Differing interpretations of North Dakota’s 2017 law providing for tax increment districts has led to the introduction of a House bill to spell out the rights of counties and school districts.

The House Finance and Taxation Committee heard from a Cass County commissioner and a West Fargo/Minot developer at a hearing on House Bill 1495 Monday.

TIFs are tax incentive tools used by cities to offset public or private costs for urban renewal. A TIF captures the increase in property taxes resulting from new or redevelopment over a period of time and diverts that revenue to subsidize the development or associated public infrastructure.

The City of Minot had approved a five-year TIF to EPIC Companies for a public street improvement associated with the construction of Blu on Broadway, completed in 2021. The city approved a 20-year TIF to bond for asbestos removal and other demolition in EPIC’s redevelopment of the Big M building. It also recently approved a five-year TIF for public space included in EPIC’s mixed-use development, The Tracks, under construction in southwest Minot.

Following state law, the City of Minot sought approval from the county and school district for the Big M TIF because the proposed duration was longer than five years. The county denied the 20-year TIF but approved an eight-year tax incentive.

Rep. Scott Wagner, R-Fargo, prime sponsor of the bill, said the City of Fargo has interpreted state law to say county and school district approval aren’t necessary even if longer than five years if a TIF is for public infrastructure.

Chad Peterson, chairman of the Cass County Commission and president of the North Dakota County Commissioners Association, said HB 1495 is “housekeeping” to reinforce county and school district rights and could head off litigation between Cass County and Fargo.

“If the City of Fargo wants to give an exemption for 20 years, that’s upon them,” Peterson said. “If the school wants to validate that, they are independently elected local governments. They should have their voice independent of mine, but they should not impact my budget.”

McKenzy Braaten, vice president of communications for EPIC Companies, said allowing a political subdivision to opt out creates a burden on the entities that do participate.

In the instance of Minot’s Big M building, more of the burden of the tax incentive falls on the school and city because of Ward County’s decision to participate at a lesser level, she said.

“The county is still reaping some of the benefits of those tax incentives. That building itself, the M building, was behind on taxes. They hadn’t been paid for numerous years. We had to pay them to catch them up,” Braaten said.

“This bill as written could have negative impacts on economic development and make it much more difficult to provide these public amenities, destination locations, support local art and more that we stand for,” she added. “One of the ways that we’re kind of navigating a little bit around some of these situations is we are splitting things up and asking for only five-year options instead of going for that longer term TIF.”

The committee took no action on the bill.