Office of the Revisor of Statutes
Minnesota Session Laws - 2000, Regular Session
Key: (1) language to be deleted (2) new language
CHAPTER 482-S.F.No. 2893
An act relating to business subsidies; providing
clarification to the obligation of government agencies
and businesses related to certain business subsidies;
amending Minnesota Statutes 1999 Supplement, sections
116J.993, subdivision 3; 116J.994, subdivisions 1, 2,
3, 4, 5, 6, 7, 8, 9, and by adding a subdivision; and
116J.995.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Section 1. Minnesota Statutes 1999 Supplement, section
116J.993, subdivision 3, is amended to read:
Subd. 3. [BUSINESS SUBSIDY.] "Business subsidy" or
"subsidy" means a state or local government agency grant,
contribution of personal property, real property,
infrastructure, the principal amount of a loan at rates below
those commercially available to the recipient, any reduction or
deferral of any tax or any fee, any guarantee of any payment
under any loan, lease, or other obligation, or any preferential
use of government facilities given to a business.
The following forms of financial assistance are not a
business subsidy:
(1) a business subsidy of less than $25,000;
(2) assistance that is generally available to all
businesses or to a general class of similar businesses, such as
a line of business, size, location, or similar general criteria;
(3) public improvements to buildings or lands owned by the
state or local government that serve a public purpose and do not
principally benefit a single business or defined group of
businesses at the time the improvements are made;
(4) redevelopment property polluted by contaminants as
defined in section 116J.552, subdivision 3;
(5) assistance provided for the sole purpose of renovating
old or decaying building stock or bringing it up to code and
assistance provided for designated historic preservation
districts, provided that the assistance is equal to or less than
50 percent of the total cost;
(6) assistance provided to organizations whose primary
mission is to provide job readiness and training services if the
sole purpose of the assistance is to provide those services;
(7) assistance for housing;
(8) assistance for pollution control or abatement,
including assistance for a tax increment financing hazardous
substance subdistrict as defined under section 469.174,
subdivision 23;
(9) assistance for energy conservation;
(10) tax reductions resulting from conformity with federal
tax law;
(11) workers' compensation and unemployment compensation;
(12) benefits derived from regulation;
(13) indirect benefits derived from assistance to
educational institutions;
(14) funds from bonds allocated under chapter 474A, bonds
issued to refund outstanding bonds, and 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;
(15) assistance for a collaboration between a Minnesota
higher education institution and a business;
(16) assistance for a tax increment financing soils
condition district as defined under section 469.174, subdivision
19;
(17) redevelopment when the recipient's investment in the
purchase of the site and in site preparation is 70 percent or
more of the assessor's current year's estimated market
value; and
(18) general changes in tax increment financing law and
other general tax law changes of a principally technical nature;
(19) federal assistance until the assistance has been
repaid to, and reinvested by, the state or local government
agency;
(20) funds from dock and wharf bonds issued by a seaway
port authority;
(21) business loans and loan guarantees of $75,000 or less;
and
(22) federal loan funds provided through the United States
Department of Commerce, Economic Development Administration.
Sec. 2. Minnesota Statutes 1999 Supplement, section
116J.994, subdivision 1, is amended to read:
Subdivision 1. [PUBLIC PURPOSE.] A business subsidy must
meet a public purpose other than which may include, but may not
be limited to, increasing the tax base. Job retention may only
be used as a public purpose in cases where job loss is imminent
specific and demonstrable.
Sec. 3. Minnesota Statutes 1999 Supplement, section
116J.994, subdivision 2, is amended to read:
Subd. 2. [DEVELOPING A SET OF CRITERIA.] A business
subsidy may not be granted until the grantor has adopted
criteria after a public hearing for awarding business subsidies
that comply with this section. The criteria may not be adopted
on a case-by-case basis. The criteria must set specific minimum
requirements that recipients must meet in order to be eligible
to receive business subsidies. The criteria must include
a policy regarding specific wage floor for the wages to be paid
for the jobs created. The wage floor may be stated as a
specific dollar amount or may be stated as a formula that will
generate a specific dollar amount. A grantor may deviate from
its criteria by documenting in writing the reason for the
deviation and attaching a copy of the document to its next
annual report to the department. The commissioner of trade and
economic development may assist local government agencies in
developing criteria. A copy of the criteria must be submitted
to the department of trade and economic development along with
the first annual report following the enactment of this section
or with the first annual report after it has adopted criteria,
whichever is earlier.
Sec. 4. Minnesota Statutes 1999 Supplement, section
116J.994, subdivision 3, is amended to read:
Subd. 3. [SUBSIDY AGREEMENT.] (a) A recipient must enter
into a subsidy agreement with the grantor of the subsidy that
includes:
(1) a description of the subsidy, including the amount and
type of subsidy, and type of district if the subsidy is tax
increment financing;
(2) a statement of the public purposes for the subsidy;
(3) measurable, specific, and tangible goals for the
subsidy;
(4) a description of the financial obligation of the
recipient if the goals are not met;
(5) a statement of why the subsidy is needed;
(6) a commitment to continue operations at the site in the
jurisdiction where the subsidy is used for at least five years
after the benefit date;
(7) the name and address of the parent corporation of the
recipient, if any; and
(8) a list of all financial assistance by all grantors for
the project.
(b) Business subsidies in the form of grants must be
structured as forgivable loans. If a business subsidy is not
structured as a forgivable loan For other types of business
subsidies, the agreement must state the fair market value of the
subsidy to the recipient, including the value of conveying
property at less than a fair market price, or other in-kind
benefits to the recipient.
(c) If a business subsidy benefits more than one recipient,
the grantor must assign a proportion of the business subsidy to
each recipient that signs a subsidy agreement. The proportion
assessed to each recipient must reflect a reasonable estimate of
the recipient's share of the total benefits of the project.
(d) The state or local government agency and the recipient
must both sign the subsidy agreement and, if the grantor is a
local government agency, the agreement must be approved by the
local elected governing body, except for the St. Paul Port
Authority and a seaway port authority.
(e) Notwithstanding the provision in paragraph (a), clause
(6), a recipient may be authorized to move from the jurisdiction
where the subsidy is used within the five-year period after the
benefit date if, after a public hearing, the grantor approves
the recipient's request to move. For the purpose of this
paragraph, if the grantor is a state government agency other
than the iron range resources and rehabilitation board,
"jurisdiction" means a city or township.
Sec. 5. Minnesota Statutes 1999 Supplement, section
116J.994, subdivision 4, is amended to read:
Subd. 4. [WAGE AND JOB GOALS.] The subsidy agreement, in
addition to any other goals, must include: (1) goals for the
number of jobs created, which may include separate goals for the
number of part-time or full-time jobs, or, in cases where job
loss is imminent specific and demonstrable, goals for the number
of jobs retained; and (2) wage goals for the jobs created or
retained. After a public hearing, if the creation or retention
of jobs is determined not to be a goal, the wage and job goals
may be set at zero.
In addition to other specific goal time frames, the wage
and job goals must contain specific goals to be attained within
two years of the benefit date.
Sec. 6. Minnesota Statutes 1999 Supplement, section
116J.994, subdivision 5, is amended to read:
Subd. 5. [PUBLIC NOTICE AND HEARING.] (a) Before granting
a business subsidy that exceeds $500,000 for a state government
grantor and $100,000 for a local government grantor, the grantor
must provide public notice and a hearing on the subsidy. A
public hearing and notice under this subdivision is not required
if a hearing and notice on the subsidy is otherwise required by
law.
(b) Public notice of a proposed business subsidy under this
subdivision by a state government grantor, other than the iron
range resources and rehabilitation board, must be published in
the State Register. Public notice of a proposed business
subsidy under this subdivision by a local government grantor or
the iron range resources and rehabilitation board must be
published in a local newspaper of general circulation. The
public notice must identify the location at which information
about the business subsidy, including a copy summary of
the terms of the subsidy agreement, is available. Published
notice should be sufficiently conspicuous in size and placement
to distinguish the notice from the surrounding text. The
grantor must make the information available in printed paper
copies and, if possible, on the Internet. The government agency
must provide at least a ten-day notice for the public hearing.
(c) The public notice must include the date, time, and
place of the hearing.
(d) The public hearing by a state government grantor other
than the iron range resources and rehabilitation board must be
held in St. Paul.
(e) If more than one nonstate grantor provides a business
subsidy to the same recipient, the nonstate grantors may
designate one nonstate grantor to hold a single public hearing
regarding the business subsidies provided by all nonstate
grantors. For the purposes of this paragraph, "nonstate
grantor" includes the iron range resources and rehabilitation
board.
Sec. 7. Minnesota Statutes 1999 Supplement, section
116J.994, subdivision 6, is amended to read:
Subd. 6. [FAILURE TO MEET GOALS.] The subsidy agreement
must specify the recipient's obligation if the recipient does
not fulfill the agreement. At a minimum, the agreement must
require a recipient failing to meet subsidy agreement goals to
pay back the assistance plus interest to the grantor or, at the
grantor's option, to the account created under section 116J.551
provided that repayment may be prorated to reflect partial
fulfillment of goals. The interest rate must be set at no less
than the implicit price deflator as defined under section
275.70, subdivision 2. The grantor, after a public hearing, may
extend for up to one year the period for meeting the wage and
job goals under subdivision 4 provided in a subsidy agreement.
A grantor may extend the period for meeting other goals under
subdivision 3, clause (3), by documenting in writing the reason
for the extension and attaching a copy of the document to its
next annual report to the department.
A recipient that fails to meet the terms of a subsidy
agreement may not receive a business subsidy from any grantor
for a period of five years from the date of failure or until a
recipient satisfies its repayment obligation under this
subdivision, whichever occurs first.
Before a grantor signs a business subsidy agreement, the
grantor must check with the compilation and summary report
required by this section to determine if the recipient is
eligible to receive a business subsidy.
Sec. 8. Minnesota Statutes 1999 Supplement, section
116J.994, subdivision 7, is amended to read:
Subd. 7. [REPORTS BY RECIPIENTS TO GRANTORS.] (a) A
business subsidy grantor must monitor the progress by the
recipient in achieving agreement goals.
(b) A recipient must provide information regarding goals
and results for two years after the benefit date or until the
goals are met, whichever is later. If the goals are not met,
the recipient must continue to provide information on the
subsidy until the subsidy is repaid. The information must be
filed on forms developed by the commissioner in cooperation with
representatives of local government. Copies of the completed
forms must be sent to the commissioner and the local government
agency that provided the business subsidy to the local
government agency that provided the subsidy or to the
commissioner if the grantor is a state agency. If the iron
range resources and rehabilitation board is the grantor, the
copies must be sent to the board. The report must include:
(1) the type, public purpose, and amount of subsidies and
type of district, if the subsidy is tax increment financing;
(2) the hourly wage of each job created with separate bands
of wages;
(3) the sum of the hourly wages and cost of health
insurance provided by the employer with separate bands of wages;
(4) the date the job and wage goals will be reached;
(5) a statement of goals identified in the subsidy
agreement and an update on achievement of those goals;
(6) the location of the recipient prior to receiving the
business subsidy;
(7) why the recipient did not complete the project outlined
in the subsidy agreement at their previous location, if the
recipient was previously located at another site in Minnesota;
(8) the name and address of the parent corporation of the
recipient, if any;
(9) a list of all financial assistance by all grantors for
the project; and
(10) other information the commissioner may request.
A report must be filed no later than March 1 of each year for
the previous year and within 30 days after the deadline for
meeting the job and wage goals. The local agency and the iron
range resources and rehabilitation board must forward copies of
the reports received by recipients to the commissioner by April
1.
(c) Financial assistance that is excluded from the
definition of "business subsidy" by section 116J.993,
subdivision 3, clauses (4), (5), (8), and (16) is subject to the
reporting requirements of this subdivision, except that the
report of the recipient must include instead:
(1) the type, public purpose, and amount of the financial
assistance, and type of district if the subsidy assistance is
tax increment financing;
(2) progress towards meeting goals stated in the subsidy
assistance agreement and the public purpose of the assistance;
(3) if the agreement includes job creation, the hourly wage
of each job created with separate bands of wages;
(4) if the agreement includes job creation, the sum of the
hourly wages and cost of health insurance provided by the
employer with separate bands of wages;
(5) the location of the recipient prior to receiving the
assistance; and
(6) other information the grantor requests.
(d) If the recipient does not submit its report, the local
government agency must mail the recipient a warning within one
week of the required filing date. If, after 14 days of the
postmarked date of the warning, the recipient fails to provide a
report, the recipient must pay to the grantor a penalty of $100
for each subsequent day until the report is filed. The maximum
penalty shall not exceed $1,000.
Sec. 9. Minnesota Statutes 1999 Supplement, section
116J.994, subdivision 8, is amended to read:
Subd. 8. [REPORTS BY GRANTORS.] (a) Local government
agencies of a local government with a population of more than
2,500 and state government agencies, regardless of whether or
not they have awarded any business subsidies, must file a report
by April 1 of each year with the commissioner. Local government
agencies of a local government with a population of 2,500 or
less are exempt from filing this report if they have not awarded
a business subsidy in the past five years. The local government
agency report must include a list of recipients that did not
complete the recipient report required under subdivision 7 and a
list of recipients that have not met their job and wage goals
within two years and the steps being taken to bring them into
compliance or to recoup the subsidy.
If the commissioner has not received the report by April 1
from an entity required to report, the commissioner shall issue
a warning to the government agency. If the commissioner has
still not received the report by June 1 of that same year from
an entity required to report, then that government agency may
not award any business subsidies until the report has been filed.
(b) The commissioner of trade and economic development must
provide information on reporting requirements to state and local
government agencies.
Sec. 10. Minnesota Statutes 1999 Supplement, section
116J.994, subdivision 9, is amended to read:
Subd. 9. [COMPILATION AND SUMMARY REPORT.] The department
of trade and economic development must publish a compilation and
summary of the results of the reports for the previous calendar
year by July August 1 of each year. The reports of the
government agencies to the department and the compilation and
summary report of the department must be made available to the
public.
The commissioner must coordinate the production of reports
so that useful comparisons across time periods and across
grantors can be made. The commissioner may add other
information to the report as the commissioner deems necessary to
evaluate business subsidies. Among the information in the
summary and compilation report, the commissioner must include:
(1) total amount of subsidies awarded in each development
region of the state;
(2) distribution of business subsidy amounts by size of the
business subsidy;
(3) distribution of business subsidy amounts by time
category, such as monthly or quarterly;
(4) distribution of subsidies by type and by public
purpose;
(5) percent of all business subsidies that reached their
goals;
(6) percent of business subsidies that did not reach their
goals by two years from the benefit date;
(7) total dollar amount of business subsidies that did not
meet their goals after two years from the benefit date;
(8) percent of subsidies that did not meet their goals and
that did not receive repayment;
(9) list of recipients that have failed to meet the terms
of a subsidy agreement in the past five years and have not
satisfied their repayment obligations;
(10) number of part-time and full-time jobs within separate
bands of wages; and
(11) benefits paid within separate bands of wages.
Sec. 11. Minnesota Statutes 1999 Supplement, section
116J.994, is amended by adding a subdivision to read:
Subd. 10. [COMPILATION.] The department of trade and
economic development must publish a compilation of granting
agencies' criteria policies adopted in the previous calendar
year by August 1 of each year.
Sec. 12. Minnesota Statutes 1999 Supplement, section
116J.995, is amended to read:
116J.995 [ECONOMIC GRANTS.]
An appropriation rider in an appropriation to the
department of trade and economic development that specifies that
the appropriation be granted to a particular business or class
of businesses must contain a statement of the expected benefits
associated with the grant. At a minimum, the statement must
include goals for the number of jobs created, wages paid, and
the tax revenue increases due to the grant. The wage and job
goals must contain specific goals to be attained within two
years of the benefit date. The statement must specify the
recipient's obligation if the recipient does not attain the
goals. At a minimum, the statement must require a recipient
failing to meet the job and wage goals to pay back the
assistance plus interest to the department of trade and economic
development provided that repayment may be prorated to reflect
partial fulfillment of goals. The interest rate must be set at
no less than the implicit price deflator as defined under
section 275.70, subdivision 2. The legislature, after a public
hearing, may extend for up to one year the period for meeting
the goals provided in the statement.
Sec. 13. [TRANSITION PROVISION.]
A granting agency that, prior to May 1, 2000, adopted
criteria that complied with Minnesota Statutes 1999 Supplement,
section 116J.994, subdivision 2, has until May 1, 2003, to
comply with the minimum criteria requirements added by section 3.
Sec. 14. [1995 TO 1999 ASSISTANCE.]
Subdivision 1. [REPEALER OF NO EFFECT.] Subdivision 2 is
applicable to the receipt of assistance between July 1, 1995,
and July 31, 1999, notwithstanding the repeal of Minnesota
Statutes, section 116J.991, by Laws 1999, chapter 243, article
12, section 4, and provided that the assistance would have been
subject to Minnesota Statutes, section 116J.991, if not for that
repeal.
Subd. 2. [PUBLIC ASSISTANCE TO BUSINESS; WAGE AND JOB
REQUIREMENTS.] A business that receives state or local
government assistance for economic development or job growth
purposes must create a net increase in jobs in Minnesota within
two years of receiving the assistance.
The government agency providing the assistance must
establish wage level and job creation goals to be met by the
business receiving the assistance. A business that fails to
meet the goals must repay the assistance to the government
agency.
Each government agency must report the wage and job goals
and the results for each project in achieving those goals to the
department of trade and economic development. The department
shall compile and publish the results of the reports for the
previous calendar year by August 1 of each year. The reports of
the agencies to the department and the compilation report of the
department shall be made available to the public.
For the purpose of this subdivision, "assistance" means a
grant or loan in excess of $25,000 or tax increment financing.
Sec. 15. [EFFECTIVE DATE.]
The amendment in section 1, adding clause (21), is
effective the day following final enactment and is retroactive
to January 1, 2000. Section 14 is effective January 1, 2001.
Presented to the governor May 11, 2000
Signed by the governor May 15, 2000, 10:55 a.m.
Official Publication of the State of Minnesota
Revisor of Statutes