County approves TIF
Commission modifies decision in special meeting
Ward County commissioners met in special session Friday to fit their intent to provide tax relief to the Big M building developer into the city’s existing Tax Increment Financing tool.
Commissioners had voted 4-1 Tuesday to provide EPIC Companies with an eight-year abatement of its county-only property taxes on the downtown Minot building. Upon investigation, State’s Attorney Roza Larson determined that the county doesn’t have authority to create a tax exemption of that length and that any tax exemption request needs to come through the city.
The commission voted 3-2 to amend its support to take the form of a TIF. While the city’s TIF calls for 90% of taxes collected on improvements to go toward the Big M project over 20 years, the county’s TIF provides that 100% of taxes go to the project for eight years.
The city plans to bond for an amount to assist EPIC Companies with costs related to some interior demolition and asbestos abatement. Taxes paid by EPIC would go toward paying off the bonds. Because the county’s TIF participation differs from that agreed to by the city and Minot School District, calculations will take place to determine the bond and how the TIF would operate.
Commissioner John Fjeldahl had voted for the tax relief but rejected the TIF because of concerns about how it is set up.
“I just don’t like that we’re using basically taxpayers’ assets to back a loan for a private entity, and then it can be marketed,” he said. “That TIF financing follows the building, not the person or the company investing. So it can be marketed to somebody else.”
Commissioner Howard “Bucky” Anderson, who proposed the original eight-year tax relief, said he can support converting to a TIF because the tax relief is similar, although he prefers a cleaner method of providing assistance than using 90% of tax collections to pay a bond.
“There’s too many ways, in my opinion, to manipulate a TIF, and that’s why I’m not crazy about them,” he said.
Fjeldahl had proposed a six-year tax exemption rather than a TIF at last Tuesday’s meeting, which was defeated before the eight-year tax exemption was approved.
“I think one thing Commissioner Fjeldahl was looking for was accountability. That would concern me, too,” said Commissioner John Pietsch. “I’m not in favor of the TIF to start with, but what he offered as far as a tax exemption for those years would give some accountability.”
Pietsch had voted against the tax exemption on Tuesday and joined Fjeldahl in voting against the TIF on Friday.
Minot Finance Director David Lakefield explained the reason for the bond as a means of financing for the developer.
“They have to have that money lined up to start the project to get things going. That’s where the big difference between this approach of this TIF and a future tax abatement comes into play. The project may not go forward or you may not be able to finance it through traditional sources because that money is needed upfront,” Lakefield said.
EPIC Chief Operating Officer Blake Nybakken, speaking remotely, said his understanding was that the county’s original action was taken as part of the TIF. He noted his company cannot utilize a TIF and also seek other tax exemptions.
Lakefield also clarified that a tax exemption excuses a property owner from paying taxes, whereas the proposed TIF requires the taxes to be paid but directs them toward a portion of the project providing public benefit, such as reducing blight.
EPIC plans to have construction underway this summer. The project includes condominiums and apartments above the lower-level commercial space.