Agenda - Council - 08/11/2015 - Laserfiche WebLink

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The Issue of Business Subsidy By state law, cities may not grant business subsidies until the grantor has held a public hearing and adopted formal criteria for awarding business subsidies. The criteria must meet legal requirements set out by the Legislature. The City of Ramsey has previously adopted a "Business Subsidy Policy" that meets the requirements imposed by the State of Minnesota. In Minnesota a "Business Subsidy" means "a state or local government agency grant, contribution of personal property, real property, infrastructure, the principal amount of a loan at rates below those commercially available to the recipient, any reduction or deferral of any tax or any fee, any guarantee of any payment under any loan, lease, or other obligation, or any preferential use of government facilities given to a business". Ramsey's Business Subsidy Policy contains mandatory criteria including: 1. The "But For" Test. There is a substantial likelihood that the project would not go forward without the business subsidy. Given the nature of redevelopment and associated costs Life Fitness has options including leasing or developing the manufacturing project elsewhere where the redevelopment costs would not be incurred. The subsidy insures that the expansion will happen at the identified location. 2. Wage Policy — If the project results in the creation of jobs, the wage for the jobs created must be at least equal to 70% of the most recent median wage for the Twin City Metro Region. The current median wage in this region is $20.49 per hour. Given the current median wage, the minimum threshold to meet the City of Ramsey policy guidelines currently stands at $14.34 per hour. Jobs projected for this project will pay $16.85 per hour which meets the City's requirements. 3. Economic Feasibility—the recipient must demonstrate to the satisfaction of the City that is has adequate financing for the project and that the project will be completed in a timely fashion. Life Fitness is owned by Brunswick Corporation, a publicly traded company based out of Lake Forest, Illinois, with a market capitalization of $4.88 billion and $119M in world-wide sales for 2014. In my opinion, it is highly unlikely that the company cannot secure financing for the project. The project is also slated to begin construction by September of 2015. 4. Compliance with the Business Subsidy Act — The project as defined meets the requirements of the Business Subsidy Act. It is important to note that the Business Subsidy Policy contains the following language: "The City of Ramsey reserves the right to approve projects and business subsidies which may vary from the principles and criteria set forth in the Business Subsidy Policy". • Page 2