07-45CITY OF OTSEGO
COUNTY OF WRIGHT
STATE OF MINNESOTA
RESOLUTION NO. 2007-45
RESOLUTION ADOPTING A POLICY AND
CRITERIA FOR GRANTING BUSINESS SUBSIDIES
BE IT RESOLVED by the City Council (the "Council") of the City of Otsego, Minnesota
(the "City"), as follows:
(1) Hearing. On July 9, 2007, the Council held a public hearing on the question of
the adoption of the Business Subsidy Policy and Criteria, and said hearing was preceded by
published notice thereof.
(2) Adoption of the Business Subsidy Criteria, Filing. The Business Subsidy Policy
and Criteria attached hereto as Exhibit A is hereby adopted. The City Clerk is hereby authorized
and directed to submit a copy of the Business Subsidy Policy and Criteria with the Department of
Employment and Economic Development, along with the next annual report in accordance with
Minnesota Statutes, Section 116J.994, Subdivision 2.
Adopted on July 9, 2007, by the Otsego City Co cil.
ay
Attest:
Councilmember Heidner moved the adoption of the foregoing resolution, and
said motion was duly seconded by Councilmember Stoc a , and upon vote
being taken thereon, the following voted in favor thereof- Mayor Fournier, Councilmembers
Thorsted and Darkenwald
and the following voted against the same: None
whereupon said resolution was declared duly adopted.
2036173x2
CITY CLERK'S CERTIFICATE
I, the undersigned, being the duly qualified and acting City Clerk of the City of Otsego,
Minnesota, DO HEREBY CERTIFY that I have carefully compared the attached and foregoing
extract of minutes of a duly called and regularly or specially held meeting of the City Council of
said City held on July 9, 2007, with the original minutes thereof on file in my office and I further
certify that the same is a full, true, and correct transcript thereof insofar as said minutes relate to
adoption of a policy and criteria for granting business subsidies.
WITNESS my hand officially this �— day of July, 2007.
2036173x2
EXHIBIT A
City of Otsego
Business Subsidy Criteria
SECTION 1. PURPOSE AND AUTHORITY
1.1 The purpose of this document is to establish the criteria for the City of Otsego
(the "Grantor") for granting of business subsidies for private development. The criteria shall be
used as a guide in the processing and reviewing applications requesting business subsidies.
1.2 The City's ability to grant business subsidies is governed by the limitations
established in Minnesota Statutes, Sections 116J.993 through 1161995 (the "Statutes").
1.3 Unless specifically excluded by the Statutes, business subsidies include grants by
state or local government agencies, contributions of personal property, real property,
infrastructure, the principal amount of a loan at rates below those commercially available to the
recipient of the subsidy, 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.
1.4 These criteria are to be used in conjunction with other relevant policies of the
Grantor.
1.5 The City may deviate from these criteria by documenting in writing the reason(s)
for the deviation. The documentation shall be submitted to the Department of Employment and
Economic Development with the next annual report.
1.6 The Grantor may amend this document at any time. Amendments to these criteria
are subject to public hearing requirements contained in the Statutes.
SECTION 2. PUBLIC PURPOSE REQUIREMENT
2.1 All business subsidies must meet a public purpose.
2.2 The creation or retention of jobs may be, but is not required to be, a public
purpose for granting a subsidy. If job creation is a goal, the City shall enter into a business
subsidy agreement requiring the creation of at least 1 job at the wage floor set forth in Section
2.5 and any additional job creation requirements. The determination that jobs are not a public
purpose for the subsidy and that the related wage and job goals are zero shall be made following
a public hearing.
2.3 Job retention may only be used as a public purpose in cases where job loss is
specific and demonstrable. The City shall document the information used to determined the
nature of the job loss.
2036173v2
2.4 The creation of tax base shall not be the sole public purpose of a subsidy.
2.5 The wage floor for wages to be paid for the jobs created shall be one hundred and
fifty percent (150%) of the State minimum wage in effect at the time the subsidy is granted. The
City will seek to create jobs with higher wages as appropriate for the overall public purpose of
the subsidy.
SECTION 3. BUSINESS SUBSIDY APPROVAL CRITERIA
3.1 All new projects approved by City of Otsego should meet the following minimum
approval criteria. However, it should not be presumed that a project meeting these criteria will
automatically be approved. Meeting these criteria creates noncontractual rights on the part of any
potential developer.
3.2 To be eligible to receive a business subsidy, the recipient must meet the following
minimum requirements:
(a) The subsidy must achieve a public purpose.
(b) The project must comply with local plans and ordinances.
(c) The recipient shall provide information demonstrating that granting the
subsidy is necessary for the proposed development to occur.
(d) The recipient enters into an agreement pursuant to these criteria and the
Statutes.
3.3 The business subsidy shall be provided within applicable state legislative
restrictions, debt limit guidelines, and other appropriate financial requirements and policies.
3.4 The project must be in accord with the Comprehensive Plan and Zoning
Ordinances, or required changes to the plan and Ordinances must be under active consideration
by the City at the time of approval.
3.5 Business subsidies will not be provided to projects that have the financial
feasibility to proceed without the benefit of the subsidy, in effect, business subsidies will not be
provided solely to broaden a developer's profit margins on a project. Prior to consideration of a
business subsidy request, the Grantor may undertake an independent underwriting of the project
to help ensure that the request for assistance is valid.
3.6 Prior to approval of a business subsidy, the developer shall provide any required
market and financial feasibility studies, appraisals, soil boring, information provided to private
lenders for the project, and other information or data that the Grantor or its financial consultants
may require in order to proceed with an independent underwriting.
2036173x2 2
3.7 Any developer requesting a business subsidy should able to demonstrate past
successful general development capability as well as specific capability in the type and size of
development proposed.
3.8 The developer must retain ownership of the project at least long enough to
complete it, to stabilize its occupancy, to establish the project management, and to initiate
repayment of the business subsidy, if applicable.
3.9 A recipient of a business subsidy must enter into a subsidy agreement with the
Grantor as described in Section 4.
3.10 A recipient of a business subsidy must make a commitment to continue operations
within the City for at least five years after the benefit date.
3.11 Any business subsidy will be the lowest possible level and least amount of time
necessary, after the recipient maximizes the use of private debt and equity financing first.
SECTION 4. SUBSIDY AGREEMENT
4.1 In granting a business subsidy, the Grantor shall enter into a subsidy agreement
with the recipient that provides the information, wage and job goals, commitments to provide
necessary reporting data and recourse for fail to meet goals required by the Statutes.
4.2 The subsidy agreement may be incorporated into a broader development
agreement for a project.
4.3 The subsidy agreement will describe the requirements for the recipient to provide
the reporting information required by the Statutes.
Adopted by: City Council of the City of Otsego, Minnesota
Date of adoption: July 9, 2007
Date of public hearing: July 9, 2007
2036173x2 3