HomeMy WebLinkAboutCity Council Minutes 07-13-2004 SpecialAdopted Minutes
Special Council Meeting
July 13, 2004
Deputy Mayor Stein called a Special Meeting of the Plymouth City Council to order at 7:00 p.m.
in the Public Safety Training Room, 3400 Plymouth Boulevard, on July 13, 2004.
COUNCIL PRESENT: Deputy Mayor Stein, Councilmembers Black, Slavik, Hewitt, Neset, and
Bildsoe.
ABSENT: Mayor Johnson.
STAFF PRESENT: City Manager Ahrens, Community Development Hurlburt, Housing
Manager Barnes, and City Clerk Paulson.
Discuss State Law Requirement for a Business Assistance Policy
Housing Manager Barnes reported on the new requirement (State Statute 116J.993 -116J.995)
that requires local government agencies to adopt a policy that regulates business subsidies. He
stated the law does provide a number of exclusions to this definition including subsidies less than
25,000, redevelopment of polluted property, assistance for housing, and funds from bonds
allocated under Chapter 474A. He stated until presently, the City hasn't needed this policy
because there has been no subsidy provided to a business that is required under law.
He stated in 1996, as part of the Department of Trade and Economic Development's loan to
Value Rx, the City received $100,000 to use as seed money for an economic development
revolving loan program. The economic development fund has seen no activity until recently.
During the past few months, staff has received requests from a few businesses that are interested
in locating in Plymouth and would like to utilize the City's program if possible. Staff has also
had discussions with developers for commercial projects about the possibility of using the tax
abatement laws, which would be considered a business subsidy in some cases. He stated the
Housing and Redevelopment Authority discussed this policy at their July 2003 meeting and
adopted a resolution approving the policy with no modifications.
He explained the law requires that local units of government establish a set of criteria that would
be used in awarding business subsidies. He stated the criteria must include specific wage and job
goals. For the wage goals, the City may establish a floor (minimum wage) by using a formula
that would generate a specific amount or it could be a specific dollar amount. After reviewing
policies in other communities and evaluating the current and prospective business market in
Plymouth, staff recommends that the City set as its wage floor 200% of the federal minimum
wage. The federal minimum wage currently is $5.15 and 200% would be $10.30. The basis for
this is that many of the new businesses being started are in the retail sector, which typically has a
Adopted Council Minutes
Special Meeting of July 13, 2004
Page 2 of 4
lower wage scale for their employees than those in the manufacturing industry. He stated that
the business subsidy law does allow for a city to deviate from the wage and job goals, provided
they document the reason for the deviation and provide the information in their next annual
report.
He stated the Council would have the flexibility of amending the policy at any time.
Councilmember Bildsoe commented that this isn't just a City issue, but being able to partner
with the State in their programs and utilizing legislative representatives. He stated the City never
needed a policy previously because of its location and the economics, but within the next five to
10 years there would be redevelopment properties in the City.
Councilmember Slavik suggested that there be language in the policy that states nothing commits
the City in participating at any time. She added that there should be further discussion on how
subsidies could affect existing businesses.
Motion was made by Councilmember Hewitt, and seconded by Councilmember Bildsoe, to add
the above comments to the draft policy and bring it back to a future Council Meeting. With all
members voting in favor, the motion carried.
Discuss Financial Assistance to AGA Medical Corporation for Expansion and Renovation
of Building at 9700 Schmidt Lake Road
Housing Manager Barnes stated on May 25, 2004 the Council received a presentation from AGA
Medical Corporation (AGA) regarding their company and their desire to renovate the former
Qwest building at 9700 Schmidt Lake Road, which they acquired January 2004. The Council
directed staff at that meeting to conduct an analysis of financial assistance scenarios for both tax
increment financing and tax abatement. He discussed the following financial assistance options:
1. Economic development district (fiscal disparities from outside of the district).
2. Economic development district (fiscal disparities from inside of the district).
3. Tax abatement (fiscal disparities from outside the district).
4. Tax abatement (fiscal disparities from inside the district).
5. Plymouth revolving loan fund
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Special Meeting of July 13, 2004
Page 3 of 4
He stated the maximum available would be from an economic development tax increment
finance district for eight years, taking the fiscal disparities from outside of the district. He
explained that taking the fiscal disparities from outside of the district means the burden for the
fiscal disparities portion would fall on all taxpayers in the City and not just the taxpayer(s) inside
the tax increment financing district. He stated the City hasn't typically created a district taking
the fiscal disparities from outside the district, unless there is a public purpose that benefits the
entire City.
He stated the City could use tax abatement, in which taxes are still paid, but are applied to the
development purpose. The tax abatement scenarios represent only the new value of
improvements. He noted that this project wouldn't meet the County's tax abatement guidelines,
and it is unlikely that the Robbinsdale School District would consider abatement due to budget
issues.
The City could also use the Plymouth Revolving Loan Fund that was funded through repayments
from the Value Rx loan in 1996. If the City would choose to use the Plymouth Revolving Loan
fund, the guidelines would need to be revised allowing the entire amount to be loaned out at one
time.
He noted that AGA has indicated that they would be applying to the Minnesota Department of
Employee and Economic Development (DEED) for additional assistance. Depending on the
type of assistance from DEED, the City might have to provide local funding to assist AGA in
order for their application to be considered.
He stated the City would require AGA to comply with the City's business subsidy policy (yet to
be adopted), wage and job goals. He noted that the City could place additional requirements on
AGA such as a minimum assessment agreement and provisions that deal with the company
moving or being sold during a certain period of time. All of this would be negotiated with AGA
as part of the development agreement.
Councitmember Bildsoe asked what AGA's expectations are of the City. Representatives of
AGA who were in attendance, replied there would be an approximate $2 million package
between the State and the City. Their emphasis would be to create new positions, and the
average employee would make $60,000 per year. They stressed that this would be a
redevelopment project as the building is over 30 years old. Councilmember Bildsoe encouraged
them to work with Senator Gaither and Representative Johnson.
Councilmember Stein stated that he would like to include a condition that the company couldn't
relocate until the district would be paid back.
Adopted Council Minutes
Special Meeting of July 13, 2004
Page 4 of 4
Motion was made by Councilmember Bildsoe, and seconded by Councilmember Black, to
recommend the use of tax increment financing without deciding the fiscal disparity (with other
restrictions placed at a certain time). With all members voting in favor, he motion carried.
Adiournment
Mayor Johnson declared the meeting adjourned O 6:52 P.M.
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Sandra R. Paulson, City Clerk