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RESOLUTION NO. 351
A RESOLUTION APPROVING A BUSINESS SUBSIDY POLICY
FOR THE CITY OF STILLWATER
WHEREAS, the City of Stillwater desires to adopt a Business Subsidy Policy as required
by law, and to encourage job creation and retention by providing assistance to businesses that
demonstrate a clear and ongoing commitment to the community by providing living wage jobs to
their employees and to residents where applicable by giving priority to these businesses over
businesses that have not traditionally paid living wages.
NOW, THEREFORE, BE IT RESOLVED that the City adopt Business Subsidy Policy in
the form attached to this Resolution as Exhibit A.
Enacted by the City Council of the City of Stillwater this 7th day of December, 1999.
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ATTEST:
CITY OF STILLWATER
Business Subsidy Policy
Definitions
"Business subsidy" or "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 business, any reduction or deferral of any tax of 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. These criteria only apply to subsidies when the
cumulative assistance package is over $25,000. (See Exclusions below.)
A "living wage" will be defined as 150% of the federal poverty level for a family of four.
Businesses that provide employer-paid comprehensive health insurance may pay a living wage
defined as 130% of the federal poverty level for a family of four. The federal poverty level for a
family of four is $8.02 per hour for 1999 or $16,000 per year.
"Comprehensive health insurance" is defined as:
(1) Employer 100% premium payment for individual coverage or 80% premium payment
for family coverage;
(2) Employer minimum payment of 80% for office visits, emergency care, surgery and
prescriptions;
(3) A maximum yearly deduction of$I,OOO; and
(4) Maternity coverage.
Stillwater's Priorities
Stillwater will focus its job creation and retention assistance at businesses that demonstrate a
clear and ongoing commitment to the community by providing living wage jobs to their
employees and to residents where applicable by giving priority to these businesses over
businesses that have not traditionally paid living wages; however,
(1) Each project shall be evaluated on a case by case basis, recognizing its importance and
benefit to the community from all perspectives, including created or retained
employment positions.
(2) If a particular project does not involve the creation of jobs, but is nonetheless found to
be worthy of support and subsidy, it may be approved without any specific job or wage
goals, as may be permitted by applicable law.
(3) In cases where the objective is the retention of existing jobs, the recipient of the subsidy
shall be required to provide reasonably demonstrable evidence that the loss of those
jobs is imminent.
(4) The setting of wage and job goals must be sensitive to prevailing wage rates, local
economic conditions, external economic forces over which neither the grantor not the
recipient of the subsidy has control, the individual financial resources of the recipient
and the competitive environment in which the recipient's business exists.
(5) Because it is not possible to anticipate every type of project which may in its context
and time present desirable community building or preservation goals and objectives, the
governing body must retain the right in its discretion to approve projects and subsidies
which may vary from the principles and criteria of this Policy.
Procedure
Stillwater will hold a public hearing about all proposed subsidies over $100,000. Written
comments submitted before the hearing will become part of the official considerations.
There will be a two-week period prior to the public hearing for existing business owners,
managers and employees to comment on the impact the City subsidizing the business is expected
to have on them. If the subsidized business is expected to result in job loss in existing
businesses, the City must compare the numbers of and salaries of the jobs that will be created to
the ones that are expected to be lost.
(1) The business subsidy will only be provided within applicable state legislative
restrictions, debt limit guidelines, and other appropriate financial requirements and
policies.
(2) The project must be in accordance with the Comprehensive Plan and Zoning
Ordinances, or required changes to the plan and Ordinances must be under active
consideration by the City at the time of approval.
(3) Business subsidies will not be provided to projects that have the financial feasibility to
proceed without the benefit of the subsidy. In effect, business subsidies will not be
provided solely to broaden a developer's profit margins on a project. Prior to
consideration of a business subsidy request, the City may undertake an independent
underwriting of the project to help ensure that the request for assistance is valid.
(4) Prior to approval of a business subsidy, the developer must provide any required market
and financial feasibility studies, appraisals, soil boring, information provided to private
lenders for the project, and other information or data that the City or its financial
consultants may require in order to proceed with an independent underwriting.
(5) A recipient of a business subsidy must enter into a subsidy agreement with the City.
ReQuirements
(1) A business subsidy must have a defined public purpose. Increasing the tax base may
not be used as a public purpose, nor can job retention be used as public purpose unless
job loss is imminent and demonstrable.
(2) Loan guarantees must have participation by a private lender to assume at least 50% of
the risk.
(3) Business subsidies in the form of grants must be structured as forgivable loans. For
other types of subsidies, the agreement must state the fair market value of the subsidy
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to the business, including the value of conveying property at less than a fair market
price, or other in-kind benefits the business.
(4) A business must set goals to be achieved within two years for the number of jobs that
they will create (or retain when job loss is imminent and demonstrable) and the wages
that these jobs will pay.
(5) A business must have a goal for the percentage of new jobs that will be held by City
residents.
(6) The business must disclose if the subsidy is expected to result in job loss (within the
business) elsewhere and/or how this will impact job levels of the business in
Minnesota.
(7) The business must disclose any potential adverse impact on the environment that could
result from this project.
Subsidy AQreement
Businesses must be willing to enter into a subsidy agreement that includes:
(1) A statement of why the subsidy is needed;
(2) A statement of the public purpose for the subsidy;
(3) A list of all financial assistance by all grantors for the project;
(4) The name and address of the parent corporation of the business, if any;
(5) A description of the subsidy, including the amount and type of subsidy, and type of
district if the subsidy is tax increment financing;
(6) A statement of the job and wage goals for the project;
(7) A description of the financial obligation of the business if the goals are not met;
(8) A commitment to continue operations at the site where the subsidy is used for at least
five years after the benefit date;
(9) A statement that the business does not have an ongoing unresolved adverse action on
their record with the Occupational Safety and Health Administration (OSHA), the
Environmental Protection Agency (EP A), or the National Labor Relations Board
(NLRB);
(10) A statement that the business has a business-wide affirmative action policy; and
(11) A requirement that the business offer employees the opportunity to participate in a
health care program which includes an employer contribution.
Preferences
All other things being equal and to the extent legally possible, preference will be given to
applicants meeting the following criteria;
(1) Businesses that contribute to employee childcare and retirement accounts.
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(2) Businesses that are locally owned;
(3) Businesses that have a goal that 60% or more of the new jobs will be held by City
residents; and
(4) Businesses that have traditionally paid living wages.
Exclusions
The following forms of financial assistance are not a business subsidy:
(1) A business subsidy ofless that $25,000;
(2) Assistance that is generally available to all businesses or to a general class of similar
businesses, such as a line of business, size, location, or similar general criteria;
(3) Public improvements to buildings or lands owned by the state or local government that
serve a public purpose and do not principally benefit a single business or defined group
of businesses at the time the improvements are made;
(4) Redevelopment property polluted by contaminants as defined in Minn. Stat. S I 16J.662,
subd. 3;
(5) Assistance provided for the sole purpose of renovating old or decaying building stock
or bringing it up to code, provided that the assistance is equal to or less than 50% of the
total cost;
(6) Assistance provided to organizations whose primary mission is to provide job readiness
and training service if the sole purpose of the assistance is to provide those services;
(7) Assistance for housing;
(8) Assistance for pollution control or abatement;
(9) Assistance for energy conservation;
(10) Tax reductions resulting form conformity with federal tax law;
(11 ) Workers' compensation and unemployment compensation;
(12) Benefits derived from regulation;
(13) Indirect benefits derived from assistance to education institutions.
Adopted by the City Council of the City of Stillwater
Date of adoption: December~, 1999
Date of public hearing: December~, 1999
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