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HomeMy WebLinkAboutItem 06.hDate: August 1, 2011 Proposed Action Overview Primary Issues to Consider Supporting Information REVISED BUSINESS SUBSIDY POLICY Item No. Staff recommends adoption of the following motion: Move to adopt the attached revised Business Subsidy Policy. Passage of this motion will result in the City having an updated policy for business subsidies that is consistent with the City's Strategic Plan for Economic Development. The 2011 -2013 Strategic Plan for Economic Development included the goal of developing a Toolbox of Incentives to attract new businesses or facilitate expansion of existing businesses in Lakeville. This resulted in the review and several recommended changes to the current Business Subsidy Policy that was adopted in 2003. One of the proposed changes to the policy is to incorporate minimum wage levels for jobs that are proposed to be created by businesses seeking subsidies. The proposed minimum wage level in the revised policy is equal to the minimum wage established by the MN Department of Employment and Economic Development for cities located in the seven - county metropolitan area. The other primary change to the proposed revised policy recommended by the EDC was to consider projects that would create affordable workforce or senior housing for possible subsidies. The EDC reviewed this proposed revised policy at their July 6 Meeting and unanimously recommended approval. The City Council reviewed this revised policy at their July 25 Work Session. A minor change to the minimum wage levels provision has been incorporated as a result of the City Council discussion. Staff recommends approval of the revised Business Subsidy Policy. • What is the impact of the proposed revisions to the Business Subsidy Policy? It provides the City with more specific criteria by which to evaluate business development projects seeking financial assistance. • Copy of Revised Business Subsidy Policy vid L. Olson Community and Economic Development Director Financial Impact: $ None Budgeted: Y/N Source: Related Documents (CIP, ERP, etc.): 1.00 PURPOSE 2.00 POLICY 8/1/2011 Draft Policy 1.25 BUSINESS SUBSIDY POLICY 1.01 This Policy is adopted for purposes of the Business Subsidies Act (the "Act "), Minnesota Statues, Sections 116J.993 through 116J.995. Terms used in this Policy are intended to have the same meanings as if used in the Act, and this Policy shall apply only with respect to "subsidies" as defined by the Act if and to the extend required thereby. 2.01 The City of Lakeville and the Lakeville Economic Development Commission maintain several policy documents which speak to the general goals and objectives for the provision of public assistance for private development or redevelopment activities. These documents include, but are not limited to the current Strategic Plan for Economic Development and the Comprehensive Land Use Plan. 2.02 The City of Lakeville has determined that in order for any project to be considered for financial assistance, a finding is needed that determines that, "but for" the City's assistance, this project will not occur or will not occur within a reasonable amount of time. The City will also need to demonstrate a return on its investment based on one or more of the public benefit categories listed in this Policy. 2.03 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 one or more of the following categories: a. The creation of new jobs /increase in total payroll. 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. Preference will be given to higher paying jobs that also provide benefits such as health care coverage. b. 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. c. Redevelopment projects that result in the stabilization of business districts or neighborhoods by elimination of blighting conditions. 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. 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. g. 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. 2.04 If a particular project does not involve the creation of jobs, but is nonetheless found to meet another public purpose of the City it may be considered without any specific job wage goals, as permitted by Minnesota Statutes. This public purpose has to be something other than an increase to the City's tax base. Other measurable, specific and tangible goals must be established. Examples of tangible goals may include redevelopment or clean -up of a contaminated site or increased tourism. 2.05 Each project shall not only be evaluated against the Business Subsidy Policy but also against other applicable City of Lakeville or Economic Development Commission policies, including the Comprehensive Land Use Plan, current Strategic Plan for Economic Development. The level of assistance to be provided for any project is at the discretion of City of Lakeville. 2.06 Because it is not possible to anticipate every type of project which may in its context and time present desirable community building or preservation goals and objectives, the governing body must retain the right in its discretion to approve projects and subsidies which may vary from the principles and criteria of this Policy. The burden will be on the applicant to demonstrate, to the satisfaction of the City of Lakeville, that the public benefit justifies the requested subsidy. 2.07 In all cases of business subsidy, where the subsidy is equal to or greater than the threshold prescribed in Minnesota Statutes, a subsidy agreement will be entered into between the City and the recipient. This agreement will delineate the subsidy structure and amount, as well as the expected public benefit. The agreement will include provisions for repayment and other resolution options if the expected public benefit is not achieved. Upon completion of the project, the actual costs of the elements of the project eligible for the business subsidy will be verified. All business subsidies will be subject to the criteria outlined in Minnesota Statutes, Section 116J.933 through Section 116J.955 except those subsidies as exempted by same.