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City of Mountain Iron, Minnesota



Resolution 25-04 JOBZ Business Criteria

RESOLUTION NUMBER 25-04

JOBZ BUSINESS SUBSIDY POLICY AND CRITERIA

NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF MOUNTAIN IRON, MINNESOTA, that it shall adopt the following Business Subsidy Policy and Criteria:

Preamble. Whenever the City of Mountain Iron invests public funds or agrees to voluntarily forfeit tax or other revenue that benefit private development projects, those projects should create the greatest number of FTE jobs that pay a living wage possible for the residents of the City of Mountain Iron and the surrounding region. Mountain Iron policy makers and economic development agents must keep the critical need for living wage FTE jobs the priority whenever public dollars are invested in a private business or development project. 

Business Subsidy Public Purpose. The public purposes of this policy shall be to accomplish the following on behalf of the City of Mountain Iron:

Enhance economic growth in this area

Create high quality job growth in this area

Retain high quality jobs in this area

Stabilize the community

This policy is adopted in compliance with M.S. � 116J.994 Subd. 2. A copy of the policy shall be submitted to the Department of Employment and Economic Development along with the first annual Business Subsidy report. 

Principles of Business Subsidy Implementation. The City of Mountain Iron shall target its business subsidy assistance to businesses that demonstrate a clear and ongoing commitment to the community by providing living wage jobs to their employees and to Mountain Iron residents, where applicable, by giving priority to those businesses over businesses that have not traditionally paid living wages. 

The City of Mountain Iron shall focus its business subsidy assistance only to businesses which agree to comply with annual business subsidy reporting requirements as required by Job Opportunity Building Zone (JOBZ) statute M.S. �� 469.310 – 469.320; and/or as required by the Business Subsidy statute M.S. �� 116J.993 – 116J.995.

All other things being equal and to the extent legally possible, the City of Mountain Iron shall give preferential treatment for business subsidies to business that engage in responsible labor relations defined as neutrality on union organizing. 

Although the primary purpose of this policy is the creation of living wage jobs, we cannot achieve our economic development goals without a trained and ready workforce and adequate childcare. The city shall commit to assist businesses to obtain trained and work-ready employees through the DEED Workforce Development Centers; MNSCU and other services; and to facilitate access to childcare. 

The City of Mountain Iron agrees to require that a qualified business shall not to compete with or displace local businesses currently operating within the subzone community.

I. DEFINITIONS

“Authorized Business Subsidy Signatory” means the City Council who is authorized by this Policy to execute business subsidy agreements on behalf of the City of Mountain Iron.

“JOBZ Business Subsidy” means tax exemptions or tax credits available to a qualified business located in a job zone under the Job Opportunity Building Zone (JOBZ) statute M.S. �� 469.310 – 469.320. JOBZ Business Subsidies shall include:

Exemption from individual income taxes as provided under M.S. � 469.316; and

Exemption from corporate franchise taxes as provided under M.S. � 469.317; and

Exemption from the state sales and use tax and any local sales and use taxes on qualifying purchases as provided in M.S. � 297A.68, subdivision 37; and

Exemption from the state sales tax on motor vehicles and any local sales tax on motor vehicles as provided under M.S. � 297B.03; and

Exemption from the property tax as provided in M.S. � 272.02, subdivision 64; and

Exemption from the wind energy production tax under M.S. � 272.029, subdivision 7; and

The jobs credit allowed under M.S. � 469.318.

“Business 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, and as defined by the Business Subsidy statute M.S. �� 116J.993 – 116J.995. Business subsidies shall include, but not be limited to:

Loan

Grant

Tax abatement

TIF or other tax reduction or deferral

Guarantee of payment

Contribution of property or infrastructure

Preferential use of governmental facilities

Land contribution

Other specified subsidy.

Business subsidies do not include the following:

Assistance of less than $25,000.

assistance that is generally available to all businesses or to a general class of similar businesses, such as a line of businesses, size, location or similar general criteria;

public improvements to buildings or lands owned by the City of Mountain Iron 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;

Property polluted by contaminants being redeveloped as defined in M.S. � 116J.552, subd. 3.

assistance provided for the sole purpose of renovating old or decaying building stock or brining it up to code and assistance to designated historic preservation sites or districts, provided that the assistance is equal to or less than 50% of the total cost of the development;

assistance to provide job readiness and training services;

assistance for housing;

assistance for pollution control or abatement, including assistance from a TIF hazardous substances subdistrict;

assistance for energy conservation;

tax reductions resulting from conformity with federal tax law;

workers compensation and unemployment compensation;

benefits derived from regulation;

indirect benefits derived from assistance to educational institutions;

funds from bonds allocated under M.S., Chapter 47A refunding bonds and 501(c)(3) bonds;

assistance for collaboration between a Minnesota higher education institution and a business;

assistance fro a tax increment financing soils condition district as defined under M.S.469.174, subd.19;

redevelopment when the Recipients or Qualified Business� investment in the purchase of the site and in site preparation is 70 percent or more of the assessor�s current years estimated market value;

general changes in tax increment financing law and other general tax law changes of a principally technical nature;

federal assistance until the assistance has been repaid to and reinvested by the local governmental unit;

funds from dock or wharf bonds issued by a seaway port authority;

business loans or loan guarantees of $75,000 or less; and

Federal loan funds provided through the U.S. Economic Development Administration.

“Business Subsidy Report” means the annual reports submitted each year for each business receiving a business subsidy in the community. The report is submitted by the LGU in order to comply with M.S. � 116J.994 Subd. 7. (b).

“Criteria” means the equitably applied, uniform standards by which the Economic Development Agency and /or the City bases its decision to award any business subsidy to a private business or development project establishing a business and creating jobs in the City of Mountain Iron. 

“DEED” means Minnesota Department of Employment and Economic Development.

“Economic Development Agent” means the city department, local or regional economic development agency or other authorized entity that is empowered to solicit, negotiate and form business subsidy agreements on behalf of the City of Mountain Iron. The Economic Development Agent for the City of Mountain Iron shall be the City Council, hereinafter “Agent”.

“Health Insurance” means basic health insurance which shall include: employer 100% premium payment for individual coverage or 80% premium payment for family coverage; employer minimum payment for 80% of office visits, emergency care, surgery and prescriptions; a maximum yearly deduction of $1,000, and maternity coverage. 

“Living Wage Job” shall mean a job which pays wages and health benefits that total at least the rate of 110% of the current poverty level for a family of four.

“Local Governmental Unit” hereinafter LGU, means the statutory or home rule charter city, county, town, iron range resources and rehabilitation agency, regional development commission.

“Operation Start Date” shall mean the date by which the business begins is operations in the zone as evidenced by constructing a facility or relocating to an existing building in a facility and beginning revenue generating operations and/or hiring employees.

“Qualified Business” means a person that carries on a trade or business at a place of business located within a Job Opportunity Building Zone as referenced in M.S. � 469.310 Subd. 11; and complies with the reporting requirements specified by M.S. � 469.313 Subd. 2. (5); and shall comply with the criteria in Section II.C. of this agreement; and shall also mean “Recipient” as defined by Business Subsidy law. A qualified business shall not include a retail business, a low-wage service business, an agricultural production business, or a business that pays less than the living wage defined in this agreement.

“Recipient” means any business entity that receives a business subsidy as defined by M.S. � 116J.993 and that has signed a Business Subsidy Agreement with a city. 

“Relocating Business” A business relocating from another Minnesota non-JOB Zone location. 

“Relocation Agreement” means a binding written agreement between a relocating qualified business and the commissioner of DEED pledging that the qualified business shall either: (a) increase full-time for full-time equivalent employment in the first full year of operation within the job opportunity building zone by at least 20 percent, or (b) make a capital investment on the property equivalent to 10% of the gross revenues of operation that was relocated in the immediately preceding taxable year; and provides for repayment of all tax benefits if the requirements of (a) or (b) are not met.

“Subzone” means the parcel or parcel of land designated by the Commissioner of Employment and Economic Development within a Job Opportunity Building Zone within the boundaries of Mountain Iron to receive certain tax credits and exemptions specified under M.S. � 469.310-469.320.

“Zone” means a Job Opportunity Building Zone or an Agricultural Processing Facility Zone designated by the commissioner of Employment and Economic Development under M.S. � 469.314.

II. BUSINESS SUBSIDY REQUIREMENTS

Business Subsidy Policies. The City of Mountain Iron adopts the following:

1. Any time the City of Mountain Iron provides a business subsidy to a Qualified Business or Recipient that business is subject to the wage levels, job creation and other criteria set forth in this policy and specified in the Business Subsidy Agreement made with the LGU. In the event of a conflict between the requirements of the Business Subsidy statute M.S. �� 116J.993 – 116J.995 and the JOBZ statute M.S. �� 469.310 – 469.320, the JOBZ statute shall supersede.

2. The City of Mountain Iron requires that all FTE within a JOBZ area shall be compensated at not less then 110% of the federal poverty rate for a family of four. Compensation shall include wages and benefits.

3. The City of Mountain Iron requires that businesses meeting and maintaining business subsidy agreement requirements shall do so through December 31, 2015.

4. The qualified business shall be identified in the Business Subsidy Agreement as a: 

a. Trade or business located in and operating in a JOBZ or APF Zone at the time of Zone designation; OR

b. New trade or business start-up located with the subzone; OR

c. Business expanding in the subzone which is a business that maintains its current operations in its current location and is expanding its operations and its payroll within the City of Mountain Iron subzone; OR

d. A business relocating from another state; OR 

e. A business relocating from another Minnesota non-Zone location specifying the City.

5. The City of Mountain Iron may deviate from wage and job criteria in Section II, by documenting the reason in writing for the deviation and attaching a copy of this reason to the next annual Business Subsidy Report submitted to DEED.

6. The City of Mountain Iron shall have an overall goal of creating jobs under this policy shall be held by Mountain Iron residents. It is expected that all qualified businesses or recipients shall have a quantified target for the number of residents to be hired.

7. The City of Mountain Iron authorizes the Mayor as representative of the city to act as its Authorized Business Subsidy Signatory to execute business subsidy agreements on behalf of the City of Mountain Iron.

8. The City of Mountain Iron authorizes the Mountain Iron EDA to act as its Economic Development Agent for purposes of marketing and initiating and negotiating Business Subsidy Agreements on its behalf.

9. Requirements of businesses. The City of Mountain Iron shall require all businesses receiving a business subsidy to comply with the following:

a. The business shall attend a properly noticed public hearing shall be held by the City of Mountain Iron as provided by M.S. � 116J.994, when the value of the subsidy does or is expected to exceed $100,000 from local sources. The purpose of the hearing shall be held to identify define the criteria that the qualified business or recipient shall meet in order to be eligible to receive a business subsidy or become a qualified business for purposes of the JOBZ statute. The hearing shall specify the subsidy provided, public purpose(s) that shall be achieved by offering the subsidy, and shall specify the measurable, specific, and tangible goals committed to by the qualified business. As provided by M.S. 116J.994, Subd. 5., a public notice shall be published in print and if possible, on the internet, at least 10 days prior to the hearing, identifying the location, date time and place of the hearing; and providing information about the business subsidy proposed, including a summary of the terms of the subsidy.

b. If the business is qualified to receive JOBZ tax benefits, that business shall agree to continue to operations in the jurisdiction where the subsidy is used (the subzone) for the duration of the job zone term.

c. If the qualified business or recipient is a relocating business under the definition in this agreement, the business shall be required to enter into a binding written “Relocation Agreement between the qualified business and the commissioner of DEED pledging that the qualified relocating business shall:

(1) Commit to signing a Relocation Agreement with DEED; and CHOOSE ONE from 2 or 3:

(2) Cease one or more operations or functions at a non-Zone location and begin performing substantially the same functions inside the Mountain Iron Zone; or

(3) Reduce employment at the non-Zone location starting one year before and ending one year after beginning operations in the Zone where its employees in the Zone are engaged in the same line of business as the employees at the location where it reduced employment; and CHOOSE ONE (or BOTH, if applicable) from 4 and 5:

(4) Increase full time employment by 20% (measured relative to the operations that were relocated) within the first full taxable year of operation within the Zone and maintains the required level of employment during each year of zone designation; or

(5) Make a capital investment in the Zone equivalent to at least 10% of gross revenues for the taxable year immediately preceding relocation to the Zone.

d. The business shall identify an operation start date when business operations for the proposed qualified business are planned to begin in the zone. The date when business operations begin is called the “operation start date”.

DULY ADOPTED BY THE CITY COUNCIL THIS 7th DAY OF JUNE, 2004.

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