HomeMy WebLinkAbout4. Amendment of Business Subsidy Policy FDf� y.
Covncil /0.�".a,
CITY OF SHAKOPEE
Memorandum
TO: Honorable Mayor and City Council/Economic Development
Authority (EDA)
Mark McNeill, City Administrator/EDA Executive Director
FROM: R. Michael Leek, Community Development Director
SUBJECT: Revision to City of Shakopee Subsidy Policy
MEETING DATE: April 17, 2012
INTRODUCTION:
The City Council is asked to consider and adopt the proposed changes to the City of
Shakopee Business Subsidy Policy. The City of Shakopee has operated for some years
under the attached Business Subsidy Policy. Following the discussion of the SanMar
request for assistance, the City Council directed staff and the EDAC to review and
recommend possible changes to the policy that would allow greater flexibility in wage
rates. Attached for the EDA's and City Council's information are a) a copy of the current
policy, b) and interlineated copy of the policy as proposed to be revised, and c) a clean
copy of the proposed revision.
DISCUSSION:
At the time the policy was put in place, the federal minimum wage was $5.15 per hour,
so 275% of the minimum wage was $14.16 per hour. This wage level addressed the
then-Council's concern that City assistance be given to projects which created livable
wages. In 2007 Congress passed a bill that resulted in the minimum wage increasing
over time. It is currently $7.25 per hour. Applying the 275% standard, jobs created
(exclusive of benefits) are to pay about $19.94 per hour. For some business segments
that is no longer realistic. This was the case in the SanMar project, where typical wages
for warehouse positions are apparently between $12 and $14 per hour, which
nonetheless is significantly higher than the minimum wage.
In the attached draft that was prepared in early 2011, staff attempted to address this by
a) excepting retained jobs and b) allowing the Council to establish different wage goals
from project to project. The EDAC may wish to discuss whether to further reduce the
275% requirement in general.
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RELATIONSHIP TO CITY GOALS:
This item relates to the following City goals;
B. Positively manage the challenges and opportunities presented by growth,
development and change, and to
D. Maintain, improve and create strong partnerships with other public and private
sector entities.
EDAC RECOMMENDATION:
On March 21, 2012 the EDAC unanimously recommended Alternative No. 1.
REQUESTED ACTION:
EDA:
Recommend to the City Council the proposed revisions to the City's Business Subsidy
Policy as proposed by city staff and the City Attorney and recommended by the EDAC.
City Council:
Offer and pass a motion adopting the proposed revised Business Subsidy Policy as
proposed by city staff and reviewed by the City Attorney.
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R. Michael Leek
Community Development Director
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RESOLUTION NO. 7187
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SHAKOPEE ADOPTING A REVISED
BUSINESS SUBSIDY POLICY
WHEREAS, the Shakopee City Council determined that changes in economic and
development circumstances warranted a review of the City's Business Subsidy Policy (the
Policy); and
WHEREAS, City staff and the City Attorney reviewed the Policy and proposed a
number of revisions to the policy, which revisions have been reviewed by the Shakopee
Economic Development Advisory Committee (EDAC); and
WHEREAS, at its meeting of March 21, 2012 the EDAC approved a motion to
recommend to the City Council that it approve the revised Business Subsidy Policy; and
WHEREAS, the Economic Development Authority (EDA) and City Council considered
the revised policy at their meetings of April 17, 2012; and
WHEREAS, the EDA recommended approval of the revised Policy.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
SHAKOPEE, MINNESOTA, THAT:
It hereby adopts the revised Business Subsidy Policy, dated April 17, 2012
Adopted in session of the City Council of the City of Shakopee, Minnesota held
the day of , 2012.
Mayor of the City of Shakopee
ATTEST:
Julie Linnihan, City Clerk
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CITY OF SHAKOPEE/
SHAKOPEE ECONOMIC DEVELOPMENT AUTHORITY (EDA)
BUSINESS SUBSIDY POLICY
April 17, 2012
I. Purpose
This document sets forth the business subsidy policy and the specific criteria to be considered by the
City of Shakopee (City) and the Shakopee Economic Development A ority (EDA) in evaluating requests
for business subsidies. In adopting these criteria, it is the intent ity and EDA to comply with
Minnesota Statutes, Sections 116J.993-116J.995 (the Act). T and EDA hereby adopt the
definitions contained in the Act for application of the crite d are incorporated herein by
reference. The City and the EDA have each adopted t' cy and th riteria after a public hearing
in accordance with the Act. Henceforth in this doc - the term "City' des both the City and the
EDA unless otherwise designated.
II. Goals of this Policy
It is the City's intent to advance the follo nd object ' granting business subsidies:
a. It is the goal o ' to provi siness 'es tha onsistent with the City of
�
Shakopee' ' e plan a �'' . her 'des dopted by the City to guide
� ..,
develop f the co nity.
b. It is the goal City t ovide busi subsidies that are consistent with the Act,
i ;
�
. oject � ich th �- ss idy is being provided must �ee� have a
"pu ' rpos ; luding, bu imited to, the public purposes stated in Section
III belo
. The recipie ust en to a business subsidy agreement with the City that is
onsistent wi' e Act;
iii. recipient t commit to remain in the site for which the business subsidy was
gr for st five (5) years from the date that the business subsidy takes
effect enefit date as defined in the Act);
iv. The busin s subsidy agreement sets forth the findings relative to the criteria
contained herein, and any specific job, wage, property valuation or other goals
established ��*°� *"° ^� �� "°°��^^ with respect to the business subsidy.
III. Business Subsidy Criteria
The following criteria shall be utilized in evaluating a request for a business subsidy. However, that an
applicant meets these criteria does not create a contractual right to a business subsidy. The City may at
any time and at its own discretion modify these criteria as permitted by the Act.
H:\CC\2012\Draft Business Subsidy Policy_clean copy_04172012.docx 1
a. Increase in Tax Base. The Act provides that an increase in tax base cannot be the sole basis
for granting a business subsidy, however, the City considers an increase in tax base is a
critical factor in *"°''�*„ � ° *"°* ° �" , ��'�' ^ .^+" +"° ^ ^"+'
„�,.o«.,,-„ ,. .,,�;+,,,., f,,,-+h„ �;+„ +„ ,. �,.�o� granting a business subsidy. The City may
consider a specific goal for tax base increase in connection with a specific request for
assistance.
b. Job Creation. The applicant will be required to demonstrate that the proposed project
will create the maximum number ofjobs feasible in ligh f the project type and site. Jobs
to be created may include jobs that will be retained, � y with a demonstration by the
applicant that, absent the business subsidy, the j would be specific and
demonstrable. If, after the public hearing, th e �nes that the creation or
retention of jobs is not a goal of the specif' o�ect, the j ation goal may be set at zero
(0).
c. Wages. New jobs to be created b project must pay at le 5% of the federal
minimum wage exclusive of benefits. J � be retai may not b uired to meet the
above wage standard. After the public hea he ay establish oals for new
jobs to be created that va ' he standar , and which take into ccount of the
following additional factors;
i. The size of the busine d i tial to c. higher paying jobs in the future;
ii. Prevai ' I wage rat
iii. Lo nditions,
iv. E al econo actors o neither ity nor the recipient of the
busi ubsidy control;
The indi I� ources he recipient; and
�' . mpe ` nviron � wh the recipient's business exists.
ther Econo Re ment Go If creation of jobs is determined not to be a goal
a project (an xtens ages) the proposed business subsidy must achieve specific,
: le and meas e goa► ed to one or more of the following;
rovides a si ant economic impact by means of a multiplier effect within the
munity;
ii. Re in gr economic or commercial diversity within the community;
iii. Contr he establishment or reestablishment of a critical mass of
commerc industrial development within an area of the City;
iv. Provides goods or services that are not currently available in the community;
v. Increases the range of goods or services that are available in the community;
vi. Encourages the growth of fast-growing businesses;
vii. Encourages private investment or reinvestment that results in the removal of blight
or remediation of pollution;
viii. Supports the retention and/or adaptive re-use of buildings of historical or
architectural significance;
H:\CC\2012\Draft Business Subsidy Policy_clean copy_04172012.docx 2
ix. Encourages the full utilization of existing or planned public infrastructure
improvements.
In granting business subsidies, the City may deviate from the criteria outlined above if a) the reasons for
the deviation is documented in writing and b) reported to the Minnesota Department of Employment
and Economic Development (DEED) pursuant to the Act.
IV. Application Process for Business Subsidies
The applicant will complete and submit the City's Application for ss Subsidy; submit with the
application a deposit of XXXX (dollars) to cover the City's ad � tive review costs; and provide other
information which may be requested by the City. All mat u d to the City in connection with
a business subsidy application shall become the prope e City. eview process shall involve at
least the following steps;
a. City staff or the City's agent shall revie pplicatio aterials a ke a preliminary
recommendation to the Cit Council and E ar � the complet of the
application, 2) whether th '� tion meets s of this policy, and whether the
application complies with th i tablished i � policy.
b. In the event that the City Cou nd ; cur wit recommendation in a. above, a
public hearin set at whic e City ider a recommendation related to
° :4., ik
the applica review a co ' y G staff or the City's agent shall
, 3;;
take into nt at lea e followi '
i. App credit lysis;
� =.
Financia c ropos � - oject/application;
�� . omp of the ap tion.
t the time sche public he , City staff or the City's agent will make a final
commendatio he Ci ncil and EDA regarding the application. The City Council
DA may adop reco dation or direct City staff or the City's agent to develop
alte ��e informati nd/or alternatives for action by the City Council and EDA.
�
V. Compliance a ` orY ,'' quirements.
a. Any assistanc s not meet the definition of a"business subsidy" will be excluded
from the require nt of holding a public hearing prior to granting a business subsidy. All
assistance that meets the definition shall be subject to the requirement of a public hearing.
b. Every recipient of a business subsidy must enter into a business subsidy requirement
agreement with the City, which agreement must fulfill the requirements of the Act.
c. Both the recipient and the City must comply with the reporting and monitoring
requirements of the Act.
d. In the event that a recipient fails within two (2) years of the benefit date as defined in the
Act to meet the goals set forth in the business subsidy agreement, the recipient or its
successors and assigns shall be liable to repay to the City the assistance plus interest. The
H:\CC\2012\Draft Business Subsidy Policy_clean copy_04172012.docx 3
City may prorate repayment to reflect partial fulfillment of the goals set forth in the
business subsidy agreement. The rate of interest charged must be set at no less than the
implicit price deflator for government consumption expenditures and gross investment for
state and local governments prepared by the bureau of economic analysis of the Unites
States Department of Commerce.
e. The City may, after holding a public hearing, extend the time for compliance with business
subsidy agreement job and wage goals by up to one (1) year.
;;;;
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CITY OF SHAKOPEE/
SHAKOPEE ECONOMIC DEVELOPMENT AUTHORITY (EDA)
BUSINESS SUBSIDY POLICY
IRevised Januarv 10, 2011)
I. Purpose
This document sets forth the business subsidy policy and the specific criteria to be considered by the
City of Shakopee (City) and the Shakopee Economic Development ority (EDA) in evaluating requests
for business subsidies. In adopting these criteria, it is the inten City and EDA to comply with
Minnesota Statutes, Sections 1161.993-1161.995 (the Act). and EDA hereby adopt the
definitions contained in the Act for application of the crit nd re incor orated herein b
reference. The City and the EDA have each adopted olicy and th iteria after a public hearing
in accordance with the Act. Henceforth in this d t the term "City' des both the City and the
EDA unless otherwise designated.
II. Goals of this Policy
It is the City's intent to advance the foll nd object ' granting business subsidies:
a. It is the oal to rovi siness � s tha onsistent with the Cit of
Shako e' re ' e lan a th s des ado ted b the Cit to uide
develo f the co nit .
b. It is the oal Cit rovide busi subsidies that are consistent with the Act
. o'ect hich th s sid is bein rovided must mee� have a
" u r os includin but not limited to the ublic ur oses stated in Section
111 below."
. The reci ie ust en '; t�to a business subsid a reement with the Cit that is
onsistent w he Act•
iii. reci ienL st commit to remain in the site for which the business subsid was
r fo <at least five 5 ears from the date that the business subsid takes
effect (i.e. the benefit date as defined in the Act);
iv. The busin�ess subsidv a�reement sets forth the findin�s relative to the criteria
contained herein, and anv specific iob, wa�e, proqertv valuation or other �oals
established °'�°• *"° ^"�'� "°°•�^^ with respect to the business subsidv.
III. Business Subsidy Criteria
The following criteria shall be utilized in evaluating a request for a business subsidy. However, that an
applicant meets these criteria does not create a contractual right to a business subsidy. The City may at
any time and at its own discretion modify these criteria as permitted by the Act.
H:\EDAC\2012\3-21-12\revised business subsidy policy draft_K&G reviewed_01102011.docx 1
a. lncrease in Tax ease. The Act provides that an increase in tax base cannot be the sole basis
for �rantinR a business subsidv, however, the Citv considers an increase in tax base is a
critical factor in *'� r'r�� r � 4h-.4 � r�l� -. Ill r� .•�!� Fhri r� �rh �
^�;�•^�'^�'"^ r�'. *^ ����'^� �ranting a business subsidy. The Citv mav
consider a specific �oal for tax base increase in connection with a specific request for
assistance.
f7. J C�2ptl0nk Th2 dppllCdnt wll� b2 f2pUlred t0 demOnStrat2 that the pfOp052d pf012Ct —� COmm011t [M1]: Need to come up with the �
---- — --- — --- -
create the maximum number of'obs feasible in li f the ro'ect t e and site. Jobs minimum requirement forjob creation.
to be created ma include'obs that will be retaine . nl with a demonstration b the
a licant that absent the business subsid the � would be s ecific and
demonstrable. If after the ublic hearin th de � es that the creation or
retention of'obs is not a oal of the s e" o'ect the ' ation oal ma be set at zero
�
c. Wa es. New �obs to be created ro"ect must a at le . 5% of the federal
minimum wa e exclusive of benefits. J be ret '" ma not b uired to meet the
above wa e standard. Aft he ublic hea ma establish oals for new
�obs to be created that va he standard e and which take into account of the
followin� additional factors;
i. The size of the busine nd i tial to c hi her a in 'obs in the future•
ii. Prev i I wa e rat
iii. L ono nditions
iv. E al econo actors o ch neither Cit nor the reci ient of the
busi ubsid s control•
he indi �� urce he reci ient� and
. m e environ ' w the reci ient's business exists.
Other Econo Re ment 6o If creation of'obs is determined not to be a oal
a ro"ect an xtens a es the ro osed business subsid must achieve s ecific
le and meas !e oal ted to one or more of the followin •
rovides a si 'cant economic impact by means of a multiplier effect within the
munity;
ii. Re in r economic or commercial diversit within the communit •
iii. Contri the establishment or reestablishment of a critical mass of
commeraal/industrial development within an area of the City;
iv. Provides �oods or services that are not currentiv available in the communitv:
v. Increases the ran�e of Roods or services that are available in the communitv:
vi. Encourages the �rowth of fast-growin� businesses;
vii. Encourages private investment or reinvestment that results in the removal of bli�ht
or remediation of pollution;
viii. Supports the retention and/or adaptive re-use of buildings of historical or
architectural significance;
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ix. Encourages the full utilization of existing or planned public infrastructure
improvements.
In granting business subsidies, the City may deviate from the criteria outlined above if a) the reasons for
the deviation is documented in writing and b) reported to the Minnesota Department of Employment
and Economic Development (DEED) pursuant to the Act.
IV. Application Process for Business Subsidies
The applicant will complete and submit the City's Application f ess Subsidy; submit with the
application a deposit of XXXX (dollars) to cover the City's ad " tive review costs; and provide other
information which may be requested by the City. All mat su d to the City in connection with
a business subsidy application shall become the pro f the City. eview process shall involve at
least the following steps;
a. City staff or the City's agent shail revie pplica materials a ke a preliminary
recommendation to the Ci Council and E 1) the complete of the
application, 2) whether th ;�tion meets als of this policy, and 3) whether the
application complies with tli ^ i ablished i'' ' policy.
b. In the event that the City Cou nd cur wit recommendation in a. above, a
public heari et at whi e City ider a recommendation related to
the appli review a e n City staff or the City's agent shall
take into nt at lea e followi
i. App credi alysis;
inancia ����� ���`�'�� � opos �� oject/application;
. omp of the p ation.
At the time sche public he , City staff or the City's agent will make a final
commendatio ' he Ci ncil and EDA regarding the application. The City Council
< DA may adop reco dation or direct City staff or the City's agent to develop
alte e informati nd/or alternatives for action by the City Council and EDA.
V. Compliance a or equirements.
a. Any assistanc es not meet the definition of a"business subsidy° will be excluded
from the requirement of holding a public hearing prior to granting a business subsidy. All
assistance that meets the definition shall be subject to the requirement of a public hearing.
b. Every recipient of a business subsidy must enter into a business subsidy requirement
agreement with the City, which agreement must fulfill the requirements of the Act.
c. Both the recipient and the City must comply with the reporting and monitoring
requirements of the Act.
d. In the event that a recipient fails within two (2) years of the benefit date as defined in the
Act to meet the goals set forth in the business subsidy agreement, the recipient or its
successors and assigns shall be liable to repay to the City the assistance plus interest. The
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City may prorate repayment to reflect partial fulfillment of the goals set forth in the
business subsidy agreement. The rate of interest charged must be set at no �ess than the
implicit price deflator for government consumption expenditures and gross investment for
state and local governments prepared by the bureau of economic analysis of the Unites
States Department of Commerce.
e. The City may, after holding a public hearing, extend the time for compliance with business
subsidy agreement job and wage goals by up to one (1) year.
;��
��� '� }�.
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CITY OF SHAKOPEE
SHAKOPEE
ECONOMIC DEVELOPMENT AUTHORITY
Business Subsidy Policy
Co rY �� S�vcE 1s5�
129 Holmes Street South Shakopee, MN 55379
Phone (952) 233-3800 Fax (952) 233-3801
EMT-236509v 1
SH235-14
CITY OF SHAKOPEE
SHAKOPEE ECONOMIC DEVELOPMENT AUTHORITY
BUSINESS SUBSIDY POLICY
I. Purpose
This document sets forth the business subsidy policy and the specific criteria to be considered by the
City of Shakopee ("City") and the Shakopee Economic Development Authority ("EDA") in
evaluating requests for business subsidies. In adopting these criteria, it is the intent of the City and
EDA to comply with Minnesota Statutes, Sections 116J.993-116J.995 (the "Act"). The City and
EDA hereby adopt the definitions contained in the Act for application in the criteria. The City and
EDA have each adopted this policy and these criteria after public hearing in accordance with the
Act. Henceforth, the term "City" includes the City and EDA unless otherwise designated herein.
II. Goals and Objectives
It is the City's intent to advance the following goals and objectives in granting business subsidies:
a.) All business subsidies must be consistent with Shakopee's comprehensive plan and
any other similar plan or guide for development of the community.
b.) Recipients must enter into a subsidy agreement with the City that is consistent with
the Act. The recipient must meet a public purpose, co�n�nit to re�nain at the site for
five years after the benefit date, meet a specific wage floor, and must set and meet
wage and job goals, unless the public purpose is not employment, in which case after
a public hearing wage and job goals my be set at zero.
III. Business Subsidy Criteria
Every business subsidy recipient must meet a public purpose, which must include but not be limited
to increasing the tax base. The following criteria shall be utilized in evaluating a request for a
business subsidy, although meeting these criteria does not create a contractual right to a business
subsidy, and the City may later modify these criteria, as permitted by the Act.
a.) Increase in Tax Base. While the Act provides that an increase in the tax base cannot
be the sole grounds for granting a subsidy, the City requires such increase as a
necessary condition for any subsidy.
b.) .Iobs and Wages. Every business subsidy recipient must create the maximum
number of livable wage jobs feasible for the proposed project and site, and these jobs
must pay at least 275% of the federal minimum wage exclusive of benefits. The City
will take into account the special needs of small or growing businesses with the
potential to create high paying jobs in the future. The setting of wage goals must be
EMT-236509v l 2
SH235-14
sensitive to prevailing wage rates, local economic conditions, external economic
forces over which neither the grantor nor 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. The jobs created may include jobs to be
retained, but only if job loss is specific and demonstrable. If, after a public hearing,
it is determined that creation or retention of jobs is not a goal, wages and jobs may
be set to zero.
c.) Other Goals. If creation of jobs it is not a goal, the business subsidy must achieve
measurable, specific, and tangible goa(s.
d.) Economic Development or Redevelopment. Business subsidies should promote one
or more of the following:
1. Provide significant economic impact (multiplier effect) within the
community;
2. Encourage economic and commercial diversity within the community;
3. Contribute the establishment or reestablishment of a critical mass of
commercial development within an area;
4. Provide basic goods and services, increase the range of goods and services
available or encourage fast-growing business;
5. Promote redevelopment objectives and removal of blight, including pollution
remediation;
6. Promote the retention or adaptive reuse of buildings of historical or
architectural significance;
7. Encourage full utilization of existing or planned infrastructure
improvements.
The City may deviate from these criteria in granting business subsidies if the reasons for the
deviation are documented in writing and reported to the Department of Employment and Economic
Development, pursuant to the Act.
IV. Compliance and Reporting Requirements.
a.) Every business subsidy granted by the City (whether greater or lesser
than $100,000) will be subject to the requirement of a public hearing.
Any assistance that is excluded from the definition of a"business
subsidy" under the Business Subsidy Act is not subject to the hearing
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requirement or any other portion of these policies. Every business
subsidy must be approved by the Shakopee City Council, and by the
EDA Board of Commissioners if the subsidy is granted by the EDA.
b.) Every recipient of a business subsidy must enter into a business subsidy agreement
fulfilling the requirements of the Act.
c.) Both the business subsidy recipient and the City must comply with the reporting and
monitoring requirements of the Act.
d.) If a business subsidy recipient fails to meet the goals set forth in the business subsidy
within two years, the business subsidy assistance plus interest must be paid back to
the City, provided that repayment may be prorated to reflect partial fulfillment of
goals. Interest must be set at no less than the implicit price deflator for government
consumption expenditures and gross investment for state and local governments
prepared by the bureau of economic analysis of the United States Department of
Commerce.
e.) The City may, after a public hearing, extend the time for compliance with business
subsidy job and wage goals by up to one year.
V. Application Process for Business Subsidies
The applicant will complete the City's Application for Business Subsidies; submit with the
application a deposit of $5,200 to cover City administrative costs; and provide other information as
requested by the City.
a.) City staff or the City's agent shall review the application materials and make
preliminary recommendations to the Shakopee Economic Development Authority
and City Council as to the compliance of the application and proposed project with
the business subsidy policy and the goals and criteria set forth herein.
b.) Final evaluation of the application shall include, in addition to items subject to
preliminary review, a review of applicable credit analysis, financial structuring and
legal compliance. A foimal recommendation shall then be made to the Economic
Development Authority and the City Council.
c.) After a review of the final evaluation and fonnal recommendation, the Shakopee
Economic Development Authority and City Council shall consider final approval of
the granting of a business subsidy and hold the appropriate public hearings.
d.) All applications and supporting materials and documents shall become the property
of the City.
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