Guest blog post by Natalia Madryga, Hylden Advocacy & Law
What is state bonding?
State bonds are a form of public debt that the State uses to pay for large-scale construction projects. There are a few types of State bonds, but the most common are State General Obligation (GO) Bonds. GO Bonds are fully backed by the state. There is no statutory or constitutional limit on the amount of debt the state can carry, but in 2009, the State issued formulas capping state bonding to ensure a good credit rating.
What can State bonding be used for?
There are constitutional restrictions for issuing GO bonds. Bond proceeds must be used for capital “bricks and mortar” projects. State bonding can only be used for land acquisition, predesign, design, construction, and major remodeling. Bonding cannot be used for operating expenses and costs, overhead, master planning, or general maintenance. Unlike more flexible state appropriations, GO bonding requires that the property or facility be owned by state or political subdivision and the program operated in that facility must have a public benefit.
Although private non-profits cannot directly receive GO bonding funds, local governments can serve as a public fiscal agent to allow state bonding for a project that will be managed for a non-profit’s purpose. This is done through a set of agreements: the non-profit provides a long-term lease for the bonding project site to the local entity serving as fiscal agent, which allows for GO bonds to be used for the project. Simultaneously, the local government fiscal agent enters a use agreement with the nonprofit for the purpose specified by the bonding legislation.
Typical projects receiving state GO bonding have statewide significance, such as university and college campuses, libraries, museums, state agency buildings, parks, trails, municipal infrastructure, zoos, water-treatment plants.
How do local governments and nonprofits secure state bonding?
A non-profit or local government entity can build support for a bonding request by first raising non-state funds dedicated to the project. The capital project can be completed in phases as well. Many capital projects come before the Legislature in multiple phases; first seeking funds to be used for site acquisition and/or planning, thereby making it more feasible to raise the private match and then return to the state for a request to complete the project.
Once a non-profit garners the support of the local unit of government and are added to their list of bonding priorities, non-profits must build support among state legislators – local delegation members, bonding committee members, and caucus leaders in the House and Senate. The next step is to secure a coveted spot on the local bonding tour agenda arranged by the House and Senate Capital Investment Committees with the local government officials and staff. These “bonding tours” are held during the interim, and legislators tour communities across the state to see first-hand the local infrastructure needs.
During the legislative session, a local legislator will introduce a bill and request a committee hearing. Powerful Senate and House committee chairs decide which projects they will fund and the total size of their bill. The bonding bill must pass the House and Senate with 3/5ths majority, so projects from members in the minority must also be included in the final package to have sufficient votes to pass. Once the Legislature reaches agreement and the bonding bill is passed by both the House and Senate, it must be signed into law by the Governor.
Securing state bonding is a feat in itself, but it is only the beginning. There are additional steps to be taken after the bonding bill passes and the project has been appropriated funds. Matching funds must be raised with proper documentation; predesign and design require state approval; and a grant agreement with the state must be signed.
Post by Kathleen Lohmar Exel, Foundation Director
Tours and Primers and Design Charrettes, Oh My! Economic Development Day found the LSP Class learning about Economic Development from a variety of perspectives while getting familiar with the East Side of Saint Paul. We started the day at the new Local 455 Pipefitters Union Hall hearing about the history of the topic from Louis Jambois and representatives from the River, Rail and Workforce Industries. Then we hopped on a bus and Monte Hilleman of the Saint Paul Port Authority gave us a tour of development projects including the Phalen Corridor, Westminster, Williams Hill, and Beacon Bluff. We then spent time at the East Side Family Clinic hearing about Economic Development happening between the community, the City of Saint Paul, the East Side Neighborhood Development Corporation, and the Neighborhood Development Center. That was followed by lunch outside at The HUB, the creative place-making multi-year partnership of the East Side Arts Council and the Saint Paul Port Authority. This educational streetscape incorporates interactive public art focusing on best practices in next generation energy use and storm water management. After returning to the Local 455, the class was able to spend time with 15 experts in Economic Development hearing about their work and asking questions. We rounded out the day with the ever-popular Design Charrette, orchestrated by BWBR architects: Jackie Peck, LSP 2015, Erin McKiel, LSP 2013, and Shida Du. The class worked on a design simulation and worked through what they would like to see developed at the Ramsey County Riverfront Site (former West Publishing and Ramsey County Jail). The class was able to reflect on the day and have some fun at Brunson’s Pub at the end of the day.
Special thanks to Tonya Bauer, Saint Paul Port Authority & LSP 2016, chair of the day and her committee, Maurice Harris of Greater MSP, Ling Becker of Vadnais Heights Development Corporation, and Molly Murphy of Northwestern Mutual and Brunson’s Pub, all from LSP 2017; plus, Kylle Jordan, MN Deed & LSP 2015 and Cat Beltmann, So Good Consulting & LSP 2016. The committee developed an Economic Development Primer that gave the class a great base and common understanding of development terms before the day started and they also developed a packet that showed each of the projects on the bus tour before they were developed and how many jobs were no present at the sites; truly an effort that went above the expected duties of a committee.
The Citizens League Minimum Wage Study Committee met on Thursday, May 24, 2018 at the University of St. Thomas. Check out last’s week recap on the second meeting if you missed it.
Co-chair B Kyle opened the meeting with a question to the committee members: what are their employees’ and networks’ thoughts on increasing minimum wage to $15? Particularly to those who currently make around $15/hour, how would they feel if the other employees’ wages increased to $15? One restaurant owner has been preparing for this increase and deliberately increased his dishwashers, line cooks, and chefs to $15 or more depending on their line of work. No employees have expressed any concern about other employee’s increased wage and were satisfied with their increase. He owns two locations - one in Minneapolis and the second in Saint Paul, totaling 48 full time and part time staff.
Thomas Durfee updated the Committee with his current research analysis on “firm birth” rates (when a business is founded) and “firm death” rates (when a business closes) in the City of Saint Paul. A few problems that Thomas identified were: no data on firm loss; and unemployment data does not provide reasoning WHY a person is unemployed. Thomas will report his findings at next week’s meeting.
The Committee heard a presentation from Jeff Schneider, Strategic Management Team, from the City of Minneapolis on the Staff Report on a Minimum Wage Policy. Jeff first acknowledged to the Committee there are many research studies on the effects of increased minimum wage projections, but not a whole lot on increased minimum wage post-implementation. Where many cities use revenue thresholds to determine exemptions and roll-out timelines, Minneapolis is unique in that they use a head count to determine appropriate roll-out timeline.
The second speaker to the Committee was Brian Walsh, Supervisor of Labor Standards Enforcement Division, Department of Civil Rights, City of Minneapolis. Brian shared his struggles working on the issues of minimum wage, “How do you mitigate the short term pain [for small employers]? There is no answer” and added that “There has to be investments [into partnership communities] in these policies after they pass.” Brian spoke about the value of being proactive to minimum wage issues - such as city working with community led partnerships and how “community policing” of minimum wage compliance should be a community-led enforcement effort.
The Committee asked Jeff and Brian many questions addressing issues including head count exemption, revenue privacy, the department’s budget, wage theft data, and preemptive approach. Brian referred back to Jeff’s comment on Seattle’s approach to minimum wage and how they created a robust Office of Labor Standards that budgeted to work with partnership communities – “Seattle is the gold standard” and is 2-3 years ahead of the minimum wage issue, being the first in the nation to reach out to diverse organizations and recognizing efforts.
A quarter of the Committee members were unable to attend this meeting. These absences, while coincidental, had the effect of leaving out input and insights from those committee members - many of whom represented women, minority owned businesses, people of color, and small non-profits. Because the committee is a representative sample of communities affected by the minimum wage, and one person cannot carry the load of an entire point of view, community engagement and input is important to the process.
The next meeting will be held on Thursday, May 31, 2018 with a panel of businesses that are underrepresented at the table to share their thoughts and concerns with the Committee.
About this blog series: SPACC public affairs staff will be attending each of the study committee meetings and writing a recap blog after each meeting in order to keep our members informed of the process. (Since President/CEO B Kyle is the co-chair and an active member of the committee her perspective will be included just like the other participants, but the blog should not be considered to be her opinion personally or a direct reflection of just her role on the committee.) Since the Citizens League will be publishing exhaustive minutes of the meetings, our blog is not meant to be a complete record, but instead will provide an overview of the high points of the meetings and the content. When appropriate, we will also provide analysis of what committee recommendations could mean for our members. If you have a question about the committee please connect with Shannon.