March 11th Commissioners Meeting

Draft Tax Abatement Policy


I have been "observing" the Commissioners since 1994 and, for most of that time, there was never any consideration of tax abatements for businesses coming into the County. Familiar with a company named MCLANE? Most people living in Northfield would recognize the name. When they decided to locate in Northfield, they came before the Commissioners confident in their ability to get a tax abatement at the County level because they had successfully acquired it from the city of Northfield. They were turned down flat. Dan Minnick told them that Rice County had no precedent for tax abatement. He added that if they wanted to locate here, they would have to operate under the same conditions as every other business in the County. (This may be the only time that Minnick and I ever saw eye-to-eye on any issue and, if he were to read this blog, it would probably be as distasteful for him to read that sentence as it is for me to write it.)

I cannot say the Board still operates by those rules since Jim Brown became a Commissioner. After ramming the Economic Development District through with promises that this would cure our rising taxes by providing a larger tax base, Brown has been sniffing around every tax abatement opportunity he comes across. JOBZ in Faribault? Can Rice County find some way to force a fit for the EDD? No? Then it must be Tax Increment Financing. Is there no way Rice County can make it apply? No? Not being the kind of guy who can take "no" for an answer where his reputation is concerned, Brown pushed for a tax abatement policy and, voila, the first draft appeared today. Too bad he was absent for his big moment in the sun.

State Statutes allow tax abatements for up to 10% of the current levy. The Rice County 2008 levy is $19,093,972 and 10% of that would be $1,909,397. However, the Commissioners opted to go with 5% of the levy, $954,698, because the amount is cumulative for 10 years. Now, whether that means that it is incremental for each business for 10 years or that it goes into the general pool (so to speak) is not made clear in the policy.
There are all sorts of evaluation criteria, annual reporting and recapture of abatement language. Most of it does not seem too bad but there are two questions that are nagging and will not go away.

1. The Economic Development District was touted as a cure-all for our tax base woes so, when the policy lists "increase OR preserve the tax base" under its minimum requirements, how does "preserve tax base" cure tax woes for Rice County residents. After all this is an economically precarious time and the abatement for each business will last for at least 10 years. And, what is to keep those businesses in the County at the end of those ten years. After all, their building is aging and, if they are having trouble with employees, what better way to rid themselves of those problems than by packing up and leaving?
2. The companies granted tax abatements are supposed to file annual reports and there is always the possibility of abatement recapture if the requirements for having obtained the abatement are not met. BUT, who is going to be monitoring these companies? Is it Kuennen, head of the Economic Development Department? That is certainly not spelled out in the policy. Also, this is a political process as is everything that comes before the Commissioners. I have "observed" Jim Brown going to bat for individuals and companies that should be fined, yet he has patted them on the back for doing the best they could. Is there any doubt that he will do this for any of the companies that file for tax abatements in his Economic Development District?

A public hearing will be held before the Commissioners once the draft is cleaned up. Keep it in mind, request a copy of the policy and go to the hearing. Make the Commissioners hear your concerns!