Economic Development Association of Minnesota Legislative Update June 20, 2008 EDAM Legislative Committee Co-Chairs Miles Seppelt & Aaron Backman EDAM Lobbyist Kathy Hahne Faegre & Benson

EDAM Legislative Priorities 1)Increase Transportation Investment 2) Preserve & Enhance Economic Development Tools & Resources  Business Subsidy Law Changes  JOBZ Retention 3) Passage of Strategic Entrepreneurial Economic Development (SEED) Initiative

Transportation Funding  PASSED!!  $6.592 Billion for roads and transit over 10 years  Trunk Highway Fund$3.43 billion  CSAH$1.45 billion  MSA$382 million  Other local roads$118 million  Metro Transit$1.15 billion  Greater MN Transit$ 58 million

Funding Elements  5¢ increase in gas tax  2¢ on April 1 st  3¢ on October 1 st  3.5¢ surcharge on gas tax for highway bond debt  $1.8 billion in trunk highway bonds over 10 years  ¼ % sales tax increase for transit (Metro counties)  Greater MN counties authorized to impose ½ % sales tax increase  Eliminating caps on license tab fees (New vehicles)

Still We’re Paying Less! “Real” value of Gas tax, adjusted for inflation Gas tax, adjusted for inflation, with a 8.5¢ per gallon inflation adjustment Current state gas tax  Adjusted for inflation, we’re paying 13.2¢ per gallon cents

Business Subsidies  Goal was to raise definition of business subsidy to $250K  PASSED: Definition set at $150K  Definition of a Business Subsidy  Business loans & loan guarantees  Public notice & hearing requirement

Business Subsidies (Cont.)  Must still adopt a set of criteria  Must provide a 1-time report to DEED including: (1)Name of recipient, organizational structure, address & contact information, industry sector; (2) Amount & use of the financial assistance, total project budget, list of all financial assistance by all grantors & private sources of financial assistance; (3) Public purpose of the financial assistance, job goals, hourly wage of each job created, cost of health insurance provided by the employer; (4) Date the project will be completed; (5) Name and address of the parent corporation of the recipient, if any; and (6) Any other information the commissioner may request.  Must provide a second report within one year of completing the above report on the progress in meeting the purposes and goals described above.

JOBZ Program Retention  Tax breaks under the program last until December 31, 2015  Gov. Pawlenty proposed updating JOBZ making it a fixed 10-year program  Legislature proposed eliminating JOBZ after Legislative Auditor Report issued  EDAM Members testified in favor of JOBZ  EDAM Legislative Committee supported DEED’s efforts to retain program  Best participation by Membership in a number of legislative sessions

JOBZ Program Retention (cont.)  Current sunset date remains for JOBZ  MN Legislature added audit & oversight requirements to the program  JOBZ Reporting Requirements  Businesses must file report by Oct. 15 th  DOR is required to notify DEED of noncompliant businesses  Failure to file disqualifies business from future tax benefits and requires 2 year repayment

JOBZ Program Retention (cont.)  JOBZ Clawback Provisions  Provisions that apply to businesses that are no longer operating in a JOBZ or are no longer qualified businesses  Investors who receive JOBZ benefits, but who are not qualified businesses, are subject to repayment on same terms as entities with BSA  Tax statements for repayment of property taxes must be provided to taxpayer of record in addition to business.

JOBZ Program Retention (cont.)  Breach of BSAs by businesses in zone  Creates a new provision that deals with JOBZ businesses that operate in zone, but are in violation of the terms of BSAs (e.g., have not created required number of jobs or investment)  Businesses lose at least one year of JOBZ tax benefits. Section requires proportional reduction  Business that violates a revised, second subsidy agreement is permanently barred from JOBZ.

JOBZ Program Retention (cont.)  Annual Certification of Compliance  Chapter 469 has new section requiring all JOBZ businesses to annually certify each December 1 st to DEED Commissioner they are in compliance with terms of BSA. Failure to comply results in permanent loss of JOBZ eligibility and repayment of two years tax. Also is public information.

JOBZ Program Retention (cont.)  OSA Audit Authority  Authorizes OSA to request tax return and unemployment compensation return info from DOR and DEED in order to perform JOBZ audits.

Strategic Entrepreneurial Economic Development (SEED) Initiative  Business Development infrastructure, $7.5 million  Bioscience Development Infrastructure, $9 million  Redevelopment Grant Program, $8.5 million  Minnesota Investment Fund – reduced by $3 million  Minnesota Public Facilities Authority  Broader authorization for funding of waste water infrastructure projects for both cities and counties  Ability to issue debt for projects that receive partial funding through DEED programs

Additional Development Tools  Election to delay receipt of tax increment  Redevelopment and Renewal and Renovation TIF Districts  Bioscience Zones  HRA levy increase  Tax Abatements

EDA Conflict of Interest Changes  Conflict of Interest  Prepare a written statement describing the conflict and  Submit the statement to the commissioners of the authority  Assign the matter to another employee  A commissioner  Shall not attempt to influence the decision  Shall not take part in the decision  Shall not be counted toward the quorum  Misdemeanor Penalty  No appearances by commissioner or employee for one year