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Ed Hodder Economic Analyst, Analysis and Evaluation MN Department of Employment and Economic Development

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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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Presentation Transcript
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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
Presentation Goals
  • Overview of Law
  • Definition of criteria
  • Operating requirements
  • Results
  • JOBZ reporting requirements
what is the business subsidy law overview
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.
what is the business subsidy law definition
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.
what is the business subsidy law entities subject to the law
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.
what is the business subsidy law entities subject to the law7
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).
criteria definition
Criteria Definition
  • Uniform standards or guidelines by which a grantor and or subzone administrator bases its decision to award any business subsidy.
operating requirements
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.
operating requirements10
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.
results specific wage floor
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.
results specific wage floor12
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.
results job creation goals and other provisions
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.
results capital investment
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.
jobz reporting requirements reports from grantors to deed
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.
in conclusion
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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