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Ed Hodder Economic Analyst, Analysis and Evaluation MN Department of Employment and Economic Development Evaluating the Deal: Criteria at the Local Level, Hibbing August 18, 2004. Presentation Goals. Overview of Law Definition of criteria Operating requirements Results

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Ed Hodder

Economic Analyst, Analysis and Evaluation

MN Department of Employment and Economic Development

Evaluating the Deal: Criteria at the Local Level, Hibbing August 18, 2004


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Presentation Goals

  • Overview of Law

  • Definition of criteria

  • Operating requirements

  • Results

  • JOBZ reporting requirements


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What Is the Business Subsidy Law?Overview

  • The business subsidy law M.S. §116J.993 through §116J.995 outlines the operating and reporting requirements for awarding business subsidies in Minnesota.

  • Under the JOBZ law M.S. §469.320 a subzone administrator must comply with the reporting and operating requirements under M.S. §116J.993 through §116J.995.


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What Is the Business Subsidy Law?Definition

  • Tax exemptions or tax credits and local sales tax available to a qualified business located in a job zone;

  • State and local government agency grants;

  • Contributions of personal property, real property, or infrastructure;

  • Loans at rates less than commercially available;

  • Tax/fee reductions or deferrals including tax increment financing (TIF);

  • Guarantees of payments; and

  • Preferential use of government facilities.


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What Is the Business Subsidy Law?Entities Subject to the Law

  • Grantor or subzone administrator:

    • The legal representative designated by the local government unit to administer a subzone; and

    • Any state or local government agency with the authority to grant a business subsidy.


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What is the Business Subsidy Law?Entities Subject to the Law

  • Recipients or Qualified Businesses:

    • A for-profit business; and or

    • A person that carries on a trade or business at a place of business located with in a Job Opportunity Zone (JOBZ).


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Criteria Definition

  • Uniform standards or guidelines by which a grantor and or subzone administrator bases its decision to award any business subsidy.


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Operating Requirements

  • Grantors and or subzone administrators may not provide business subsidies until they have:

  • Held a public hearing on criteria:

    • Criteria must include a specific wage floor for wages paid and jobs created.

    • The wage floor may be stated as a specific amount or may be stated as a specific formula that will generate a specific dollar amount.


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Operating Requirements

  • A grantor or subzone administrator may deviate from the criteria only in writing and provide a copy to DEED.

  • A copy of the criteria must be submitted to DEED with the first annual report.


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Results – Specific Wage Floor

  • A significant number grantors submitted criteria policies prior to the changes made in the 2000 legislative session.

  • Grantors must amend their criteria policies to include a specific wage floor for wages to be paid and jobs created.


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Results – Specific Wage Floor

  • Of the 260 criteria policies submitted by grantors from 2000 to 2004 currently in place, 136 policies have a specific wage floor from $5.15 to $19.30.




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Results - Job Creation GoalsOne job per $ of subsidy


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Results – Job Creation Goals and Other Provisions

  • One policy has a job creation goal of 60% new jobs created to be held by city residents.

  • One policy requires businesses with at least 100 FTE’s to spend 5% of the loan amount on training programs and to encourage housing. Businesses with at least 75 FTE’s to offer a health plan.


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Results – Capital Investment

  • One criteria policy requires a capital investment of at least $500,000 for inclusion into JOBZ program.

  • One criteria policy requires an investment of at least $100,000 for a new business and $50,000 for a existing business.


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JOBZ Reporting RequirementsReports from Grantors to DEED

  • Each year subzone administrators must file a Minnesota Business Assistance Form (MBAF) with DEED for each JOBZ business subsidy agreement.

    • Report annually after the approval date for the duration of the zone term.

    • Report at a minimum, information the law requires recipients or qualified businesses to report to grantors or subzone administrators.

    • The MBAF is on DEED’s website and each year’s reports are due April 1, 2005 from grantors.


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In Conclusion

  • Criteria development is a fundamental first step toward accountability and for evaluating the success of the JOBZ program.


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  • To learn more about JOBZ, information is available on DEED’s website at www.deed.state.mn.us (Click on the JOBZ logo)

  • Copies of submitted criteria policies and the law are available on DEED’s website at www.deed.state.mn.us (Click on Community Development, then Business Subsidies Reporting).

  • Questions can be directed to Ed Hodder at 651-296-0580 or [email protected]


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