116J.994 Regulating local and state business subsidies. 

    Subdivision 1.    Public purpose.  A business subsidy 
 must meet a public purpose other than increasing the tax base.  
 Job retention may only be used as a public purpose in cases 
 where job loss is imminent and demonstrable. 

    Subd. 2.    Developing a set of criteria.  A business 
 subsidy may not be granted until the grantor has adopted 
 criteria after a public hearing for awarding business subsidies 
 that comply with this section.  The criteria must include a 
 policy regarding the wages to be paid for the jobs created.  The 
 commissioner of trade and economic development may assist local 
 government agencies in developing criteria. 

    Subd. 3.    Subsidy agreement.  (a) A recipient must 
 enter into a subsidy agreement with the grantor of the subsidy 
 that includes: 

    (1) a description of the subsidy, including the amount and 
 type of subsidy, and type of district if the subsidy is tax 
 increment financing; 

    (2) a statement of the public purposes for the subsidy; 

    (3) goals for the subsidy; 

    (4) a description of the financial obligation of the 
 recipient if the goals are not met; 

    (5) a statement of why the subsidy is needed; 

    (6) a commitment to continue operations at the site where 
 the subsidy is used for at least five years after the benefit 
 date; 

    (7) the name and address of the parent corporation of the 
 recipient, if any; and 

    (8) a list of all financial assistance by all grantors for 
 the project. 

    (b) Business subsidies in the form of grants must be 
 structured as forgivable loans.  If a business subsidy is not 
 structured as a forgivable loan, the agreement must state the 
 fair market value of the subsidy to the recipient, including the 
 value of conveying property at less than a fair market price, or 
 other in-kind benefits to the recipient. 

    (c) If a business subsidy benefits more than one recipient, 
 the grantor must assign a proportion of the business subsidy to 
 each recipient that signs a subsidy agreement.  The proportion 
 assessed to each recipient must reflect a reasonable estimate of 
 the recipient's share of the total benefits of the project. 

    (d) The state or local government agency and the recipient 
 must both sign the subsidy agreement and, if the grantor is a 
 local government agency, the agreement must be approved by the 
 local elected governing body, except for the St. Paul Port 
 Authority and a seaway port authority. 

    Subd. 4.    Wage and job goals.  The subsidy agreement, 
 in addition to any other goals, must include:  (1) goals for the 
 number of jobs created, which may include separate goals for the 
 number of part-time or full-time jobs, or, in cases where job 
 loss is imminent and demonstrable, goals for the number of jobs 
 retained; and (2) wage goals for the jobs created or retained. 

    In addition to other specific goal time frames, the wage 
 and job goals must contain specific goals to be attained within 
 two years of the benefit date. 

    Subd. 5.    Public notice and hearing.  (a) Before 
 granting a business subsidy that exceeds $500,000 for a state 
 government grantor and $100,000 for a local government grantor, 
 the grantor must provide public notice and a hearing on the 
 subsidy.  A public hearing and notice under this subdivision is 
 not required if a hearing and notice on the subsidy is otherwise 
 required by law. 

    (b) Public notice of a proposed business subsidy under this 
 subdivision by a state government grantor must be published in 
 the State Register.  Public notice of a proposed business 
 subsidy under this subdivision by a local government grantor 
 must be published in a local newspaper of general circulation.  
 The public notice must identify the location at which 
 information about the business subsidy, including a copy of the 
 subsidy agreement, is available.  Published notice should be 
 sufficiently conspicuous in size and placement to distinguish 
 the notice from the surrounding text.  The grantor must make the 
 information available in printed paper copies and, if possible, 
 on the Internet.  The government agency must provide at least a 
 ten-day notice for the public hearing. 

    (c) The public notice must include the date, time, and 
 place of the hearing. 

    (d) The public hearing by a state government grantor must 
 be held in St. Paul. 

    Subd. 6.    Failure to meet goals.  The subsidy 
 agreement must specify the recipient's obligation if the 
 recipient does not fulfill the agreement.  At a minimum, the 
 agreement must require a recipient failing to meet subsidy 
 agreement goals to pay back the assistance plus interest to the 
 grantor provided that repayment may be prorated to reflect 
 partial fulfillment of goals.  The interest rate must be set at 
 the implicit price deflator defined under section 275.70, 
 subdivision 2.  The grantor, after a public hearing, may extend 
 for up to one year the period for meeting the goals provided in 
 a subsidy agreement. 

    A recipient that fails to meet the terms of a subsidy 
 agreement may not receive a business subsidy from any grantor 
 for a period of five years from the date of failure or until a 
 recipient satisfies its repayment obligation under this 
 subdivision, whichever occurs first.  

    Before a grantor signs a business subsidy agreement, the 
 grantor must check with the compilation and summary report 
 required by this section to determine if the recipient is 
 eligible to receive a business subsidy. 

    Subd. 7.    Reports by recipients to grantors.  (a) A 
 business subsidy grantor must monitor the progress by the 
 recipient in achieving agreement goals. 

    (b) A recipient must provide information regarding goals 
 and results for two years after the benefit date or until the 
 goals are met, whichever is later.  If the goals are not met, 
 the recipient must continue to provide information on the 
 subsidy until the subsidy is repaid.  The information must be 
 filed on forms developed by the commissioner in cooperation with 
 representatives of local government.  Copies of the completed 
 forms must be sent to the commissioner and the local government 
 agency that provided the business subsidy.  The report must 
 include: 

    (1) the type, public purpose, and amount of subsidies and 
 type of district, if the subsidy is tax increment financing; 

    (2) the hourly wage of each job created with separate bands 
 of wages; 

    (3) the sum of the hourly wages and cost of health 
 insurance provided by the employer with separate bands of wages; 

    (4) the date the job and wage goals will be reached; 

    (5) a statement of goals identified in the subsidy 
 agreement and an update on achievement of those goals; 

    (6) the location of the recipient prior to receiving the 
 business subsidy; 

    (7) why the recipient did not complete the project outlined 
 in the subsidy agreement at their previous location, if the 
 recipient was previously located at another site in Minnesota; 

    (8) the name and address of the parent corporation of the 
 recipient, if any; 

    (9) a list of all financial assistance by all grantors for 
 the project; and 

    (10) other information the commissioner may request. 

 A report must be filed no later than March 1 of each year for 
 the previous year and within 30 days after the deadline for 
 meeting the job and wage goals.  

    (c) Financial assistance that is excluded from the 
 definition of "business subsidy" by section 116J.993, 
 subdivision 3, clauses (4), (5), (8), and (16) is subject to the 
 reporting requirements of this subdivision, except that the 
 report of the recipient must include: 

    (1) the type, public purpose, and amount of the financial 
 assistance, and type of district if the subsidy is tax increment 
 financing; 

    (2) progress towards meeting goals stated in the subsidy 
 agreement and the public purpose of the assistance; 

    (3) the hourly wage of each job created with separate bands 
 of wages; 

    (4) the sum of the hourly wages and cost of health 
 insurance provided by the employer with separate bands of wages; 

    (5) the location of the recipient prior to receiving the 
 assistance; and 

    (6) other information the grantor requests. 

    (d) If the recipient does not submit its report, the local 
 government agency must mail the recipient a warning within one 
 week of the required filing date.  If, after 14 days of the 
 postmarked date of the warning, the recipient fails to provide a 
 report, the recipient must pay to the grantor a penalty of $100 
 for each subsequent day until the report is filed.  The maximum 
 penalty shall not exceed $1,000.  

    Subd. 8.    Reports by grantors.  (a) Local government 
 agencies of a local government with a population of more than 
 2,500 and state government agencies, regardless of whether or 
 not they have awarded any business subsidies, must file a report 
 by April 1 of each year with the commissioner.  Local government 
 agencies of a local government with a population of 2,500 or 
 less are exempt from filing this report if they have not awarded 
 a business subsidy in the past five years.  The local government 
 agency must include a list of recipients that did not complete 
 the report and of recipients that have not met their job and 
 wage goals within two years and the steps being taken to bring 
 them into compliance or to recoup the subsidy.  

    If the commissioner has not received the report by April 1 
 from an entity required to report, the commissioner shall issue 
 a warning to the government agency.  If the commissioner has 
 still not received the report by June 1 of that same year from 
 an entity required to report, then that government agency may 
 not award any business subsidies until the report has been filed.

    (b) The commissioner of trade and economic development must 
 provide information on reporting requirements to state and local 
 government agencies. 

    Subd. 9.    Compilation and summary report.  The 
 department of trade and economic development must publish a 
 compilation and summary of the results of the reports for the 
 previous calendar year by July 1 of each year.  The reports of 
 the government agencies to the department and the compilation 
 and summary report of the department must be made available to 
 the public. 

    The commissioner must coordinate the production of reports 
 so that useful comparisons across time periods and across 
 grantors can be made.  The commissioner may add other 
 information to the report as the commissioner deems necessary to 
 evaluate business subsidies.  Among the information in the 
 summary and compilation report, the commissioner must include: 

    (1) total amount of subsidies awarded in each development 
 region of the state; 

    (2) distribution of business subsidy amounts by size of the 
 business subsidy; 

    (3) distribution of business subsidy amounts by time 
 category, such as monthly or quarterly; 

    (4) distribution of subsidies by type and by public 
 purpose; 

    (5) percent of all business subsidies that reached their 
 goals; 

    (6) percent of business subsidies that did not reach their 
 goals by two years from the benefit date; 

    (7) total dollar amount of business subsidies that did not 
 meet their goals after two years from the benefit date; 

    (8) percent of subsidies that did not meet their goals and 
 that did not receive repayment; 

    (9) list of recipients that have failed to meet the terms 
 of a subsidy agreement in the past five years and have not 
 satisfied their repayment obligations; 

    (10) number of part-time and full-time jobs within separate 
 bands of wages; and 

    (11) benefits paid within separate bands of wages. 

    HIST: 1999 c 243 art 12 s 2