HomeMy WebLinkAbout5.b. Business Subsidy Policy Draft Update
EXECUTIVE SUMMARY
Port Authority Meeting Date: March 15, 2022
AGENDA ITEM: Business Subsidy Policy Discussion. AGENDA SECTION:
New Business
PREPARED BY: Eric Van Oss, Economic Development
Coordinator AGENDA NO. 5.b.
ATTACHMENTS: Business Subsidy Policy, Business
Subsidy Policy Draft APPROVED BY: LJM
RECOMMENDED ACTION: Discussion Item.
BACKGROUND
The City Council recently met to update their strategic plan and identify new goals for 2022/2023.
Reviewing and revising the city’s business subsidy policy under the bucket of “Growing Rosemount” was
one of those goals.
In the 1998 legislative session, the Business Subsidy Act was adopted, which required all local government
to have a policy for public subsidies in excess of $100,000. The Port Authority reviewed and adopted the
attached policy in 2000. Since then, the City has used primarily Tax Increment Financing (TIF) to facilitate
numerous economic development projects such as the Waterford, Culvers, Morrison, and Project Osprey.
Historically, the Business Subsidy Policy has largely been in the form of TIF driven redevelopment
housing projects. Within the last several years interest in greenfield development for Business Park and
Industrial uses has dramatically increased. Staff anticipates that that more businesses will seek subsides for
distribution and light manufacturing facilities. As the policy is 20 years old, staff believes it is a good time
to revisit the subsidy policy and to ensure it is in line with the goals and priorities of the Port Authority.
The current policy outlines the criteria for approval but does not outline how the policy advances the
economic development goals/priorities of the Port Authority and City Council via the Comprehensive
Plan. Other cities have revised their Business Subsidy Polices to prioritize issue areas such as
transportation/utility infrastructure, elimination of blight, creating of workforce housing, increased wage
goals and new/unmet services.
At the February Port Authority meeting, Commissioners and staff discussed the need for an updated
policy and broad concepts to include. Staff reviewed the 2040 Comprehensive Plan, Council/Port goals,
and other cities business subsidy policies. The current policy only addresses the statutory and regulatory
process of administering subsidies. Staff suggests changing the structure of the policy to include sections
that outline the purpose, subsidy criteria, application process, minimum requirements and subsidy
agreement. Currently there is an informal process and it is applied on a project-by-project basis; however,
given the flurry of activity, staff believes a codified process would be helpful to streamline subsidy
requests.
2
Section 2, Business Subsidy Criteria, lists examples of project types and criteria that would need to be met
in order to qualify for a subsidy. These are a mix of Rosemount’s goals outlined in various documents and
other cities policies. These examples can be refined and added to as needed in order to best address
development in Rosemount.
The last significant change is the suggestion to add a formal application and fee, while also outlining that a
developer is responsible for any additional fees or required market and financial feasibility studies,
appraisals, and soil boring studies needed for the project. In the past the city has been reimbursed for
some costs, but it is applied on a project-by-project basis. As the number of requests increases, staff felt it
was imperative to include some kind of financial stakes for developers. This helps ensure only serious
projects move forward, while also reducing the City’s financial cost in the event of entertaining multiple
requests in a calendar year.
RECOMMENDATION
Discusses the draft policy and provide feedback.
4
CITY COUNCIL IN AND FOR
THE CITY OF ROSEMOUNT, MINNESOTA
Business Subsidy Criteria
1. PURPOSE
1.01 The purpose of this document is to establish the City Council's criteria for
granting of business subsidies, as defined in Minnesota Statutes I I6J.993,
Subdivision 3, for private development. This criteria shall be used as a guide in
processing and reviewing applications requesting business subsidies.
1.02 The criteria set forth in this document are guidelines only. The City Council
reserves the right in its discretion to approve business subsidies that vary from the
criteria stated herein if the City Council determines that the subsidy nevertheless
serves a public purpose.
1.03 The City Council may amend the business subsidy criteria at any time.
Amendments to these criteria are subject to public hearing requirements pursuant
to Minnesota Statutes, Section 116J.993 through 116J.994.
2. STATUTORY LIMITATIONS
2.01 In accordance with the Business Subsidy Criteria, Business Subsidy requests must
comply with applicable state statutes. The City Council ability to grant business
subsidies is governed by the limitations established in Minnesota Statutes
116J.993 through 116J.994.
3. PUBLIC POLICY REQUIREMENT
3.01 All business subsidies must meet a public purpose other than increasing the tax
base. Job retention may only be used as a public purpose in cases where job loss
is imminent and demonstrable.
4. BUSINESS SUBSIDY APPROVAL CRITERIA
4.01 All new projects approved by the City Council should meet the following
minimum approval criteria. However, it should not be presumed that a project
meeting these criteria will automatically be approved. Meeting these criteria
creates no contractual rights on the part of any potential developer or the City
Council.
4.02 The project must be in accord with the Comprehensive Plan and Zoning
Ordinances, or required changes to the plan and ordinances must be under active
consideration by the City at the time of approval.
4.03 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.
4.04 Prior to approval of a business subsidy's financing plan and when deemed
appropriate by the City Council, 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 as requested.
4.05 A recipient of a business subsidy must make a commitment to continue operations
at the site where the subsidy is used for at least five years after the benefit date.
4.06 Recipients of any business subsidy will be required to meet wage and job goals
determined by the City Council on a case -by -case basis, giving consideration to
the nature of the development, the purpose of the subsidy, local economic
conditions, and situational circumstances.
4.07 The City Council will utilize Tax Increment Financing to support the
community's long -term economic, redevelopment, and housing goals.
4.08 Each Tax Increment Financing subsidy will be analyzed and evaluated by the City
Council. Each project shall be measured against the general criteria in Sections 1
through 5 and the specific criteria in the City Council Tax Increment Financing
Policy.
Business Subsidy Policy Draft
1. PURPOSE
The purpose of the Rosemount Business Subsidy Policy is to establish criteria for the granting of business
subsidies, including assistance through Tax Increment Financing (TIF), Tax Abatement, and other
incentive and assistance programs that may become available through the City. For the purposes of this
document, the term “City” includes the Rosemount City Council, the Rosemount Port Authority, City
staff, financial consultants, and legal counsel.
This policy will be used as criteria for providing subsidies, in addition to the requirements and limitations
set forth by provision of Minnesota Statutes Section 116J.993 through 116J.995, as amended (the
“Business Subsidy Act”). The criteria set forth in this Business Subsidy Policy shall be used as a guide in
processing and reviewing an application requesting a business subsidy and shall be used in conjunction
with other relevant policies of the City. The City may amend this Business Subsidy Plan at any time.
Amendments to this Plan are subject to public hearing requirements contained in the Business Subsidy
Act.
The City reserves the right to approve or reject projects on a case-by-case basis, taking into
consideration established polices, project criteria, and demand on City services in relation to the
potential benefits form the project. Meeting this policy criteria does not guarantee the award of
business assistance for the project. Approval or denial of one project is not intended to set precedent
for approval or denial of another project. The City has the right to deviate from this policy. Any applicant
who is not in good standing with the City regarding licenses, fees, code violations, or other City issues
will not be considered for a business subsidy.
2. BUSINESS SUBSIDY CRITERIA
Because projects vary greatly in structure and public benefit derived, each project will be considered on
its own merits. Consideration will be given to projects providing public benefits in two or more of the
following categories:
a) The creation of new jobs/increase in total payroll. A project must create a minimum of 10 jobs.
Preference will be given to higher paying jobs that also provide benefits such as health care
coverage. Retention of existing jobs. To be considered under this category, it must be
demonstrated – to the satisfaction of the City - that the loss of jobs is specific and can be
demonstrated.
a. Potential Wage Criteria: In the case of new job creation, new jobs must pay an average
wage equal to the minimum wage level for business assistance programs administered
by the Minnesota Department of Employment and Economic Development for cities
located in the seven-county metropolitan area in place at the time of an application by
any business seeking a subsidy.
b. Potential Wage Criteria: The project provided a business subsidy must create at least
one full-time equivalent job paying at least 200% of the State minimum wage in effect at
the time the subsidy is granted. The maximum amount of subsidy per job created will be
equal to the annual salary of the job(s) being created that comply with the wage
requirement.
c. Potential Wage Criteria: The wage floor for wages to be paid for the jobs created shall
be not less than 200% of the State of MN Minimum Wage. The City will seek to create
jobs with higher wages as appropriate for the overall public purpose of the assistance.
Wage goals may also be set to enhance existing jobs through increased wages, which
increase must result in wages higher than the minimum under this Section.
b) "But-For" Test. When there is a substantial likelihood that the project would not go forward or
would not go forward in the same capacity without the business subsidy. This criterion may be
met based solely on representation of the recipient of the business subsidy.
c) Other Economic or Redevelopment Goals. If creation of jobs is determined not to be a goal of a
project (and by extension wages) the proposed business subsidy must achieve specific, tangible,
and measurable goals related to one or more of the following:
a. Projects that provide value in the forms of needed transportation and other utility
infrastructure improvements including regional infrastructure in the community that
would be completed in conjunction with the project.
b. Redevelopment projects that result in the stabilization of business districts or
neighborhoods by elimination of blighting conditions.
c. Projects create new business or residential opportunities in Downtown Rosemount.
d. Projects that enhance or increase the economic diversity of the community by attracting
businesses or industries not currently located in the City. New job wage requirements
will apply to any new jobs created.
e. Projects that result in the development of affordable, senior, or workforce housing.
f. Multi-family housing with high-amenities considered market rate
g. Quality of Life based on business/projects. Those business/entities that provide a
desirable good or service and address an unmet demand in the community will be
considered. New job wage requirements will apply to any new jobs created.
h. Provides opportunity for the attraction of destination-oriented uses such as outdoor
recreation, entertainment and shopping.
4. BUSINESS SUBSIDY APPLICATION PROCESS
The applicant will complete and submit the City's Application for Business Subsidy along with the
required application fee (refer to the current year's adopted fee schedule). The application fee covers
the City's outside financial analysis costs and the development of a business subsidy agreement by legal
counsel. The applicant will also provide any additional information requested by the city. Prior to
approval of a business subsidy’s financing plan and when deemed appropriate by the City Council, 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 as requested.
The applicant will be liable for any additional costs beyond the initial deposit. All materials submitted to
the City in connection with a business subsidy application shall become the property of the City and is
subject to data privacy law. The review process shall involve at least the following:
1. Staff shall review the application materials and make a preliminary recommendation to the
City regarding:
a. The completeness of the application, and
b. Whether the application meets the goals and criteria of this policy.
2. If the City concurs with the recommendation, a public hearing will be set.
3. At the time of the scheduled public hearing, staff will make a final recommendation to the City
regarding the approval or denial of the subsidy application. This recommendation will be based on:
a. Applicable credit analysis.
b. Financial structure of the proposed project/application.
c. Legal compliance of the project/application.
4. The City will conduct the public hearing, during which they will take citizen comment on issuing the
subsidy. After the public hearing is closed, the City will either approve or deny the Business Subsidy
request. If the subsidy is approved, the business and the City will enter into a Business Subsidy
Agreement.
5. BUSINESS SUBSIDY MINIMUM PROJECT REQUREMENTS
All new projects approved by the City Council should meet the minimum approval criteria outlined in
Section 3. However, it should not be presumed that a project meeting these criteria will automatically
be approved. Meeting these criteria creates no contractual rights on the part of any potential developer
or the City Council. The project must be in accord with the Comprehensive Plan, Zoning Ordinances and
other Economic Development Plans or required changes to the plan and ordinances must be under
active consideration by the City at the time of approval. Each Tax Increment Financing subsidy and Tax
Abatement will be analyzed and evaluated by the City Council. Each project shall be measured against
the general criteria in Sections 1 through 5 and the specific criteria in the City Council Tax Increment
Financing Policy.
6. SUBSIDY AGREEMENT
In granting a business assistance, if required by the Statutes, the City shall enter into a subsidy
agreement with the recipient that provides the following information:
1. Wage and job goals (if applicable)
2. Commitment to provide necessary information for reporting purposes
3. Five-year operation commitment after the benefit date ‘
4. Recourse for failure to meet goals required by the Statutes
The subsidy agreement may be incorporated into a broader development agreement for a project. The
assistance agreement will commit the recipient to provide the reporting information required by the
Statutes, if any.