HF 1676

1st Engrossment - 87th Legislature (2011 - 2012) Posted on 03/05/2012 04:25pm

A bill for an act
relating to economic development; creating performance rewards on fast
investment today program; providing tax benefits; appropriating money;
proposing coding for new law in Minnesota Statutes, chapter 469.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

new text begin [469.352] PERFORMANCE REWARDS ON FAST INVESTMENT
TODAY (PROFIT).
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For purposes of this section, the following terms
have the meanings given.
new text end

new text begin (b) "Business" means an individual, corporation, partnership, limited liability
company, association, or other entity.
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new text begin (c) "Commissioner" means the commissioner of employment and economic
development unless stated otherwise.
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new text begin (d) "New full-time equivalent position" means a position that:
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new text begin (1) is created at a PROFIT business during the taxable year; and
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new text begin (2) has annualized expected hours of work of at least 1,950 hours.
new text end

new text begin (e) "Performance rewards on fast investment today (PROFIT) business" means a
business that is designated by the commissioner under subdivision 4.
new text end

new text begin (f) "Taxing authority" means a county, home rule charter or statutory city, town,
school district, or joint powers board under section 471.59 acting on behalf of local
government units with jurisdiction to tax in the applicable geographic area.
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new text begin (g) "Wages" has the meaning given in section 290.92, subdivision 1, clause (1).
new text end

new text begin (h) "Agreement" or "business subsidy agreement" means a business subsidy
agreement under section 116J.994 that must include but is not limited to: specification of
the duration of the agreement, job goals and a timeline for achieving those goals over the
duration of the agreement, and construction and other investment goals and a timeline
for achieving those goals over the duration of the agreement. The commissioner shall
annually verify whether the terms of the agreement are being met by the participating
PROFIT business.
new text end

new text begin Subd. 2. new text end

new text begin PROFIT business designation; eligibility requirements. new text end

new text begin (a) To be
eligible for designation as a PROFIT business, a business must satisfy all of the following
requirements:
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new text begin (1) the business is engaged in at least one of the following activities as its PROFIT
business activity in Minnesota:
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new text begin (i) manufacturing;
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new text begin (ii) warehousing;
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new text begin (iii) distribution;
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new text begin (iv) information technology;
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new text begin (v) finance;
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new text begin (vi) insurance; or
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new text begin (vii) professional or technical services; and
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new text begin (2) a business has entered into a business subsidy agreement with the commissioner
and the appropriate local taxing authority specifying the length of the subsidy, the job
creation goals, wage rates, and investment goals for the duration of the subsidy. An
agreement under this subdivision must include the following minimum requirements:
new text end

new text begin (i) creation of at least ten new full-time equivalent positions within the first two
years of designation as a PROFIT business. Positions or employees moved or relocated
from another location of the business in Minnesota must not be included in any calculation
or determination of job creation or new positions under this section. A business may
not terminate, lay off, or reduce the working hours of any employee for the purpose of
hiring an individual to satisfy job creation goals under this section. Each new full-time
equivalent position must pay:
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new text begin (A) an hourly wage of at least $16.80 per hour for businesses located in the
seven-county metropolitan area as defined in section 473.121, subdivision 2; or
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new text begin (B) an hourly wage of at least $13 per hour for businesses located in all other areas
of the state; and
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new text begin (ii) investment of at least $500,000 in a construction project in the taxing authority's
jurisdiction during the two years immediately following designation as a PROFIT
business. For the purposes of this section, "construction project" includes a new,
expanded, or remodeled facility and an expenditure of up to $250,000 for machinery and
equipment for use or operation at the location of the PROFIT business.
new text end

new text begin (b) A business that is primarily engaged in making retail sales to purchasers who are
physically present at the business location in Minnesota, lobbying, political consulting,
leisure, hospitality, gaming, or professional services provided by attorneys, accountants,
business consultants, physicians, or health care consultants, is not eligible for designation
as a PROFIT business.
new text end

new text begin Subd. 3. new text end

new text begin Local approval. new text end

new text begin (a) Any business seeking PROFIT designation by the
commissioner shall submit an application for approval to each taxing authority affected by
the tax refunds provided under this section.
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new text begin (b) Applications for local approval shall be made on a form and follow procedures
and deadlines established by the commissioner.
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new text begin (c) In considering an application for local approval, each taxing authority shall
consider:
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new text begin (1) the eligibility requirements under subdivision 2;
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new text begin (2) potential increases in economic activity generated by the applicant in the taxing
authority; and
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new text begin (3) results of a cost-benefit analysis of the potential economic activity generated by
the applicant and the revenue implications of potential tax refunds under this section.
new text end

new text begin (d) Local taxing authorities shall notify the commissioner, on a form established by
the commissioner, of applications for which local approval has been granted.
new text end

new text begin Subd. 4. new text end

new text begin Designation by the commissioner. new text end

new text begin (a) Upon receiving notification of
local approval under subdivision 3, the commissioner shall review the determination by
the local taxing authorities, the subsidy agreement, and eligibility requirements under
subdivision 2, to determine whether it is in the best interests of the state and local taxing
area to designate a business as a PROFIT business.
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new text begin (b) Prior to approving the proposed designation of a business under this subdivision,
the commissioner shall also consider the following:
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new text begin (1) the economic outlook of the industry in which the business engages;
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new text begin (2) the projected sales of the business that will be generated from outside the state
of Minnesota;
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new text begin (3) how the business will build on existing regional, national, and international
strengths to diversify the state's economy;
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new text begin (4) whether the business activity would occur without public financial assistance;
new text end

new text begin (5) the effect of public financial assistance on industry competitors;
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new text begin (6) the job creation and investment goals of the proposed subsidy agreement that
exceed the minimum requirements under subdivision 2, paragraph (a), clause (2); and
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new text begin (7) any other criteria the commissioner deems necessary.
new text end

new text begin Subd. 5. new text end

new text begin Certification for tax benefits. new text end

new text begin (a) The commissioner must initially certify
a PROFIT business as eligible to receive tax refunds under subdivisions 6 to 8, if the
business has met the jobs creation and wage goals, and investment requirements of the
agreement in the two years immediately following designation as a PROFIT business.
The commissioner must notify the commissioner of revenue that the business is eligible
for tax refunds under subdivisions 6 to 8. Any PROFIT business that fails to achieve
initial certification under this paragraph is deemed ineligible for future certification under
this subdivision.
new text end

new text begin (b) Each year after initial certification under paragraph (a), the commissioner must
verify that a business has continued to meet the requirements of the subsidy agreement and
certify to the commissioner of revenue that a business is eligible for the tax refunds. For
any year after the two-year period immediately following designation, a PROFIT business
that fails to maintain the minimum job creation goals under subdivision 2, paragraph (a),
clause (2), is ineligible to receive tax refunds.
new text end

new text begin (c) Tax refunds under this section are available only for real and personal property
located at, or goods or services used or consumed at, PROFIT business locations that are
covered by the business subsidy agreement under this section and have been approved by
the local taxing authorities and the commissioner.
new text end

new text begin Subd. 6. new text end

new text begin Tax refunds; percentage; duration. new text end

new text begin (a) A business that is certified under
subdivision 5 is eligible for the following tax refunds for up to 12 years from the date of
initial certification of eligibility by the commissioner under subdivision 5, paragraph (a):
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new text begin (1) the property tax refund for certain improvements as provided in subdivision
7; and
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new text begin (2) a refund for sales and use tax and any local sales and use taxes on qualifying
purchases as provided in subdivision 8.
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new text begin (b) A refund of property, sales, and use taxes paid may be paid upon filing with the
commissioner of revenue a claim for refund in the form and manner prescribed by the
commissioner of revenue.
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new text begin (c) The commissioner of employment and economic development shall determine
the percentage of tax refunds that a PROFIT business may receive based on the
performance of the business in reaching the subsidy agreement goals in the prior 12
months. The commissioner shall certify the percentage of tax refunds to the commissioner
of revenue. No tax refund may be paid without certifications of eligibility and percentage
of tax refunds from the commissioner of employment and economic development.
new text end

new text begin Subd. 7. new text end

new text begin Property tax refund. new text end

new text begin (a) The property tax imposed on the increase in tax
capacity resulting from the value of improvements made to real property and personal
property, classified under section 273.13, subdivision 24, and owned and operated by a
PROFIT business, may be refunded as provided in this subdivision.
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new text begin (b) For property to qualify for the refund, the occupant must be a PROFIT business.
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new text begin (c) A PROFIT business is eligible for the refund beginning the first assessment year
after the business is certified by the commissioner. To be eligible, the property must be
occupied by July 1 of the assessment year by a PROFIT business.
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new text begin (d) A PROFIT business must notify the commissioner of revenue in writing of
eligibility under this subdivision by July 1 in order to begin receiving the refund under this
subdivision in the following year.
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new text begin (e) The refund is distributed and continues annually as long as the qualified PROFIT
business continues to be certified as eligible under subdivision 5.
new text end

new text begin Subd. 8. new text end

new text begin Sales and use tax refund. new text end

new text begin (a) A PROFIT business is eligible for a refund
of taxes paid under chapter 297A on the purchase and use of construction materials,
services, and supplies used or consumed in, including equipment incorporated into, real
property owned by a PROFIT business if used in the conduct of a PROFIT business
and the purchase was made and delivery received during the duration of the PROFIT
business designation.
new text end

new text begin (b) The refund under this subdivision applies regardless of whether the purchases are
made by the PROFIT business or a contractor hired to perform work or provide services at
the PROFIT business location.
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new text begin (c) The tax must be refunded in the manner provided under section 297A.75.
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new text begin Subd. 9. new text end

new text begin Appropriation. new text end

new text begin An amount sufficient to pay the refunds under subdivisions
7 and 8 is appropriated to the commissioner of revenue from the general fund.
new text end