What is an eligible business type?
Eligible business types including manufacturing, warehouse, distribution and some information technology operations. Businesses that are not eligible for the program include: retail, health clinics, lobbying, gambling, sports facilities, hospitality services and businesses that serve a direct community area (for example, local veterinarians, roofing contractors, trash haulers, etc.). Businesses shall be able to locate outside of Minnesota and be able to serve the same customers.
How long does it take to be designated once an application is submitted?
If the application is complete, a project may be approved within a few weeks. For projects that are eligible to receive $500,000 or more, a 10-day notice and public hearing and subsequent official approval by DEED is required and may factor into a project’s timing.
What is the state’s public hearing process?
A 10-day notice in the State Register is required along with a hearing to be held in Saint Paul. Hearing information will be available in the State Register and on DEED’s website. If interested parties are unable to attend in-person, DEED will provide call-in options.
At what point in the process will the public hearing be held?
Every effort will be made to hold the public hearing as soon as allowed by law. The public hearing is required to be held prior to formal JCF designation and should therefore be factoring into application and project timing.
What does a business need do to become a participant in the Job Creation Fund Program?
Read and complete the application in partnership with the local government where the project will be located. Use the checklist to ensure all materials are complete. If DEED approves the application, a business subsidy agreement that details the award and performance commitments, will be completed and signed by the business and DEED officials.
What is considered local government support for the JCF Program?
A local government is a county, city or town where a business applying to the JCF program will be located. The local government must provide a resolution in support of a business applying to the program.
What is the role of the local government with the Job Creation Fund Program?
The local government is a point of contact for a business inquiring about the program and will work in consultation with DEED to determine if a business is a good fit for the program. The local government submits the program application to DEED on behalf of the business, provides a resolution supporting the project, and also assists the business with yearly reports and payment requests submitted to DEED.
Can a business get a JCF award and/or rebate and other DEED funding?
Yes, but DEED will determine how best to allocate funds from different state sources based on specific project information and program demand.
How does JCF work with phased projects?
Each facility can have only one JCF project open at any point in time. However, a JCF project may be amended one time if capital investment and job creation will be more than noted in the application. If the same facility has a subsequent expansion, the business may apply for JCF if the previous JCF goals were met. Each project “phase” application will be evaluated independently and must meet JCF requirements.
Can a project that started prior to designation receive JCF benefits?
No. Each application will require the business to certify that the project has not yet started and the business would not have the same project if not for JCF funds. Examples of a project commencement may include, but not limited to indicators such as building permits, construction bids, signed construction contracts, actual construction, site improvements, or architectural design contracts, etc.
When can a project begin to count costs incurred and jobs created?
Once the business subsidy agreement is fully signed by both the business and DEED, capital investment and job creation will be eligible for an award and/or rebate. The project may begin once an award letter has been signed however.
Does prevailing wage apply to JCF projects?
If JCF benefits are $200,000 or more, prevailing wage will apply to the construction project. The local government will be responsible for ensuring that the JCF business is aware of the prevailing wage requirements and/or forward prevailing wage contacts with the Minnesota Dept. of Labor and Industry. See more about prevailing wage requirements.
Can a business opt out of JCF designation before their agreement is complete?
Can a business that is consolidating operations receive JCF designation?
Yes, as long as the cities from where the business is moving their operations provide a written note not objecting to the move and other JCF program rules are followed.
If a business is expanding at various locations, can they combine expansion jobs at different sites to and combine capital investment at different sites to count toward the requirements to be eligible for JCF designation?
No. Each expansion at each location must meet the requirements of the JCF program.
What happens if a business does not meet its goals?
If the business does not make reasonable progress on the project within six months (e.g, building permits, construction contracts, etc.), meet the one-year capital investment goals or the two-year job creation goals will be removed from the program but may apply for future designation. If these initial goals are met but not in subsequent years, the only penalty is no JCF award and/or rebate for that year.
When can a business request an award and/or rebate?
A business may request payment of an award and/or rebate as soon as one year from date of designation so long as the minimum capital investment and job creation requirements outlined in their agreement have been met.
How will funds be provided to a JCF business?
Once a project has been designated, the business will provide reports to DEED documenting performance. Once the goals as stated in the business subsidy agreement are met, additional documentation is submitted including payroll reports, invoices, sworn construction statements, among other documents. Once DEED has verified the performance, an award and/or rebate will be provided to the business.
How does DEED verify performance?
DEED will review documents submitted by the local government and business. To verify performance, additional information sometimes may need to be submitted to DEED prior to payment authorization. DEED may also conduct on-site monitoring and examine documents relevant to the project.
Are the award and rebate levels the same throughout the state?
Each business generally will receive the same JCF award and/or rebate level regardless where the project is located. However, projects located in Greater Minnesota will have up to 7 years to receive JCF benefits (versus 5 years for Twin Cities metropolitan area projects) and Greater Minnesota projects will receive up to a 7.5 percent rebate on eligible capital investment expenditures (versus 5 percent for Twin Cities metropolitan area projects). Also projects certified as a Targeted population also receive potential rebates of $2,000 - $4,000 per job, per year (versus rebates of $1,000 - $3,000 for non-targeted populations).
What is considered the Twin Cities metropolitan area?
For this program, the "metropolitan area" means the eleven counties of Anoka, Carver, Chisago, Dakota, Hennepin, Isanti, Ramsey, Scott, Sherburne, Washington, and Wright.
What is considered a Targeted population?
For this program, a "targeted population" means a business that is located in Greater Minnesota or if 51% of the business is cumulatively owned by minorities, veterans, women or persons with a disability.
Does a business have to take both the job creation award and capital investment rebate?
No. However, the business will need to create at least 10 new permanent full-time jobs in two years in the Twin Cities metropolitan area (versus 5 new permanent full-time jobs in Targeted Population projects) and invest at least $500,000 in real property within one year in the Twin Cities metropolitan area (versus $250,000 in real property in Targeted population projects). These levels may be higher as outlined in the business subsidy agreement. The program benefits are capped at $1 million for most projects, with $500,000 representing the maximum job creation award and capital investment rebate. Regardless of whether a business chooses one benefit or another, prevailing wage requirements apply if program benefits meet or exceed $200,000.
May some projects receive more than $1 million?
Yes. Projects that involve at least 200 new permanent full-time jobs in the Twin Cities metropolitan area and at least 75 new permanent full-time jobs in Greater Minnesota and $25 million in capital investment may receive up to $2 million ($1 million job creation award and $1 million capital investment rebate). The business still needs to create at least 10 new permanent full-time jobs in two years in the Twin Cities metropolitan area (versus 5 new permanent full-time jobs in Targeted Population projects) and invest at least $500,000 in real property within one year in the Twin Cities metropolitan area (versus $250,000 in real property in Targeted population projects). Personal property like equipment and fixtures may be included as part of the $25 million, but the capital investment rebate only applies to real property improvements.
All jobs created through the program must be new permanent full-time jobs. What is a new permanent full-time job?
A new permanent full-time job is a permanent position that requires an employee to work an expected 2,080 hours annually. The position may not be vacant (after being filled during the 12-month period) for more than 90 days to be counted toward the full-time job goal.
Does the business need to maintain its base employment?
Yes. Only the jobs created that represent a net increase in full-time permanent positions in Minnesota and at the project site will be considered eligible for a job creation award.
Are projects that retain jobs eligible to participate in JCF?
Yes, but project must retain at least 200 permanent full-time jobs in the eleven-county Twin Cities metropolitan area and at least 75 permanent full-time jobs in Greater Minnesota; and have $25 million in capital expenditures. The business still needs to invest at least $500,000 in real property within one year in the Twin Cities metropolitan area (versus $250,000 in real property in Targeted population projects). Personal property like equipment and fixtures may be included as part of the $25 million, but the capital investment rebate only applies to real property improvements. Although there are no job creation awards for retention projects, JCF may provide up to $1 million in capital investment rebates.
What types of work are eligible for a job creation award?
Any type of work created by the business are eligible for a job creation award. The workers must be new permanent full-time workers expected to work 2,080 hours annually and earn specified levels to earn the rebates of $1,000- $3,000 per job, per year in non-targeted population projects and $2,000 - $4,000 per job in targeted population projects. (Hours worked may include regular, overtime, PTO (Paid Time Off), Holiday, Vacation, Sick, Bereavement, Military Service, and Volunteer). All workers counted toward the new permanent full-time jobs goal must earn at least $13.27 per hour in total compensation (earned wages and voluntary benefits).
Does a business qualify for a job creation award if it pays its workers $13.27 wages and benefits?
No. Workers paid at least $13.27 wages and benefits will count toward job goal minimums; however, at least $27,716 in annual cash wages (to be adjusted annually) must be paid to workers to receive the minimum job creation award.
Are seasonal employees included in the full-time job creation goal?
No. Only new permanent full-time employees expected to work 2,080 hours annually can be counted toward a job creation award. All new workers must earn at least $13.27 per hour in total compensation (earned wages and voluntary benefits).
Can construction jobs for building improvements be counted toward JCF job goals?
No. Only new permanent full-time jobs created and employed by the JCF business are counted toward JCF job goals.
Do contract workers, temp to hire, and/or workers who receive 1099s count toward JCF job goals?
No. Only new permanent full-time jobs created and employed by the JCF business are counted toward JCF job goals.
Do new or retained full-time employees count toward JCF award need to be based in Minnesota?
Since this is a program to benefit Minnesota, county and cities, the employees are expected to be based in Minnesota and work the majority of their hours at the JCF facility.
What types of jobs are counted toward a business’ base employment?
New permanent full-time employees expected to work 2,080 hours annually are counted toward base employment.
What is considered a “retained” job for JCF purposes?
A retained job is a permanent full-time position that is currently present at the business’ existing facility.
Can a part-time worker that moves to full-time be counted as a new full-time job?
Yes, but only if the part-time worker was working 1,040 or fewer hours annually for the business prior to employment as a permanent full-time employee.
If a business drops below the 10-job requirement (versus 5-job requirement in Targeted population projects) during their period of designation, are they in violation of their agreement?
Each business may have unique job creation requirements that must be met within two years of designation (10 or 5 new permanent full-time jobs is the minimum depending on location). Once the two year goals are met, a company may drop below their goals, with the consequence being that they would not receive any job creation award or capital investment rebate for that year.
How does a business demonstrate retained jobs?
A business is required at the time of application to submit quarterly payroll reports for the previous year to demonstrate retained that will be located at a JCF project site.
How does a business demonstrate new permanent full-time jobs?
A business will be asked to provide a payroll report annually and at the time of request for a job creation award. The payroll report should include all new permanent full-time jobs, hire dates, wages paid, voluntary benefits and any other information requested.
What types of expenditures are eligible for the capital investment rebate?
Expenditures eligible for the capital investment rebate are expenditures used for the purpose of building or improving real fixed property where JCF employees will be located. They include construction materials, services and supplies. Land or property acquisition costs are not eligible.
What is the best way to identify real property?
Real property includes land, buildings and various items that are integrated into the land and/or building. Examples may include: utility systems incorporated into a building, items that are not free-standing (i.e., permanently held in place by gravity and not constrained from moving), ponderous machinery and equipment used in a business that would be considered real property under common law. Equipment and machinery that could be moved with minimal effort is not considered real property.
What happens if the JCF business doesn't directly make the capital expenditures?
If the JCF business and the developer/landlord can show capital expenditures on a lease or similar document, those may qualify once the JCF business reimburses the developer/landlord through monthly payments or similar periodic payment. The payments must be amortized over the life of a long-term lease.
What types of assistance are considered a local contribution?
TIF, low-interest loans, grants, tax abatement, and other sources of financing or in-kind contributions to a project are considered a local contribution for a project. Please contact DEED to inquire about the eligibility of other forms of assistance.
How does a business demonstrate capital investment expenditures?
To demonstrate qualifying capital expenditures, a business may be asked to provide items such as sworn construction statements, A1A contractor forms, invoices for costs, etc.
How does a business get a capital investment rebate if they lease a building?
In order to remain eligible for the program, at least $500,000 in real property improvements in the Twin Cities metropolitan area or $250,000 in real property improvements in Targeted Population projects must be spent on the JCF business project within one year of JCF designation. In order to qualify for a capital investment rebate, the party that will receive the capital investment rebate must have directly expended the funds being rebated on. If the JCF business is the rebate recipient, tenant improvements that are built into the lease may not be counted until they have been paid to the landlord. In addition, the JCF business may not receive any portion of the rebate until the program minimum has been reached in directly expended capital investment. Proof of expenditures are required, thus a business may need to work with the building developer to provide proof of expenditures with appropriate documentation. Once job thresholds are reached, JCF rebates are then provided yearly based on eligible capital expenditures incurred directly by the JCF business and eligible tenant improvement costs. If built into the lease, tenant improvement costs must be contractually documented and fully amortized over the lease period. Tenant improvement costs cannot be front-loaded into the lease but may be paid out of pocket up front. The lease must last for at least the term of the JCF business subsidy agreement.
Can a business be eligible for a capital investment rebate if they lease a building from a local government?
Yes. The business must work with the local government to demonstrate that at least $500,000 in real property improvements in the Twin Cities metropolitan area or $250,000 in eligible real property improvements in Targeted Population projects was spent within one year of JCF designation to remain eligible for the program. Proof of expenditures with appropriate documentation will be required from the business. Once job thresholds are reached, JCF rebates are then provided for any eligible real property improvements paid for up front by the JCF business and then yearly based on tenant improvement costs which must be shown in a lease or similar document and fully amortized over the lease period. Tenant improvement costs cannot be front-loaded into the lease and the lease must last for at least the term of the JCF business subsidy agreement. In order to receive a capital investment rebate, the JCF business must have directly expended the funds being rebated on. Tenant improvements that are built into the lease may not be counted until they have been paid to the landlord. In addition, the JCF business may not receive any portion of the rebate until the program minimum has been reached in directly expended capital investment.
If a developer is constructing the building where a JCF business will be located, does the developer receive the capital investment rebate?
The JCF business typically receives the rebate. However, the developer may receive the rebate if the JCF business is in agreement and the developer provides proof of the eligible real property improvements.
In a lease scenario, how does a business leasing a facility prove $500,000 in real property improvements if the developer is building a new building?
The developer and JCF business must work together to compile proof of expenditures. The developer must spend at least $500,000 in the Twin Cities metropolitan area or $250,000 in Targeted Population projects on the building within one year of the JCF designation date regardless of whether the minimum has been spent on the JCF business’ leased space. This must occur within one year of JCF designation in order for the project to remain eligible for the program. Once the minimum eligible real property improvements have been made to the JCF business’ leased space, a rebate may be provided based on eligible real property expenditures included in the tenant improvement costs outlined in the lease and other eligible expenditures the JCF business may have made directly.
Can a JCF business assign proceeds received from the program to a third party or lender?
DEED’s business subsidy agreement will not address these scenarios. It will be up to the business and third party to make their own agreement. In these cases, it is important to understand that JCF funds are not guaranteed and are based on actual performance.