.14  report by that date, the commissioner shall issue a warning to 
  8.15  the government agency.  If the commissioner has not received a 
  8.16  report by June 1 of the same year, then the government agency 
  8.17  may not grant any business subsidy until it files the report. 
  8.18     (c) The commissioner of trade and economic development must 
  8.19  provide information and training on reporting requirements to 
  8.20  state and local government agencies. 
  8.21     Subd. 9.  [COMPILATION AND SUMMARY REPORT.] The department 
  8.22  of trade and economic development must publish a compilation and 
  8.23  summary of the results of the reports for the previous calendar 
  8.24  year by July 1 of each year.  The reports of the government 
  8.25  agencies to the department and the compilation and summary 
  8.26  report of the department must be made available to the public. 
  8.27     Among the information in the summary and compilation 
  8.28  report, the commissioner must include: 
  8.29     (1) total amount of subsidies awarded in each development 
  8.30  region of the state; 
  8.31     (2) distribution of business subsidy amounts by size of the 
  8.32  business subsidy; 
  8.33     (3) distribution of business subsidy amounts by time 
  8.34  category, such as monthly or quarterly; 
  8.35     (4) distribution of subsidies by type and by public 
  8.36  purpose; 
  9.1      (5) percent of all business subsidies that reached their 
  9.2   goals; 
  9.3      (6) percent of business subsidies that did not reach their 
  9.4   goals by two years from the benefit date; 
  9.5      (7) total dollar amount of business subsidies that did not 
  9.6   meet their goals after two years from the benefit date; 
  9.7      (8) percent of subsidies that did not meet their goals and 
  9.8   that did not receive repayment; 
  9.9      (9) number of part-time and full-time jobs within separate 
  9.10  bands of wages; and 
  9.11     (10) benefits paid within separate bands of wages. 
  9.12     Sec. 3.  [116J.995] [ECONOMIC GRANTS.] 
  9.13     An appropriation rider in an appropriation to the 
  9.14  department of trade and economic development that specifies that 
  9.15  the appropriation be granted to a particular business or class 
  9.16  of businesses must contain a statement of the expected benefits 
  9.17  associated with the grant.  At a minimum, the statement must 
  9.18  include goals for the number of jobs created, wages paid, and 
  9.19  the tax revenue increases due to the grant. 
  9.20     Sec. 4.  [REPEALER.] 
  9.21     Minnesota Statutes 1998, section 116J.991, is repealed.