06-15-2001 - Laserfiche WebLink

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Completed projects built with subsidies would generate less tax money than • cities and bond holders expected. New projects -- such as the Mermaid -- might p not get built at all. The changes would result from Gov. Jesse Ventura's plan to have the state essentially take over education funding, which would lower local property taxes on all buildings; and from a separate reduction in property-tax rates on commercial-industrial properties. The Minnesota Historical Society's director told legislators recently that the changes would create a $4 million funding gap for the long-planned eight-story building to be built within the ruins of the historic Washburn Crosby Mill on the banks of the Mississippi. "It would require totally rethinking the project," said director Nina Archabal. For the first year, analysts have put the loss of property-tax money from tax- increment projects statewide at more than $130 million. House leaders have offered $195 million in grants to help cities make up the loss. Some observers • fear the grant money won't be enough, considering that many of the 2,103 tax- increment districts and 436 Minnesota cities that use the subsidy might need to be bailed out. "The problem, of course, is we don't know how much we need," said Andrea Stearns, a lobbyist for the League of Minnesota Cities. "The problem may be much worse five years down the road." Others don't share Stearns' alarm. "It's the old saying, 'If you build a house of cards, should you blame the wind?" said Lyle Wray, executive director of the Citizens League, a non-profit group that has criticized what it sees as the too-liberal granting of subsidies. How it works Tax-increment financing is popular with developers because some of their costs are shifted to taxpayers. It's popular with city officials because some of the subsidy costs are shifted indirectly to taxpayers statewide. •