Minnesota Session Laws - 2000, Regular Session

                            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.