Forest Lake EDA debates wage thresholds and eligibility in draft business subsidy policy

Abby, the city's economic development staff, presented a new draft business subsidy policy and asked the Economic Development Authority for direction, saying the goal is to "provide a uniform policy that can be easy to understand and implement and slim down." She framed the policy as a foundation for future assistance and noted prior drafts from 2009, 2012 and 2023.

The presentation emphasized what counts as a subsidy — grants, principal reductions on loans, tax or fee deferrals, guarantees and preferential use of public facilities — and cited state law as read in the meeting: "The Minnesota statutes 11 6 j 9 9 3 through 9 dot 9 9 5," which Abby identified as the business subsidy reporting framework the city must consider when thresholds are reached. "A lot of that act is really more about reporting to the state when we are giving subsidies," she said.

Why it matters: commissioners characterized the draft as an attempt to make visible what the city will and will not fund and to protect public funds while encouraging economic growth. Abby said the policy's core objectives are to expand and diversify the economy, create quality jobs, strengthen commercial and industrial districts, encourage orderly development and ensure responsible stewardship of public money.

Key debates and guidance to staff

- Eligibility: Abby said the draft targets projects that improve public infrastructure, create new business or residential opportunities in downtown and stabilize business districts and transportation corridors. Commissioners asked whether 'downtown' should be tied to the city's downtown study; Abby agreed that referencing that study would help clarify boundaries.

- Expansion vs. relocation: Commissioners pressed for clarity on whether significant growth by an existing business (expanded square footage or added jobs) should qualify. Abby said expanded job creation or demonstrable economic impact would be considered and suggested staff could propose capital-investment triggers or percent-of-market-value criteria for expansions.

- Agreements and protections: Abby described the application and agreement process, from the two-page façade-improvement CIIP agreement to larger development agreements with staged payments and clawbacks if conditions are unmet. "With our larger projects ... we can, claw back, essentially," she said, adding the city often tailors protections in the agreement rather than embedding every clause in the umbrella policy.

- Jobs and wages: Much of the discussion focused on the wage standard used to justify wage-based subsidies. Abby summarized industry approaches (115%, 150%, 200% of the state minimum) and cited MIT living-wage data (single adult living wage roughly $23/hour). She recommended the EDA consider a stronger floor than the current draft's 150% of the state minimum ($17.12/hour). "At a minimum, I think that we should be looking at that 200% to try to encourage more head-of-household opportunities," she said.

Commissioners debated several options: using a percent of the state minimum, using county or Forest Lake median wages, or a hybrid (percent-of-state or local median, whichever is higher). One commissioner argued for local median measures to keep pace with inflation, while others cautioned that very high wage floors could exclude small businesses and startups. Commissioners also discussed whether meeting wage thresholds could be achieved by having the owner occupy the qualifying job; Abby said she would prefer a clear requirement for a non-owner position.

Outcome and next steps

The EDA directed staff to refine the draft to: reference the downtown study as the downtown boundary where applicable; clarify the definition of "applicant" and how to treat business entities and owners; and provide specific language on wages that captures the group's preference for a higher floor (staff noted a working direction of "400% of the state minimum or 100% of Forest Lake median, whichever is greater," subject to staff's final drafting and statutory conversion). Abby said she will revise the draft to require at least one non-owner job for wage-based subsidies and to return a polished policy to the EDA for sign-off before forwarding to the city council alongside related TIF and tax abatement policies.

Quotes

"The intent of the policy is to ensure long term well-being of citizens, by expanding and diversifying our economy," Abby said when outlining policy goals. "A lot of that act is really more about reporting to the state when we are giving subsidies," she added when describing the statute.

A commissioner expressed the view succinctly during the wage debate: "If you're gonna create jobs at less than $10 an hour, I'm sorry, but I don't want to subsidize you." Another commissioner advocated for local context: using the Forest Lake median "so that we keep you ahead of inflation."

What happens next: Staff will redraft the policy language to reflect the EDA's direction on eligibility, wage thresholds and applicant definitions and present a final draft at the next EDA meeting; staff also plans to coordinate with council on TIF and tax abatement policy discussions.