An economic tool is giving communities a way to attract jobs.
The Job Opportunity Building Zone program was passed by the Legislature in the last session with a goal of stimulating economic development in distressed areas of the state with the carrot of local and state tax exceptions.
"It really could have tremendous economic effect on the companies that choose to locate there," said Sheila Haverkamp, Brainerd Lakes Area Development Corp. executive director.
The law provides an opportunity to create a tax-free enterprise zone for business development. The plan is to attract manufacturing or higher-paying jobs not retail. Up to 10 JOBZones and five Agricultural Processing Facility Zones may be created. The JOBZones cannot exceed 5,000 acres but may include subzones opening the opportunity for multiple properties. The state was strongly encouraging joint applications covering several government jurisdictions.
Region 5 Development Commission, which works with Cass, Crow Wing, Morrison, Todd and Wadena counties, is administering the JOBZone with BLADC acting as a subzone administrator in Crow Wing County, which could have 1,000 acres for a zone. A Crow Wing County Board resolution is needed to allow county communities to participate. The board has not voted on that issue.
Haverkamp said the zones do not have to be all in one spot and can be spread throughout several cities or even areas in a city.
Haverkamp said they have been brainstorming potential areas as possible zones, including the Northern Pacific Center, industrial park land and city land in Brainerd and land in Baxter. A consultant was hired to work with Region 5 to help write applications. Now the organizations are looking to attract cities, townships and counties to participate in the program.
Tax exemptions include corporate franchise tax, income tax for operators or investors, sales tax on goods and services used in the zone if they were purchased during the zone's duration, property tax on commercial and industrial improvements but not on land, wind energy production tax and employment tax credit for high-paying jobs.
Aid also is available to zones that have a 3 percent drop in tax capacity as a result of property tax exemptions.
Qualified businesses include those already in the zone when a designation is made, startups or relocations from other states and relocations within the state as long as the business increases employment by 20 percent within the first year or makes a capital investment equal to 10 percent of gross revenues, according to the state.
Application times are short. Requirements include property identification for the JOBZone, a development plan, marketing plan and documentation. Once established a JOBZone can last a maximum of 12 years.
Interested communities need to identify land parcels for the zone, identify the JOBZone's time length and adopt a resolution. Applications are due Oct. 15. And property information and maps are needed by Oct. 1. Zones will be designated by the end of the year and will be in effect starting Jan. 1.
BLADC listed options of vacant industrial areas, commercial and industrial property, land surrounding existing manufacturing companies, vacant buildings and unique properties.
Cities and towns can manage subzones though a property ownership control and/or business subsidy agreements.
The Minnesota Department of Employment and Economic Development, formerly the Department of Trade and Economic Development, indicated communities may charge businesses that locate in subzones a fee to cover costs associated with the zone, bond for infrastructure and charge usual service fees, BLADC reported.
The JOBZ program is appealing to several areas.
The Cass County Board voted to support an application from any Cass city, township, Leech Lake Reservation or unorganized area of the county.
The city of Brainerd looked at the zone as an option for the land the city owns near Highways 25 and 18.
The Pequot Lakes Area Development Organization formed a committee to look at the program with the potential for land in the industrial zone. Recently Craig Molstad, Mille Lacs Area Community Development Corp. director, discussed the program with Mille Lacs County commissioners. The East Central Regional Development Commission is applying for one of the 10 zones statewide and identified about 100 acres in Mille Lacs County.
In late August, Molstad told commissioners that acreage could be banked and then exchanged for other land parcels in the future if needed. Specific parcels were identified for the application. The county board approved.
The application for the tax-free zone designation in the county was set to be prepared for submission to DEED, via the East Central Regional Development Corp.
In January, The Associated Press reported Gov. Tim Pawlenty stating the JOBZ plan was the "mother of all economic development tools."
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