shakopee business subsidy policy revision 6:21:16

7/26/2019 Shakopee Business Subsidy Policy Revision 6:21:16

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6.B.

Public Hearings

TO: Mayor and City Council

FROM: Samantha DiMaggio, Economic Development CoordinatorDATE: 06/21/2016

SUBJECT: Revision to the City of Shakopee Business Subsidy Policy (B,D)

Action Sought

The City Council and Economic Development Authority (EDA) for the City ofShakopee are asked to convene in join session to conduct a public hearing on the proposedrevisions to the City's Business Subsidy Policy.

Background

Prior to 2012, Shakopee's Business Subsidy Policy stated that each job created needed topay at least 275% of Federal Minimum Wage. Federal Minimum Wage at that time was$5.15/hour, therefore each full time equivalent (FTE) job created needed to pay at aminimum, $14.16/hour exclusive of benefits.

On May 15, 2012, Council authorized authorized modifications to the Business SubsidyPolicy reducing the minimum wage to 175% of Federal Minimum Wage ($12.69/hour)exclusive of benefits.

The current Federal Minimum Wage is $7.25/hour. However, in Minnesota starting inAugust of 2016, large employers are required to pay workers $9.50/hour and smallemployers $7.25. Staff is recommending that the wage in City's Business Subsidy Policybe increased to $19.00 (200% of the State of Minnesota's minimum wage for large

employers).

Recommendation

This policy has been reviewed by they City's legal council and is recommenced by staff.

Budget Impact

No financial impact to the City on the establishment of the policy.


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Relationship to Vision

This supports Goal B, "Positively manage the challenges and opportunities presented by

growth, development, and change", and Goal D, " Maintain improve and create strong

partnerships with other public and private sector entities".

Requested Action

After holding a public hearing, if the Council concurs, it should by motion approveResolution No. 7733, A Resolution Approving the amended Business Subsidy Policy.

Attachments

2016 Business Subsidy Policy

Res. No. 7733

Redlined Policy


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CITY OF SHAKOPEE, MINNESOTA

RESOLUTION NO. 7733

RESOLUTION APPROVING REVISED BUSINESS SUBSIDY POLICY

WHEREAS, Minnesota Statutes, Sections 116J.993 through 116J.995 (the "Statutes") require the

adoption of criteria for the granting of business subsidies as defined in the Statutes; and,

WHEREAS, the City of Shakopee (the City) has determined that it is necessary and appropriate toadopt business subsidy criteria pursuant to the Statutes; and,

WHEREAS, the City has performed all actions required by law to be performed prior to the adoption andapproval of the proposed business subsidies, including the holding of a public hearing upon publishednotice as required by law,

WHEREAS, the City previously approved Business subsidy criter ia on May 15, 2012, and has now

deter mined to amend and restate the criter ia in accordance with requirements of the Business

Subsidy Act.

NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Shakopee, that the business

subsidy criteria, contained in Exhibit A of this resolution are hereby approved, ratified, established, and

adopted and shall be placed on file at the City of Shakopee, Minnesota.

Adopted by the City Council of the City of Shakopee, Minnesota this 21st day of June, 2016.

___________________________________

Mayor

ATTEST:

___________________________________

City Clerk


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June 21, 2016 Page 1

City of Sha kop ee, Minn eso ta

BUSINESS SUBSIDY POLICY

1) POLICY PURPOSE

For the purposes of this document, the term Cityincludes the Shakopee City Council, staff, the

Economic Development Authority, advisory boards and commissions, financial consultants and legal

counsel.

Economic development incentives ar e financial tools that enable the City to pr ovideopportunities and benefits for its businesses and residents. Incentives can take a var iety offorms, including,but not limited t o, cash, debt financing, tax and fee waivers, credits and reba tes.The City of Shakopee provides economic development incentives in order to achieve its long-range vision of creating a diverse an d sustainable economic base. A sustainable economic base is

achieved in part th rough the creat ion and retent ion of quality, high paying jobs. A diverse andsustainable economy offers oppor tun ity for improved quality of life for the residents ofShakopee. Economic development p rojects may also achieve other worthwhile goals. Forinstance, some projects pr ovide value to the community in the forms of infrastructureimprovements, stabilization of business distr icts or neighborhoods, or concentration of selectedindustries.

This document sets forth the specific criteria the City uses to evaluate a request for Business

Subsidy. In adopting these cr iter ia, it is the intent of the City to comply with Minnesota Statu tes,

Sections 116J.993-116J.995 as amend ed (the Act). The City hereby adopts the definitions contained

in the Act for application of the criter ia, and they are incorpor ated her ein by reference. The City has

adopted this policy and these criteria a fter a public hearing in accordance with the Act.

The City reser ves the r ight to approve or reject projects on a case-by-case basis, taking into

consideration established policies, project criteria, and demand on City services in relation to the

potent ial benefits from the p roject. Meeting policy criter ia does not guarantee the award of

business assistance to the project. Approval or denial of one project is not intended to set

precedent for approval or denial of another project.

The City can deviate from th is policy for projects that supersede t he objectives identified herein.

Any applicant who is not in good stand ing with the City, in regards to licenses, fees or other sp ecific

charges, will not be considered for business subsidies.

The City may charge a fee for r equests under this policy, and t hese fees will be adopted annually

dur ing the fee schedule review.


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2) BUSINESS SUBSIDY OBJECTIVES

As a mat ter of adopted policy, the City will consider offering a business subsidy to assist p rivate

development p rojects that achieve one or mor e of the following objectives:

To increase the Citys tax base.

To retain local jobs and/ or increase the number and diversity of jobs that offer st able

employment and/ or att ractive wages and benefits. Preference will be given to higher

paying jobs tha t also provide benefits such as health care coverage.

To encourage new head of household job creation paying at least $19.00/ hour (200% of the

federal minimum wage), exclusive of benefits. Jobs to be retained are n ot required to meet

the above wage standard. After a public hear ing, the City may establish wage goals for new

jobs to be created that vary from the above standard, and take into account these addit ional

factors;

o The size of the business and its potential to create higher paying jobs in the future;

o Local economic conditions;

To support projects that pr ovide value in the forms of needed transpor tation and other

utility infrast ructur e improvements that would be completed in conjunction with the

project.

To encourage additional unsubsidized pr ivate development in the a rea, either d irectly or

indirectly through spin off development.

To facilitate the development p rocess and t o achieve development on sites which would not

otherwise be developed but for the use of a business subsidy.

To remove blight and/ or encourage redevelopment of commercial and industrial areas that

will result in high-quality redevelopment and private re investment.

To offset increased costs of redevelopment (i.e. contaminated site clean-up) over and above

the costs normally incurred in development . To create opportunities for affordable housing and/ or a diversification of housing stock

available within the community.

To suppor t a project that will improve the quality of life in the City by providing a desirable

good or service and addressing an unmet demand in the community.

To contr ibute to the implemen tat ion of other public policies, as adop ted by the City from

time to t ime, such as the promotion of quality urban or architectural design, energy

conservation, and decreasing capital and/ or oper ating costs of local government .

To suppor t the retention and/ or adap tive re-use of buildings of historical or architectura l

significance.

To promote r evitalization and r edevelopment in the Main Street Corr idor.


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3) ECONOMIC DEVELOPMENT INCENTIVE PROGRAMS

Criteria for these programs are at the discretion of the governing body and may include additional

policies and procedures.

a. Tax Abat eme nt : The City of Shakopee is granted the power t o utilize tax abatement by

Minnesota Statutes 469.1812 t hrough 469.1816 as amended and the City of Shakopee Tax

Abatement Policy approved on March 18, 2014, author ized by EDA Resolution No. 2014-3

and City Council Resolution No. 7435. The fundamental pur pose of tax abatement in

Shakopee is to encourage desirable development or r edevelopment tha t would not

otherwise occur but for the assistance pr ovided through the tax abatement. The City utilizes

Pay-As-You-Go Tax Abatement, which r elies on the developer to pay for the up-front

project costs with reimbursement from tax abatement.

b. Tax Incre ment Financing: The City of Shakopee is gran ted the power t o utilize TIF by the

Minnesota Tax Increment Financing Act, Minnesota Statutes 469.174 through 469.1794 as

amended and the City of Shakopee Tax Increment Financing Policy approved on March 18,2014, author ized by EDA Resolution No. 2014-2 and City Council Resolution No. 7434. The

fundamental purpose of tax increment financing in the City of Shakopee is to encourage

desirable development or r edevelopment that would not otherwise occur but for the

ass istance p rovided t hrough TIF. The City ut ilizes Pay-As-You-Go TIF, which relies on the

developer to pay for the up-front p roject costs with reimbursement from tax incremen t.

c. Met r opo litan Coun cil Sewe r Availability Cha r ge (SAC) Cred it: When new construction

or a change in use of a proper ty requires additional sanitary sewer capacity, a fee is charged

by the Metr opolitan Council-Environmental Services. The fee is based on the Metr opolitan

Councils de terminat ion of the number of sewer availability charge (SAC) units.

d. City of Shakope e San itar y Sewe r Availability Char ge (SAC) Cred it: In 1994, the City

adopted access fees for the san itary sewer system (SAC). Those fees ar e used for

constr uction of other MCES inter ceptors and long-term maintenance of the City sanitary

sewer system. For any construction project or change in use, the City SAC is the same as the

number of units det ermined by the Metropolitan Council. However, City fees will be

imposed only for the units resu lting from an expansion or a change of use that requires

additional charges.

e. Minnesota Investment Fund : The City of Shakopee is granted the power to utilize the

Minnesota Investment Fund Program by Minnesota Statute 116J.8731 as amended.

f. Commer cial Exterior Impr ovement Program : The City of Shakopee is granted the power

to utilize the Commer cial Exter ior Improvement Program by the Municipal Commercial

Rehabilitation Loan Program, Minnesota Statute 469.184 as amended .


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g. Prope rty Sales: The City of Shakopee may negotiate the sale price of property owned by

the City or EDA for n ew or expanding businesses and/ or multi-family housing

developments.

h. Bonds: The City of Shakopee, Minnesot a (the City) has the author ity to issue r evenue

bonds p ursuant to Minnesota Statutes, Sections 469.152 to 469.1651 (the IndustrialDevelopment Act), Minnesota Statutes, Chapter 462C (the Housing Act) and the City of

Shakopee Pr ivate Activity Revenue Bond Policy approved on June 18, 2013 , authorized by

City Council Resolution No. 7318. The City Council of the City will consider t he issuance of

pr ivate activity bonds (both taxable and tax-exempt) to finance the following types of

projects; manufactur ing/ indust rial facilities, multifamily housing, health care facilities,

other projects on behalf of 501(c)(3) organizations and other projects authorized by state

statutes and federa l law. In extraor dinar y circumstances, the City Council of the City may

consider and approve the issuance of Private Activity Bonds by the Economic Development

Author ity for the City of Shakopee ( the EDA).

4) APPLICATION PROCESS

a. The applicant will complete and submit the City's Application for Business Subsidy along

with the r equired application fee (refer to the curr ent years adopted fee schedule). The

application fee covers t he City's outs ide legal counsel review and financial analysis costs.

The applicant will also provide any additional informat ion requested by the City. The

applicant will be liable for any additiona l costs beyond the initial deposit. All mater ials

submitted to the City in connection with a business subsidy application shall become t he

property of the City and is subject to data pr ivacy law.

b. City staff or the City's agent shall review the application mater ials and make a preliminary

recommendation to the City regarding the completeness of the application, whether the

app lication meets the goals of this policy, and whether the application complies with the

criter ia established in the incentive programs policy.

c. When necessary, Public Hearing Notices are published and sent t o the county and/ or school

board.

d. In the event that the City concurs with the recommendation above, the City will consider the

app lication dur ing a public meeting. The City will grant final approval or denial of the

proposal.

e. Additional agreements and program r equirements (including annual reporting) may be

necessary depend ing on the form of business subsidy and/ or the value of the award, as

defined in Minnesota Business Subsidy Statute , Sections 116J.993-116J.995 as amended

(the Act).


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2014 Page 1

City of Sha kop ee, Minn esot a

BUSINESS SUBSIDY POLICY

1) POLICY PURPOSE

For the purposes of this document the term Cityincludes the Shakopee City Council, Staff, the

Economic Development Authority, Advisory Boards and Commissions, Financial consultants, and legal

counsel.

Economic development incentives ar e financial tools that enable the City to provide

opportunities and benefits for its businesses and residents. Incentives can take a var iety of

forms, including,but not limited t o, cash, debt financing, tax and fee waivers, credits and rebates.

The City of Shakopee provides economic development incentives in order to achieve its long-

range vision of creating a diverse and sustainable economic base. A sustainable economic base is

achieved in part th rough the creat ion and retent ion of quality, high paying jobs. A diverse andsustainable economy offers oppor tun ity for improved quality of life for the residents of

Shakopee. Economic development projects may also achieve other wor thwhile goals. For

instance, some pr ojects provide value to the community in the forms of infrastructure

improvements, stabilization of business d istricts or neighborhoods, or concentration of selected

industries.

This document sets forth the business subsidy policy and the specific criter ia to be considered by

the City of Shakopee (City) and the Shakopee Economic Development Authority (EDA) in evaluating

requests for business subsidies. In adopting these criter ia, it is the inten t of the City and EDAto

comply with Minnesota Statutes, Sections 116J.993-116J.995 as amended ( the Act). The City and

EDAhereby adopt the definitions contained in the Act for application of the criter ia, and they areincorporated herein by reference. The City has and the EDA have each adopted this policy and these

criter ia after a public hearing in accordance with the Act.

The City reser ves the r ight to approve or reject projects on a case-by-case basis, taking into

consideration established policies, project criter ia, and demand on City services in re lation to the

potent ial benefits from t he pr oject. Meeting policy criter ia does not guarantee the award of

business assistance to the project. Approval or denial of one project is not intended to set

precedent for approval or denial of another project.

The City Council (and EDA) can deviate from this policy for p rojects that supersede the objectives

identified her ein. Any applicant who is not in good standing with the City, in regards to licenses,fees or other specific charges, will not be considered for business subsidies.

The City may charge a fee for r equests under this policy, and t hese fees will be adopted annually

dur ing the fee schedule review.

2) BUSINESS SUBSIDY OBJECTIVES


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2014 Page 2

As a mat ter of adopted policy, the City will consider offering a business subsidy to assist p rivate

development projects that achieve one or more of the following objectives:

To increase the Citys tax base.

To retain local jobs and/ or increase the number and diversity of jobs that offer stable

employment and/ or att ractive wages and benefits. Preference will be given to higher

paying jobs tha t also provide benefits such as health care coverage.

To encourage new head of household job creation paying at least 200 per cent of the federa l

minimum wage,exclusive of benefits. Jobs to be reta ined are not required to meet the above

wage standard. After a public hear ing, the City may establish wage goals for new jobs to be

created that vary from the above standard, and take into account these additional factors;

o The size of the business and its potential to create higher paying jobs in the future;

o Local economic conditions;

To support projects that pr ovide value in the forms of needed transpor tation and other

utility infrast ructur e improvements that would be completed in conjunction with the

project.

To encourage additional unsubsidized pr ivate development in the area, either d irectly or

indirectly through spin off development.

To facilitate the development process and to achieve development on sites which would not

otherwise be developed but for the use of a business subsidy.

To remove blight and/ or encourage redevelopment of commercial and industr ial areas that

will result in high-quality redevelopment and private reinvestment .

To offset increased costs of redevelopment (i.e. contaminated site clean-up) over and above

the costs normally incurred in development.

To create oppor tunities for affordable housing and/ or a diversification of housing stock

available within the community.

To suppor t a project that will improve the quality of life in the City by providing a desirable

good or service and addressing an unmet demand in the community.

To contr ibute to the implemen tat ion of other public policies, as adopted by the City from

time to t ime, such as the promotion of quality urban or architectural design, energy

conservation, and decreasing capital and/ or operating costs of local government.

To suppor t the retention and/ or adaptive re-use of buildings of historical or architectura l

significance.

To promote revitalization and r edevelopment in the Main Street Corr idor.

3) ECONOMIC DEVELOPMENT INCENTIVE PROGRAMS

Criteria for these programs are at t he discretion of the governing body and m ay include

additional policies and procedures.

a. Tax Abat em en t: The City of Shakopee is granted the power t o utilize tax abatement by

Minnesota Statutes 469.1812 thr ough 469.1816 as amended and the City of Shakopee Tax

Abatement Policy approved on March 18, 2014, author ized by EDA Resolution No. 2014-3


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2014 Page 3

and City Council Resolution No. 7435. The fundament al purpose of tax abatement in

Shakopee is to encourage desirable development or r edevelopment that would not

otherwise occur but for the assistance provided through the tax abatement. The City ut ilizes

Pay-As-You-Go Tax Abatement, which relies on the developer to pay for the up-front

project costs with the promise of being reimbursed.

b. Tax Incre ment Financing: The City of Shakopee is gran ted the power t o utilize TIF by the

Minnesota Tax Increment Financing Act, Minnesota Statutes 469.174 thr ough 469.1794 as

amended and the City of Shakopee Tax Increment Financing Policy approved on March 18,

2014, author ized by EDA Resolution No. 2014-2 and City Council Resolution No. 7434. The

fundamental purpose of tax increment financing in the City of Shakopee is to encourage

desirable development or redevelopment tha t would not otherwise occur but for the

assistance provided through TIF. The City utilizes Pay-As-You-Go TIF, which relies on the

developer to pay for the up-front project costs with the pr omise of being reimbursed.

c. Met r opo litan Coun cil Sewe r Availability Cha r ge (SAC) Cred it: When new constructionor a change in use of a proper ty requires additional sanitary sewer capacity, a fee is charged

by the Metr opolitan Council-Environmenta l Services. The fee is based on the Metr opolitan

Councils determination of the number of sewer availability charge (SAC) units.

d. City of Shakope e San itar y Sewe r Availability Char ge (SAC) Cred it: In 1994, the City

adopted access fees for the sanitar y sewer system (SAC). Those fees are used for

construction of other MCES inter ceptors and long-term maintenance of the City sanitary

sewer system. For any construction project or change in use, the City SAC is the same as t he

number of units de termined by the Metr opolitan Council. However, City fees will be

imposed only for the units r esulting from an expansion or a change of use that requires

additional charges.e. Minnesota Investment Fund : The City of Shakopee is granted the power to utilize the

Minnesota Investment Fund Program by Minnesota Statut e 116J.8731 as amended .

f. Commer cial Exterior Impr ovement Program : The City of Shakopee is granted the power

to utilize the Commercial Exter ior Improvement Program by the Municipal Commercial

Rehabilitation Loan Program, Minnesota Statute 469.184 as amended .

g. Prope rty Sales: The City of Shakopee may negotiate the sale price of property owned by

the City or EDAfor new and expanding businesses, as well as for businesses re locating to

the City. or expanding businesses and/ or multi-family housing developments.

h. Bonds: The City of Shakopee, Minnesot a (the City) has the author ity to issue r evenue

bonds pursuant to Minnesota Statutes, Sections 469.152 to 469.1651 (the Industrial

Development Act), Minnesota Statutes, Chapter 462C (the Housing Act) and the City of

Shakopee Private Activity Revenue Bond Policy approved on June 18, 2013, author ized by

City Council Resolution No. 7318. The City Council of the City will consider t he issuance of

pr ivate activity bonds (both taxable and tax-exempt) to finance the following types of

projects; manufactur ing/ indust rial facilities, multifamily housing, health care facilities,

other projects on behalf of 501(c)(3) organizations and other projects authorized by state


11/12

2014 Page 4

statutes and federal law. In extraor dinar y circumstances, the City Council of the City may

consider and approve the issuance of Private Activity Bonds by the Economic Development

Author ity for the City of Shakopee ( the EDA).

4) APPLICATION PROCESS

a) The applicant will complete and submit the City's Application for Business Subsidy alongwith the r equired application fee (refer to the current years adopted fee schedule). The

application fee covers t he City's outs ide legal counsel review and financial analysis costs.

The applicant will also provide any additional informat ion requested by the City. The

applicant will be liable for any additional costs beyond the initial deposit. All materials

submitted to the City in connection with a business subsidy application sha ll become the

property of the City and is subject to data pr ivacy law.

a. City staff or the City's agent shall review the application materials and make a preliminary

recommendation to the City Council and EDA regarding 1) the completeness of the

application, 2) whether the application meets the goals of this policy, and 3) whether the

application complies with the criteria established in this the policy incentive programspolicy.

b) Public Hearing Notices are published and sent to the county and/ or school board.

c) In the event that the City Council and/ or EDA concur with the r ecommendation above, the

City and/ or EDA will consider the application during a public meet ing. The City Council

grants final approval or denial of the proposal.

d) Additional agreements and program requirements may be necessary depending on the form

of business subsidy and/ or t he value of the award , as defined in Minnesota Business

Subsidy Statute, Sections 116J.993-116J.995 as amended ( the Act).

5) SUBSIDY AGREEMENT & REPORTING REQUIREMENTS

All assistance that meets the definition shall be subject to the r equirement of a public

hearing. Any assistance that does not meet t he definition of a "business subsidy" will be

excluded from the requirement of holding a public hear ing prior to grant ing a business

subsidy.

Every recipient of a business subsidy must en ter int o a Business Subsidy Agreement with

the City, which agreement must fulfill the r equirements of the Act.

Both the recipient and the City must comply with the reporting and monitoring

requirements of the Act.

In the event t hat a r ecipient fails within two (2) years of the benefit date as defined in the

Act to meet the job and wage goals set forth in the Business Subsidy Agreement , the

recipient and its successors shall be liable to r epay to the City the assistance plus inter est.

The City may prorate repayment to reflect part ial fulfillment of the goals set forth in the

business subsidy agreement. The ra te of interest charged must be set at no less than the

implicit p rice deflator for government consumption expenditures and gross investment for

state and local governments pr epared by the Bureau of Economic Analysis of the Unites

States Department of Commerce.


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2014 Page 5

The City may, after holding a public hear ing, extend the time for compliance with business

subsidy agreement job and wage goals by up to one (1) year.

The developer/ business shall file a repor t annually for two years after the date the benefit

is received or until all goals set forth in the application and performance agreement have

been met, whichever is later. Reports shall be completed using the format drafted by the

State of Minnesot a and shall be filed with the City of Shakopee no later than March 1 of eachyear for the pr evious calendar year . Businesses fulfilling job creation r equirements must

file a report to that effect with the City within 30 days of meeting the r equirements.

The developer/ business owner shall maintain and operate its business at the site for which

the assistance was awarded for a minimum period of five years after the benefit is received.

The developer/ business will be required to att ain or exceed the jobs and wages goals set

forth in t he Business Subsidy Agreement .

Developer / Businesses failing to comply with the above provisions will be subject to fines,

repayment r equirements, and be deemed ineligible by the State of Minnesota to receive any

loans or grants from public ent ities for a period of five years.

*This policy shall be reviewed on a biennial basis with the next review being set for August,

September 2016.

shakopee business subsidy policy revision 6:21:16

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