Agenda - Economic Development Authority - 01/13/2011

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tax revenue. On average, $1 of public investments in brownfields has been shown to leverage $8 in total investment. Brownfields investment also leverages jobs: on average, it takes only $10,000 to $13,000 in public investment to produce one job vs. the standard $35,000 per job as estimated by the U.S. Department of Commerce. In Minnesota, the figures are even more impres- sive. According to the Minnesota Department of Employment and Economic Development's (DEED) records, it takes less than $6,000 in public investment per job. In addition, each DEED dollar attracts an average of $26 in other investments. Public expenditures in environmental assessments and clean- ups related to property transactions and redevelopment are far - sighted investments in future responsible growth - more brownfields sites will be made "development- ready," future growth can be steered to places where infrastructure is in place, and existing communities can be revitalized, and the negative externalities associated with sprawl can be avoided. DEED funds brownfield cleanup and redevelopment through its Cleanup and Redevelopment Grant Programs. EDAM sup- ports legislative initiatives that restore and strengthen funding levels for economic development and brownfields programs administered by DEED and the Metropolitan Council. In recent years both DEED and the Met Council have experi- enced budget reductions for these programs. EDAM supports maintaining or enhancing current funding levels for investigat- ing and cleanup up contaminated property for redevelopment. DEED's Redevelopment Grant program assists with other site preparation costs not related to contamination, such as demoli- tion and infrastructure improvements on sites where future development plans will create jobs, new housing opportunities and tax base enhancement. Cities sometimes need assistance with demolition and other activities on sites where there is no current development plan. Communities may need to address more immediate public safety concerns or hazardous conditions on a site before considering future redevelopment options. A proposed Demolition Loan Program would provide develop- ment authorities loans up to 100% of demolition costs for a qualifying site. Loans would be at 2% interest and a portion could be forgiven based on development benefits. EDAM supports funding the Redevelopment Grant program at a level of $15 million per year, with half being allocated to a newly proposed Demolition Loan Program. In addition to DEED's statewide brownfield Cleanup and Re- development Grant Programs, and proposed Demolition Loan Program, a Transit Improvement Area Loan Program was cre- ated in 2008 to fund installation of public improvements. Al- though DEED has designated the Transit Improvement Areas, the program has not yet been funded. Each of these programs assists sites that have future redevelopment potential. EDAM supports funding in the amount of $10 million per year for the Transit Improvement Area Loan Program. The Department of Commerce administers a Petrofund which provides partial reimbursement for corrective action costs associ- ated with releases from underground and above - ground petroleum storage tanks. The Petrofund also removes abandoned under- ground petroleum storage tanks. The Petrofund is also the primary funding source for DEED'S Contamination Cleanup Grant Program. The Department of Commerce is expected to introduce legislation to extend the current sunset of 2012 for the Petrofund. EDAM supports extending the sunset date for the Petrofund. III. PASSAGE OF STATE NEW MARKET TAX CREDITS New Market Tax Credits loans are intended to provide the financing to allow small business owners in low income census track areas to expand their businesses. EDAM supports passage of a State New Market Tax Credit In- vestment Program for businesses that either expand or relocate in low income census tracks in Minnesota. This program would mirror the Federal New Market Tax Credit Program that was created 10 years ago to address the lack of capital available for businesses and economic development ventures in low income areas. The program could include the following provisions: a. Business loans in low income census tracks within Minnesota could be used to purchase equipment, purchase buildings, build new, or remodel buildings. b. Investors would receive a 39% tax credit for investing in low income areas. c. The 39% state income tax credit would be taken over seven (7) years. The State program could be modeled after the successful Missouri Program, zero tax credits for years 1 and 2, then 7% for year three and 8% for the final four (4) years. With this structure, the immediate impact on the State budget would be lessened and could be incrementally increased over time. This will let the legislature give an immediate boost to economic develop - ment in the most needed areas, attract and leverage more federal tax credit dollars to Minnesota and help create new jobs in the low income census tract areas of the state. d. The Minnesota Department of Revenue will adminis- ter this tax credit program.