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5.a BUSINESS SUBSIDY POLICY AND CRITERIA BUSINESS SUBSIDY POLICY AND CRITERIA INTRODUCTION The City is interested in encouraging economic activity through tourism and industry, thereby broadening its tax base and improving the quality of life for our citizens. The use of public funds may be necessary or desirable to stimulate business growth in certain cases. The decision to provide incentives to a business is guided by the expectation that the financial benefits to the City will produce s sufficient return on the community’s investment and that the business will be a good fit for the community. All proposed incentives are subject to a public hearing. This policy is meant to encourage the following:  Encourage existing businesses to expand  Provide employment opportunities for area residents  Assist entrepreneurs and new start up business  Recruit new companies to the City which will provide full-time employment for adults  Assist existing businesses make improvements to their buildings.  Projects that address the housing needs to the City PURPOSE AND AUTHORITY The purpose of this policy is to establish a process for the application for and approval of business subsidies in the City. These criteria shall apply to both the Economic Development Authority (EDA) and the City Council when considering applications for business subsidies, as defined in Minnesota Statutes §116J.993, Subdivision 3, for private development within the City. “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 recipient, any reduction or deferral of any tax or 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 shall be used as a guide for processing and reviewing applications requesting business subsidies. The City is authorized to grant business subsidies pursuant to Minnesota Statutes §116J.993 through 116J.995. Amendments to these crit eria are subject to public hearing requirements pursuant to Minnesota Statutes §116J.993 through 116J.995. STATUTORY LIMITATIONS All applications or requests for business subsidies must comply with all applicable state statutes. The definitions and minimum criteria set forth in Minnesota Statutes §116J.993 through 116J.995 are hereby adopted and incorporated herein by reference. The City’s ability to grant business subsidies are ultimately governed by the limitations established in Minnesota Statutes §116J.993 through 116J.995. APPLICATION REQUIREMENTS Each request for a business subsidy shall be submitted in writing to the EDA on a form provided by the City. In addition to the information on the form, the applicant shall provide information that addresses the following criteria:  Market – Is there a demand,  Financing – Can it be profitable,  Physical – Is it physically possible,  Legal – Are there planning or zoning restrictions PUBLIC POLICY REQUIREMENTS Any application for a business subsidy must meet a public purpose which may include, but may not be limited to increasing the tax base. BUSINESS SUBSIDY CRITERIA The following criteria will be considered by the City when reviewing applications for business subsidies in accordance with Minnesota St atutes. However, it should not be presumed that a project meeting these criteria will automatically be approved. Meeting these criteria creates no contractual rights on the part of any applicant, business, proposed project or potential developer. The ultimate benefit to the City must be at least equal to the costs of the business subsidy. The business subsidy may only be provided within debt limit guidelines and other appropriate financial requirements and policies. The project for which a business subsidy is sought will be evaluated based on the following criteria:  New businesses, Retain existing businesses o Projects where the need for additional infrastructure is in proportion with anticipated property tax benefits, o Projects that promote the development of the village mixed use or rural commercial districts, o Projects that increase or preserve the tax base, o Projects that provide full-time employment that would help to attract families, o Projects that have the potential to materially increase local spending, o Projects that address gaps in current City services  Rehabilitation of existing structures & enhancement of architectural appeal, o Projects that impact historic structures, o Projects that would not occur without City involvement, o Projects at critical locations or focal points in the community, o Projects that positively impact other businesses in the village mixed use and rural commercial districts o Projects that improvement properties where the market value is less than the cost to rebuild  Housing, o Market rate projects that would attract families. o Projects that address the need for life cycle housing. The applicant, proposed project or potential development must comply with any applicable Comprehensive Plan and Zoning Ordinances, or required changes to the Plan and Ordinances must be under active consideration at the time of approval. Prior to consideration of a business subsidy request, the City may require an independent underwriting of the proposed project or potential development. Any applicant requesting a business subsidy may be required to demonstrate past successful general development capability as well as specific capability in the type and size of project or development being proposed. The applicant must retain ownership of the project at least long enough to stabilize its occupancy, to establish the project management, and if applicable, to initiate repayment of the business subsidy. A recipient of business subsidy shall continue operations at the site where the subsidy is used for at least five (5) years after the benefit begins. The business subsidy funding will be set at the lowest level of funding and for the shortest period of time which is feasible to meet the objectives. The impact of the project on surrounding areas will be taken into consideration. Impacts include but not limited to: pollution, traffic, sewer and water, parks, and need for additional government services such as law enforcement. Equal consideration will be given to the renovation or expansion of existing business and new businesses proposing to relocate in the City. Penalties for projects/developments not meeting the established criteria will be included within each individual business subsidy/development agreement. New developments or building renovation assistance may not receive both tax abatement and tax increment financing incentives simultaneously. REVIEW AND APPROVAL EDA Board shall review each application and make a recommendation to the City Council as to the granting of a business subsidy. The City Council will make the final decision on granting the business subsidy. The City Council will provide adequate notice of and hold a public hearing on any matter relating to granting a business subsidy of $25,000 or more. The City Council may approve individual terms and amounts at its discretion. The City Council may limit the amount of the business subsidy:  To a specific dollar amount per year or in total,  To the increase in property taxes resulting from improvement of the property,  To the increases in property taxes resulting from increases in the market value or tax capacity of the property,  In any other manner the City Council determines are appropriate.