Professional Documents
Culture Documents
Public Hearings
TO:
FROM:
DATE:
06/21/2016
SUBJECT:
Action Sought
The City Council and Economic Development Authority (EDA) for the City of
Shakopee are asked to convene in join session to conduct a public hearing on the proposed
revisions to the City's Business Subsidy Policy.
Background
Prior to 2012, Shakopee's Business Subsidy Policy stated that each job created needed to
pay 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 a
minimum, $14.16/hour exclusive of benefits.
On May 15, 2012, Council authorized authorized modifications to the Business Subsidy
Policy 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 in
August of 2016, large employers are required to pay workers $9.50/hour and small
employers $7.25. Staff is recommending that the wage in City's Business Subsidy Policy
be 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.
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 approve
Resolution No. 7733, A Resolution Approving the amended Business Subsidy Policy.
Attachments
2016 Business Subsidy Policy
Res. No. 7733
Redlined 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 to
adopt 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 and
approval of the proposed business subsidies, including the holding of a public hearing upon published
notice as required by law,
WHEREAS, the City previously approved Business subsidy criteria on May 15, 2012, and has now
determined to amend and restate the criteria 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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Com m er cial Exter ior Im pr ovem en t Pr ogr am : The City of Shakopee is granted the power
to utilize the Commercial Exterior Improvement Program by the Municipal Commercial
Rehabilitation Loan Program, Minnesota Statute 469.184 as amended.
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g. Pr oper ty Sales: The City of Shakopee may negotiate the sale price of property owned by
the City or EDA for new or expanding businesses and/ or multi-family housing
developments.
h. Bon ds: The City of Shakopee, Minnesota (the City) has the authority to issue revenue
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, authorized by
City Council Resolution No. 7318. The City Council of the City will consider the issuance of
private activity bonds (both taxable and tax-exempt) to finance the following types of
projects; manufacturing/ industrial facilities, multifamily housing, health care facilities,
other projects on behalf of 501(c)(3) organizations and other projects authorized by state
statutes and federal law. In extraordinary circumstances, the City Council of the City may
consider and approve the issuance of Private Activity Bonds by the Economic Development
Authority 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 required application fee (refer to the current years adopted fee schedule). The
application fee covers the City's outside legal counsel review and financial analysis costs.
The applicant will also provide any additional information 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 shall become the
property of the City and is subject to data privacy law.
b. City staff or the City's agent shall review the application materials and make a preliminary
recommendation to the City regarding the completeness of the application, whether the
application meets the goals of this policy, and whether the application complies with the
criteria established in the incentive programs policy.
c. When necessary, Public Hearing Notices are published and sent to the county and/ or school
board.
d. In the event that the City concurs with the recommendation above, the City will consider the
application during a public meeting. The City will grant final approval or denial of the
proposal.
e. Additional agreements and program requirements (including annual reporting) may be
necessary depending 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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As a matter of adopted policy, the City will consider offering a business subsidy to assist private
development projects that achieve one or more of the following objectives:
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and City Council Resolution No. 7435. The fundamental purpose of tax abatement in
Shakopee is to encourage desirable development or redevelopment that would not
otherwise occur but for the assistance provided through the tax abatement. The City utilizes
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 In cr em ent Fin an cin g: The City of Shakopee is granted the power to 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, authorized 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 that 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 promise of being reimbursed.
c. Metr opolitan Coun cil Sewer Availability Char ge (SAC) Cr edit: When new construction
or a change in use of a property requires additional sanitary sewer capacity, a fee is charged
by the Metropolitan Council-Environmental Services. The fee is based on the Metropolitan
Councils determination of the number of sewer availability charge (SAC) units.
d. City of Shakopee San itar y Sewer Availability Char ge (SAC) Cr edit: In 1994, the City
adopted access fees for the sanitary sewer system (SAC). Those fees are used for
construction of other MCES interceptors 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 determined by the Metropolitan Council. However, City fees will be
imposed only for the units resulting from an expansion or a change of use that requires
additional charges.
e. Min n esota In vestm en t Fun d: The City of Shakopee is granted the power to utilize the
Minnesota Investment Fund Program by Minnesota Statute 116J.8731 as amended.
f. Com m er cial Exter ior Im pr ovem en t Pr ogr am : The City of Shakopee is granted the power
to utilize the Commercial Exterior Improvement Program by the Municipal Commercial
Rehabilitation Loan Program, Minnesota Statute 469.184 as amended.
g. Pr oper ty Sales: The City of Shakopee may negotiate the sale price of property owned by
the City or EDA for new and expanding businesses, as well as for businesses relocating to
the City. or expanding businesses and/ or multi-family housing developments.
h. Bon ds: The City of Shakopee, Minnesota (the City) has the authority to issue revenue
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, authorized by
City Council Resolution No. 7318. The City Council of the City will consider the issuance of
private activity bonds (both taxable and tax-exempt) to finance the following types of
projects; manufacturing/ industrial facilities, multifamily housing, health care facilities,
other projects on behalf of 501(c)(3) organizations and other projects authorized by state
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statutes and federal law. In extraordinary circumstances, the City Council of the City may
consider and approve the issuance of Private Activity Bonds by the Economic Development
Authority 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 required application fee (refer to the current years adopted fee schedule). The
application fee covers the City's outside legal counsel review and financial analysis costs.
The applicant will also provide any additional information 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 shall become the
property of the City and is subject to data privacy 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 programs
policy.
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 recommendation above, the
City and/ or EDA will consider the application during a public meeting. 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 the 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 requirement of a public
hearing. Any assistance that does not meet the definition of a "business subsidy" will be
excluded from the requirement of holding a public hearing prior to granting a business
subsidy.
Every recipient of a business subsidy must enter into a Business Subsidy Agreement with
the City, which agreement must fulfill the requirements of the Act.
Both the recipient and the City must comply with the reporting and monitoring
requirements of the Act.
In the event that a recipient 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 repay to the City the assistance plus interest.
The City may prorate repayment to reflect partial fulfillment of the goals set forth in the
business subsidy agreement. The rate of interest charged must be set at no less than the
implicit price deflator for government consumption expenditures and gross investment for
state and local governments prepared by the Bureau of Economic Analysis of the Unites
States Department of Commerce.
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The City may, after holding a public hearing, 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 report 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 Minnesota and shall be filed with the City of Shakopee no later than March 1 of each
year for the previous calendar year. Businesses fulfilling job creation requirements must
file a report to that effect with the City within 30 days of meeting the requirements.
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 attain or exceed the jobs and wages goals set
forth in the Business Subsidy Agreement.
Developer/ Businesses failing to comply with the above provisions will be subject to fines,
repayment requirements, and be deemed ineligible by the State of Minnesota to receive any
loans or grants from public entities 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.
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