Caledonia Argus

JOBZ program pact amended, wages set

Posted: 5/18/04

By David Heiller
Argus News Editor

The Houston County Board of Commissioners amended the business subsidy criteria for the Job Opportunity Building Zone (JOBZ) program on May 11.

The decision came after a public hearing jointly with the Economic Development Authority (EDA) of Houston County, Minnesota and the JOBZ Subzone Cities of Eitzen, Houston and Spring Grove.

JOBZ is a state program that gives business subsidies to qualifying businesses.

The key part of the amendment was the setting of a wage at 110 percent above the poverty level, which would currently be about $10 per hour. The board decided to have that amount include the cost of life and health insurance.

In other words, an employee of a JOBZ business could earn $7 per hour if their benefits equaled $3 per hour, bringing the total to $10.

Tom Falbo, Spring Grove city administrator/clerk/treasurer, lobbied for that change. He felt that without it, businesses would be discouraged from coming to his city. ìThe working poor in one community is not the same as the working poor in another community,î he said.

Heather Gray of Spring Grove questioned the countyís authority in the JOBZ process. She said that the program is an agreement between the city and state. County and school district rights end at that point, she claimed.

She asked what would happen if a city wasnít on board with the countyís agreement.

JOBZ coordinator Joyce Iverson, who is the Community/Business Development Coordinator for Southeast Minnesota Development Corporation, said that having cities in agreement with the county would streamline the process.

Commissioner Kevin Kelliher explained the countyís role as setting criteria and offering it to cities. He also defended the wage requirement, saying that a low wages cost the county in the long run because they require the county to pay for services such as day care.

How JOBZ works

JOBZ was set up by the Minnesota Department of Employment and Economic Development to stimulate business activity in outstate Minnesota. Eligible businesses in a zone will operate in an en environment nearly free of state and local taxes. The hope is that it helps new and expanding companies grow by lowering their overall costs. The program started in January 2004 and will last 12 years.

Cities that participate in JOBZ set up areas in which new businesses can be built, or in some cases, expanded. (Land swaps are available if a business is built in an area outside the job zone.)

The benefit to the business is that they are exempt from paying most property taxes, sales taxes, and corporate taxes.

In order to reap that tax abatement benefit, businesses have to meet certain requirements. For example, they have to create at least one new full-time equivalent (FTE) job for each $20,000 of business subsidy received per year during the term of the zone. The total wages for the new jobs shall be at least equal to the business subsidy received.

Also, as stated earlier, they have to pay a wage equal to 110 percent of the poverty level, including benefits.

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