The St. Cloud HRA works diligently to recruit new businesses and employers to our Community. We also work along side existing companies on retention and expansion initiatives. For certain eligible projects, we can provide financial assistance in order to increase or retain jobs and tax base. Below is a list of financing mechanisms that we can either provide or coordinate. All financial assistance must be approved by the HRA Board and City Council, and must meet the City/HRA Business Subsidy Criteria, as well as, specific program criteria.
What is JOBZ?
Job Opportunity Building Zones (JOBZ) started in 2004 in Minnesota. It is an exciting tool to stimulate business activity. Eligible businesses in a JOBZ designated zone operate in an environment nearly free of state and local taxes. These tax incentives will help new and expanding companies lower their overall costs and will help facilitate their growth and prosperity. The City of St. Cloud was awarded approximately 145 acres of approved tax-free zones. We have been modifying our zones as needed for qualified projects.
JOBZ Tax Exemptions include:
- Income Tax for business owners or lessees.
- Sales and Use Taxes on goods and services used in the zone.
- Property Tax (except for land, general obligation bonds, and school operating levies in place prior to zone designation).
- Wind Energy Production Tax.
- Job Creation Credit for businesses that pay more than $30,000 annual salary.
To qualify for the JOBZ tax exemptions, a business must start-up in a sub-zone, relocate from outside of a sub-zone or expand into a sub-zone. Companies wishing to participate in the JOBZ program must meet the business assistance goals of the community in which they wish to locate. Relocating business are required to increase employment by 20% within one year of occupying the new facility. Expanding businesses must also meet this requirement of 20% or increasing their employment by at least 5 employees, whichever is greater, within the first full year of operations in the Zone.
Tax Increment Financing
Tax Increment Financing (TIF) is an incentive offered to eligible developments by the HRA. State statutes define the parameters of eligibility. Basically, the base tax value is calculated as the current status of a particular parcel of development property. Next, a value is projected for the project when the development is complete. The difference is called the tax increment. The total amount of tax increment is calculated for the projected term of the district. A developer can then obtain a loan based on the projected tax increment revenues in order to use the funds upfront for development purposes.
The assistance must be in the public interest by accomplishing one or more of the following purposes:
- Increase or preserve tax base
- Provide increased employment opportunities
- Redevelop or renew blighted areas
- Provide access or services for the residents
- Provide public infrastructure
Tax Abatement
A development project may request a form of property tax abatement from the local taxing jurisdictions, including the City, County and School District. The real estate taxes are rebated to qualified and approved projects. Projects must apply to each taxing jurisdiction individually. The St. Cloud HRA serves as the facilitator for tax abatement in St. Cloud.
Revolving Loan Funds
The City and HRA work very closely with the Minnesota Department of Employment and Economic Development (DEED) and other agencies to provide other types financing to new or expanding businesses. These other financing sources work well with the programs listed above. Examples include the Minnesota Investment Fund and the City of St. Cloud/St. Cloud HRA Revolving Loan Fund.
Minnesota Investment Fund
financing to companies to support the capital costs of new construction,
expansion, and equipment acquisition. Funds are provided to the city in which
the expansion occurs, then given to the business through a loan agreement.
City of St. Cloud/St. Cloud HRA Revolving Loan Fund
The St. Cloud HRA administers a small revolving loan fund and offers flexible,
low-interest financing for new or expanding businesses. Loan funds can be
equipment purchases. Loan applications are available at the HRA office or can
Loans range between $5,000 - $100,000 and individual terms are negotiated.
Minnesota Community Capitol Fund
which offers subordinated gap financing in conjunction with a primary lender.
These funds can be used for building improvements or equipment purchases
related to a business development. Applicants should contact MCCF staff
directly if interested.
State Incentives:
Customized Training through the Minnesota Job Skills Partnership Program
Job Skills Partnership is a source of assistance for companies seeking to train or re-train workers to strengthen productivity and competitiveness.
Maximum funding for any one project is $400,000, which needs to be matched by cash or in-kind services from the business receiving the assistance. The Department of Employment and Economic Development (DEED) provides staff support and its commissioner serves as board chair.
Workforce Center System
The Department of Employment and Economic Development (DEED) Workforce Center System is a fully-integrated service provider for companies growing and seeking to fill vacancies.
