Wednesday, May 23, 2012

Who can apply for Minnesota "Bonds" Sweepstakes?

The City of St Paul wants dearly to get $27 million dollars of the $50 million bond "sweepstakes" money for the Saint's stadium as their media blitz has outlined. I decided to call the Commissioner's Office of Minnesota Department Employment and Economic Development.(DEED)  I wanted to know how I could apply with a "public" partner to get some of the bonding money also.

I was told by the polite person who answered at the Commissioner's office, I would have to talk with him, but he's "not in now."  I then asked if there was any criteria or detail laying out the process and how the proposals would be judged and awarded and by whom.  She then told me to hang on the phone for a bit.  She got back to me and stated staff were meeting this week to develop criteria and "process".

I tell you this scenario to illustrate the uniqueness of how $50 million of public bonding money is set to be spent in a competitive process.  First class cities like St Paul can put in a proposal, or counties can such what Hennepin County may do for light rail development.  The proposals are limitless for ideas for use of public monies to build public infrastructure and for eligible projects.

The language of the bill is such that a small city or town could apply for $250.000 to help them and their community with infrastructure and projects.  But I worry big government entities such as cities of the first class and 7 County Metro Area will come into the process and suck up the money dry.

The Legislature and Governor Dayton decided on this extraordinary process to dole out millions of public monies.

Usually the bonding bill is one of the most political of all bills at the Minnesota Legislature.  The Governor has his priority, the Senate and House of Representatives theirs.  It takes more than a simple majority for a bonding bill to pass.  The parties do a lot of horse trading, log rolling, and other kinds of action to crank out a bill that serves the interest of Minnesotans.

The roll out of the $50 million to the public on infrastructure and eligible projects is proceeding fast, many questions need asking with answers.  Just a few I have thought of.  Will the criteria and process such be such that it is a foregone conclusion who will be the winners or losers?  Has there been already behind the scenes agreement that certain projects will get funded?  Do small government entities have a chance for small cost projects?  

To the credit of Governor and Legislature the law is designed to give out the public monies in an open competitive process, not the horse trading way which is done many times in secret at the Legislature.

How open, competitive, or how broad or narrow as to who can apply and get bonding dollars depends on what the the Commissioner of Deed does in criteria, guidelines, standards, and process as to who makes the decisions and how they are made.

Below is the Section 33 of the 2012 Bonding law, Chapter 293 that lays out the process for rolling out the bonds.

    Subdivision 1. Creation of account. A business development through capital
projects account is created in the bond proceeds fund. Money in the account may only be
used for capital costs for eligible projects and public infrastructure.
    Subd. 2. Definitions. For purposes of this section:
(1) "local governmental unit" means a county, city, town, special district, public
higher education institution, or other political subdivision or public corporation;
(2) "governing body" means the city council, board of county commissioners, town
board of supervisors, board of trustees, board of regents, or other body charged with
governing a political subdivision of the state;
(3) "public infrastructure" means publicly owned physical infrastructure in this state,
including, but not limited to, wastewater collection and treatment systems, drinking water
systems, storm sewers, utility extensions, telecommunications infrastructure, streets,
roads, bridges, and parking ramps; and
(4) "eligible project" means any project for which general obligation bonds of
the state may be issued. Eligible projects must be capital projects for acquisition or
improvement of publicly owned fixed assets having a useful life of at least ten years.
    Subd. 3. Grant program established. The commissioner shall make competitive
grants to local governmental units for eligible projects and public infrastructure required
to support an eligible project, which may include: predesign, design, acquisition of land or
buildings, construction, furnishing, and equipping a new or renovated building. The local
government unit may employ or contract with persons, firms, or corporations to perform
one or more or all of the functions of architect, engineer, or construction manager with
respect to all or any part of an eligible project and related public infrastructure. The local
government unit may deliver the eligible project and related public infrastructure through
either a design-build or construction manager at-risk method. To the extent practicable
and at the discretion of the local government unit, the local government unit may have
rights and exercise powers with respect to the acquisition, construction, use, and operation
of an eligible project, as are granted under section 473.756. No consent or approval of
another political subdivision is required for the effectiveness or the exercise by a local
government unit of the rights or powers.
    Subd. 4. Application. (a) A local governmental unit must apply to the commissioner
for a grant under this section. At a minimum, a local governmental unit must include the
following information in its application:
(1) a resolution of its governing body certifying that the money required to be
supplied by the local governmental unit to complete the project is available and committed;
(2) a detailed estimate, along with necessary supporting evidence, of the total costs
of the eligible project;
(3) an assessment of the potential or likely use of the site for innovative business
activities after completion of the eligible project;
(4) a timeline indicating the major milestones for the eligible project, including
anticipated completion dates;
(5) an estimate of the operating costs for the project for ten years following
completion; and
(6) any additional information or material the commissioner prescribes.
(b) The determination of whether to make a grant under subdivision 3 is within the
discretion of the commissioner, subject to this section.
    Subd. 5. Match. An amount granted under this program must be matched with at
least an equal amount from nonstate sources. Any contribution to a project from nonstate
sources made before a grant award is made under this section shall count towards the
match requirement.
    Subd. 6. Priorities. (a) If applications for grants exceed the available appropriation,
grants must be made for projects that, in the commissioner's judgment, provide the
highest return in public benefits for the public costs incurred. In making this judgment,
the commissioner shall evaluate and prioritize eligible projects on the following
(1) creation of new jobs, retention of existing jobs, or improvements in the quality of
existing jobs as measured by the wages, skills, or education associated with those jobs;
(2) improvement in the quality of existing jobs, based on increases in wages or
improvements in the job duties, training, or education associated with those jobs;
(3) increase in the local tax base, based on demonstrated measurable outcomes;
(4) demonstration that investment of public dollars in the project will induce private
(5) whether the project provides necessary repair or replacement of existing capital
(6) whether the project reduces operating expenses of or increases revenue from
existing capital asset, thereby offsetting at least a portion of project costs;
(7) whether the project provides health or safety benefits;
(8) the number of residents served by or who will benefit from the project;
(9) demonstration of local support;
(10) the capacity of the project to attract revenue from out of state; and
(11) objective cost benefit analysis and return on investment.
(b) The factors in paragraph (a) are not listed in a rank order of priority; rather, the
commissioner may weigh each factor, depending upon the facts and circumstances, as the
commissioner considers appropriate. In prioritizing projects, the commissioner shall make
an appropriate balance between the metropolitan area and greater Minnesota.
    Subd. 7. Sunset. This section expires June 30, 2016.

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