Ward County commissioners met in a special session Friday to insert their intention to give property developer Big M tax breaks into the city’s existing tax hike funding instrument.
Commissioners had voted 4-1 on Tuesday to give EPIC Companies an eight-year rebate on their property taxes on the downtown, county-only Minot building. After an investigation, District Attorney Roza Larson determined that the county does not have the authority to create a tax exemption of this length and that any request for a tax exemption must be made through the city.
The commission voted 3 to 2 to change its support to take the form of a TIF. While the city’s TIF requires that 90% of taxes collected on improvements go to the Big M project over a 20-year period, the county’s TIF requires 100% of taxes to go to the project for eight years.
The city plans to pledge an amount to help EPIC companies with the costs associated with some interior demolition and asbestos remediation. The taxes paid by EPIC would be used to repay the bonds. Because the county’s TIF participation differs from that agreed upon by the city and the Minot School District, calculations are made to determine the binding and functioning of the TIF.
Commissioner John Fjeldahl had voted in favor of the tax break but rejected the TIF over concerns about its structure.
“I just don’t like that we’re essentially using taxpayer wealth to cover a loan to a private entity and then it can be marketed.” he said. “This TIF funding follows the building, not the person or the investing company. So it can be marketed to someone else.”
Commissioner Howard “buckie” Anderson, who proposed the original eight-year tax break, said he could support moving to a TIF because the tax break is similar, although he prefers a cleaner method of support than using 90% of tax revenue to pay a bond.
“In my opinion there are too many ways to manipulate a TIF and that’s why I’m not crazy about them.” he said.
Fjeldahl had proposed a six-year tax exemption instead of a TIF at last Tuesday’s meeting, which was rejected before the eight-year tax exemption was approved.
“I think one thing Commissioner Fjeldahl was looking for was accountability. That would interest me too”, said Commissioner John Pietsch. “I’m not initially for the TIF, but what he was offering in terms of a tax exemption for those years would provide some accountability.”
Pietsch had voted against the tax exemption on Tuesday and voted against the TIF on Friday together with Fjeldahl.
David Lakefield, Minot’s finance director, explained the reason for the bond issue as a means of financing the developer.
“You have to have the money ready to start the project and get things going. This is where the big difference between this approach of this TIF and a future tax break comes into play. The project may not go forward or you may not be able to fund it from traditional sources because that money is needed up front.” said Lakefield.
EPIC’s chief operating officer, Blake Nybakken, said remotely that his understanding was that the county’s original action was taken as part of the TIF. He noted that his company cannot use TIF and can apply for other tax exemptions as well.
Lakefield also clarified that a tax exemption exempts a property owner from paying taxes, while the proposed TIF requires the taxes to be paid but directs them to a portion of the project that will provide public benefits, such as:
EPIC plans to start construction this summer. The project includes condominiums and apartments above the commercial space in the basement.