Taking the Mystery out of Economic Development Tools Chris Eng, Chisago County HRA-EDA.
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Transcript of Taking the Mystery out of Economic Development Tools Chris Eng, Chisago County HRA-EDA.
![Page 1: Taking the Mystery out of Economic Development Tools Chris Eng, Chisago County HRA-EDA.](https://reader031.fdocuments.us/reader031/viewer/2022032200/56649ca55503460f94966483/html5/thumbnails/1.jpg)
Taking the Mystery out of Economic
Development Tools
Chris Eng, Chisago County HRA-EDA
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Property Tax Incentives Capture and use a portion of the new property
tax revenues generated from new development
These incentives are not an exemption from paying taxes, rather they are a rebate or “redirected investment” from the new property taxes generated
Property tax incentives do not raise the property taxes on anyone else
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Base Value = $20,000
Vacant Vacant PropertyProperty
Current Taxes ($2,000) are Current Taxes ($2,000) are “Frozen”“Frozen”
Building Blocks of Property Tax Incentives
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Base Value = $20,000Taxes = $2,000
Development Development OccursOccurs
““Capture”Capture” a portion of the a portion of the increased property taxes increased property taxes from new value of the from new value of the parcel (Increment)parcel (Increment)
Property Tax Incentives
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Base Value = $20,000Old Taxes = $2,000
Increment = Increment = Difference Difference
Between Old Between Old Taxes and Taxes and New TaxesNew Taxes
New Value = $2,000,000New Value = $2,000,000New Taxes = $22,000New Taxes = $22,000
Building Blocks of Property Tax Incentives
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Tax Increment Financing
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Tax Increment Financing
• Uses New Taxes (Increment) from New Development to “Write Down” the Development Costs (ie. land cost, water, sewer, streets, storm water, etc.)
• 9 Years Economic Development District
• 25 Years Redevelopment District
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Tax Abatement
• Not an Abatement (should be called a “Redirected Investment”)
• Most Often Redirected for Infrastructure– Expansions, Contamination Clean-up, Business Park
Development, Public Improvements– Can go up to 15 Years– Each Taxing Jurisdiction Chooses to Participate and
Amount of Participation
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Tax Abatement Examples
• Chisago City Industrial Park - Infrastructure• Stacy Industrial Park - Infrastructure• Rush City Industrial Park - Infrastructure• Rush City Airport - Taxiway• North Branch - Contamination Clean-up, Road
Improvements• Wyoming - Storm Water Improvements,
Business Expansion
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Who “Captures” and Approves Tax Incentives
Cities, Counties, Schools, Townships
Approval by governing boards only
Cannot “capture” or “redirect” the State portion of the property tax
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Why Use Property Tax Incentives?
• Encourage development or redevelopment that would not occur without assistance
Compete for businessesCreate/retain jobs Increase commercial/industrial tax baseRedevelop blighted areasConstruct and finance public infrastructureWrite down development/redevelopment costs
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North Branch - TangerBegan in 1992First Outlet North of Twin Cities1992 Property Tax = $126
Tax Increment Financing ProgramTanger an “Economic Engine”2007 Property Tax = $787,000 (+)
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General Safety
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Project Specifics
General Safety, Inc. has been located in Chisago County since 1929
Company manufactures custom built fire trucks
60 Employees @ $17 per hour
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Competition from Other States
• General Safety has manufacturing facilities in South Dakota and Nebraska
• Looking to expand in Chisago County, but couldn’t financially justify the development.
• Property taxes are approximately 1/2 in South Dakota compared to MN
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Chisago County/City of Wyoming
• Tax Abatement “Rebate” was used to balance the playing field with South Dakota and keep the company in Wyoming and Chisago County
• $6,000 per year for 10 years County• $4,000 per year for 10 years City
• Company currently pays over $70,000 in taxes annually
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General Safety Tax Impact
• 2003 “Base” Property Tax = $33,642• 2007 Total Property Tax = $70,246
• 2003 City Property Tax = $7,732• 2007 City Property Tax = $18,915
• 2003 County Property Tax = $10,640• 2007 County Property Tax = $22,505
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Employment Impact
• General Safety Tax Abatement Requirements:
• Company would need to add 10-12 new jobs (@$17 per hour) and a 10,000 sq. ft. addition to the building
• Currently have 138 employees @ $17 per hour
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Polaris Industries
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City of Wyoming
• Polaris Industries looking for 400 – 600 acres for a new R&D Facility
• City of Wyoming Wastewater Treatment site was considered first choice for Minnesota location (also looking at Wisconsin sites)
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Wyoming Waste Water Treatment Project
• Total cost to decommission ponds, prepare site for development, construct sanitary sewer pipeline to Chisago Lakes Joint Wastewater Treatment Facility and expand treatment facility to add capacity approximately $14 million
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Project Financing
• Polaris paid approximately $7 million for land
• City received $1.5 million from DEED (MIF and Business Development Infrastructure Grant)
• City received $1.5 million from US Dept. of Commerce
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Project Financing
• Chisago City contributed approximately $500,000 towards cost of the sanitary sewer pipeline
• MN PFA Bond approximately $3.8 million
• No School, County or City Property Tax Dollars given to Polaris
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Project Financing
• Polaris received JOBZ benefits on building, but still pays taxes on land (previously tax exempt)
• 2008 estimates approximately $150,000 in property taxes (Increment = $150,000)
• Tax Abatement Agreement between City and County
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Tax Abatement to City of Wyoming
• County and City will escrow the property taxes paid by Polaris and use for shortfalls in the wastewater project if needed
• If revenues are adequate to cover expenses, funds will be kept by County and City. Current Estimates = $364,700 (positive balance)
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• 226 High Wage Paying Full Time Employees in Community (@ $60,000 +)
• $47 million in New Private Investment• Water & Waste Water Improvements• Increase in Commercial/Industrial Market
Values• Increase in Tax Revenue
Community Benefits
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Business Loan Funds
• Minnesota Investment Fund• Chisago County Business Enterprise Fund• Initiative Foundation• Minnesota Community Capital Fund• Small Cities Development Program (DEED)• City Revolving Loan Funds