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Presentation to the Senate Business, Industry, and Jobs Committee. January 7, 2009 Mark Lofthus, DEED Business and Community Development Division. Today’s Presentation. Review 2008 Legislative changes Review DEED’s administrative changes Current project status/looking forward.

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Presentation Transcript

Presentation to the

Senate Business, Industry,

and Jobs Committee

January 7, 2009

Mark Lofthus, DEED

Business and Community Development Division


Today s presentation
Today’s Presentation

  • Review 2008 Legislative changes

  • Review DEED’s administrative changes

  • Current project status/looking forward


Summary of ola report
Summary of OLA Report

  • Wide variation in implementation

  • Cost/benefits and need not examined

  • Subsidy agreements not standard

  • Inadequate and delayed compliance

  • Need for verification of business data

  • Need for more effective targeting



2008 legislative outcomes
2008 Legislative Outcomes

  • Business Subsidy Agreements cannot be amended without DEED’s approval

  • Businesses that substantially meet goals may be allowed to remain in program: reduced benefit duration

  • Clarification of clawback provisions


2008 legislative outcomes1
2008 Legislative Outcomes

  • State Auditor and Legislative Auditor given access to tax and unemployment (jobs) data to assist in compliance reviews

  • Increased business reporting requirements (new reports to Revenue)


Deed administrative changes
DEED Administrative Changes

  • Implementation of JOBZ and Business Finance Office

  • Seven meeting around Minnesota in July and August

  • Changes formalized in October 6, 2008 – State Register notice

  • Discussed with OSA and OLA

    => Based on authority in 116J.314, Subd. 6 to establish administrative processes without rulemaking


Deed administrative changes1
DEED Administrative Changes

  • Application Process

    • DEED’s review process

      • Is need for JOBZ demonstrated?

      • Do benefits to state exceed tax costs?

      • Would other assistance be more appropriate?

      • Will competitors be injured?

      • Scoring system weighs number and wages of jobs, return on investment, community distress


Deed administrative changes2
DEED Administrative Changes

Summary

  • Approval of all JOBZ applications=> All projects originate and approved locally, with DEED sign-off

  • Standardized Business Subsidy Agreement

  • Heightened reporting/compliance


Deed administrative changes3
DEED Administrative Changes

  • DEED must review and score all JOBZ applications

    • Submitted by city with information from the business

      • JOBZ Benefit Calculator

      • Description of JOBZ project need and community needs and priorities

      • Sources and uses of project funding

      • Listing of local and regional competitors

      • Proposed new jobs with wages and benefits


Deed administrative changes4
DEED Administrative Changes

  • Business Subsidy Agreement

    • Attorney General consulted on development of standard agreement

    • DEED approves all agreements prior to execution

    • New, clear definitions of “employee” and “full time equivalent” employee


Deed administrative changes5
DEED Administrative Changes

  • Heightened reporting/compliance

    • Revised Minnesota Business Assistance form specifically for JOBZ

    • New projects reviewed on anniversary date; thereafter on business subsidy schedule

  • New reports to Revenue (legislative)

    • October 15 – expected tax benefits

    • December 1 – certification of continued compliance


Deed administrative changes6
DEED Administrative Changes

  • Heightened reporting/compliance

    • If job creation goals are not met:

      • If business still operates, and has >50% goal attainment, reduced duration of benefits

      • If business still operates, and has <50% goal attainment, terminated but no clawback

      • If business closed or violates statute, subject to Revenue’s clawback determination


Current status of jobz projects
Current Status of JOBZ Projects

  • Fully in compliance: 314 projects, 6,392 new jobs as of 2007 MBAF review

  • Operating, but with reduced benefits: 5 projects

  • Operating, but terminated from JOBZ: 11 projects

  • Business closed or did not meet wage goals: 46 projects


Current status looking forward
Current Status/Looking Forward

  • Clarify authority for DEED to grant extensions for Business Subsidy Agreements; needed in this economy

  • JOBZ is a selectively targeted tool – it is not for every/most businesses

  • Green JOBZ will be proposed to attract renewable energy projects

  • State Auditor will begin their annual audit


For more information
For More Information:

www.positivelyminnesota.com

or contact:

Mark Lofthus, 651-259-7440 or [email protected]


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