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Fact Sheet: 1999 Business Subsidies Law <br /> <br />Developing Criteria and Stating Public Purposes <br /> for Business Subsidies <br /> <br />Under Minn. Stat. §116J.993 through §116J.995, granting agencies must develop cdteda for awarding <br />business subsidies after a public headng. In addition, each business subsidy agreement must indicate a <br />public purpose. The law allows grantors flexibility in stating public purposes appropriate for their <br />communities, but requires that agreements meet a public purpose other than increasing the tax base and that <br />job retention be used as a public purpose only when job loss is imminent and demonstrable. Although the <br />law does not require public purposes to be addressed in the criteria, grantors may want to refer to the public <br />purposes below for criteria ideas. The following public purposes and cdteda were recommended by the <br />legislatively established Corporate Subsidy Reform Commission. <br /> <br />Enhancing Economic Diversity <br />,/' In what ways does the project improve the mix of businesses in the area so as to: (1) allow the area <br /> to participate in fast~, rowing industries; (2) prcJtect the area from adverse eccnomic cons-~quences <br /> caused by slow growth or declining industries that are dominant in the area; and (3) provide essential <br /> consumer services, or develop a network of local suppliers to businesses within the community <br /> where they otherwise do not exist? <br /> <br />Creating High-Quality Job Growth <br /> How many new jobs will be created, and what will they pay? <br /> How do wages proposed to be paid compare to community wage levels? <br />,/ How many jobs will be created with opportunities for career advancement, educational opportunities, <br /> or occupational training? <br /> VVhat are the projections for job growth at the project over the nest period of two to five years? <br /> VVhat are the fringe benefits that are payable for the jobs (particularly, is there child care, health care, <br /> and pension coverage)? <br /> <br />Providing for Job Retention, Where Loss is Imminent and Demonstrable <br />Note: Under the ~ 999 law, job retention can be used as a public purpose only in cases where job loss is <br />imminent and demonstrable. <br />,/' After collecting the necessary documents, is there substantial evidence that the company will have to <br /> shut down involuntarily? ' <br />,/' After collecting the necessary documents, is there substantial evidence that the company has <br /> received an offer to move to another state or community that is attractive enough that a reasonable <br /> person would seriously consider a move for business reasons? <br />,," VVhat potential negative effect would the subsidy have on other competing businesses and overall <br /> area job quality? <br /> <br />Stabilizing the Community <br /> How will the project constitute a significant investment in an area that (1) has not historically received <br /> similar investments; (2) is a blighted area; or (3) is an economically depressed area? <br /> How will the project stimulate other investment or create spinoff businesses and jobs in the area? <br /> <br />Increasing the Tax Base <br />Note: The/aw requires business subsidies to meet a public purpose otherthan increasing the tax base, but <br />grantors may use increasing the tax base in conjunction with another pub/ic purpose. <br />,/ How will the project uniquely affect the property tax base for all taxing jurisdictions, both short term <br /> and long term and both directly and indirectly? <br /> How will the project affect other local business and individual property tax bills? <br /> <br />SOURCE: Corporate Subsidy Refbrm Comrhission, 1997 Corporate Subsidy Reform Commission Report, February 6, 1998. <br /> <br />Deparb'nent of Trade and Ec~3nomic Development <br /> <br />Page 4 of 4 <br /> <br />Ju~ 27,1999 <br /> <br /> <br />