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Hermantown council adopts updated business subsidy policy, adds TIFF/abatement rules and minimum job and wage thresholds
Summary
The Hermantown City Council approved a restated business subsidy policy that formalizes tax increment and tax abatement financing geographies, requires a 'but‑for' showing for subsidies, directs HEDA staff to review applications, and sets program thresholds including a minimum of five jobs for job-creation incentives and a 135% state minimum‑wage floor for subsidized jobs.
The Hermantown City Council approved a restated business subsidy policy after a staff presentation that described a consolidated, modernized approach to public subsidy and financing.
"The intent of a business subsidy policy is to create consistency and predictability for developers and for businesses," said Mr. Ranchetti, who outlined the changes. The update creates separate policies for tax increment financing (TIFF) and tax abatement financing (TAF), maps priority geographies aligned with the comprehensive plan (including Maple Grove Road and Highway 53 corridors), and requires a "but‑for" financial showing that a project could not move forward without public participation.
Under the adopted policy HEDA (the city's economic development authority) will review applications and make recommendations to council; HEDA may administer smaller programs such as storefront loan programs, while larger subsidy or financing packages must come to council for approval. The policy requires applicants to satisfy two items from a list of community benefits; staff said job creation remains a listed benefit but is not alone sufficient. For projects tied to job creation the policy sets a minimum of five new jobs and recommends a minimum wage threshold of 135% of the state minimum wage (described in the record as effectively $15 per hour) for subsidized positions.
Councilor Gisler moved to approve the restated policy; Councilor Jelly seconded. A roll-call vote was recorded and the resolution carried.
The policy also replaces the previous fast-track committee with HEDA staff review and includes maps showing redevelopment districts and priority areas for TIFF and TAF. Staff told the council HEDA will hold its own public hearing on June 18 as required for any grantor under state rules. Council members asked no substantive questions during the public hearing and no members of the public addressed the council on the item.
What happens next: HEDA will continue its review of future subsidy applications and the council will retain final authority over TIFF and abatement approvals.
