00-0376R

RESOLUTION ADOPTING POLICY AND CRITERIA FOR UTILIZING BUSINESS SUBSIDIES IN COMPLIANCE WITH MINNESOTA LAW.

BY COUNCILORS STENBERG AND ___________________:

BE IT RESOLVED, that the city council and city officials shall act in conformance with the Minnesota law and the following provisions whenever the city considers or utilizes business subsidies, as the term is defined in Minnesota statutes:

City of Duluth - business subsidy criteria and policy.

(a) The purpose of this criteria and policy is to establish the city's position as it relates to the use of business subsidies, as defined in Minnesota Statutes Section 116J.993, or its successor law, for private development. This criteria and policy shall be used by the city in processing and reviewing applications requesting business subsidies. The city hereby adopts the definitions of Minnesota Statutes Sections 116J.993 through 116J.995 or its successor. It is the policy and duty of the city of Duluth to comply with Minnesota Statutes Sections 116J.993 through 116J.995, or its successor;

(b) The city shall have the option of amending or waiving sections of this criteria as allowed by law and subject to any public hearing requirements pursuant to Minnesota Statutes, Sections 116J.993 through 116J.995, or its successor;

(c) In accordance with the business subsidy criteria, business subsidy requests must comply with applicable state statutes. The city of Duluth's ability to grant business subsidies is governed by the limitations established in Minnesota Statutes Sections 116J.993 through 116J.995, or its successor;

(d) All business subsidies must meet a public purpose which may include, but shall not be limited to, increasing the tax base. Job retention shall only be used as a public purpose in cases where job loss is specific and demonstrable. The public purpose must comply with Minnesota Statutes Sections 116J.993 through 116J.995, or its successor;

(e) All new projects that receive business subsidies approved by the city of Duluth shall meet the following mandatory minimum approval criteria. However, it should not be presumed that a project meeting these criteria will automatically be subsidized. Meeting these criteria creates no contractual rights on the part of any potential developer:

(1) The business subsidy shall be provided within applicable state legislative restrictions, debt limit guidelines, and other appropriate financial requirements and policies;

(2) The project must be in accord with the comprehensive plan, zoning ordinances, and other city land use regulations, or required changes to the plan and ordinances must be under active consideration by the city at the time of approval;

(3) Business subsidies will not be provided to projects that have the financial feasibility to proceed without the benefit of the subsidy. In effect, business subsidies will not be provided solely to broaden a developer's profit margins on a project;

(4) Prior to approval of a business subsidies financing plan, the developer shall provide any required market and financial feasibility studies, appraisals, soil boring, information provided to private lenders for the project, and other information or data that the city officials may require in order to proceed with an independent evaluation of whether the project qualifies for a business subsidy;

(5) A developer requesting a business subsidy should demonstrate past successful general development capacity, and specific capability in the type and size of development proposed;

(6) The developer must retain ownership of the project at least long enough to complete it, to stabilize its occupancy, to establish the project management, and to initiate repayment of the business subsidy, and continue operations on site, as set out in Minnesota law, for five years after the benefit date;

(7) Each subsidized project must create at the site the maximum number of jobs that pay wages in compliance with the city's living wage ordinance and any other government minimum wage standard, though higher paid jobs are preferred. Each subsidized project must increase the tax base;

(8) The level of TIF funding should be reduced to the lowest possible level and shortest time period by maximizing the use of private debt and equity financing first, and then using other funding sources or project revenues that can be structured into the project funding, prior to using additional TIF funding. All TIF use shall comply with law;

(9) A business that receives city of Duluth government assistance for economic development or job growth purposes must create a net increase in jobs in Duluth within two years of receiving the assistance. The city 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 city or other government agency which provided the assistance, as set out in Minnesota statutes and regulations;

(10) All business subsidy request should optimize the private development potential and investment at a site;

(11) Recipients of business subsidies in instances where creation of jobs is the sole or primary public purpose will be encouraged to create the highest number of jobs at the highest feasible wage. However, the establishment of wage and job goals will take into account prevailing wage rates, local economic conditions, the individual financial resources of the recipient and wages paid by the recipient's competitors. There can be a subsidized project which does not have job growth or development as a purpose;

(f) A recipient must enter into a subsidy agreement with grantor which will comply with Minnesota Statutes Sections 116J.993 through 116J.995, or its successor. It shall include, but not be limited to, the following:
(1) Description of the subsidy;

(2) Statement of the public purpose;

(3) Goals for the subsidy;

(4) Description of the financial obligation of the recipient if the goals are not met;

(5) Statement of the reason why the subsidy is needed;

(6) Commitment to continue operations at the site where the subsidy is used for a minimum of five years after the benefit date, as defined in the statute;

(7) Goals for the jobs created, or where job loss is imminent, goals for jobs retained;

(8) Reporting requirements to the city as detailed in Minnesota Statutes Section 116J.994, or its successor;

(g) The city of Duluth, any recipient of a business subsidy, and any other appropriate party is bound by the public hearing, monitoring and reporting requirements of Minnesota Statutes Sections 116J.993 through 116J.995, or its successor.

STATEMENT OF PURPOSE: This resolution establishes a city policy to comply with procedures and standards of the state law on business subsidies, and adopts criteria for use by the city in processing subsidy requests.