House Job Growth and Energy Affordability Policy and Finance Committee  2/28/18

House Job Growth and Energy Affordability Policy and Finance Committee 2/28/18


>>[GAVEL]>>CHAIR GAROFALO:
GOOD AFTERNOON CAN I CALL THIS MEETING OF THE JOB GROWTH ENERGY AFFORDABILITY POLICY AND FINANCE COMMITTEE TO ORDER. TODAY IS WEDNESDAY; FEBRUARY 28.
MEMBERS; WE HAVE FOUR ITEMS ON OUR
AGENDA TODAY. THE FIRST ONE IS GOING TO BE A UPDATE
ON THE JOBS EXTENSION REPORT FROM
DIGIT KEY. IF WE HAVE AN INDIVIDUAL’S HAIR IF THEY COULD COME ON UP TO THE TABLE
REPRESENTATIVE FABIAN IF
YOU WANT
TO COME UP AND TALK A LITTLE BIT ABOUT AT
THE TESTIFIERS TABLE I KNOW THIS
IS SOMETHING
OR DON LAST SESSION. IF YOU WANT TO YOU DON’T
HAVE TO. [INAUDIBILE / OFF MIC]
SO WELCOME TO THE COMMITTEE.
REPRESENTATIVE FABIAN L RECOGNIZE YOU TO
GIVE US A FEW WORDS AND WE WILL MOVE ON WITH A PRESENTATION>>REPRESENTATIVE FABIAN: THIS IS A BIG DEAL. I’LL LET
RICK G
ET INTO THE DETAILS BUT THEY’VE DONE A GREAT JOB PUTTING A PACKAGE TOGETHER. THEY DID A GREAT JOB OF GETTING TOGETHER WITH THE DEPARTMENT OF EMPLOYMENT AND ECONOMIC DEVELOP AND TO COME UP WITH A PLAN. I LOOK FORWARD TO LOTS OF JOBS AND LOTS OF OPPORTUNITIES
NORTHWEST MINNESOTA.
SO PEOPLE AT THEIR ACROSS MINNESOTA ARE LOOKING FOR JOBS PLACE IN DEEP RIVER FALLS LIKE YOU TO SOME WORKERS.
LICK ALREADY HIM INTRODUCE HIMSELF IN A WAY WE’LL GO
>>CHAIR GAROFALO: WELCOME TO THE COMMITTEE. PLEASE STATE
YOUR NAME AND BEGIN
YOUR TESTIMONY>>TESTIFIER: RICK-FROM
DIGIT KEY. WERE PLEASED TO GIVE YOU
AN UPDATE ON THE PROJECT. SO I THINK OF SLIDES IN POCKETS AND
ALL MOVE FROM THE SLIDES VERY
QUICKLY. I’LL KEEP IT BRIEF. JUST GIVE AN UPDATE ON WHAT WE ARE DOING UP IN DEEP RIVER FALLS COMMITTEE OF ABOUT
9000 RESIDENTS I WORK FOR DIGIT KEY ELECTRONICS FOR A GLOBAL ELECTRONIC COMPONENT DISTRIBUTION COMPANY. THE PER SLIDE SHOWS THE
ARTIST RENDERING OF OUR NEW PRODUCT
DISTRIBUTION CENTER THAT WERE PLANNING TO BUILD IN DEEP
RIVER FALLS. IT’S GOING TO BE FEATURING HIGHLY AUTOMATED MATERIAL HANDLING TECHNOLOGY
INCREASED OUTPUT
AND EFFICIENCY AND CAPACITY FOR US
THAT INVESTMENT OF
$300 MILLION. THE SECOND SLIDE TITLED
WEST SPEAKER>>REPRESENTATIVE CHANGING IS A WAY TO SHOW THE INFRASTRUCTURE SOME OF THE INFRASTRUCTURE
THAT IS HAPPENING AS A RESULT OF
THE PROJECT. YOU
CAN SEE FOR STREET BEEN EXTENDED WEST
FOR STREET BEEN EXTENDED W. TECHNOLOGY DR.
BEING BUILT
. NEW TRUCK ROUTE BEING BUILT NEXT TO THE DIGIT
KEY EXPANSION AND S
OME PUBLIC CONSTRUCTION AT THE BOTTOM OF
THE PAGE. SOME-ANOTHE
R ROAD BEING BUILT OFF OUR PARKING LOT. YOU CAN SEE WITH THE DIGIT KEY RED OVAL IS THERE
I DON’T KNOW IF IT’S IN COLOR PROBABLY NOT IN COLOR FOR YOU BUT YOU CAN SEE THE EXPANSION BUILDING APPROXIMATELY THREE TIMES THE SIZE OF OUR CURRENT CAMPUS
AT THAT $300 INVESTMENT LEVEL $CCC MILLION INVESTMENT LEVEL. YOU CAN ALSO SEE A PARKING LOT JUST TO THE SOUTH OF IT. I W
AS JUST BUILT IN OCTOBER. IF YOU GO TO THE THESE ARE JUST A COUPLE BUSINESS ORIENTATION SLIDES
IT’S CALLED GLOBAL FOOTPRINT. IT SHOWS
ARE 11 LOCATIONS AROUND THE WORLD
INCLUDING THE THREE US-BASED LOCATIONS
. DEEP RIVER FALLS AS WELLS FARGO AND BLOOMINGTON. WE GOT A SMALL IT DEVELOPMENT OFFICE IN BLOOMINGTON IN A WAREHOUSE
OF ABOUT THREE AND 75;000 FT.
IN FARGO;
THREE AND 50;000 FT. IN FARGO WHERE WE HAVE OFF-SITE STORAGE OF COURSE
OUR GLOBAL HEADQUARTERS IN DEEP RIVER FOSTERED SHOW SALES. WE GREW BY 20 SUPERSONICS 26% BY REVENUE
$2.3
BILLION FIRST TIME WE’VE EVER SURPASSED THE JUBILEE DOLLAR SALES MARK IN A
COMPANY HISTORY.
THAT WAS PRETTY SPECIAL? A BIG CELEBRATION
ABOUT THAT NEXT SLIDE IS ABOUT OUR
EMPLOYMENT GROWTH BY HEADCOUNT TO YOU CAN SEE WE ENDED THE YEAR 3587 TOTAL
HEADCOUNT GLOBALLY AND NOW WE
ARE 3654 WE ARE CREATING JOBS LITERALLY EVERY MONTH.
WE ARE TRYING TO KEEP UP WITH GROWTH BUT WE’VE A 40% RUN RATE ON SALES THIS YEAR WE THINK WILL
HAVE A 10-5
0% BY THE END OF THE YEAR BUT WE CAN KEEP UP. SA
LES IS REALLY GREAT. THE IS SHOWING A LITTLE BIT
FOR YOU TO SEE WHERE RESIDENTS LIVE BY CITY OF NORTHWESTERN MINNESOTA WITH THIS PROJECT
IS HAPPENING. THE DEEP RIVER FALLS
POPULATION OF DIGIT KEY IS
A 7881 AND IF YOU
THE GENTLEMAN NEXT TO ME KNOWS A LOT OF
THESE COMMUNITIES
BECAUSE THAT’S IN HIS DISTRICT BUT YOU CAN SEE
ADJOINING DISTRICTS AS WELL AND YOU CAN SEE THE NUMBER OF PEOPLE IMPACTED BY THE PROJECT.
THE IT JUST DOES WHAT WE DID
IN 2017.
VERY IMPORTANT DATE IN MAY WHEN USYO
U THE LEGISLATURE APPROVED THE EXPANSION PROVIDED BENEFITS FOR US
THROUGH THE PROGRAM THE GEB ETC.
IN JUNE THE CITY OF DEEP
RIVER FALLS SOLD AS A MAJOR PROPERTY
OF THEIRS AND WE-THEY TOOK ON
THEIR ELECTRICAL UTILITY BUILDING AND ON THAT SITE WE BOTH THE PARKING LOT
AND YOU CAN SEE THE SEQUENCE OF EVENTS THERE IN SEPTEMBER
SOME OF YOU CAME TO JOIN US IN DEEP
RIVER FALLS FOR WE CALLED OUR GROUNDBREAKING EVEN THOUGH YOU WERE REALLY BROKE
THINGS SICKLE GROUND NEXT MONTH IT’S A THANK YOU PERIOD TO THINK THE PUBLIC OFFICIALS BOTH LOCAL AND STATE FOR HELPING US. WE COMPLETED OUR NEW PARKING LOT IN OCTOBER WHERE WE
WHEN THE SITE WHERE WE PURCHASED THE PROPERTY FROM THE CITY.
THEN WE SELECT OUR GENERAL
CONTRACTOR [INAUDIBLE] IN NOVEMBER. IF YOU LOOK AT THE WITH A PICTURE OF THE BUILDING IS THERE
IT’S ACTUALLY JUST KIND OF A
MOCKUP ILLUSTRATION YOU CAN AGAIN SEE WHAT
THE HEAD NOW FOR US WE ARE FINISHING THE
BUILDING DESIGN
IF YOU LOOK AT THIRD BATTALION FROM THE LEFT THE BUILDING CONSTRUCTION STARTING NEXT MONTH
WEATHER PERMITTING WE A PHASED CONSTRUCTION. THIS WILL BE A FACILITY IT’S GOT THE
PERIMETER OF
THE METRODOME AS FAR AS HOW LARGE THAT IT
YOU CAN GET A SENSE OF HOW BAD
THAT IS. THREE BUILDINGS IN THE BUILDING
[INAUDIBLE] WE SHOULD BE COMPLETING THAT
END OF 2019 BEGINNING OF 2020
AND WE NEED A COUPLE OF YEARS TO
OPERATIONALIZE THE BUILDING SO IT’S A 3.5 YOUR PROJECT AND
OUR ENGINEERS AND ARE
CONSTRUCTION FOLKS
ARE [INAUDIBLE] WHEN THIS THING IS CAN BE COMPLETE BECAUSE THERE’S ALWAYS THINGS THAT COME UP
THAT’S OUR GOAL AT THIS POINT IN TIME TO THE JUST SHOWS KIND OF THE DEPICTION
OF WHAT WE THINK IS GOING TO BE A TREMENDOUS LOCAL ECONOMIC
IMPACT. INSIDE DIGIT KEY THIS MANY MANY COMPANIES LIKE FEDEX
AND UPS
LOCAL HVAC AND PALLET COMPANIES AND RESTAURANTS
THAT ARE ALIVE AND WELL INSIDE OUR FACILITY THERE TO CONTINUE
TO GROW AND CREATE JOBS OUTSIDE OF THE ONES THAT WE COMMITTED
TO GROWING. IF YOU LOOK IN OUR COMMUNITY DOWNTOWN AIRPORT
HOTEL DEPARTMENT
BUILDINGS TREMENDOUS GROWTH IN AMENITIES
AND PEOPLE TO MAN
THOSE TWO STAFF THOSE AMENITIES FOR
OUR GROWTH TREMENDOUS
LOCAL IMPACTED THE
NEXT SLIDE ENTITLED JOB CREATION FACTS
THESE ARE NOT NECESSARILY NEW
CONSTRUCTION JOBS TO THESE PEOPLE BUT WE ARE BRINGING TO AN
50 NEW CONSTRUCTION
AND EQUIPMENT INSULATION
JOBS TO DEEP RIVER FALLS AREA DURING THAT PERIOD OF TIME. GOT HOUSING
WE GET ALL KINDS OF THINGS WE’VE GOT TO DO TO KEEP THESE PEOPLE FED
AND CLOTHED AND PUT UP IN LODGING.
SO WE’VE GOT A LOT OF WORK FOR US IN A SMALL TOWN HAD OF US TO DO.
AS YOU KNOW; WE CREATING 100 JOBS
A YEAR
AND WE’VE COMMITTED TO THAT OVER THE NEXT 10 YEARS IN EXCHANGE FOR SOME STATE BENEFITS
THE ENCOURAGING NEWS AND
BRINGING YOU DEEP RIVER FALLS
TODAY IS THE 2017 WHICH WAS JUST
THE BEGINNING OF THE FIRST YEAR OF OUR TRACKING OF JOBS;
WE CREATED THE COMMITTEE
CREATED A 170 NEW JOBS
; 140 WHICH WITH HER
IN DEEP RIVER FALLS. HER JOB CREATION GOALS ARE
BEING EXCITED EXCEEDED ALREADY IN THE FIRST YEAR THE PROJECT IT JUST ABOUT DONE HERE BUT THE LAST SLIDE
; GOES BACK AND SHOWS YOU THE VALUE FOR THE POSITIONS AT DIGIT KEY. WE ARE NOT CREATING MINIMUM WAGE JOBS WITH YOUR CRANE JOBS THAT THE LOWEST PAIN ENTRY-LEVEL FULL-TIME POSITION PAYS 15.60
PER HOUR.
YOU CAN SEE THE BOX TO REPRESENTS AN ANNUALIZED
LEVEL $XXXII;DCXL. IN
THE MIDDLE BOX ARE THE DEPICT
ION OF THE BENEFITS OF THE VALUE OF OUR BENEFITS PLANS TO
THE EMPLOYEES TOTALING 25;640
TOTALING 25;643 TOTAL PACKAGE
OF $50;254 A YEAR.
SO THESE ARE VERY GOOD PAYING JOBS
AND WE TRAIN EVERYONE IN ORDER FULFILLMENT
AND SALES TRANSACTION A SALES TO START
AND THEY CAN GROW THEIR CAREER THROUGH DIGIT KEY.
WHEN WE CAME TO THIS COMMITTEE WERE TALKING
ABOUT JOBS EXCEEDING 1650 PER
HOUR BUT
THAT WAS THE AVERAGE OF ALL STARTING JOBS.
THIS IS THE MOST PAINFUL TIME PAY
AT 15.6 DATE AND OUT. I WANTED TO PICK THAT FORGET THE
JUST A COUPLE OF STATE IMPACT SLIDES FOR YOU TO IN
MY TIME. ONE IS THE FISCAL IMPACT OF
THIS PROJECT. EXISTING OPERATIONS WE STARTED
THE PROJECT AN INDEPENDENT
STUDY GROUP STUDY THIS FOR US AND
SHOWED THAT THE VALUE OF ALL
TAX REVENUE FLOWING TO THE STATE OF MINNESOTA BASED ON
EXISTING OPERATIONS WAS
$450 MILLION THE
EXPANSION-WILL ADD $180 MILLION TO THE
STATE’S TREASURY
ANNUALLY SO WE WILL HAVE A FUTURE ANNUAL
FISCAL IMPACT OF
603 MILLION. SO THIS IS A TREMENDOUS
BOOST TO THE STATE’S TREASURY AS A RESULT
OF WHAT WE ARE DOING HERE. THEN; THE LAST SIDE SLIDE
TALKING ABOUT ANNUAL
ECONOMIC INPUT OUTPUT WHICH OF THE VALUE OF GOODS AND SERVICES PUT INTO THE ECONOMY AS A RESULT OF OUR PROJECT WE ALREADY HAD A
$1.5 BILLION
EXISTING OPERATIONS ECONOMIC
OUTPUT LEVEL.. THIS PROJECTS IS ADDING 500 MILLION
IN ANNUAL ECONOMIC OUTPUT SOA
P YOU 2 BILLION FUTURE ECONOMIC OUTPUT COULD DIMINISH PROJECT FOR THE STATE OF MINNESOTA.
THEN THE LAST LIGHT ARTICLE
GOIN
G FORWARD IS A BIG ONE IS HAVING ADEQUATE MEMBERS TO KEEP UP WITH THE PACE OF OUR
SALES GROWTH IN
THE REQUIREMENTS OF THE PROMISES WE MADE AT THE
STATE LEVEL. SECONDLY;
TEMPORARY HOUSING
TO SUPPORT NEW CONSTRUCTION MERCY IN INFLUX OF CONSTRUCTION
FOLKS. THIRD; LONG-TERM HOUSING FOR DIGIT KEY HIRES
WHEN YOU’RE HIRING THIS
MANY PEOPLE THEY NEED PLACES TO LIVE. WE’VE GOT
TO KEEP OUR FOOT ON THE GAS WITH THE LOCAL OFFICIALS TO
DO THAT.
FOURTHLY; NO DISRUPTION TO OUR CUSTOMER BASE IT WE’VE GOT TO DO ALL THIS WILL WE KEEP
EVERYBODY HAPPY TO OUR SALES CONTINUE TO GROW. FIFTH;
WE HAVE GOT TO STAY COMMITTED TO SAFETY QUALITY AND OUR CORE COMPANY VALUES
AND THEN DURING THIS WHOLE PERIOD AND THEN SIX;
WE WILL HAVE TO WORK CLOSELY WITH EVERYONE. NOT ONLY THE
LOCAL LEVEL
BUT AT THE STATE LEVEL. SO THOSE ARE GOALS
GOING FORWARD. THANKS FOR THE OPPORTUNITY. THANK YOU FOR YOUR SUPPORT OF OUR PROJECT LAST
YEAR THAT
RESULTED IN SUCH A GENEROUS OFFERING OF
INCENTIVE MONEY FROM THE STATE. YOU WILL MAKE GOOD ON OUR PROMISES WE APPRECIATE THE OPPORTUNITY TO GIVE YOU THIS UPDATE TODAY.>>CHAIR: THANK YOU VERY MUCH FOR YOUR TESTIMONY AND VERY BRIEFLY
FOR THOSE OF MEMBERS OF THE COMMITTEE THAT DON’T KNOW;
CAN YOU TELL LIVID ABOUT THE PRODUCTS AND SERVICES THAT DIGIT KEY OFFERS
INTERNATIONALLY; WHAT
IT IS THAT
YOU DO?>>TESTIFIER: WHAT WE DO
IS BASICALLY WE ARE COMPANY THAT’S
A DISTRIBUTOR
WE DON’T MAKE ANYTHING WE DISTRIBUTE
ELECTRONIC COMPONENTS. SO WE PURCHASE
COMPONENT TREE FROM SUPPLIERS ALL OVER THE WORLD
THAT
MAKE ELECTRONIC CIRCUIT BOARD
LEVEL COMPONENTS. WE MARKET THOSE COMPONENTS ON A WEBSITE. WE’VE HUNDREDS OF ENGINEERS
THAT WORK WITH PROSPECTIVE CUSTOMERS
TO UNDERSTAND THE FORM FIT AND FUNCTION OF
THOSE PARTS AND THEN WE SELL
THOSE PARTS ALL OVER THE WORLD.
WE TRANSACT IN OVER A DOZEN LOCAL LANGUAGES
AND CURRENCIES AND WE
HAVE SUPPORT
ALL OVER THE WORLD SUPPORTING IT LOCALLY. SO
WE ARE VERY FORTUNATE T
O SEE THE GROWTH WE ONLY SELL ABOUT 3% OF
OUR PRODUCT IN THE STATE
OF MINNESOTA SO THE WORLDS
OUT THERE WE HAVE GOT
MARKET SHARE; A LOT OF MARKETSHARE AHEAD OF US TO GAIN IT’S A
BIG MARKET.>>
REPRESENTATIVE GAROFALO:>>CHAIR
GAROFALO: FASTENED YOUR WRITING DEEP RIVER FALLS.
AMENDMENTS ARE NOT SILICON VALLEY NOT EVEN CLOSE TO
SILICON VALLEY.>>CHAIR GAROFALO: REFRESH
MY RECOLLECTION I BELIEVE THE TWO INCENTIVES WE PASSED US YOUR WORK PRESENT
OF FABIAN-CORRECT ME IF I’M WRONG BUT THE
$4 MILLION
FOR SET-ASIDE FROM MINNESOTA INVESTMENT FUND AND THE 1.6 MILLION FROM
BDP I? IS THAT IT?
>>TESTIFIER: THERE WAS A SELL
TAX REBATE
>>CHAIR GAROFALO: THAT WAS
ANOTHER
COMMITTEE [LAUGHING] THAT WAS A SELL TAX.
ANYTHING ELSE?
>>TESTIFIER: NO. OTHER
THAN FROM SPEECH OF THINGS WE DID LOCALLY TO
APPRECIATE EVERYTHING>>CHAIR GAROFALO: BEFORE WE GO TO COMMENTS OR QUESTIONS
REPRESENTATIVE FABIAN TO
THAT ANYTHING>>REPRESENTATIVE FABIAN: JUST A BIG SINCERE THANKS TO EVERYBODY I WILL ALSO HAVE TO SAY; TOO; THAT
THE EXEMPTIONS ON THE SELL TAX AND SO FORTH IS ALSO TIED TO
PERFORMANCE STANDARDS THAT ARE WRITTEN INTO THE AGREEMENT WITH THE DEPARTMENT
OF ECONOMIC DEVELOPMENT SO IT’S NOT LIKE IT’S GOING TO HAPPEN NO MATTER WHAT COULD THEY DO HAVE TO BE
PERFORMANCE STANDARDS I’M SURE THE STUFF CAN VERIFY THE.
>>TESTIFIER: YES WE HAVE TO MEET GOALS. WE BEEN MEETING WITH DEPUTY
COMMISSIONERS EXTENSIVELY.>>
CHAIR GAROFALO: QUESTIONS ARE COMMON FOR MEMBERS OF THE
COMMITTEE?
REPRESENTATIVE CLARK>>
REPRESENTATIVE CLARK: A COUPLE QUESTIONS I REALLY
THE VALUE OF A DIGITALLY
CAREER AND THAT’S VERY IMPRESSIVE. A HOLD OF YOU A QUESTION ABOUT YOUR
HEALTH PLAN.
IS THAT A PRIVATE HEALTH INSURANCE OR
SOME PUBLIC>>TESTIFIER: WE
ARE SELF-INSURED. THE PLAN IS ADMINISTERED THROUGH BLUE CROSS BLUE SHIELD OF MINNESOTA
AT OF AS OF THIS TIME IT’S VERY
RICH PLAN. IT’S VERY
VERY INEXPENSIVE FOR EMPLOYEES. $37 EVERY TWO WEEKS FOR FULL
FAMILY COVERAGE; FREE OF IT’S JUST YOUR OWN COVERAGE.
VERY FEW DEDUCTIBLES OR CO-PAYS TO SPEAK OF OTHER THAN EMERGENCY ROOM VISITS.
FANTASTIC INSURANCE PLAN AND WE HOPE THE PAY I
N BENNETT’S BENEFITS GETS PEOPLE INJURED BUT WE HOPE IT’S THE CULTURE AND VALUES AND EXPERIENCE THAT KEEPS A
MATTER COMPANY>>
REPRESENTATIVE CLARK: IT SOUNDS LIKE AN AMAZING PLAN
MAYBE
I’LL [INAUDIBLE] I ALSO WANT TO ASK ABOUT
YOUR HOUSING FOR
YOUR WORKERS.YOUR WORKFORCE HOUSING; HOUSE ICON?>>TESTIFIER: WILL WE CONTINUE TO HAVE A
FULL-COURT PRESS IN TERMS OF ASKING
PRIVATE DEVELOPERS TO GO UP TO DEEP
RIVER FALLS.
THE EXTENT IMITATION THROUGH ANYBODY
WHO CAN HEAR MY VOICE TO COME UP AND TALK TO US ABOUT THE ADVANTAGES OF BUILDING IN DEEP RIVER FALLS. RURAL PARTS OF
THE STATE ARE NOT THE FIRST PLACES A LOT OF DEVELOPERS GO
BUT WE WANT THEM TO COME HERE AND SEE THE SUCCESS STORY WE ARE WRITING COME AND JOIN US AND HELP US WITH THAT. WE ARE WORKING VERY CREATIVELY
WITH A NUMBER OF
DEVELOPERS LOCALLY WITH EXISTING HOUSING
TO RENOVATE MAKE
THINGS AVAILABLE FOR THE EMPLOYEES.
>>CHAIR GAROFALO:
REPRESENTATIVE FABIAN>>
REPRESENTATIVE FABIAN: THANK YOU MR. CHAIR. ONE OF THE THINGS THAT
INTEREST ME IS THIS A PROJECT I BELIEVE RICK
; SAYS IS CAN BE 3.5 YEARS IN
THE MAKING>>TESTIFIER: RICE RIGHT
>>
REPRESENTATIVE FABIAN: ONE OF THE THINGS I’VE SPENT A LOT OF TIME AND IN THE LEGISLATURE SET UP IN HERE
SINCE 2011 IS ENVIRONMENTAL REVIEW AND EXPEDITION OF
THESE PERMITS WHERE ARE YOU OUT IN THE PROCESS AND I GUESS THE OTHER QUESTION I HAVE ARE YOU USING THE BUSINESS ONE STOP THAT
WE HAVE SET UP?
>>TESTIFIER: I’M NOT SURE. WE DO A MEETING WITH
MPCA TO TALK ABOUT AN
AIR PERMIT ISSUE. IT’S PROBABLY
IMPORTANT PART IMPORTANT TO WHAT
TO START A PROJECT WE WILL MAKE SURE
WE HAVE EVERYTHING IN PLACE WERE LOOKING AT SOME TIMING
BUT WERE HOPING WE CAN COME OUT
OF THAT.
>>REPRESENTATIVE FABIAN: SO YOU HAVE NOT
>>CHAIR: MR.
CHAIR-YOU’RE NOT INCORPORATED THE BUSINESS
ONE STOP?
>>TESTIFIER: I DON’T
BELIEVE SO.>>REPRESENTATIVE FABIAN: THANK YOU MR. CHAIR.
HIS COMMISSIONER
PARTY HERE? CAN ASK
COMMISSIONER HARDY JUST ONE OR TWO QUESTIONS; PLEASE
>>CHAIR GAROFALO: YOU CAN ASK HER BUT YOU CAN SUBPOENA HER TO
COME DOWN.
COMMISSIONER HARDY; YOU APPEARING BEFORE THIS
COMMITTEE
VOLUNTARILY? [LAUGHING]>>TESTIFIER: WHENEVER A MEMBER CALLS I TRY TO ANSWER. FOR THE
RECORD I’M COMMISSIONER OF MINNESOTA DEPARTMENT OF EMPLOYMENT AND ECONOMIC 11.
>>
CHAIR GAROFALO: REPRESENTATIVE FABIAN>>REPRESENTATIVE FABIAN: I WOULD LIKE TO INTRODUCE YOU TO.
THERE’S SOMETHING
>>TESTIFIER: I KNOW HIM
VERY WELL.
>>
REPRESENTATIVE FABIAN: I LIKE TO REACQUAINT YOU AND I WOULD APPRECIATE IF YOU
COULD BE OF ANY ASSISTANCE THROUGH THE BUSINESS ONE STOP WITH
THE PERMITTING I WOULD VERY MUCH
APPRECIATE THAT. SO YOU CAN OF AN OFF-LINE CONVERSATION. YOU DON’T HAVE TO HAVE THAT HERE ON THE SECOND
>>CHAIR GAROFALO:
THAT’S WHY COLOR DOWN TO HAVE THE
OFF-LINE CONVERSATION.
COMMISSIONER HARDY>>TESTIFIER
: WE FOR THE RECORD WERE MORE THAN HAPPY TO DO THAT. THE BUSINESS. IS A
BODY THAT
CONSISTS OF MY DEPARTMENT; SEVERAL
OTHER AGENCIES THAT HAVE PERMITTING
OVERSIGHT AND OUR GOAL IS TO MAKE SURE THAT AS PROJECTS
SUCH AS DIGIT KEY
THAT ARE COMPLEX AND
REQUIRE ANOTHER OF DIFFERENT PERMITS OF THAT
THEY’VE ONE DOOR TO GO THROUGH AND WE CAN BE ABLE
TO ASSIST THEM TO MOVE THROUGH
THAT PROCESS AND SO WE ARE
COMMITTED TO DO THAT AND
WE WILL WORK WITH OUR PARTNERS AT THE PCA
TO ASSIST IF YOU HAVE OTHER
PERMITS [INAUDIBLE]>>CHAIR FABIAN:
ANYTHING ELSE?>>REPRESENTATIVE FABIAN:
THANK YOU>>CHAIR GAROFALO:
REPRESENTATIVE TONY>>
REPRESENTATIVE MAHONEY: THANK YOU MR. CHAIR. YOU
HAD MENTIONED TO THE TEST OF OUR; YOU WOULD MENTION 170 JOBS
THIS YEAR. ONE OF THE THINGS
IN THE OFFICE OF LEGISLATIVE
AUDITOR’S REPORT TALKED ABOUT PART-TIME
AND FULL-TIME JOBS
THAT GO ALONG WITH SOME OF THESE
INCENTIVES. COULD YOU TELL ME
THOSE JOBS YOU CREATED
[INAUDIBLE] DEEP
RIVER FALLS. ARE THEY ALL FULL-TIME OR A
MIX? WHAT?
>>TESTIFIER: SPEECH
OR GOVERNMENT REMINDER TO MEMBERS WE GO THROUGH THE
COMMITTEE CHAIR NOT BECAUSE THE COMMITTEE CHAIR SAYS ONLY PART OF THE CONVERSATION
SO THAT WE ARE ONE PERSON TALKING
A TIME. [INAUDIBILE / OFF
MIC] [LAUGHING] WE ALWAYS KNOW THAT WHEN I’M NOT CHAIRING THE COMMITTEE
I ALWAYS DUTIFULLY FOLLOW THAT ROLE
WITHOUT EXCEPTION. TO THE TESTIFIER.
>>TESTIFIER: SO I MAY ANSWER
THE QUESTION?>>CHAIR GAROFALO:
YES [LAUGHING]
>>TESTIFIER: YES SO WE
BASICALLY THERE’S
A MIX OF JOBS IN TERMS OF
CLASSIFICATION STATUS BUT WHEN WE SAY THAT
THESE ARE 170
NEW GLOBAL JOBS TO DIGIT KEY 140 OF THEM;
WHATEVER MIX A FULL
AND PART-TIME CREATED IN DEEP
RIVER FALLS
ASSIGNED TO THE DEEP RIVER THIEF RIVER
FALLS LOCATION.>>REPRESENTATIVE
MAHONEY: ACTUALLY; I WILL STOP
THAT GOOD ALL TALK WITH
DR PARTICULARS ON FULL-TIME AND
PART-TIME JOBS AND HOW THAT RELATES TO ANY
OF THIS STATE INCENTIVES BUT
REPRESENTATIVE CLARK TOUCHED ON AN ISSUE AND YOU ARE GREAT
REPRESENTATIVE HERE AND I
HAVE HAD SOME WORDS ABOUT
HOUSING IS DONE UP IN NORTHERN MINNESOTA
AND SUBSIDIES THAT
SHOULD COME FROM HERE OR THERE.
I KNOW IT IS NOT YOUR BUSINESS HOW TO DO
HOUSING IN THE
RIVER FALLS YOU HAVE ALWAYS
1800 EMPLOYEES AND YOU’VE ADDED ANOTHER HUNDRED AND YOU’RE LOOKING TO ADD 50-100 A YEAR
DOES YOUR CORPORATE OFFICE
ACTUALLY HAVE SOME KIND OF A
HOUSING PLAN; OTHER THAN JUST ENCOURAGING
CONTRACTORS TO COME THERE?
BECAUSE FRANKLY;
CONTRACTORS WWILL GO WITH THE MONEY IS.
SO DO YOU HAVE A PLAN FOR HOW
TO INCREASE THE HOUSING
IN THIEF RIVER FALLS AND
THE SURROUNDING-I’M SURE THIS CAN
BE SUBURB THE
RIVER FALLS PRETTY SOON THE WAY
YOU’RE GROWING.>>
CHAIR GAROFALO: TO THE TESTIFIER
>>TESTIFIER: SO WE ARE IN THE BUSINESS OF ELECTRONIC
COMPONENTS DISTRIBUTION.
WE DON’T NECESSARILY WANT TO GET INTO BUILDING
HOUSING BUT WE ARE VERY VERY INTERESTED IN THAT. PROCESS OF THE GOVERNORS
TASK FORCE ON HOUSING LAST WEEK
SPEAKING ABOUT
OUR EXPERIENCE AND WHAT WE
DO IS TRY TO DO A LOT OF THE THINGS ON THE
>>REPRESENTATIVE LIEBLING: TO ENCOURAGE THOSE THINGS SO WE HAVE $800 RELOCATION ALLOWANCE
FOR HOUSING FOR FOLKS MOVING INTO THE AREA AT ANY LEVEL OF
THE COMPANY FROM A 60 MILE OR FOR
THE RADIUS OUTSIDE OF THIEF RIVER FALLS. WE TRY TO INCENTIVIZE THOSE NEW
TRANSPLANTS TO BE ABLE TO
FIND HOUSING TO BE ABLE TO GET INTO SOMETHING NOT HAVE THE BURDEN OF THAT. WE ALSO; WE
RENT APARTMENTS
FROM LOCAL LANDLORDS AND SUBLEASE OF THOSE TWO
NEW FOLKS
CONSULTANTS; CONTRACTORS NEW EMPLOYEES. NOT ALL
BUT SOME. WE AGAIN TRY TO
INSTIGATE WHERE WE CAN. WE TRY TO
WORK WITH OUR LEGISLATIVE DELEGATION
THERE’S ANY STATE PROGRAMS THERE’S A WONDERFUL STATE GRANT THAT WE RECEIVED IN THIEF RIVER FALLS A FEW YEARS AGO WE DID
SOME GREAT REPRESENTATIVE
FABIAN KIEL AND
SEN. STUMP AT THE TIME DID SOME
WONDERFUL WORK TO GET US THIS GRANT MONEY
THAT WE WERE ABLE TO WORK WITH OUR SITTING WE GOT 105
UNITS BUILT MARKET RATE UNITS AND THAT WAS TREMENDOUSLY HELPFUL.
FIRST THEY RENTED UP
RIGHT AWAY. SO WE TRY TO WORK WITH LOCAL
AND PUBLIC LOCAL AND STATE OFFICIALS AS MUCH AS
WE CAN
TO TAKE ADVANTAGE OF ANYTHING THAT’S
OUT THERE.>>CHAIR GAROFALO: ANY
OTHER QUESTIONS OR COMMENTS FOR MEMBERS OF THE COMMITTEE? ANY CLOSING COMMENTS REPRESENTATIVE FABIAN
>>
REPRESENTATIVE FABIAN: I JUST WANT TO POINT OUT; TOO; DIGIT KEY IS A COMEDY THAT WAS BORN AND RAISED IN DEEP THIEF RIVER FALLS BY
>>REPRESENTATIVE LIEBLING: AND IT IS STILL OWNED TODAY
SOLELY BY RON
STERNAL AND HIS HEART AND COMMITMENT IS NOT
JUST AN PEOPLE FALLS BUT ALSO
IN MINNESOTA. THE OPPORTUNITY TO TALK TO AN HIM A NUMBER OF TIMES. HE’S
VERY APPRECIATIVE THIS A COMPANY THAT’S ON
FIRM FOOTING AND IT’S GOT A VERY BRIGHT FUTURE. THANKS TO THE INNOVATION AND CREATIVITY THAT
HE
HAS DEMONSTRATED IN HIS LEADERSHIP OF
THIS COMPANY AND I GUARANTEE IF HE WAS SITTING IN THIS ROOM TODAY
ASKED YOU TO PICK HIM OUT OF THE CROWD YOU WOULDN’T BE ABLE TO
DO IT. HE’S THAT UNASSUMING.
THANK YOU.>>CHAIR GAROFALO: THINK IT WITHOUT THANK YOU FOR YOUR PRESENTATION WE LOOK FORWARD
TO HEARING CONTINUED SUCCESS IT FROM YOU IN THE FUTURE. THANK YOU VERY MUCH.
OKAY REPRESENTATIVE WEST AND
THOSE FROM SUMMIT ACADEMY.GOO
D AFTERNOON. WELCOME TO THE COMMITTEE REPRESENTATIVE WEST IF YOU WANT TO BEGIN INTRODUCTION AND WE WILL PROCEED WITH TESTIMONY FROM THERE.>>REPRESENTATIVE WEST: THANK YOU MR. CHAIR. I’M HAPPY TO BE JOINED HERE BY
SUMMIT ACADEMY. JAY SEAN AND LOUIS KING. THEY
HAVE DONE-I VISITED THEM
EARLY ON
MY LEGISLATIVE TIME AND I WAS COMPLETELY BLOWN AWAY BY WHAT THEY ARE DOING
IT WAS VERY EXCITING TO SEE SUCH A
SUCCESSFUL PROJECT WE WILL
HEAR ABOUT WHAT THEY’VE
BEEN DOING AND I WAS HAPPY TO CARRY
THEIR LEGISLATION
TO HELP THEM KEEP DOING THE COMMISSION THEY’VE BEEN DOING FOR A
WHILE NOW. NOBODY WANTS TO HEAR FROM ME AS
MUCH AS HE CAN MAKE HIS CASE A LOT BETTER THAN HE CAN TALK TURN IT
OVER TO->>CHAIR GAROFALO: WELCOME TO
THE COMMITTEE. THE STATE NAME FOR THE
RECORD AND BEGIN YOUR TESTIMONY>>TESTIFIER: THANK YOU MR.
LEWIS KING PRES. AND CEO OF SUMMIT
ACADEMY OIC TO MEMBERS OF THE COMMITTEE; THANK
YOU FOR HAVING US
TODAY AND I WANT TO THANK REPRESENTATIVE WEST FOR
HIS SUPPORT AND
SUBSEQUENT FUNDING OF OUR GED PROGRAM.
SOME OF THE ACADEMY
OR VOCATIONAL TRAINING SCHOOL LOCATED IN
NORTH MINNEAPOLIS. WE BELIEVE THAT THE BEST
SERVICE PROGRAM IN THE WORLD IS
A JOB. WE SIMPLY DO
ONE THING. TRAIN AND PUT PEOPLE
TO WORK. OUR SPECIALTIES
ARE HEALTHCARE AND CONSTRUCTION.
YOU MIGHT HAVE SEEN IN THE NEW YORK TIMES
ON FRIDAY WHERE WE
WERE FEATURED FOR
WORK WITH MORTENSEN AND GETTING PEOPLE
INTO THE
CONSTRUCTION TRADE. THIS IS PARTICULARLY IMPORTANT
AS WE FACE A
DEMOGRAPHIC SHIFT IN
THE STATE AND WE NEED EMPLOYEES TO KEEP US
GOING FORWARD. A COUPLE OF YEARS AGO
SOMEONE DISCOVERED WAS A
SILENT EPIDEMIC IN
OUR COMMUNITY 72;000 PEOPLE IN
HENNEPIN COUNTY DID NOT HAVE
A GED TO GIVE YOU
SOME COMPARISON; THE POPULATION OF BROOKLYN PARK
IS ROUGHLY 78;000. WE TALK
ABOUT DISPARITIES
20;000 AFRICAN-AMERICANS
IN HENNEPIN COUNTY DO NOT HAVE A GED
THE POPULATION OF GOLDEN VALLEY; MEN WOMEN AND CHILDREN; IS
20;000. THEREFORE; WITH FIGURED WE WOULD TAKE A SWING
AT THIS. WE
ALSO DECIDED NOT TO TREAT IT AS A K-12 ISSUE
BUT TO TREAT IT AS A
WORKFORCE ISSUE. TO PARTNER WITH BUSINESS
RATHER THAN EDUCATORS AND SCHOOLS.
I WAS A FORMER SCHOOL
BOARD MEMBER.
[INAUDIBLE] SO WE LEFT THEM ALONE AND WENT TO THE BUSINESS COMMUNITY AND GIVES YOU PARTNER WITH
COMMISSIONER HARDY AND HERE WE
ARE TODAY. I’M PROUD TO SAY YOU HAVE IN
YOUR HANDOUTS THAT
WE REACHED; AFTER A LITTLE BIT OVER
A YEAR; A 100 GED. THIS IS
VERY IMPORTANT MILESTONE FOR US. WE
LAUNCHED THE 1000
GED CAMPAIGN IS WAY TO BRING ATTENTION TO
THIS ISSUE WE
PARTNERED WITH PRIVATE SECTOR AND OUR GOAL IS
TO RAISE $5 MILLION TO DATE WE
RAISED 2.2
FROM FOUNDATIONS AND HALF 1 MILLION
FROM INDIVIDUALS IN ADDITION TO THE MONIES THAT
YOU PROVIDED.
WE ARE WELL ON OUR WAY TO A LITTLE BIT ABOUT
THE PEOPLE THAT WE SERVE.
74% OF THE PEOPLE ARE COLOR; 56%
AFRICAN-AMERICAN. 60% MALE.
40% FEMALE. AVERAGE AGE IS 28. 82%
LIVE BELOW
AND 65% OF THE FEDERAL POVERTY LINE. 49%
WERE UNEMPLOYED AT THE TIME THEY CAME TO US AND THE AVERAGE WAGE
IS BELOW $11;000. UPON
LEAVING SUMMIT THE AVERAGE PLACEMENT
WAGE IS 33;590
$33;592. THE PAY TO HAVE BEEN DOLLARS FOR
LONGITUDINAL
STUDY IN CONCLUDED THAT 82% OF OUR
PROGRAM PARTICIPANTS
WERE EMPLOYED THREE YEARS AFTER ENROLLING
AT S
UMMIT. WE FEEL VERY GOOD ABOUT THESE RESULTS. WE THINK THAT
THIS IS VERY
IMPORTANT ENDEAVOR COULD I RECOGNIZE THE NEED
FOR PRE-K EARLY
CHILDHOOD DEVELOPMENT
BUT THE TRUTH IS THESE CHILDREN GO HOME TO
ADULTS AND THESE ADULTS ARE
NOT STABLE WHEN THEY DON’T
SET EXAMPLES OF WORK WHEN
THEY DON’T TAKE CARE OF THEIR
OWN FAMILIES; IT SETS A BAD PRECEDENT FOR
THE CHILDREN AND I THINK WE WOULD GENERALLY AGREE
WE CANNOT
RAISE THEM-THEY CANNOT RAISE THEIR CHILDREN
FOR THEM. ON
THE HORIZON; IN JULY OF THIS YEAR WE WILL LAUNCH
AN IT PARTNERSHIP WITH A GROUP
; ATOMIC DATA; AND BEGIN TO
TRAIN PEOPLE IN CYBER SECURITY
AS WELL AS
HELPDESK. CURRENTLY; IF YOU’RE NOT
INTERESTED IN THE STRUCTURE
OF HEALTHCARE WE DON’T HAVE ANYTHING FOR YOU
SO WE WANT YOU
TO DIVERSIFY SO WE ATTRACT MORE
YOUNG PEOPLE; BRING THEM INTO THE WORKFORCE;
SO THEY CAN BE LEADERS
IN THIS COMMUNITY AND RAISE THEIR
OWN FAMILIES.
AT THIS TIME I LIKE TO INTRODUCE MR. JAY SEAN
COLEMAN WHO IS A
STUDENT AT SUMMIT. STARTED OFF WITH A
GED PROGRAM AND IS NO
IN THE PRE-APPRENTICE
ELECTRICIAN PROGRAM.>>
REPRESENTATIVE GAROFALO: GOOD AFTERNOON. WELCOME TO THE COMMITTEE TO STAY NAME FROM THE RECORD SO 100 YEARS AND NOW WE KNOW YOUR.
>>TESTIFIER:
JAY SEAN:. I’M A STUDENT AT SUMMIT LIKE YOU
SAID FROM PHASE 1 OUT OF
TWO ELECTRIC SCHOOL AND I
WANT IN WITH NO GED;
NO EDUCATION. WITHIN 10 WEEKS AND A LOT OF
HARD WORK
AND SUPPORT FROM THE STUFF I WALKED OUT WITH
A GED AND AM
CURRENTLY ENROLLED IN THEIR
ELECTRICAL PROGRAM. I JUST FEEL LIKE IT’S A
GREAT HELP IT’S A DIVERSE SCHOOL.
CULTURALLY AND AGE DIVERSE.
LIKE YOU SAID THE AVERAGE
WAS 28. I AM 22.
GRANDPA’S AND GRANDMAS IN THERE SO IT’S
REALLY COOL. AND WALK OUT WITH
THE TRADE FROM NOT HAVING AN EDUCATION AT ALL. TO HAVING
A CAREER. TO LOOK
FORWARD TO. SPEAKER>>REPRESENTATIVE GAROFALO: YOU SAID YOU’RE 22 YEARS OLD
>>TESTIFIER: YES
>>CHAIR GAROFALO: WILL THAT’S PRETTY GOOD IS PRETTIER A LITTLE BIT OLDER THAN
REPRESENTATIVE WEST THAT SITTING RIGHT NEXT TO.
WAS AT THE COMPLETION OF YOUR TEST MAY?>>
TESTIFIER: YES>>
CHAIR GAROFALO: A QUICK QUESTION FOR YOU
. WITH REGARD TO THE TRADE UNIONS IN THESE BLUE-COLLAR JOBS ARE DEFINING THE RESOURCES FROM THE TRADE UNITS ARE THEY PARTNERING WITH YOU ARE THEY
BEING HELPFUL? ARE THEY ANY THINGS WE CAN BE DOING TO HELP FACILITATE A
RELATIONSHIP MORE. I KNOW THERE IS A SHORTAGE OUT THERE IN THE WORKFORCE ARE NOW
>>TESTIFIER: MR. CHAIR IF YOU ASKED ME THE QUESTION 15
YEARS AGO WE HAVE A VERY LONG
CONVERSATION. TODAY WE’VE ESTABLISHED OUR CREDIBILITY IN
TERMS OF
PUTTING PEOPLE IN. PEOPLE TO STADIUMS
;; UNION DEPOT.
THE CARPENTERS-AND DETERMINE OUR PEOPLE HAD
BETTER RETENTION AND BOOKS THEY
BROUGHT IN
THAT FOLKS WALKING OFF THE STREETS. IF AN
ACTIVE PARTNERSHIP
WITH ELECTRICIANS AND THE
CARPENTERS AND QUITE FRANKLY MOTHER NATURE IS IN CHARGE AT THIS POINT. WE WERE
NOT PREPARED FOR WHAT’S UPON
US AND ITS STRUCTURAL
AND PERMANENT. SO WHAT WE ARE BEGINNING TO SEE NOW IS
THE PEOPLE WHO GOT
THE JOBS WITH THE FIRST
TO STADIUMS THAT YOU MIGHT READ IN THE ARTICLE;
ARE BECOMING
INFORMANTS; SUPERVISORS; AND
ULTIMATELY SUPERINTENDENTS. IN THAT CASE;
SOCIAL NETWORK [INAUDIBLE] IN THE BEGIN TO BRING
PEOPLE IN THE SAME WAY [INAUDIBLE] AND
JOHNSON IT. AS THE
DEMOGRAPHICS CHANGE THE COMPLEXIONS
OF THE LABOR UNIONS WILL CHANGE ALSO
AND WON’T
BE AFFIRMATIVE-ACTION. WILL
SIMPLY BE SUPPLY AND DEMAND.
>>CHAIR GAROFALO: THINK IT REPRESENT OF WEST ANY
OTHER TESTIFIERS?>>REPRESENTATIVE WEST: NO.
>>CHAIR GAROFALO: ANY OTHER QUESTIONS OR COMMENTS FROM
THE COMMITTEE? REPRESENTATIVE CLARK
>>CHIEF CLERK: IT’S GOOD YOU’RE THE PROGRESS OF THIS ORGANIZATION AND VERY IMPRESSIVE AND I THINK
YOUR REPUTATION WITH
THE CONSTRUCTION IS EXEMPLARY. I’M
JUST WONDERING IF NOT HEARD MUCH ABOUT THE
HEALTH CLAIRE
PART OF THE WORK YOU ARE DOING. COULD RESPOND TO THAT A LITTLE BIT WHAT KIND OF
[INAUDIBLE] ARE ABLE TO OFFER
.. SO THAT’S ONE QUESTION. THE SECOND QUESTION HE THOUGHT IT WAS IMPORTANT TO DO TRACKING YOUR STUDENTS THREE
YEARS AFTER. THAT’S REALLY
SIGNIFICANT DATA.
IF YOU COULD JUST TALK ABOUT THOSE TWO ISSUES
I’D APPRECIATE THAT?
>>TESTIFIER: WE REFER TO OUR
HEALTHCARE AS
[INAUDIBLE] OF COURSE WE
PUT CONSTRUCTION IN SO WE CAN GET YOUNG MEN OFF
THE STREETS AND SO THEY CAN ACT
AS FATHERS;RATHER THAN THREATS TO
THE COMMUNITY. THE
HEALTHCARE PROGRAM CONSISTS OF THE
COMMUNITY
WORKER DISCIPLINE; WHICH SEEKS TO EDUCATE
COMMUNITIES OF COLOR ARE
TAKING ADVANTAGE
PREVENTATIVE MEASURES RATHER THAN UTILIZING THE
EMERGENCY ROOM
AS A PRIMARY MEANS OF OBTAINING HEALTHCARE.
IN ADDITION; IT
ALSO OFFERS CERTIFIED NURSING ASSISTANT.
IN ADDITION; WE ALSO TRAIN AND
MEDICAL ADMIN AND
THE WOMAN IS AT THE FRONT DESK
AT UNITED IS A SUMMIT GRAD.
THE ADMINISTRATIVE SIDE RUNS THE
GAMUT FROM THAT JOB THROUGH
INSURANCE PROCESSING. THE
HEALTHCARE COMPONENT MAKES UP ONE THIRD OF OUR
ENROLLMENT AND AS YOU MIGHT IMAGINE IT’S
DOMINATED BY OUR YOUN
G WOMEN ALTHOUGH WE HAVE BEEN IN IT
AS WELL. IN TERMS OF THE THREE
YEAR PERFORMANCE;
THAT WAS BASED ON A
LONGITUDINAL STUDY THAT WE HAD [INAUDIBLE]
RESEARCH CONDUCT THE
ENTIRE EXPERIMENT. LOOKING AT HIM
OVER A FIVE-YEAR PERIOD OR TWO YEARS BEFORE SUMMIT AND THREE
YEARS AFTER. WE CURRENTLY TRACK
OUR PEOPLE HOW TO THREE AND
65 DAYS AND WE MAINTAIN AN ACTIVE
BENCH BECAUSE OF THE CYCLICAL NATURE
OF
CONSTRUCTION SEASONALITY PEOPLE DO TURN TO US
FOR SOURCES OF LABOR.
>>CHAIR GAROFALO: ANY OTHER QUESTIONS OR COMMENTS FOR MEMBERS OF THE COMMITTEE?
REPRESENTATIVE CLARK WERE
YOU DONE?>>
REPRESENTATIVE CLARK: CAN YOU TELL ME A LITTLE ABOUT THE
WAGE STRUCTURE? THAT
EMPLOYMENT OPPORTUNITIES?
>>TESTIFIER: WOULD YOU REPEAT YOUR
QUESTION PLEASE>>REPRESENTATIVE CLARK: I WANT TO KNOW ABOUT THE
WAGE STRUCTURE FOR THE EMPLOYMENT OPPORTUNITIES
FOR HEALTHCARE?>>TESTIFIER: CERTAINLY. THE
HEALTHCARE FOLKS RANGE
FROM 29-$30;000
. SOME OF THE COMMUNITY
HEALTH WORKERS PRIMARILY WORKING FOR
THE COUNTY THOUGH IN AT
HIGHER WAGES. WE DELIVER WE CHOSE NOT TO FOCUS ON CERTIFIED
NURSING ASSISTANTS THEY TEND
TO BE AT THE LOWER RANGE. OUR
THEORY IS NEVER
BASED ON ONE INCOME LEVEL IN
THE HOUSEHOLD. IT’S ALWAYS BASED ON TWO.
THAT IS THE LEADING CAUSE OF THE DISPARITIES
THAT WE DISCUSSED.
WHEN YOU TALK ABOUT
AFRICAN-AMERICAN INCOMES YOU TYPICALLY ARE
TALKING ABOUT
A SINGLE HEAD OF HOUSEHOLD WHEN YOU SPEAK TO
THE 63;000 OF THE WHITE COMMUNITY THERE’S TWO PEOPLE
TO IF I CAN GET MY YOUNG MEN
AND WOMEN BOTH TO
GET JOBS IN THEIR MID-30S-I HAVE THREE DAUGHTERS
AND AN UNEMPLOYED BOY IS NOT A GOOD
MARRIAGE CHOICE PERIOD. IF WE
CAN GET THESE YOUNG MENIN
A POSITION WHERE THEY
ARE EARNING AND THEY CAN COMBINE THEIR INCOME WITH SOMEONE ELSE
WE CAN THEN BEGIN TO BUILD FAMILIES
AND COMMUNITIES. WE HAVE TRIED
EVERYTHING ELSE.>>CHAIR GAROFALO:
REPRESENTATIVE MORAN>>
REPRESENTATIVE MORAN: I JUST WANT TO REMIND THIS
COMMITTEE THAT
A FEW YEARS AGO WE WERE
RESPONDING TO WAGES IN THE BLACK COMMUNITY
FALLING BEHIND
IN SO I JUST WANT TO SAY TO
THE CHAIR OF THIS COMMITTEE AND
THE BODY THANK YOU FOR RESPONDING TO THAT NEED
AN INVESTING IN AN ORGANIZATION AND A COMPANY LIKE SUMMIT
OIC WHO IS REALLY TRANSFORMING
AND CREATING ABLE-BODIED
PROVIDERS THEMSELVES IN OUR COMMUNITY
AND JUST REVERSING THAT
[INAUDIBLE] THAT WAS OUT THERE
AND CREATING SKILLED
EDUCATED NETWORKS. THAT IS
REALLY OBTAINING FAMILY
SUSTAINING EMPLOYMENT. SO I JUST WANT TO SAY;
THANK YOU FOR YOUR HARD WORK
AND COMMITMENT TO CREATING THE SKILLED WORKFORCE FOR
THE COMMUNITY AND ALSO FOR THIS BODY
TO INVES
T IN THOSE ORGANIZATIONS THAT ARE OUT THERE IN THE COMMUNITY DOING
TRANSFORMATIONAL WORK. THAT’S COMMENTS FOR BOTH
OF US.>>CHAIR GAROFALO: THANK
YOU REPRESENTATIVE MORAN. REPRESENTATIVE
FOR MAHONEY>>
REPRESENTATIVE MAHONEY: MAYBE I’M JUST NOT READING THE
PIECE CORRECTLY BUT
I THINK IN THE DEMOGRAPHICS WERE YOU HAVE
THE INCOME 82%
LIVING BELOW 165% OF THE POVERTY
AND THEN YOUR PRE-ENROLLMENT
WAGES 11;000 MY THINK SOMETHING IS
WRONG THERE. THAT’S NOT A REAL
BIG ISSUE. I WANT TO
COMPLEMENT YOU ON YOUR TRAINING OF THE
SUPPORT CRAFTS TO THE
CONSTRUCTION WORLD I’M
JUST WONDERING IF YOU BE
SO SUCCESSFUL YOU GET A
MAJOR INDUSTRY OR
MAJOR CRAFTS I SHOULD CALL IT/?
>>CHAIR GAROFALO:
[INAUDIBILE / OFF MIC]
[LAUGHING] QUICKLY LOSING CONTROL OF
THE COMMITTEE. SEEING NO FURTHER COMMENTS OR QUESTIONS MR. KING OF ANYTHING CLOSING COMMENTS
REPRESENT
OF WEST.>>TESTIFIER: MR. CHAIR MEMBERS THE COMMITTEE; THANK YOU FOR YOUR SUPPORT
REPRESENTATIVE MAHONEY A CHECK
THE MATH.
WE DO HAVE ONE ISSUE WERE GOING TO BRING BEFORE YOU. ACTUALLY TWO
THINGS. ONE THE DEMAND FOR PEOPLE IN IT IS NOT
GOING ANYWHERE. SO WE ARE
GOING TO GET OUT THERE AND
PROVIDE LEADERSHIP AROUND
THAT ISSUE. OUR INITIAL PARTNERS
ATOMIC DATA WE ARE GOING TO USE THAT AS A
LEARNING GROUND AND GET BACK
TO YOU AND HOW WE WANT TO
EXPAND IT. THE SECOND THING I WANT TO LEAVE ON YOUR
MIND TODAY
IS THAT WE NEED TO FOCUS ON THE WORKERS OF THE FUTURE. I
THINK THE OUR YOUTH
DEVELOPMENT ELEMENTS ARE
WOEFULLY BEHIND. THE
EMERGING WORKFORCE COMMITTEES OF COLOR
THAT WE LOOK AT WHAT’S HAPPENING WITH
THOSE KIDS COMING OUT OF
HIGH SCHOOL
THERE’S A BIG OPPORTUNITY THERE FOR US.
THAT IS SOMETHING THAT IN THE COM
ING MONTHS WE ARE GOING TO SIT DOWN
WITH YOU AND TALK ABOUT IT.
LAST NIGHT WAS MEETING WITH
[INAUDIBLE
] IT WAS BEEN WITH KNIFE GREATER THAT’S YOUR NINTH GRADER FIVE YEARS AGO AND WE GOT TO THINK ABOUT THEM THAT WAY AND GETTING TO INVEST WITH
THEM
AND [INAUDIBLE] IT TAKES BUSINESS TO GET INVOLVED. SO THOSE TWO THINGS YOU WILL
FIND US GOING IN THE COMING MONTHS
AND AGAIN THANK YOU SO MUCH FOR
YOUR SUPPORT.>>CHAIR GAROFALO: THANK YOU.
MR. COLEMAN THANKS FOR YOUR TESTIMONY THAT WE WISH YOU CONTINUED SUCCESS IN YOUR TRAINING MEMBERSHIP PROGRAMS TO PARTICIPATE IN COULD
MR. KING MY THINK OF YOUR LEADERSHIP AND REPRESENT
OF WEST THANKS FOR OFFERING THIS BILL LAST SESSION BRINGING IT TO A SUCCESSFUL CONCLUSION. THANK YOU ALL.
MEMBERS; THE THIRD AND FINAL AGENDA ITEM WE HAVE IS THE
IS LEASE OF THE OFFICE OF THE LEFT
SIDE OF
TO REPORT ON THE MINNESOTA INVESTMENT FUND.
MEMBERS; THIS REPORT WAS
RELEASED TODAY
. NOT SURE ANYONE BESIDES ME HAD A CHANCE TO READ
IT TODAY. IT’S IN
YOUR PACKETS YOU CAN FEEL FREE TO TAKE IT AND READ FURTHER
ON IT BUT AS ALWAYS; LEGISLATURE AND A
BIPARTISAN BASIS HOLDS
THE OFFICE OF LEGISLATIVE UTTERED IN HIGH ESTEEM IS QUITE
WAY US TO
BE EVALUATED PROGRAMS AND SEEKING IMPROVEMENTS TO THEM. SO WELCOME TO THE COMMITTEE. PLEASE; STATE NAME FOR THE RECORD RECEIPT WITH
YOUR PRESENTATION.>>TESTIFIER:
THANK YOU MR. CHAIR NURSE MY NAME IS JUDY MANDEL DEPUTY LEGISLATIVE AUDITOR FOR OLA’S PROGRAM EVALUATION DIVISION AND BEFORE
MR. ALTER AND MR. KERSHNER GET INTO THE PRESENTATION I JUST WANT TO PAUSE FOR A MOMENT AND FOR SAY THANK YOU
FOR HEARING A RELEASE OF
THIS EVALUATION SECOND I JUST REMIND
YOU THAT WE ARE DOING THIS EVALUATION IN RESPONSE TO LEGISLATION
YOU ALL PASSED IN 2015.
IN 2015 WAS A SECTION ADDED TO OUR PART OF
THE LAW WHICH
DICTATES US TO CONDUCT AN EVALUATION OF AN
ECONOMIC DEVELOPMENT INCENTIVE PROGRAM EVERY YEAR. SO THIS IS
OUR SECOND SUCH EVALUATION. LAST YEAR
WE DID ONE ON THE RESEARCH TAX CREDIT THIS YOU
ARE ONE
DOING ONE ON THE MINNESOTA
INVESTMENT FUND TO IT YET TO BE DETERMINED WHICH ECONOMIC DEVELOPMENT
INCENTIVE PROGRAM WE WILL EVALUATE NEXT
YEAR BUT BASED ON THE
CURRENT L
AW WE WILL BE DOING ON. SO I JUST WANT TO REMIND YOU THAT IS AN ONGOING OBLIGATION OF OUR OFFICE AND WITH THAT I’LL TURN IT OVER
TO THE COMANAGERS OF THE EVALUATION AND THANKS AGAIN
FOR HEARING OUR EVALUATION.
>>CHAIR GAROFALO: WELCOME TO THE COMMITTEE. PLEASE NAME FOR THE RECORD.>>TESTIFIER: THANK YOU MR. JACK FOR
THE RECORD BY NAME IS JOEL ALTER WITH A LEGISLATIVE
AUDITOR’S OFFICE
DAVID KERSHNER IS GOING TO BE ASSISTING WITH THE PRESENTATION IN
A MOMENT I ALSO WANT
TO MENTION THAT ON WALTER WHO HELPED US WITH
THIS EVALUATION.
THE MINNESOTA INVESTMENT FUND OR IS OFTEN
CALLED; MYTH; IS
A BUSINESS SUBSIDY PROGRAM CREATED BY
THE LEGISLATUREAND THE INTENT OF THE PROGRAM IS GREAT JOBS
RETAIN JOBS AND
CREATE INVESTMENTS.
OVERALL; HOWEVER; WE FOUND THAT THE IMPACT OF
THE PROGRAM IS NOT AS CLEAR AS WE WOULD LIKE TO SEE. IT’S HARD
TO DISTINGUISH WHAT ACTIVITIES
THE PROGRAM HAS INDUCED VERSUS THOSE THAT
WOULD’VE HAPPENED WITHOUT THE PROGRAM.
IN ADDITION; WE OBSERVED THAT
THE PROCESS
FOR CREATING THE PROJECTS IS A
COMPLICATED ONE. WHEN WE THINK LOCAL OFFICIALS CAN BE CONSULTED ABOUT
THESE PROJECTS BUT WE THINK
IT’S UNCLEAR
THAT LOCAL GOVERNMENTS NEED TO PLAY A DIRECT ROLE IN ADMINISTRATION OF THE PROGRAM.
FINALLY; WE THINK THE DECIS
IONS REGARDING THIS PROJECT SHOULD BE MORE CONSISTENT
AND TRANSPARENT. BEFORE WE DISCUSS
OUR FINDINGS; A LITTLE BIT OF
BACKGROUND ABOUT
THE PROGRAM. THE PROGRAM IS DESCRIBED SOMETIMES
AS MINNESOTA’S WORKFORCE ECONOMIC DEVELOPING PROGRAM. SOME OTHER ECONOMIC DEVELOPMENT PROGRAMSHA
VE RESTRICTIONS THAT LIMIT THEIR USE OF CERTAIN TYPES OF PROJECTS
THE PROGRAM IS OFTEN
MORE FLEXIBLE. IT WAS CREATED BY THE LEGISLATURE IN 1996
AT THE STATE LEVEL. ADMINISTERED BY THE DEPARTMENT OF
EMPLOYMENT AND
ECONOMIC DEVELOPMENT OVER A RECENT FIVE-YEAR PERIOD DE
ED AWARDED FUNDING TO AN AVERAGE
OF ABOUT 20
BUSINESSES ANNUALLY WHEN A BUSINESS APPLIES FOR A
MYTH SUBSIDY HOW MUCH DOES MYTH
TYPICALLY AWARD. WHILE THE AVERAGE IS
ABOUT $500;000 IF IT’S IN THE
METRO AREA TENDS TO BE A LITTLE HIGHER THAN THAT.
OUTSIDE THE TWIN CITIES AREA A LITTLE BIT LESS. SINCE 1996
MORE THAN 300 LOCAL GOVERNMENTS
HAVE PARTICIPATED
IN PROJECTS. USUALLY THESE ARE CITY GOVERNMENTS FOR THEY ALSO MAY BE COUNTIES OR LOCAL ECONOMIC DEVELOPMENT AUTHORITY A
ND IF YOU’RE INTERESTED IN
THE REPORT ON
PAGE 17 THERE IS A MAP THAT GIVES YOU A LITTLE BETTER IDEA
OF AT LEAST REGIONALLY WHERE
THE PROJECTS HAVE OCCURRED IN
RECENT YEARS. AS I SAID THE PROGRAM STRUCTURE IS A
BIT COMPLICATED. RATHER
THAN DEED GIVING SUBSIDIES DIRECTLY TO QUALIFYING BUSINESSES
THE PROCESS HAS ADDITIONAL STEPS INVOLVING LOCAL GOVERNMENTS.
FIRST; IN RESPONSE TO
AN APPLICATION
SUBMITTED JOINTLY BY A LOCAL GOVERNMENT AND
A BUSINESS; DEED MAKES A GRAND
TO A
LOCAL GOVERNMENTS. THE LOCAL GOVERNMENT THEN USES THE GRA
NT TO MAKE A LOAN FOR THAT SAME AMOUNT OF MONEY TO
THE BUSINESS. THE PROCESS OFTEN TAKES TIME BECAUSE THERE ARE
SEPARATE LEGAL
DOCUMENTS THAT HAVE TO BE DEVELOPED FOR BOTH THE GRANT AND THE LOAN. IN
MOST CASES THE BUSINESS IS ALLOWED
TO KEEP ALL OR PART
OF THE WITHOUT PAYING A PACKET OF THIS HAPPENS IF THE LOAN IS DESIGNATED AS FORGIVABLE AND IF
THE BUSINESS NEEDS AND
PROJECT COMMITMENT.
IF ALL OR PART OF THE LOAN IS
NOT FORGIVABLE AS MEANS OF THE BUSINESS HAS TO PAY IT BACK.
THE LOCAL GOVERNMENT IS ALLOWED
TO KEEP SOME OF THE REPAYMENTS
BY LAW THE LOCAL GOVERNMENT CAN KEEP 40% OF THE REPAYMENT UP
TO $100;000 PER
PROJECT. REMAINDER OF
THE REPAYMENT COME BACK TO
THE STATE AND THEY CAN BE REUSED FOR OTHER
PROJECTS. THERE’S NOT A LOT OF RESTRICTIONS IN STATE
LAW REGARDING THIS BUT THERE’S SOME
WORTH MENTIONING. FIRST; THERE
CERTAIN BUSINESSES CERTAIN TYPES
OF BUSINESSES THAT THE PROGRAM
CANNOT SUBSIDIZE. PROFESSIONAL SPORTS FACILITIES;
CASINOS AND STORAGE
PRINCELY USED FOR RETAIL SALES. SECOND; STATE
LAW CAPS GRANTS AT $1 MILLION PER PROJECT.
THE LEGISLATURE AS YOU HEARD
EARLIER SOMETIMES CHOOSES TO
DESIGNATE RECIPIENTS OF GRANTS IN LAW AND OFTEN DOES THAT IF IT WISHES TO GRANT MORE THAN $1 MILLION
. AN EXAMPLE OF THE THAN THE ONE YOU HEARD EARLIER IN THIS HEARING IN 2015 THE LEGISLATURE AUTHORIZED A GRANT OF $4 MILLION TO
THE SERIOUS AIRCRAFT CORPORATION IN DULUTH.
THIRD; THE LAW SAYS THE AWARD MAY NOT EXCEED HALF OF THE
PROJECT COST. THE REST MUST
BE BORN BY THE COMPANY’S OWN RESOURCES
OR PRIVATE FINANCING OR OTHER PUBLIC SOURCES.
FINALLY; THERE’S A PROVISION IS A LOT THAT ESTABLISHES A
COMPENSATION FOR FOUR EMPLOYEES OF A COMPANY RECEIVING
A GRANTS. DAVID IS GOING TO BE TALKING MORE ABOUT THAT LATER BUT IN OUR VIEW; THAT PROVISION
OF LAW IS VAGUE AND NEED SOME CLARIFICATION.
THERE ARE TWO SOURCES OF
FUNDING FOR–STATE APPROPRIATIONS AND LOAN REPAYMENT CAN THERE’S A LONG PERIOD OF TIME
FROM ABOUT FISCAL YEAR 2005 THROUGH FISCAL
T
HROUGH FISCAL YEAR 2013 BUT NOT MUCH MONEY WAS BEING APPROPRIATED TO LIFT. IN FACT DURING THAT PERIOD WERE SIX YEARS
WITH NO MONEY APPROPRIATED IN
THOSE YEARS. THEN STARTING IN FISCAL 2014;
THAT CHANGED
. APPROPRIATIONS JUMP TO $50 MILLION
THAT YOUR REMAINED AVAILABLE FOR THE NEXT
TWO YEARS AS YOU CAN SEE IN
THE EARLY PART OF THE PERIOD
LOAN REPAYMENT WERE AN IMPORTANT PART OF THE
REVENUE PICTURE. IN RECENT YEARS THEY’VE
AVERAGED ABOUT $1 MILLION
A YEAR BUT THEY HAVE BEEN DWARFED BY THE
PROGRAMS APPROPRIATIONS. THIS NEXT GRAPH SHOWS THE STARTING BALANCES IN THE MINNESOTA INVESTMENT FUND RECENT FISC
AL YEARS. STARTING BALANCES ARE SHOWN HERE DO NOT INCLUDE THE STATE APPROPRIATION
FOR THAT YEAR. SO FOR EXAMPLE; IF WE
LOOK AT
2016 AND WE ARE SEEN A STARTING BALANCE OF THEIR OF ABOUT $23 MILLION
AND ADDED TO THAT WOULD HAVE BEEN
THE APPROPRIATION OF $15 MILLION IN
THAT YEAR;. SO WHAT WE SEE IN RECENT YEARS AT LEAST OUR SO
ME PRETTY HEALTHY BOUNCES
STARTING BALANCES
CERTAINLY BETTER THAN THE EARLY YEARS THAT
ARE SHOWN IN THE PERIOD ON THIS GRAPH.
ONE IMPORTANT TREND IS THAT
INCREASING THE LOANS PROVIDED THROUGH THE PROGRAM HAVE BEEN PARTLY OR FULLY FORGIVABLE. AGAIN THIS MEANS THAT THE BUSINESS DOES NOT HAVE TO REPAY ALL OR PART OF ITS LOAN ASSUMING THAT THE BUSINESS
MEETS ITS JOB AND
WAGE GOALS THAT IT’S COMMITTED TO. SO IN EFFECT A FORGIVABLE LOAN IS A
CONDITIONAL GRANT
. THE BUSINESS CAN KEEP THE MONEY IF IT MEETS
THOSE CONDITIONS. THE BARS ON
THIS CHART REFLECT THE
NUMBER OF
PROJECTS ANNUALLY IN EACH OF THE PAST 20 YEARS
AND THE BLUE PORTIONS OF
THE BARS SHOW THE NUMBER OF
FORGIVABLE LOANS UNTIL FAIRLY RECENTLY
THE NORM IS THAT MOST LOANS WERE REPAYABLE LOANS OVER THE PAST SEVERAL YEARS MOST LOANS
HAVE BEEN FULLY OR
PARTLY FORGIVABLE. TO PUT THIS IN
DOLLAR TERMS; BETWEEN FISCAL YEARS 2013
AND 2017 DEED AWARDED $50
FOR PROJECTS AND OF
THAT TOTAL 40 MILLION WAS FORGIVABLE IF THE
BUSINESS COMPLIED WITH THE
LOAN CONDITION.
IT’S NOT UNCOMMON FOR BUSINESSES TO ADD JOBS AFTER RECEIVING
THE SUBSIDIES. NEVERTHELESS; THERE ARE A LOT OF UNKNOWNS
ABOUT THE TRUE IMPACT OF
SPEEDUP ON JOB CREATION I KNOW SOME OF YOU
ARE FAMILIAR A BUT FOR FORECAST AND IN GENERAL; DEVELOP PROGRAMS
THE STATE DOES NOT WANT TO
BE SUBSIDIZING DEVELOPMENT THAT
WOULD OCCUR WITHIN A
STATE ANYWAY WITHOUT
STATE INVOLVEMENT. IDEALLY; THE STATE SHOULD ONLY
SUBSIDIZE PROJECTS THAT WOULD NOT OCCUR BUT FOR
STATE INVOLVEMENT. WHEN DEED
PROVIDES FUNDING TO THE PROJECT IT’S NOT REQUIRED TO MAKE
A FINDING THAT STATE ASSISTANCE
IS ESSENTIAL.
THE APPLICATION DOES ASK WHY FINANCING
IS NECESSARY FOR THE PROJECT TO
MOVE FORWARD BUT WE OBSERVED AS WE WENT TO
PROJECT FILES THAT THE RESPONSES FROM BUSINESSES AND LOCAL GOVERNMENTS
TYPICALLY BRIEF AND NOT VERY
WELL DOCUMENTED.
THE RESULT THAT WE CAN BE
SURE THAT IT WAS REALLY RESPONSIBLE FOR ALL THE
JOB CREATION IN THESE PROJECTS.
FOR EXAMPLE; IN 2014 DEED
INITIALLY AWARDED $1 MILLION GRANT TO A BROOKLYN PARK BUSINESS
.. THE BUSINESS LATER DECIDED THAT IT
WASN’T COMFORTABLE WITH SOME OF
THE REQUIREMENTS. THE
PROGRAM REQUIREMENTS AND
IT TURNED DOWN THE MONEY BUT WHEN
I HAD ANYWAY BEEN COMPLETED
THE PROJECT. IN A CASE LIKE THAT YOU SAID
YOURSELF; WELL
WAS IT REALLY ESSENTIAL FOR THAT
PROJECT? WHAT WE RECOMMEND
IS THAT THE LEGISLATURE AMENDED THE
STATE LAW TO REQUIRE STRONGER
ASSURANCE THAT
IT’S ESSENTIAL TO
INDIVIDUAL PROJECTS. SPECIFICALLY WHAT WE SUGGEST
IS THAT
THE BUSINESS SHOULD EITHER HAVE
TO DEMONSTRATE THAT THEY DO NOT
HAVE ACCESS TO FINANCING THAT WOULD ENABLE
THE PROJECT TO
PROCEED OR DEMONSTRATE THAT THE
BOS JOB GAINS WOULD LIKELY OCCUR IN
ANOTHER STATE.
DEED HAS REPORTED ON THE EXTENT
TO WHICH ITS HELP
TO FOSTER PRIVATE INVESTMENT WE THINK THOSE REPORTS HAVE BEEN OVERSTATED.
DEED HAS SUGGESTED THAT OVER A RECENT 4.5 YEAR PERIOD
WITHIN $2 BILLION IN
PRIVATE INVESTMENT
WAS LEVERAGE. WE FOUND THAT
MORE THAN HALF OF THE REPORTED LEVERAGE INVESTMENT
WAS FROM A SINGLE PROJECT AND
IN FACT THAT PROJECT DID NOT
LEVERAGE $1.2 BILLION THAT
DEED CLAIM. JUST TO SAY WERE
WORRIED ABOUT
THE PROJECT 2015 THERE WAS
A LATE COMPANY CALLED MOM BRAND THAT
WAS BOUGHT OUT BY AN OUT-OF-STATE FIRM CALLED
POST HOLDINGS FOR
$1.2 BILLION. MONTHS LATER THE COMPANY
APPLIED FOR
THE FUNDING FOR THE PURPOSE OF KEEPING ONE OF THE
COMPANY’S HEADQUARTERS
IN LAKEVILLE BUT CONTRARY TO WHAT DEED HAS REPORTED THE
FUNDING THAT POST HOLDINGS EVENTUALLY
RECEIVED THROUGH THE PROGRAM DID NOT IMPACT CAUSE
THAT SALE WITH THE BUSINESS
TO OCCUR. IT HAD OCCURRED
MUCH EARLIER. THAT WAS THE
LARGEST OVERSTATEMENT OF LEVERAGE INVESTMENT THAT WE SAW THERE
WERE OTHERS AND AGAIN I THINK WE HAVE THE GENERAL CONCERN
THAT BECAUSE THE LAW DOES NOT HAVE A; BUT FOR COP
FORECAST IT’S HARD TO KNOW PORTION OF
THE INVESTMENT THE ASSISTED BUSINESS ARE TRULY ATTRIBUTABLE TO THE PROGRAM. I WANT
TO SHIFT AND TALK A LITTLE BIT ABOUT THE LOCAL GOVERNMENT ROLE IN
THESE PROJECTS. DEED PLAYS
THE LEAD ROLE IN PROGRAM ADMINISTRATION OF LOCAL GOVERNMENTS HAVE
SUPPORTING RESPONSIBILITIES. THEY JOINTLY SUBMIT APPLICATIONS
WITH BUSINESSES THEIR PARTIES TO THE KEY
LEGAL DOCUMENTS; THE GRANT CONTRACT WITH DEED AND LOAN AGREEMENT WITH
THE BUSINESS. BUT KEEP IN MIND THAT MOST LOCAL GOVERNMENTS DON’T DO
PROJECTS VERY OFTEN COULD OVER A 20 YEAR HISTORY OF
THIS PROGRAM IS BEEN A LOT OF LOCAL
GOVERNMENTS INVOLVED BUT THE TYPICAL NUMBER OF PROJECTS FOR
LOCAL GOVERNMENT THAT
IS PARTICIPATED IS ONE. SO
LOCAL GOVERNMENTS DON’T KNOW THIS PROGRAM
BY HEART AND IT SOMETIMES IS A CHALLENGE
FOR THEM
TO ADMINISTER THEIR PART OF THE PROGRAM. DEED’S
APPLICATION FOR INSTRUCTS LOCAL GOVERNMENTS TO DO FINANCIAL UNDERWRITING OF PROJECTS
BUT WE FOUND THAT DEED
HAS NOT ADEQUATELY HELP LOCAL GOVERNMENTS UNDERSTAND WHAT THAT MEANS AND SO SOME
LOCAL GOVERNMENTS
HAVE STRUGGLED. EARLIER I SAID LOCAL GOVERNMENTS ARE ALLOWED BY LAW TO KEEP A PORTION OF THE
LOAN REPAYMENT DEED HAS
REQUIRED THE LOCAL GOVERNMENTS PUT THAT MONEY INTO LOCAL REVOLVING
LOAN FUNDS. SOME LOCAL GOVERNMENTS
HAVE USED
THAT MONEY TO OFFER SUBSIDIES TO BUSINESSES
BUT WE FOUND THAT MANY HAVE HAD A
HARD TIME DOING SO
.. NEARLY HALF OF THE LOCAL
GOVERNMENTS WITH-CREATED
REVOLVING LOAN FUNDS HAVE NOT SPENT THE MONEY
FROM THEM IN THE PAST DECADE.
FOR EXAMPLE;
REDWOOD FALLS IS NOT
SPENT ANY OF ITS LOCAL REVOLVING LOAN FUND FO
R IT BECAUSE IT HAS ONLY ABOUT $40;000 AND MAY BE DIFFICULT
TO ENTICE A BUSINESS
TO RELOCATE FOR THAT AMOUNT
OF MONEY. ON THE OTHER HAND; THE CITY
LIKE EGAN HAS 250;000
ITS LOCAL REVOLVING
LOAN FUND AND CITY OFFICIALS THERE TOLD
US THAT THEY’RE NOT REALLY IN THE BUSINESS OF MAKING LOANS SO THEY JUST HAVE NOT USE
THAT FUND THE LAST DECADE. MEANWHILE
STATE LAW HAS
NO PROVISIONS REGARDING THE LOCAL
REVOLVING LOAN. IT
DOES REQUIRE THAT THEY BE CREATED THIS IS NOT ABOUT THE PURPOSE THEY
SHOULD FULFILL. SO WE THINK THAT THE LEGISLATURE SHOULD CONSIDER A COUPLE OF ACTIONS RELATED TO THE LOCAL GOVERNMENT ROLE.
FIRST; WE THINK THAT THE LEGISLATURE SHOULD
CONSIDER STREAMLINING
THE PROCESS RATHER THAN HAVING
KIND OF COMPLICATED PRESENT WITH THE
MONEY GOES FIRST TO THE LOCAL GOVERNMENT AND THEN TO
A BUSINESS; WE THINK THAT
THE AGENCY TO BE MAKING THESE LOANS DIRECTLY
WITH BUSINESSES. IT WOULD BE A
SIMPLER APPROACH IT’S A STATE PROGRAM WITH STATE DOLLARS AND WE THINK
IT’S REASONABLE FOR
STATE AGENCY TO BE FULLY ACCOUNTABLE. ALTHOUGH
WE RECOMMEND THAT THE
LOCAL ROLE;; THE FORMAL
LOCAL ROLE OF LOCAL GOVERNMENTS
BE ELIMINATED AS LOCAL GOVERNMENTS CAN STILL
PLAY IMPORTANT ROLES IN
THESE PROJECTS. HELPING BUSINESSES WITH
THEIR APPLICATIONS; THE CITY COUNCIL COULD TAKE POSITIONS ON THE PROJECTS.
THEY CONSUME AND PROVIDE
INPUT DEED. WE ALSO THINK THAT THE LEGISLATURE SHOULD
CONSIDER REPEALING THE STATUTORY PROVISION THAT ALLOWS
LOCAL GOVERNMENTS TO RETAIN A PORTION
OF THE LOAN REPAYMENT. AS WE
HAVE SAID MANY
OF THE CURRENT LOCAL REVOLVING LOAN FUNDS
JUST DON’T
REALLY REVOLVE THAT IS CITIES HAVE FOUND IT HARD IN
SOME CASES TO SPEND THE MON
EY IN THESE ACCOUNTS. IF THE REPAYMENTS CAME BACK TO THE STATE THIS WOULD EITHER
ALLOW FOR MORE PROJECTS TO BE
FUNDED OR WOULD ALLOW THE PROGRAM
TO CONTINUE WITH
REDUCED APPROPRIATION.
SO LET ME TURN IT OVER TO DAVID KIRCHOFF WAS GOING TO TALK MORE ABOUT HOW
THE PROGRAM
IS ADMINISTERED.>>CHAIR GAROFALO: STATE
YOUR NAME.>>TESTIFIER: MY NAME IS
DAVID KIRSTEIN.
AS MR. ALDERSON UP TO TALK A LITTLE BIT ABOUT
DEEDS DEED’S INITIATION OF
THE PROGRAM. AS MR.
ALTER SAID; DEED HAS QUITE A
LOT OF FREEDOM TO ADMINISTER
THE PROGRAM AS IT SEES FIT. THERE’S NOT VERY MANY RESTRICTIONS IN THE LAW ABOUT HOW DEED USES THE FUNDING.
DEED CAN SET ITS OWN
POLICIES REGARDING WHICH BUSINESSES WILL
RECEIVE ASSISTANCE HOW MUCH MONEY THEY
WILL RECEIVE AND WHETHER
OR NOT THOSE LOANS WILL BE FORGIVEN. WHETHER OR NOT THE COMMITTEES WILL HAVE TO PAY
ALL THAT MONEY BACK.
WE HAD SOME CONCERNS ON HOW DEED MAKES EACH OF THOSE THREE TYPES OF DECISIONS. I’M GOING TO START FIRST BY TALKING ABOUT THAT
FIRST ONE WHICH BUSINESSES
RECEIVE FUNDING. THERE IS AN
APPLICATION PROCESS
FOR FUNDING AND DEED SCORES APPLICATION
IT RECEIVES
TO SEE A BUSINESS MEET THE MINIMUM THRESHOLD. THERE
IS A 400
POINT THRESHOLD THAT THEY ARE SUPPOSED TO MEET.
WE FOUND IT WAS PRETTY EASY
FOR BUSINESSES TO MEET
THAT THRESHOLD AND PARTLY THAT’S UP BY THE STRUCTURE OF DEED
SCORING SYSTEM. MANY POINTS ARE
GIVEN FOR PRETTY
MODEST ACCOMPLISHMENTS.
FOR EXAMPLE; ANY BUSINESS CREATING JUST 10
JOBS RECEIVES THE MAXIMUM AMOUNT OF POINTS AVAILABLE FOR
JOB CREATION WHICH IS 100
POINTS;
ONE QUARTER OF THE TOTAL. WE DON’T GET ANY ADDITIONAL POINTS FOR CREATING
50 OR 75
OR 100. 10 IS ALL YOU NEED TO CREATE IN ORDER TO
BE GET THE FULL AMOUNT OF POINTS FOR THE JOB CREATION. WE ALSO
NOTED THAT A NUMBER
OF THE ITEMS ON THE SCORE SHEET ARE
SCORED SUBJECTIVELY. SCORED BY LOAN OFFICERS BASED UPON
THE REVIEW OF THE APPLICATION. WE
FOUND FRANKLY; SOME OF THOSE LOAN OFFICERS WERE PRETTY GENEROUS IN THE POINTS THAT
THEY PROVIDED.
FOR EXAMPLE; OFFICERS COULD GIVE POINTS FOR
ECONOMIC VULNERABILITY; COMMITTEES THAT
MAYBE PARTICULAR SPECIALTIES BECAUSE THEY ARE
ECONOMICALLY VULNERABLE. [INAUDIBLE]
COTTAGE GROVE PLYMOUTH LAKEVILLE; EGAN;
RECEIVED BOTH
POINTS FOR THAT ECONOMIC VULNERABILITY SCORE
DESPITE THE FACT THAT THEIR
MEDIAN INCOME HOUSEHOLD INCOME IS FAR HIGHER THAN THE
STATE AVERAGE. LASTLY; IT SOMETI
MES SEEMED TO US AS IF DEED MADE DECISIONS BEFORE IT EVEN SCORE THE APPLICATIONS. QUITE A
FEW CASES DEED TOLD BUSINESSES
IN WRITING THAT THEY WERE
PROVISIONALLY APPROVED FOR THE
FUNDING INCLUDING THE
AWARD AMOUNTS AND WHETHER
OR NOT THE AWARDS WERE GOING TO BE FORGIVEN OVER THE SCORING PROCESS STARTED. NOW THOSE
LETTERS DID
USUALLY INDICATE THAT THE WORD WAS CONTINGEN
T UPON DEED SCORN AND APPROVAL OF THE APPLICATION BUT OUR REVIEW OF INTERNAL
DEED FILES SUGGESTED THAT DEED
STAFF OFTEN USE THESE AT DEPARTMENT LIMITS
THAT THE DEPARTMENT OFTEN FOLLOWS THROUGH ON IN ONE INSTANCE FOR EXAMPLE; THERE WAS
A
BUSINESS WHERE DEED ISSUED A PRESS RELEASE SAYING THAT THE BUSINESS WOULD RECEIVE A
$1 MILLION
FORGIVABLE LOAN FOUR MONTHS PRIOR TO THE SCORING IN
THE AWARDING OF THAT LOAN BY
DEED OFFICIALS.
DEED’S CRITERIA FOR
THE SECOND TWO DECISIONS HOW MUCH MONEY
TO PROVIDE AND WHETHER OR NOT THOSE
AWARDS WOULD BE FORGIVEN
WERE FRANKLY; A LITTLE BIT OF A MYSTERY TO US TO BE HONEST.
DEED DOES NOT PUBLISH ITS
DECISION-MAKING CRITERIA.
THERE ARE INTERNAL
WRITTEN CRITERIA THAT THE
PERMIT USES BUT WHEN WE WENT THROUGH A LARGE NUMBER OF FILES WE FOUND THAT MOST OF THEM DIDN’T FOLLOW THOSE
INTERNAL CRITERIA. THERE WAS NO DOCUMENTATION IN THE
FILE EXPLAINING WHETHER SCRIPTURE HAD NOT BEEN FOLLOWED AND WHY
ADDITIONAL MONEY
HAVE BEEN GIVEN OR NOT ADDITIONAL MONEY HAD BEEN GIVEN. WHEN
WE ASKED DEED STUFF ABOUT HOW TO MAKE DECISIONS THEY MADE A POINT OF SAYING THERE IS NO
ALGORITHM THAT EVERY WORD
IS UNIQUE EVERY BUSINESS HAS UNIQUE
SITUATION AND CONSEQUENTLY EVERY WORD IS
DECIDED INDEPENDENTLY
ON THE JUDGMENT OF
DEED STAFF. HOWEVER; DEED DID NOT DOCUMENT THE REASONS FOR ANY OF THE JUDGMENTS IN THE FILES THAT
WE REVIEWED.
THEY JUST PROVIDED THE BUSINESSES
THE MONEY. AS YOU MIGHT EXPECT FROM A FAIRLY
SUBJECTIVE PROCESS
WE FOUND THERE WERE SOME SUBSTANTIAL DISCREPANCIES FROM ONE PROJECT TO THE NEXT. IT
WAS NOT CLEAR TO US FOR EXAMPLE JUST TO TAKE AN EXAMPLE
THAT WE PUT UP ON THE SLIDE HERE; WHY WE HAVE TWO PROJECTS HERE. ONE IN MAPLE GROVE;; 31 JOBS; $27 AN
HOUR AVERAGE WAGE FOR
THOSE JOBS IN THAT PROJECT RECEIVED $700;000
HOLY FORGIVEN THE BUSINESS TO NOT HAVE TO PAY THE MONEY BACK ASSUMING AND MET
ITS PARTICLES. YET WE HAVE ANOTHER BUSINESS
IN DELANO
A LITTLE LOWER IN TERMS OF THE AVERAGE WAGE
. RECEIVED A SEVEN AND $50;000
AWARD WITHOUT AWARD WAS NOT FORGIVEN AT A WALL.
THAT COMEDY WILL BE PAYING ALL THAT MONEY BACK TO THE STATE. WE DO
NOT SEE A LOT OF DOCUMENTATION
OR SUPPORT FOR WHY DIFFERENT BUSINESS WERE RECEIVING SUCH
INCONSISTENT OUTCOMES.
[INAUDIBLE] WE RECOMMEND
THE LEGISLATURE
PUT EXPECTATIONS LIKE THAT INTO LAW.
THE LEGISLATURE
SHOULD REQUIRE DEED TO BUBBLY SPECIFY
THE CRITERIA THAT HE USES
TO DETERMINE WHICH BUSINESSES WILL RECEIVE
SPEED AFFORDS; HOW MUCH THEY
RECEIVE AND WHETHER OR NOT THOSE LOANS WILL BE FORGIVABLE.
IS WHAT YOU SHOULD GIVE SPECIFIC ENOUGH
IS WHEN
NO INSUFFICIENT DETAILS ABOUT A PROJECT BE
FORE HIM OUGHT TO BE ABLE TO COME UP WITH A REASONABLE PREDICTION OF
HOW MUCH MONEY THE STATE
WOULD PROVIDE. IN ADDITION TO OUR CONCERNS ABOUT THE
WAR DECISIONS; HE ALSO THOUGHT THAT
SOME OF DEED’S
ADMINISTRATIVE PROCEDURES COULD BE IMPROVED.
FOR EXAMPLE; BUSINESSES AGREED
TO HIRE A CERTAIN NUMBER OF
INDIVIDUALS AND MAKE A CERTAIN NUMBER OF INVESTMENTS IN ORDER TO RECEIVE A>>REPRESENTATIVE METSA: LOAN HOWEVER WE IN SOME
INSTANCES BUSINESSES
YOU HAVE THE TECH BUSINESS OBLIGATIONS WE FOU
ND WHEN BUSINESSES APPLY TO THE PROGRAM THEY OFTEN SAID THEY WOULD PAY FAIRLY
HIGH WAGES AND THOSE THAT AMENDMENT MADE
ITS DECISIONS ABOUT
WHAT TO PROVIDE THOSE BUSINESSES BASED IN PART ABOUT THE WAGES THE BUSINESSES SAID THEY WOULD PROVIDE IN THEIR
APPLICATIONS. HOWEVER; IF YOU LOOK IN
THE REPORT THAT WE PROVIDE YOU
ON PAGE 58; YOU CAN SEE THAT THE DIFFERENCE BETWEEN WHAT THE BUSINESS
IS PROPOSED AND WHAT DEED ACTUALLY REQUIRED WAS OFTEN
QUITE SUBSTANTIAL. TAKE
FOR EXAMPLE
CYTEC ENGINEER MATERIALS
IN WINONA; WHICH PROPOSED IT WOULD
PAY EMPLOYEES $25
AN HOUR BUT THEN THE LOAN AGREEMENT THAT THE
BUSINESSES SIGNED WHICH WAS ACTUALLY
THE REQUIREMENT THAT HAD
TO MEET IN ORDER TO RECEIVE
THE MIFFUNDING WILL REQUIRE THE COMPANY TO PAY
THE BOYS A MINIMUM
THE BOYS A MINIMUM OF $12.45
AN HOUR. LITTLE
FURTHER DOWN BUT THE FEDERAL PROVIDE MEDICAL PROPOSE
IT WOULD
PAY $41 AN HOUR AND THAT WAS THE BASIS UPON
WHICH DEED MADE THE AWARD IT MADE TO
THE
COMPANY. YET; THE LEGAL AGREEMENT ONLY REQUIRE THE COMPANY TO PAY $70.50
AN HOUR TO ITS EMPLOYEES. SO GENERALLY
; WE THINK THAT DEED OUGHT TO TIGHTEN ITS ADMINISTRATIVE
PROCEDURES. LASTLY;–
SORRY – I HAVE ONE MORE SLIDE ON THIS.
WE DIDN’T WANT TO POINT OUT THAT ONE THING DEED HAD I DONE
REASONABLY WELL AS TO LIMIT THE FINANCIAL RISK TO THE
STATE. D
EED HAS BEEN A PRETTY DECENT JOB RECORDING COLLATERAL TO MAKE SURE THAT BUSINESSES CAN PAY BACK THE LOAN
THEY RECEIVED AND WE ALSO NOTED THAT DEED WAS
PRETTY DILIGENT IN FOLLOWING UP
ON COMPANIES HAD
NOT MET THEIR OBLIGATIONS UNDER THOSE
LOAN AGREEMENTS AND REDUCE THE
SIZE ALONE TO REQUIRE THE COMMITTEES TO PAY MONEY BACK TO THE STATE SO WE DID WANT TO GIVE CREDIT ON
THAT ACCOUNT. NOW; LESSIG AND I WANT TO
TALK ABOUT ONE ADDITIONAL RECOMMENDATION THAT
WE HAVE FOR THE LEGISLATURE.
MR. ALSO NOTED; MIF LOANS
REQUIRE
THAT PARTICIPATE PAY A MINIMUM; STATION LEVEL TO THEIR
EMPLOYEES; 110% OF THE FEDERAL
POVERTY GUIDELINE FOR A FAMILY
OF FOUR.
THIS PROVISION IN THE STATUTE IS VERY
AMBIGUOUSLY WORDED. IT’S NOT CLEAR EXACTLY HOW IT OUGHT TO
BE INTERPRETED. IT’S NOT CLEAR
WHETHER THE APPLIES TO
ONLY NEWLY HIRED EMPLOYEES BUT ALL BUSINESS EMPLOYEES. IT’S NOT CLEAR HOW LONG BUSINESSES ARE BOUND BY
THIS PROVISION. AND BECAUSE THE PROPERTY GUIDELINES CHANGES OF YOUR IS NOT QUITE CLEAR WHICH
HE OR POVERTY GUIDELINE OUGHT TO BE ENFORCEABLE FOR A
PARTICULAR BUSINESS. SO; WE
STRONGLY ENCOURAGE OR RECOMMEND
THE LEGISLATURE
CLARIFY THAT PROVISION IN THE STATUTE TO MAKE IT
CLEAR WHAT INSTANCES ARE ACTUALLY BOUND BY
WITH REGARD TO THAT MINIMUM
COMPENSATION REQUIREMENT. WITH THAT MR. CHAIR
WE ARE WITH OUR PRESENTATION AND WE ARE VERY HAPPY TO TAKE QUESTIONS
FROM LEGISLATORS.
>
>CHAIR GAROFALO: THANK YOU VERY MUCH. BEFORE WE MOVE ON TO QUESTIONS AND COMMENTS FROM MEMBERS OF THE COMMITTEE I DO KNOW COMMISSIONER HARDY IS HERE

IS AGE-APPROPRIATE TO GIVING HER AN OPPORTUNITY TO ADDRESS THE COMMITTEE IF SHE SO CHOOSES
IF NOT PRESENT
A FABIAN WILL SUBPOENA HER AGAIN. [LAUGHIN
G] WELCOME TO THE COMMITTEE ONCE AGAIN. PLEASE RESTATE YOUR NAME FOR THE RECORD AND PROCEED WITH YOUR TESTIMONY.>>TESTIFIER: GOOD
AFTERNOON EVERYONE. MR.
JENNER MEMBERS OF THE COMMITTEE THINK THE OPPORTUNITY TO SPEAK WITH
YOU TODAY. TO RESPOND
TO THE MINNESOTA INVESTMENT FUND
PROGRAM EVALUATION. FOR THE RECORD BY NAME IS CHANTEL HARDY; THE COMMISSION OF THE MINNESOTA DEPARTMENT OF EMPLOYMENT AND ECONOMIC DEVELOPMENT. DEED
FOR SHORT. I THINK THE OFFICE OF
LEGISLATIVE AUDITOR
FOR INTERVIEW AND EFFORTS WITH US THE COMPLEXITY AND IMPACT OF THE MINNESOTA
INVESTMENT FUND ALSO CALLED SUBPOENA
FOR SURE.2011 MIF HAS PROVIDED FUNDS TO
MORE THAN 100 BUSINESS HELPING THEM IS
PROJECTED 8400 QUALITY JOBS THROUGHOUT THE STATE LEVERAGING
MORE THAN $1.5 BILLION IN
PRIVATE INVESTMENT. DEED HAS INVESTED 53 MY DOLLARS IN THIS PROJECT REPRESENTING A LEVERAGE
OF NEARLY 32 ONE. THIS
EXCLUDES THE POST
HOLDINGS PROJECT WHICH THE AUDITOR REFERRED TO
IN THEIR CITED
REPORT. STILL; A GOOD RETURN ON INVESTMENT FOR
THE STATE. MINNESOTA’S
INCENTIVE PROGRAM LIKE MIF
ARE MODEST TO FINANCE PROGRAMS AVAILABLE IN
OTHER STATES HOWEVER THEY REMAIN
CRITICAL COMPONENTS OF THE COMMUNITY AND
BUSINESS COMPETITIVENESS PLAY
KEY ROLE IN
BUSINESS EXPANSION
AND RELOCATION DECISIONS ESPECIALLY IN
GREATER MINNESOTA. BUSINESSES HAVE
MANY OPTIONS WHEN CONSIDERING NEW OR
EXPANDING OPERATIONS MIF
SERVES AS A NECESSARY INCENTIVE TO
COMPETE AGAINST OFFERS FROM
OTHER STATES TO SPUR INVESTMENT IN MINNESOTA IS WAS CRITICAL
FINANCING TOOLS FOR BUSINESSES THAT ARE ALREADY HERE BUT ONE TO
GROW. AS THE REPORT NOTES; DEED CONTINUES TO DO A GOOD
JOB MAINTAINING MANAGING THE
PROGRAM FINANCES
AND THERE’S LITTLE RISK TO
STATE FUNDS. WE CONTINUE
TO HAVE SOUND INTERNAL CONTROLS AND ENSURE FUNDS ARE
MANAGED PROPERLY
WITH WELL CONSTRUCTED LEGAL DOCUMENTS AND EFFECTIVE
CLAWBACK PROCESSES WHEN BUSINESSES DO NOT MEET THE
PERFORMANCE COMMITMENTS.
DEED HAS MANY MANY IMPORTANT IMPROVEMENTS TO
PROGRAM ADMINISTRATION
AND TRANSPARENCY INCLUDING INVESTMENT AND
NEW TECHNOLOGY TO BETTER MANAGE
OUR TRANSACTIONS. TWO NOTES; WITH RESPECT TO THE
AUDITOR’S REPORT THERE WERE A NUMBER OF PROJECTS
SELECTED BEFORE WE MA
DE IMPROVEMENTS TO
OUR TECHNOLOGY AND OUR PROTOCOLS AND SO
THOSE PROJECTS WITH RESPECT
TO THE OVERSIGHT DO NOT
REFLECT THAT. I WILL SAY THAT WE
ARE DISAPPOINTED THAT THE OVERLAY DOES NOT HIGHLIGHT THESE
IMPROVEMENTS NOR RECOGNIZE OUR COMMITMENT TO CONTINU
OUS IMPROVEMENT. MOREOVER MANY OF THESE IMPROVEMENTS ADDRESS THE
REPORTS RECOMMENDATIONS SOME OF WHICH WERE BASED ON
PROJECT ACTIVITY OCCURRING PRIOR TO IMPLEMENT SENDING
THESE IMPROVEMENTS. MANY OF THESE ISSUES IDENTIFIED IN THIS REPORT HAVE BEEN ADDRESSED
BY DEED AND WILL BE
SOLVED WITH MANY MINOR ADJUSTMENTS. I WILL
ALSO SAY WE ARE SURPRISED THAT THE REPORT MAKE
CONCLUSIONS ON THE VALUE OF MIF WITHOUT DISCUSSING TRANSACTIONS WITH THE INDIVIDUAL BUDGETS WERE SPEEDY. ANY PROJECTS
ON ITS OWN CANNOT PROVIDE PERSONAL INSIGHT
AND DYNAMICS OF THE VALUE OF MIF THAT ARE GAINED
THROUGH DISCUSSION
WITH PARTICIPANTS; WITH COMMUNITY LEADERS WITH
ELECTED MEMBERS.
WE OFTEN SPEND MONTHS IF NOT YEARS WORKING WITH BUSINESSES AND COMMITTEES PRIOR TO
APPLICATIONS
TO ENSURE THAT THOSE PROJECTS ARE VIABLE
PROJECTS. PROJECTS OF GUINEA AND BUSINESSES ARE STRONG SUPPORTERS OF THE PROGRAM GET THE
REPORT MINIMIZES THEIR PERSPECTIVE
AND HIGHLIGHTS USE FROM A SMALL NUMBER
OF INTERVIEWS WITH LOCAL
GOVERNMENT OFFICIALS.
MIF HAS BEEN THE
GAME CHANGER ONLY PROJECTS THROUGHOUT
THE YEAR. I WILL CONCLUDE
BY REITERATING MY APPRECIATION OF
THE RECOMMENDATIONS OF
THE OLA LOOK FORWARD TO IMPROVING
THE PROGRAM EVEN FURTHER USING
THE REPORT AS WE
HAVE DONE WITH PAST OLA REPORTS.
WE ARE COMMITTED TO CONTINUING TO HELP
BUSINESSES GROW AND CREATE JOBS FOR MINNESOTANS
UTILIZING IMPORTANT TOOLS SUCH AS MIF.
THANK YOU AGAIN FOR THE OPPORTUNITY SPEAK AND WITHOUT I’M HAPPY TO ANSWER ANY QUESTIONS.>>CHAIR GAROFALO: VERY
MUCH COMMISSIONER ENCINO;
SIR QUESTIONS FOR YOU THANKS AGAIN FOR BEING AVAILABLE AND THANKS FOR THE RESPONSE
TO THISMEMBERS; AND THE REPORT ITSELF THERE’S A
MORE DETAILED RESPONSE FROM THE COMMISSION AS WELL. SO THANK YOU AGAIN.
SO WE WILL NOW GO
BACK TO WEBER’S COMMENTS AND QUESTIONS.
REGARDING THE OLA REPORTED
REPRESENTATIVE MAHONEY>>REPRESENTATIVE MAHONEY:
I DO NOT A GOOD CHANCE TO REA
D THE WHOLE REPORT I GOT THROUGH ABOUT TWO THIRDS OF THE ROPE
OF IT SO YOU ARE NOT THE ONLY ONE THAT HAD SOME FUN THIS AFTERNOON OR TODAY. I AM
NOT SURE IF THIS IS HAVING THERE’S SOME THINGS IN THE REPORT
I WHOLEHEARTEDLY
AGREE WITH. THERE’S OTHERS I WISH
REPORT WOULD HAVE BEEN ABLE TO BEEN
ABLE TO-BROADEN ITS SCOPE.
THE MIF PROGRAM AS COMPARED TO WHAT OTHER STATES DO
AND RESTRICTIONS ON THOSE
PARTICULAR PROGRAMS AND I’VE MADE
A POINTOVER THE 20 YEARS HAVE BEEN HERE TO TAKE A
LOOK AT WHAT OTHER STATES WHETHER THEY ARE SOUTHEAST OR NORTHEAST
OR THE WESTERN PART OF AMERICA
AND LET’S JUST
SAY THAT THEY ARE A BIT LOOSE ON THE
REQUIREMENTS ALSO.
I’M BEING REALLY REALLY KIND TO
MANY PLACES.
WHEN A GOVERNOR HAS SHOWN UP WITH
THE STATE CHECKBOOK ONCE OR TWICE FROM
OTHER STATES
. BUT I DON’T DISAGREE. WE DO NEED TO HAVE
MORE UNDERSTANDING OF
WHAT IS-WHAT MIF IS
DOING AND WHERE IT IS WORKING. TOO MANY OF
THE REQUIREMENTS
THE CHANGES THAT HAVE BEEN RECOMMENDED IN THE
LOCAL INVOLVEMENT
; SOME OF THE WAGE; THE JOB NUMBERS; WE
HAVE TRIED. WE HAVE TRIED
VERY HARD SOME OF US HAVE TRIED VERY
HARD TO MAKE
THESE CHANGES OVER THE LAST 15 YEARS. BECAUSE OF
POLITICAL PRESSURE
FROM MEMBERS WITHIN THE TWO CHAMBERS HERE
HAVE FAILED OBVIOUSLY; THESE
PARTICUL
AR PROGRAMS DON’T RISE TO THE LEVEL OF FRONT-PAGE NEWS THAT WE ALL LIKE TO GET
AND WHEN YOU DO REFORM IF
ONE PERSON IN THESE TWO CHAMBERS
IS UPSET THAT CAN REALLY PUT A
SAND IN THE WHEELS. BUT I
WHOLEHEARTEDLY UNDERSTAND AND WOULD LIKE TO SEE SOME OF
THESE CHANGES THAT HAVE BEEN
PROPOSED HERE I
AM HAPPY; IF THE CHAIR IS INTERESTED IN DOING SOME
OF THESE HAPPY
TO PUT IVAN BRING UP SOME OF MY
OLD BILLS PROBABLY ADDRESS MOST
OF THESE-WELL SOME OF THESE ISSUES.
THEN; ONE LAST
FINAL COMMENT. REPORT DOES TALK ABOUT-THEY USE
NICER WORDS BUT THE HYPERBOLE OF
ENLARGING THE NUMBERS
AND MOST OF US THAT BEEN HERE MORE THAN A COUPLE OF YEARS
WHEN THE DEPARTMENT’S COME IN AGENCIES
COME IN; WHEN ORGANIZATIONS
COME IN CLAIMING THAT THEY
HAVE DONE
WONDERFUL WORK THEY THE NEXT BEST THING TO
SLICED BREAD WE DO TEND TO TAKE SOME OF THOSE WITH A GRAIN OF
SALT. CLAIMING $1.2 BILLION MIGHT BE A LITTLE BIT OF A
STRETCH BUT WE ARE USED TO
EXAGGERATED CLAIMS AROUND THIS PARTICULAR
COMPLEX APPEARED. SO
MUCH OF WHAT IS BROUGHT FORTH IN
THIS REPORT IS NOT UNKNOWN IT HAS NOT
-PEOPLE HAVE TRIED TO FIX SOME OF THESE PARTICULAR PROBLEMS
BUT BECAUSE OF POLITICAL
PRESSURE WHERE FROM A
PARTICULAR ORGANIZATION OR ONE OF OUR
COLLEAGUES APPEAR HAVE NOT BEEN ABLE TO GET SOME OF THOSE THINGS DONE. BUT AGAIN;
THIS HIGHLIGHTS WHAT AND HOW WE CAN FIX SOME OF THESE PROGRAMS
AND
IF THERE’S A WILL AND BACKBONE TO DO THAT AND TAKE ON SOME OF
THESE INSTITUTIONS THAT COME AND TELL
YOU THAT IF YOU CHANGE THIS WE WILL ALL GO DOWN AND BURN
IN HELL; WE COULD DO A
BETTER JOB WITH THE MONIES THAT WE HAVE.
SO MR. CHAIR THAT’S ALL MY COMMENTS
FOR TODAY.>>CHAIR GAROFALO: THANK YOU.
REPRESENTATIVE VOGEL>>REPRESENTATIVE VOGEL: THANK YOU MR. CHAIR
NOT SURE MAYBE THE QUESTION GOES TO MS. HARDY
OR TO OLA
. ONE OF THE THINGS THAT REALLY CONCERNS ME HERE IS
THE SUBJECTIVITY
OF HOW THE LOANS ARE BEING MADE. FIRST
GOT MY ATTENTION WAS THAT
AS FUNDING HAS GONE U
P THE AMOUNT OF FORGIVENESS IS ALSO GONE UP.
THAT BOTHERS ME FROM THE
STANDPOINT THAT
IF INDEED IT WAS A GOOD IDEA TO HAVE PEOPLE PAYING IT BACK WHEN THE FUNDING
WASN
‘T THERE AND WE’RE TAKING TAXPAYER MONEY AND WERE PUTTING MORE MONEY INTO THIS THEN
ARE THE CRITERIA FOR THE FORGIVENESS
BEING MORE SUBJECTIVELY APPLIED AND MORE LIBERALLY
APPLIED BECAUSE IS MORE MONEY THERE TO DO
IT? SO WHAT THAT DRIVES IS THIS
IDEA OF THE SUBJECTIVITY OF HOW THESE THINGS ARE BEING DONE AND WHAT I’M READING IN THE RESPONSE
IS THAT THE DEPARTMENT IS
IMPLEMENT IT PROVISION SEVERAL
YEARS AGO TRULY
OVERCOME THIS AND THAT’S WHY I DO NOT KNOW
IF MAYBE MS. HARDY MIGHT BE
A BETTER PERSON TO ASK THAT TO
THAN YOURSELVES BUT IT MAY BE
FIRST THOUGH
IF YOU WANT TO GIVE A LITTLE
MORE DETAIL ON ANYTHING THAT I SET TO FILL IN
THAT BLANK?
>>TESTIFIER: THANK YOU FOR
THE QUESTION. I THINK
THAT ONE OF THE THINGS THAT WE STRUGGLED WITH INTRAVENOUS EVALUATION WAS
IN TRYING TO DETERMINE
WHY THE DEPARTMENT MADE SOME OF THE DECISIONS THAT
ARE MADE. THAT WAS IN PART DUE TO THE LACK OF DOCUMENTATION THAT WE WERE ABLE TO FIND IN THE FILES
IN TERMS OF WELL WHY WAS IT
$400;000 OR WHY WAS IT TOO
DIFFICULT WERE ANYTHING LIKE THAT.
THE DEPARTMENT CAN CERTAINLY SPEAK FOR ITSELF BUT WE DID AS
K THE DEPARTMENT SOME OF THESE QUESTIONS AND THEY
GIVE US A NUMBER OF DIFFERENT ANSWERS ONE
CERTAINLY BEING THAT YES; WHEN THIS LITTLE MORE MONEY AVAILABLE AND MAKES IT POSSIBLE
FOR THEM TO HAVE A WIDER ARRAY OF THINGS THEY MAY OFFER TO
COMPANIES. ANOTHER THING
THEY SAID
IS THAT IT IS THE CASE THAT THERE ARE NOW A FAIR
NUMBER OF CONSULTANTS O
UT THERE WHO ARE CONSULTING
WITH COMPANIES AND SUGGESTING
TO THEM THAT THEY TRY AND
PUSH FOR A FORGIVABLE LOAN BECAUSE THEY
KNOW THAT THE CONSULTANTS KNOW
FROM HAVING
DONE MANY OF THESE THEY ARE AVAILABLE
IN A WAY THAT COMPANY WHO’S
COMING TO DEED FOR THE FIRST TIME
MIGHT NOT HAVE THAT SAME KNOWLEDGE.
AND
I THINK THE OTHER THING THAT
MAY ALSO THAT DEED WOULD ALSO SAY IS PERHAPS THAT THERE
HAS BEEN SOMEWHAT
STRONGER DEMAND FOR THE
MIF PROGRAM AS THE ECONOMY
HAS IMPROVED. THERE’S MORE BUSINESSES WANTING
TO GROW THAN THE WERE MAYBE 7-8
YEARS AGO. THAT BEING SAID;
THOSE ARE BROAD
CHARACTERIZATIONS THAT THEY HAVE MADE TO US WE COULD NOT
SUBSTANTIATE THEM BY LOOKING
; FILE BY FILE; AND GOING THROUGH ALL THE DOCUMENTATION THAT DEED
HAD PROVIDED. SO THAT IS AN EXPIRATION IT PROVIDED TO US THEY MAY BE ABLE TO GIVE Y
OU MORE DETAILS ON THAT TYPE OF EXPEDITION BUT WHAT I CAN SAY IS THAT FROM OUR PROCESS
OF REVIEWING THESE PROJECTS IN
GREAT DETAIL
WE WERE NOT ABLE TO SUBSTANTIATE THOSE REASONS BECAUSE THEIR SUMMARY WASN’T DOCUMENTATION TO WHY THE DECISIONS WERE
BEING MADE.>>CHAIR GAROFALO:
REPRESENTATIVE VOGEL>>
REPRESENTATIVE VOGEL: AS A FOLLOW-UP MS. HARDY MIGHT HAVE SOMETHING TO SAY
ABOUT THAT; I’M NOT SURE?
[INAUDIBILE / OFF MIC] I LEAVE THAT
FOR THE PERSON OVER THERE.
WHAT I’M LOOKING AT IS
YOUR RESPONSE AND ITEM
NUMBER TWO. WHERE IT SAYS THE LEGISLATORS SHOULD REQUIRE
STRONGER ASSURANCES AND YOU SAY THAT A PERMANENT HAS ALREADY IMPLEMENTED
PROVISIONS SEVERAL YEARS AGO TO ADDRESS THEM. I’M
JUST CURIOUS BECAUSE IT BOTHERS
ME THAT IT
IS SUBJECTIVE; WHAT YOU HAVE ACTUALLY DONE
THEN THAT TO OVERCOME I GET SOME OF THE DIFFICULTIES THAT WERE
JUST EXPLAINED?
>>TESTIFIER: JUST A COUPLE
FOUNDATIONAL PIECES. WITH RESPECT TO THE FILES THAT
THE OLA POLLED PORTALS WERE PULLED
FILES AND THEY WERE NOT ALL OF
THE MIF
FILES. SO THESE RECOMMENDATIONS A
RE GENERALIZED OVER A SAMPLE.
MANY OF THE COMMENTS THAT WE PUT
IN PLACE WERE IN
2015 WITH RESPECT TO THE FACTORS THAT WE CONSIDER
OUR HIGH LEVEL OF CAPITAL
EXPENSES; HIGH LEVEL OF
JOB CREATION ECONOMICALLY DISTRESSED AREA OR SIMILAR
DISTRESSED FACTORS
IN LIKELIHOOD OF EXPANSION LOCATING OUTSIDE OF
THE STATE. SO THOSE ARE THE FACTORS THAT WE PUT IN PLACE AND WE
WORK THROUGH AND TO THE
TESTIFIERS COMMENTS; RELATED TO
THE RESPONSES THAT HE RECEIVED FROM OUR TEAM OF THOSE ARE ACCURATE IN TERMS OF WHAT GOES INTO
THE GUIDANCE WITH RESPECT TO
LOAN FORGIVENESS.>>REPRESENTATIVE VOGEL:
AS A FOLLOW-UP
MR. CHAIR;I CAN FIND IT RIGHT NOW. AS I WAS GOING THROUGH THIS IT SEEMS TO ME THERE WAS A
SIDE-BY-SIDE COMPARISON
OF TWO COMPANIES THAT WERE OF SIMILAR NATURE.
NOT SURE WHERE IT IS IN
THE REPORT.[INAUDIBILE / OFF MIC]
>>TESTIFIER: PAGE 54
>>REPRESENTATIVE VOGEL: 54 COME OKAY. THEY LOOK VERY SIMILAR TO ME
WHEN I WAS GOING THROUGH
THIS THING THAT’S WERE I
WAS WONDERING WITH THE QUESTION ON THE SPECIFICS
ON THE PROCESS HAS BEEN PUT IN
THE CRITERIA THAT’S BEEN PUT IN
I WOULD ASSUME A POLICY THAT PEOPLE ARE FOLLOWING.
>>TESTIFIER: I’M GOING TO HAVE
DEPUTY COMMISSIONER
KEVIN MCKENNAN;; AND BE ABLE TO SPEAK TO THE SPECIFICS OF
THAT EXAMPLE.>>
CHAIR GAROFALO: WELCOME TO THE COMMITTEE. THE STATE NAME FOR THE RECORD AND PROCEED WITH YOUR TESTIMONY.>>TESTIFIER:
KEVIN MCKENNAN. IN RESPONSE TO THE QUESTION
I BELIEVE WAS A SIDE-BY-SIDE
OF [INAUDIBLE]
IN DELANO AND PRICE MECHANICAL IN MAPLE GROVE
. THOSE TWO PROJECTS IN
PARTICULAR; SO PRO WAS DOING A
LOCAL EXPANSION
OBVIOUSLY AND PRICE MECHANICAL IS NOT
LOCATED HERE. PRICE MECHANICAL WAS BASED OUT OF
WINNIPEG ACTUALLY. WITH OPERATIONS IN
ARIZONA AND ONE
OTHER STATE I DON’T RECALL OFF THE TOP OF MY HEAD.
THROUGH THE NEGOTIATIONS AND THROUGH
THE WAY THAT WE WORK WITH PROJECTS AND COMMUNITIES IT JUST SO HAPPENED THAT
THIS COMPANY REQUIRED OR
WANTED FORGIVENESS OF THIS
LOAN OTHERWISE; IT WAS GOING TO GO
SOMEWHERE ELSE. SO IN
THIS CASE THIS IS SORT OF AN
EXAMPLE OF WHAT WE HAVE DONE TO MAKE
THIS HAPPEN
IN MINNESOTA.>>REPRESENTATIVE VOGEL:
I APPRECIATE THAT. I GUESS WHAT I WAS LOOKING FOR RELATIVE TO THE
RESPONSE IS
I WOULD ASSUME THEN THERE IS NO WRITTEN
POLICY THAT GIVES POINTS OR WHATEVER SO THAT THIS IS OBJECTIVELY DONE
RATHER THAN SUBJECTIVELY DONE? I THINK THAT’S WHAT I WAS GETTING AT HERE.
>>TESTIFIER: GENERALLY; WE
HAVE GUIDELINES THAT THE AUDITOR HAS TALKED ABOUT
THAT REPRESENT
THE AMOUNT OF FORGIVENESS BASED ON THE AMOUNT OF J
OB CREATION. CERTAINLY WITH WAGES IN THOSE TYPES OF
THINGS GOING INTO THAT EVALUATION.
IN SOME CASES LIKE THIS; THERE
IS SOME
; AS THE AUDITOR HAS POINTED OUT; THERE ARE SOME
FLEXIBILITY ON OUR
BEHALF TO MAKE
THAT HAPPEN. AND IN SOME CASES LIKE THIS;
THAT IS THE DETERMINATION THAT ULTIMATELY
WAS MADE.
>>CHAI
R GAROFALO: REPRESENTATIVE VOGEL LAST ONE.
>>REPRESENTATIVE VOGEL: IF I GUESS IF I GOT SOME COMMENTS ON THE; BUT FOR. IT SEEMS LIKE A LEGITIMATE THING THAT SHOULD BE IN HERE BECAUSE THIS IS
TAXPAYER MONEY ESPECIALLY
WITH FORGIVENESS IS BASICALLY
A TRANSFER OF PAYMENTS PROBABLY FROM A BUSINESS
WHOSE PAIN THE TAXES TO
A BUSINESS THAT’S RECEIVING
THE MONEY. SO YOU WOULD WANT TO MAKE
SURE THAT INDEED; THEY HAVE TO
HAVE THIS HAVE YOU ADDRESS
THE; BUT-FOUR BUT ARE YOU CONSIDERING DOING SOMETHING LIKE THAT IN POLICY
PROCEDURE SO IT’S WELL-DEFINED?
>>TESTIFIER:
YOU WILL LIKELY NOTE THERE ARE
OTHER PROGRAMS THAT HAVE BEEN CREATED
THROUGH DEED AND HIS
REPRESENTATIVE MAHONEY I DISCUSSED WE HAD TALKED ABOUT THAT IN FRONT OF
THIS COMMITTEE OVER THE YEARS.
THIS IS ONE PROGRAM THAT DOES
NOT REQUIRE
OBVIOUSLY THAT INTERNALLY; YES; WE TRY TO STICK TO OUR GUIDELINES
AND TO WHAT IS REQUIRED TO
TRY AND MAKE SOMETHING HAPPEN HERE
IN MINNESOTA. IN THIS CASE; THERE
IS NO SPECIFIC POLICY ON THAT
TO DATE>>CHAIR GAROFALO:
COMMISSIONER AND
DEPUTY COMMISSIONER; AS PART OF
THIS THAT MANY TIMES WHEN WERE WORKING WITH RECRUITING BUSINESSES IN LOOKING
AT OPTIONS THAT PART OF THIS IS
YOUR ALMOST A QUARTZITE NEGOTIATION WITH A BUSINESS
THAT SOMETIMES DIFFERENT BUSINESSES
ARE REQUESTING
DIFFERENT THINGS. IS THAT A COMPONENT
TO IT THAT IT IS DIFFICULT TO CODIFY OR PUT
IN POLICY?
>>TESTIFIER: MR. CHAIR; THAT
IS TRUE. THERE WAS A
MENTION ABOUT
THE HIRING OF CONSULTANTS. 40; BUSINESSES
ARE VERY
CURIOUS ABOUT OTHER LOCATIONS WHEN
THEY DO SPEND THAT KIND OF MONEY TO JUSTIFY
AND MAKE GOOD DECISIONS
ABOUT WHY
THEY OPERATE IN ONE STATE OR ONE LOCATION.
VERSUS ANOTHER. SO WHEN WE GET IN
THOSE SITUATIONS IT IS
COMPETITIVE. YES.>>CHAIR GAROFALO:
REPRESENTATIVE RARICK THEN
DOHMAN THEN EVEN
>>REPRESENTATIVE RARICK: AS
YOU DESCRIBED THE SCENARIO
HERE REGARDING THE
MECHANICAL CONTRACTOR BASED IN CANADA AND
THEN ARIZONA AND
MAYBE WONDER WHEN YOU’RE NEGOTIATING THIS
WITH THEM
AS PART OF YOUR DECISION ARE YOU ALSO LOOKING AT
IF WE GIVE THEM THE GRANT TO
MOVE IN ARE WE CONSIDERING
WHAT ADVERSE EFFECT THAT MIGHT ALREADY HAVE AN
EXISTING COMPANIES? BECAUSE THESE 31 JOBS THAT ARE CREATED MUCH IS
BECOMING FROM AN
EXISTING COMPANY.
>>TESTIFIER: THAT’S A VERY
GOOD QUESTION. THE ANSWER
IS; YES. THAT IS DEFINITELY TAKEN
INTO CONSIDERATION.
MECHANICAL CONTRACTOR
MIGHT BE THE WRONG TERM FOR
THIS COMPANY. THIS IS A TYPE OF COMEDY THAT
ACTUALLY MAKES THE
COOLING SYSTEMS THAT GO IN BUILDINGS AND THEY SELL THE PRODUCT ALL OVER
THE UNITED STATES AND ACTUALLY
THAT’S QUITE A
SIZABLE MARKET. WE HAVE SEVERAL OF THOSE TYPES
OF COMPANIES THAT ARE
HERE TODAY; GLOBAL COMPANIES; HERE IN
MINNESOTA
TODAY AND THERE IS A VERY LARGE MARKET THEY’LL
PARTICIPATE IN. THE
ABSOLUTELY DO TAKE A LOOK AT THAT
CONSIDER THAT WE GENERALLY
TRY TO STAY AWAY FROM BUSINESSES WHO ARE
REALLY DEPENDENT ON OUR
LOCAL MARKET
FOR SELLING THEIR PRODUCTS
AND SERVICES. WE ARE REALLY FOCUSED ON PEOPLE ARE TRYING TO SELL
THEIR PRODUCTS OUTSIDE OF
OUR STATE.>>CHAIR
GAROFALO: REPRESENTATIVE
LAYMAN>>
REPRESENTATIVE LAYMAN: MY QUESTIONS ARE FOR MR. MCKINNON
I GUESS. YOU KNOW I
RECOGNIZE THAT THE MIF FUN IS A
STAPLE OF DEED AND ITS IMPORTANT TOOL
FOR YOU
AND I ALSO RECOGNIZE THE ECONOMIC OF ELEMENT IS NOT
HEAVEN IT’S A
MESSY BUSINESS. IT DOES
INVOLVE LIKE THE CHAIR SAID; A LOT OF NEGOTIATION
AND SOMETIMES
NEGOTIATIONS ARE PRETTY HARD TO DOCUMENT
THE FILE. SO WHEN YOU GO THROUGH INTO AN AUDIT YOU DON’T SEE
THE INTRICACIES AND YOU DON’T SEE
THE CONTACTS. SO I JUST NEED TO SAY THAT AS A FORMER
ECONOMIC DEVELOPER. BUT A COUPLE OF QUESTIONS. I WONDER IF SOME OF THE PROBLEMS WITH
THE FLUCTUATION
IN THE AMOUNT OF
FORGIVABLE LOANS DOESN’T HAVE SOMETHING TO DO WITH THE
UNPREDICTABILITY OF THE FUNDING OF THE MIF?
SO MAYBE PART OF THE PROBLEM IS WE
DON’T HAVE LONG-TERM PREDICTABLE FUNDING
SO THAT IN
YEARS WHERE YOU ARE FLUSH; YOU FEEL
A LITTLE MORE FREE TO GIVE IVAN DO YOU KNOW I’M
TALK ABOUT? WONDERING IF YOU COULD MAYBE SPEAK TO THAT?
IF; WHAT UNCERTAINTY OF THE LEVEL OF FUNDING DOES TO
YOUR ADMINISTRATION OF A FUND
? NUMBER TWO IS;
I LOOK AT THE MAP OF HOW MANY LOANS ARE MADE IN THE LAST 9-10 YEARS COME I
SEE THAT NOT VERY MANY
ARE MADE IN THE GREATER MINNESOTA AREA.
SO I WAS KIND OF SURPRISED
TO SEE THAT DEED ADAMANTLY OPPOSES
THE IDEA OF GIVING
DIRECT LOANS. I DO KNOW THAT
THERE’S MANY SMALL COMMUNITIES OUT THERE THAT REALLY DO NOT HAVE
THE ABILITY TO MA
KE LOANS EVEN ADMINISTER THIS KIND OF MONEY AND SO THE MONEY SITTING THERE
IS UNUSED AND THAT’S BEEN A STRUGGLE THAT I’VE HEARD AGAIN
AND AGAIN IN SMALLER
COMMUNITIES. SO;
I WOULD LIKE YOU JUST TO SPEAK
TO THAT. WHY WOULD
YOU NOT-YOU CAN STILL DEVELOP RELATIONSHIPS WITH LOCAL COMMITTEES WITHOUT
LETTING RUNNING THE MONEY
THROUGH THEM. SO THOSE TWO QUESTIONS.
>>TESTIFIER:
THE UNPREDICTABILITY OF FUNDING
; IT’S BEEN FAIRLY PREDICTABLE
THE LESS COUPLE OF
YEARS BUT AS NOTED; IT WASN’T FOR
MANY YEARS. HAVING
SAID THAT; GENERALLY; WHEN WE ARE TALKING
TO BUSINESSES WE ARE NOT
STARTING WITH WE WILL GIVE YOU
FORGIVABLE LOAN. THAT
IS NOT WHAT WE DO. WE DO OUR BEST
TO TRY AND RECOUP ALL OF
THOSE FUNDS
BACK SO THEN WE CAN CONTINUE
TO LEND. OVER THE PAST NUMBER OF YEARS WE HAVE BEEN A
VERY GOOD
ECONOMIC ENVIRONMENT FROM AN
EXPANSION PERSPECTIVE WE HAVE CAPTURED A LOT HERE IN
THE STATE AND A LOT OF GOOD
THINGS HAVE [INAUDIBLE] FROM A GREATER
MINNESOTA PERSPECTIVE; A LOT OF THE PROVISIONS THAT
SEE WITHIN SOME OF THE OTHER PROGRAMS THAT
WE HAVE FOR MANY YEARS WE WERE NOT
-WE REALLY DID NOT DO MUCH IN THE METRO AREA.
I THINK THAT’S PRETTY
WELL DOCUMENTED AS WELL. AS
JOB LITERACY STARTED TO
AN END PRIOR TO THE JOB CREATION
FUND STARTING; MIF BECAME A LITTLE MORE OF A PROGRAM THAT WE WOULD
USE FOR THAT TYPE
OF FORGIVENESS BUT ALSO THAT AT
THAT TIME AGAIN WE WERE ON THE
WAY UP AND WE WERE HOPING TO CAPTURE AS MUCH AS WE COULD
OBVIOUSLY AND AS WE CAME OUT
OF THE RECESSION.
>>CHAIR GAROFALO:
REPRESENTATIVE FABIAN>>
REPRESENTATIVE FABIAN: THANK YOU MR. CHAIR.
I WISH PHILOSOPHICALLY WE DIDN’T HAVE TO HAVE MIF IN THE STATE
OF MINNESOTA. I REALLY DO. BUT
REPRESENTATIVE LAYMAN MADE THE
COMMENT ABOUT
LONG-TERM UNPREDICTABLE WELL I THINK IN MANY BUSINESS AREAS IN THE STATE OF MINNESOTA
THE ONLY THING THAT’S LONG-TERM
AND PREDICTABLE
IS HOW DIFFICULT IT IS TO DO BUSINESS IN
MINNESOTA. THE BUSINESS CLIMATE
IN MINNESOTA IS ONE
THAT’S RIPE FOR OTHER STATES TO COME AND PICK OFF COMPANIES THAT
ARE HERE. I HAVE THE GOOD FORTUNE
TO REPRESENT A COMEDY LIKE
DIGIT KEY. THE GOV. NORTH
DAKOTA
SET IN [INAUDIBLE]’S OFFICE AND TRY TO
RECRUIT HIM. THEY RECRUITED TO COME TO
OTHER STATES. I RESPECT
MR. NOBLES AND I HAVEN’T EXCELLENT
WORKING RELATIONSHIP AND I’M
NOT CRITICIZING THE REPORT BUT I
AM STATING COMPANIES TODAY ARE
ACTUALLY MOBILE.
WE ARE IN HIGHLY HIGHLY COMPETITIVE ECONOMIC DEVELOPMENT
MARKET. SOMETIMES
THE FLEXIBILITY THAT’S BUILT INTO
THE MIF PROGRAM AND
PROBABLY OTHERS IS SOMETHING THAT IS
MAYBE ESSENTIAL TO BEING ABLE
TO RETAIN AND RECRUIT BUSINESSES I
TALKED ABOUT DIGIT GIVE YOU HAVE THE GOOD FORTUNE TO
REPRESENT THEM I ALSO
REPRESENT POLARIS; ARE THE WINDOWS AND DOORS AND [INAUDIBLE].
IN ALL OF THOSE COMPANIES WE ARE STARTED BY SOMEBODY JUST
LIKE MR.-WHO HAD A VISION WHO HAD
A DREAM WHO HAD
AN IDEA. EVERY SINGLE ONE OF THOSE BUSINESSES HAVE BEEN THROUGH
ECONOMIC CYCLES
BUT THE OTHER THING THEY’VE ALSO DONE IS
ALSO GROWN AND EXPANDED THEIR
BUSINESS FOOTPRINT AND FROM
MY PERSPECTIVE; TOO MUCH OF THAT
BUSINESS
FOOTPRINT EXPANSION HAS COME OUTSIDE OF THE STATE
OF MINNESOTA. IT’S AN
WISCONSIN SPIRIT LAKE IOWA IT’S IN GRAFTON
NORTH DAKOTA IT’S IN FARGO NORTH DAKOTA IT’S IN
HUNTSVILLE ALABAMA
AND IT’S ALL OVER THE WORLD IN SOME CASES AND A LOT OF THOSE DECISIONS ARE MADE BECAUSE THAT’S WHERE THE MARKET IS
WHEN POLARIS MOVED TO POLAND IT’S BECAUSE OF THE EUROPEAN MARKET. I AM J
UST SIMPLY SAYING THAT WE NEED TO COME TO THE REALIZATION THAT
WE ARE IN A HIGHLY HIGHLY COMPETITIVE BUSINESS MARKET
AND SOMETIMES IT’S MESSY. ECONOMI
C DEVELOPMENT. I RESPECT THE WORK THAT THE LEGISLATIVE AUDITOR
BU
T I ALSO HAVE TO TELL YOU THAT THE DEPARTMENT OF IMPLEMENT ABOUT
ECONOMIC DEVELOPMENT WITH A DID TO HELP
US RETAIN
DIGIT KEY I CAN IMAGINE WITH DEEP THIEF
RIVER FALLS WOULD BE GOING TO TODAY IF DIGIT KEY HAD DECIDED TO MOVE IT WOULD BE ABSOLUTELY DEVASTATING. QUITE FRANKLY;
THE AMOUNT OF MONEY THAT WAS PUT INTO THE PROJECT OVER A TEN-YEAR PERIOD AVERAGES OUT TO
CORRECT ME IF I’M MR.
MCKINNON-ABOUT ROUGHLY 5 MILLION A YEAR MAY BE A LITTLE
BIT LESS. IF I GIVE EACH AND EVERY ONE OF YOU FIVE
DOLLARS TODAY
TOLD YOU TO GO DOWN TO THE LOCAL VFW TO BUY
SOME [INAUDIBLE] I GUARANTEE YOU’RE GOING TO GET $186 BACK IF
YOU DON’T
I’LL TAKE IN MY POCKET AND GIVE YOU. THAT’S WHAT
THE EXPENSE DIGI
T KEY EXPANSION IS ON FOR MINNESOTA I’M SURE WE’VE GOT SOME ISSUES TO WORK THROUGH HERE AND ARE THE CHAIR HAS HIS GAVEL IN HIS
HAND. [LAUGHING] I’M NOT GOING TO
SUBPOENA COMMISSIONER
HARDY BUT THANK YOU FOR
YOUR INDULGENCE.>>CHAIR GAROFALO:
MISSED REPRESENTATIVE BONNIE YOU HAVE THE LAST WORD. REPRESENTATIVE
CLARK MAHONEY>>RE
PRESENTATIVE MAHONEY: THANK YOU MR. CHAIR I WILL GO. TWO THINGS HERE I DON’T HAVE THE IN FRONT OF ME SO
IT’S A TOUGH QUESTION TO
ASK BUT I WOULD LIKE US TO GET
AN ANSWER SOMETIME IN THE FUTURE BUT
I BELIEVE MINNESOTA ACTUALLY HAS
A NET GAIN BUSINESSES ON A YEAR
AND OR O
N A BUSINESS CYCLE; WHICHEVER WERE WORKS FOR THAT.
I WOULD LOVE THE DEPARTMENT TO
COME BACK SOMEDAY AND ACTUALLY
SHOW US BECAUSE THERE IS THIS HUGE FALSEHOOD THAT MINNESOTA IS A HORRIBLE PLACE TO DO BUSINESS
BUT PERIODICAL AFTER PERIODICAL; WHETHER IT IS A WALL STREET JOURNAL OR
HYDRO FOUNDATION COMES OUT AND SAYS MINNESOTA IS A GREAT TASTE TO DO BUSINESS AND WE DO IT WELL. SO I LOVE DEED COME BACK SOMEDAY AND DO MORE DETAILED
STATEMENT ON NET LOSS AND NET GAIN OF BUSINESSES.
BUSINESSES IS HARD TO DO ANYWHERE. BUT;
THEN ANOTHER PIECE I WANT TO MAKE SURE EVERYONE IS
CLEAR ON AND
I KNOW THAT APARTMENT HAS PROVIDED ME WITH
A NUMBER BUT I DON’T HAVE IT HERE WITH ME;YOU
TALK ABOUT
GEOGRAPHIC DISTRIBUTION AND MIF
AND WHAT WE AS A STATE; WE AS
A COMMITTEE; NEED TO LOOK AT IS
THE GEOGRAPHICAL
DISTRIBUTION STATEWIDE. THE NINE COUNTY
METRO AREA ALWAYS
CONTRIBUTES MORE TO THIS ECONOMIC
ELEMENT STATEWIDE
I BELIEVE. AGAIN; DOING IT WITHOUT
THE DOCUMENTATION BACK IN
MY OFFICE BUT I THINK THE
GREATER MINNESOTA OUTSIDE THAT
NINE COUNTY METRO AREA GETS ABOUT A
DOLLAR 25-A DOLLAR 50 FOR
EVERY DOLLAR THEY
PUT IN IN THE METRO AREA
GETS BETWEEN $.50 AND $.75 BACK FOR
EVERY DOLLAR WE PUT IN. THE
NINE COUNTY COUNTY METRO AREA
HENNEMAN; WASHING; RAMSEY DAKOTA; PAID
A BILL FOR ALMOST ALL
OF THIS OUTSIDE OF THAT AREA.
FOR ALL THE ACCOUNT MOMENT THAT GOES
ON AND
IT TAKES GREAT PEOPLE WHETHER
IT’S IN THIEF RIVER FALLS AND OBVIOUSLY
GOT GREAT PEOPLE IF THEY’RE DOING A GREAT
JOB OR DOWN IN ANY OTHER
PARTICULAR PLACE.
POSITION FARM GOING UP SOMEPLACE
I THINK. I AM HAPPY TO DO THAT BECAUSE
IF WE HOLLOW OUT
GREATER MINNESOTA WE AS A STATE LOSE. SO I JUST
WANT TO OUR MEMBERS ON COMMITTEE TO UNDERSTAND
NOT TO BEAT UP THE METRO AREA WE
ARE NOT THE EVIL ONES HERE BUT WE ARE TRYING TO HELP EVERYBODY
ELSE AND EVERY ONCE IN
A WHILE PAT ON THE BACK WOULD BE MUCH BETTER THAN A KICK IN THE SHINS.>>CHAIR GAROFALO:
REPRESENTATIVE CLARK YOU HAVE THE LAST WORD.
>>REPRESENTATIVE CLARK: I WAS JUST TRYING TO
FIND THE PLACE IN THE REPORT WITH A TALK ABOUT
T
HE BUTT-FOUR. BUT I’VE A QUESTION I DON’T KNOW IF THIS IS FOR THE AUDITOR OR FOR STAFF BUT I THINK PART
OF THIS IS BEING GOVERNED BY ONE 16 J;
RIGHT? WHEN WE’RE TALKING
ABOUT THAT
HAVING BEEN ONE OF THE ORIGINAL AUTHORS
OF THAT MANY MANY
YEARS AGO ONE OF THE THINGS WE TALK ABOUT IS
THAT THESE ARE THE
CRITERIA IS FOR PUBLIC PURPOSE AND SO THAT IS ONE THING I DO NOT HEAR ME
TALK ABOUT BUT-FOUR THERE WOULD BE
NO OTHER PLACE THAT COULD GET THE FUN I THINK THE OTHER THING THAT’S REALLY IMPORTANT IS THE PUBLIC PURPOSE.
FOR EXAMPLE; HAVING A BUSINESS
GET THE KIND OF MONEY THAT IT NEEDS
TO HELP MAKE A WHOLE AREA
[INAUDIBLE] FIRST. THE OTHER THING IS THE QUALITY OF THE JOBS
. I BELIEVE THAT’S PART OF 115
J; TOO. I DON’T HAVE IT IN FRONT OF ME
THAT’S WHY THE WAS WAGE WAGE LEVELS PUT IN THE SO;
BUT FOR; I KNOW A BANK
MIGHT BE WILLING TO GIVE SOME FUNDING BUT DO NOT HAVE THE SAME CRITERIA
TO LOOK AT IT BUT NOT NECESSARILY TO LOOK
AT THAT ISSUE OF WAGE LEVEL AND
PUBLIC PURPOSE. THOSE SORT OF THINGS. SO I GUESS
SINCE THAT PART OF
OUR EXISTING ECONOMIC DEVELOPMENT LAW I JUST WANT TO SAY BUT FOR HIS
TWO SIMPLE OF A RECOMMENDATION
TO L
OOK AT. I THINK IT NEEDS TO BE MORE COMPLEX JUST LIKE THE LAW ITSELF
IS COMPLEX. SO HAVE THESE ADDITIONAL FACTORS. I JUST WONDERED WHOEVER LIKE TO RESPOND
TO THAT TALK ABOUT THE SPIRIT OF HOW WE DO
IT; DEVELOPMENT HERE IN MINNESOTA?
>>TESTIFIER: I THINK THE POINT IS WE
HAVE AGREE COMPLETELY WE DID NOT TALK TODAY
A
LOT ABOUT THE FACT THAT THERE IS IN THE MIF
LAW A PUBLIC PURPOSE THAT STATED AND BECAUSE OF THAT IT’S A GIVEN
THAT PROJECTS SHOULD KEEP THAT
IN MIND AND THAT THEY SHOULD SERVE THE PUBLIC PURPOSE WHETHER
JOB CREATION JOB RETENTION
HAVING WAGES THAT MEET THE CRITERIA THAT ARE IN
THE LAW THOSE ARE ALL KIND OF
GIVENS THAT PROJECTS ARE SUPPOSED
TO COMPLY WITH THAT PUBLIC
PURPOSE. SO; I THINK WE ARE SIMPLY SAYING IN ADDITION TO
PUBLIC PURPOSES THAT ARE STATED IN THE LAW WHEN
WE DECIDE EACH PROJECTS ARE WORTHY OF FUNDING
OR NOT IT MAKES SENSE
TO APPLY SOME ADDITIONAL CRITERIA AND ASK WHETHER THIS IS
A BUSINESS THAT HAS NO OPTIONS FOR
FUNNY ELSEWHERE OR IF IT’S
A BUSINESS THAT’S LIKELY TO GO OUT OF STATE THAT’S WHAT WE
ARE SUGGESTING IS SOME ADDITIONAL CRITERIA TO CONSIDER.
>>REPRESENTATIVE CLARK:
AGAIN; SAYING HAVING NO OPTIONS FOR FUNDING ELSEWHERE IS TOO
SIMPLE BECAUSE THEY MAY BE
ABLE TO AND GET A SMALL OR EVEN GET A SIGNIFICANT LOAN BUT IF THEY CAN PROVIDE THE
KIND OF FIT PACKAGE FOR EXAMPLE THAT
WE THOUGHT
SOUGHT WITH DIGIT KEY OR OTHER BUSINESSES SEEMS TO
ME LI
KE I JUST WANT IT TO BE LOOKING AT THE WHOLE PICTURE BECAUSE-I DON’T KNOW MAYBE
YOU WOULD LIKE TO HEAR FROM
STAFF; TOO?
>>TESTIFIER:
THE LAW IS VERY SPECIFIC ON THE
FLOOR AND THE WINNER 10% OF FEDERAL
POVERTY GUIDELINES. WITH
MANDATORY BENEFITS. AS WELL THAT MANY
COMPANIES PROVIDE. WE SEE A
VARIETY OF PACKAGES THAT
ARE OFFERED FROM BUSINESSES TO
THEIR EMPLOYEES. SOME RANGE FROM TWO DOLLARS AN HOUR; THREE DOLLARS AN HOUR ON TOP OF
THE WAGE TO SOME ARE EIGHT;
10; $12 IS THAT YOU KEEP WOULD BE A GREAT EXAMPLE OF HAVING A
PRETTY SOLID BENEFIT PACKAGE.
THAT DOES COME INTOPLAY
. WHEN WE LOOK AT SOME OF THE WAGE LEVELS AND PARTICULARLY;
WITH THIS
COMES INTO PLAY IS MORE SO IN
GREATER MINNESOTA THEN PERHAPS THE METRO. WE DO HAVE
SOME GENERAL WAGE GUIDELINES
AND BENEFIT
GUIDELINES THAT WE DO SEE IN GREATER
MINNESOTA MIGHT
IN MANY CASES BE MAYBE A LITTLE BIT LOWER ON THE
BENEFIT SIDE
AND WHAT YOU MIGHT SEE IN THE METRO AREA. SO
IS THERE A CONSISTENCY TO IT
; IS A CONSISTENCY ACROSS
EVERY BUSINESS? THE ANSWER
IS; NO.>>CHAIR GAROFALO:
MEMBERS WE’VE REACHED THE END OF OUR ALLOTTED COMMITTEE TIME SO THANK YOU TO COMMISSIONER HARDY
MR. MCKINNON AS OF THE OFFICE OF THE LEGISLATIVE AUDITOR I WOULD ENCOURAGE MEMBERS
TO REVIEW
THE REPORT AND COULD YOU TO WORK WITH THE DEPARTMENT
ON THEIR SUGGESTIONS BETTER
IN THERE. WE CAN PUT FORWARD
SOME IDEAS TO TAKE A PROGRAM AND MAKE IT BETTER WITH THAT THAT COMPLETES OUR AGENDA FOR TODAY
AND WE ARE ADJOURNED.
THANK YOU.>>[GAVEL]>>[ADJOURNMENT]
>>

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