Biomass Feasibility Project Final Report - Xcel Energy

elsewhere in the county, or even to other cities. In the case of a co-generation plant attached
to manufacturing or processing facility, JOBZ status could be conferred to a generation site as
long as it can be clearly delineated. The program can’t designate equipment mixed in with an
existing plant.
The city exercises total and arbitrary discretion over JOBZ in its community. It does not have to
extend exemptions to any project that it doesn’t want. Once it does approve a project,
however, it must provide the whole JOBZ exemption package for the entire term of eligibility. It
can’t pick and choose certain benefits or terms.
When it comes to state taxes, as distinct from local taxes, even if the JOBZ project is fully
approved by local taxing authorities and the Minnesota Department of Employment and
Economic Development, it ultimately must conform to rules of the Minnesota Department of
Revenue regarding JOBZ exemptions. For questions on state tax treatment, contact Anne
Gravelle, 651-556-6836.
Prevailing wage
An important caveat to anyone considering a greenfield project in JOBZ: in order to qualify for
exemptions, the building must be constructed by workers paid prevailing wages for that county.
Equipment installation, however, does not fall under that requirement. The Minnesota
Department of Labor and Industry, which promulgates lists of prevailing wages, makes a
straightforward distinction between construction and equipment installation. If the work is done
under a construction contract, it is construction and therefore subject to prevailing wage; if it is
done under an installation contract, it is installation and therefore not subject to prevailing
wage.
For details on prevailing wages, go to: www.doli.state.mn.us, click on Prevailing-Wage Rates,
click on the Minnesota map labeled Commercial, and then click on the county where you plan
to build.
JOBZ Tax Exemptions
JOBZ exemptions fall into three categories: 1) Sales and Use; 2) Real Estate; and 3) Corporate
Franchise (income). The program also provides a tax credit against income or a cash payment
in the absence of income provided that wages average above a certain annual threshold,
which currently is in the low thirty thousand-dollar range.
Sales and Use Tax
Real estate and corporate income tax exemptions begin once a facility is up and running. But
the Sales and Use Tax exemption takes effect as soon as the developer signs a Business Subsidy
Agreement with the city. Once that is in place, the developer or its contractor can take Sales
and Use Tax exemption on purchases of building material and equipment while the plant is
under construction.
Until the end of the JOBZ period the sales tax exemption applies also to further purchases.
Goods and materials for resale always have been tax-exempt, but JOBZ exemptions include
items not for resale but for consumption at the plant: IT systems, supplies, furniture, material
handling equipment, and even vehicles (except for over-the-road trucks).
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Identifying Effective Biomass Strategies:
Quantifying Minnesota’s Resources and Evaluating Future Opportunities