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HomeMy WebLinkAbout7A - Business Assistance Policy AGENDA ITEM: DISCUSSION: CITY COUNCIL AGENDA REPORT FEBRUARY 22, 2000 7A DONALD RYE, PLANNING DIRECTOR PUBLIC HEARING TO CONSIDER APPROVAL OF BUSINESS ASSISTANCE POLICY History Minnesota Statutes 116J.993 through 116J.995 requires that, after August 1, 1999, any local government agency granting subsidies or incentives to businesses may do so only after adopting criteria for granting such incentives. A public hearing must be held on the criteria before adoption. The EDA developed the recommended criteria and transmitted them to the Council with a recommendation for adoption. At it's January 18,2000 meeting, the Council reviewed a report on the subject and , following some discussion set the date for the public hearing for February 22,2000. Current Circumstances The City does not currently have a comprehensive policy for the provision of subsidies or assistance to businesses. The only policy is one dealing with the provision of tax increment financing. Issues The primary issues are twofold: first, whether the Council wishes to retain the ability to assist businesses in the future and second, the degree of flexibility the City wishes to have if it elects to assist businesses in the future. If the City fails to adopt a policy and criteria, the City would be unable to offer any forms of assistance to businesses in the future. Adoption of a policy does not require the City to offer assistance but it does allow assistance for businesses which, in the Council's opinion, would satisfy on of the following public purposes: 1) enhancing economic diversity, 2) assisting high quality job growth, 3) stabilizing the community, 4) increasing and enhancing the tax base and 5) aiding in job retention where job loss in imminent and demonstrable. The attached policy is similar to, and consistent with the County's policy. This could be an important consideration if a future project was to receive assistance from the City and County HRA concurrently. Conclusion Following the close of the public hearing, the Council must determine if it wishes to have a business assistance policy. If the 162fil~WlgksfOo1mkliWgA~'EGdOmd.OOe, Minnesota $5372-1714 / Ph. (612) 447-4230 / Fax (612) 447-4245 AN EQUAL OPPORTUNITY EMPLOYER ~ I Council decides to adopt a policy, it needs to determine if it wishes to . adopt the policy recommended by the EDA or if it wishes to adopt a modified policy. ALTERNATIVES: 1. Elect not to adopt a business assistance policy 2. Elect to adopt the business assistance policy as recommended by the EDA and direct staffto.prepare a resolution adopting that policy. 3. Elect to adopt a business assistance as modified and direct staff to prepare a resolution adopting that policy RECOMMENDED MOTION: As determined by th ouncil REVIEWED BY: L:\OOFILES\OOEDA \BUSASST\CC022200.DOC 2 ? ECONOMIC DEVELOPMENT INCENTIVES POLICY Introduction This Policy is adopted for purposes of the Business Subsidies Act (the "Act), which is Minnesota Statutes, Sections 116J.995 through 116J995. Terms used in this Policy are intended to have the same meanings as used in the Act. A business subsidy, as defined in Minn. Stat. 116J.993(3), is herein referred to as an economic development incentive. This Policy shall apply only with respect to incentives granted under the Act if and to the extent required thereby. The essence of this policy is to provide the legal and statutory framework for the City Council to utilize economic development incentives pursuant to requirements in law. The adoption of this policy isa prerequisite to determining the level of and extent of any participation by the City of Prior Lake in economic development incentives programs. Economic development incentives seek to realize goals that benefit the community, such as the creation or retention of good paying jobs. Economic development projects may also achieve other worthwhile goals. For instance, some projects provide value to the community in the forms of infrastructure improvements, stabilization of business districts or neighborhoods, or concentration of selected industries. While job creation and retention goals will be required for any economic development project seeking incentives pursuant to this Policy, the City can require that a project seek to achieve additional goals. The goals that economic development projects must pursue to receive incentives under this policy are as follows: . Job creation/retention . Livable wages . Job training . Public infrastructure investment, and . Stable communities Specific goal targets for individual projects will be determined and agreed to between the City and the requestor prior to approval of the economic development incentives by the City Council. Policies and Procedures L:\99FILES\99EDA \EDACORR\ECDEVINC.DOC 1 16200 Eagle Creek Ave. S.E., Prior Lake, Minnesota 55372-1714 / Ph. (612) 447-4230 / Fax (612) 447-4245 AN EQUAL OPPORTUNITY EMPLOYER 1. The applicant will complete the City's Economic Development Incentives application form (Exhibit 1) and submit a minimum deposit of $1 ,000 which is non-refundable to cover City administrative costs. 2. The requestor and the City will draft an economic development incentive agreement for consideration by the City Council. When a tax abatement is requested, the economic development incentive agreement will serve as the abatement agreement. 3. The agreement will include target goals that coincide to the economic development goals identified in this policy. The recipient will report on the progress in achieving agreement goals as prescribed by the business subsidies act. Determination of Goal Targets With respect to incentives, the following principles and criteria shall guide the determination of goal targets: . Each project shall be evaluated on a case by case basis, recognizing its importance and benefit to the community from all perspectives, including created or retained employment positions, infrastructure improvements, stabilization of communities, and industry type. . If a particular project does not involve the creation of jobs, but is nonetheless found to be worthy of support and subsidy, it may be approved without any specific job or wage goals, as may be permitted by applicable law. . In cases where the objective is the retention of existing jobs, the recipient of the subsidy shall be required to provide reasonably demonstrable evidence that the loss of those jobs is imminent. . The setting of wage and job goals must be sensitive to prevailing wage rates, local economic conditions, external economic forces over which neither the City or the recipient of the subsidy has control, the individual financial resources of the recipient and the competitive environment in which the recipient's business exists. Fiscal Limitations . Total City contribution will be limited to the minimum level of assistance needed to make the proposed project feasible and capable of achieving the agreed upon goals. . If the incentive is a tax abatement, the abatement will be on the taxes collected on the value of the improvements (buildings) to the property; taxes collected on the value of the land will not be abated. L:\99FILES\99EDA \EDACORR\ECDEVINC.DOC 2 Because it is not possible to anticipate every type ofproject which may in its context and time present desirable community building or preservation goals and objectives, the City of Prior Lake retains the right in its sole discretion to approve projects and subsidies which may vary from the principals and criteria of the Policy. L:\99FILES\99EDA \EDACORR\ECDEVINC.DOC 3 ..---.............-r.--.----......-....