Agenda Packets - 1985/01/02 - Laserfiche WebLink

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DS-7. TAX-EXEMPT STATUS OF LAND HELD BY CITIES FOR DEVELOPMENT (C) (cont'd) tax-exempt fur a maximum period of three yearn. In 1984, the legislature revised the statute, providing tax-exempt status ful a period of eight years in most situations and granting an exemption for an unlimited period of years if the property is held for housing programs or is classified as "blighted land" under state law. The 1984 law provides, however, that if the property is acquired for economic development purposes and building or other improvements are constructed after acquisition of the property, and if more than one-half of the floor space of the buildings or improvements which is available for lease to or use by a private individual, corporation, or other entity is leased to otherwise used by a private individual, corporation, or other entity the property will be considered taxable. The overall intent of the statute is designed to create an incentive for political subdivisions to engage in economic development activities as well as to promote moving the property back onto the tax rolls. Unfortunately, it does not fully recognize that the process of developing industrial and economic growth, rehabilitating, or building housing may extend over a long period of time. The unce•rtaincy caused by the vague provision on improvements and leasing of one-half of the property discourages cities from being active in establishing and maintaining local development corporations, from retaining as much control as possible over their economic development and planning process, and from being selective as to the type of development which may occur in the city. Cities have every incentive to get property back on the tax rolls as soon as possible. Therefore, the League recommends that the provision concerning one-half installation of improvements be deleted or at the very least clarified, and that the eight year limit on tax-exempt status be removed. DS-8. SMALL CITIES COMMUNITY BLACK GRANT PROGRAM (C) The Small Cities CDEC program should continue as a source of funding which encournges cities to "develop viable communities by providing decent housing and suitable living environment and expanding economic opportunities, principally for purposes of low- and moderate -income," in compliance with congressional intent. The state should maintain the CDBG program balance between cities' economic development needs and the needs of low- and moderate -income people. Cities should retain maximum flexibility in determining how to carry out CDBG program objectives. -38-