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http://twincities.bcentral.com CitylBusiness July 20,200i 7 111111114110101 Tax changes hit tax increment eve loperva a"nncies seek Yl 1 solutions ........ ................... By Sam Black Community Development Agency to determine if Kryst said the MCDA staff will begin Staff reporter there's a way to bridge the gap."It's going to be a looking for the alternative sources of assis- Alternatives_bllF With a major funding, shift away from a challenge,"he said."One-third of our biggest-am tance in the next few weeks. Tlie�414i,of tislngt:IX iO,cmrnent financing popular development tool — tax increment of assistance has evaporated on us overnight." The tax breaks are good. and they will .:.J� financing. or TIF — many developers and (T1,F)was reduced by-,about 30 percent due One option would be a tax abatement for benefit Minnesota businesses and hopeful')I recent state properly_. I tax the project.Carland said.But more likely,he spur development. said Brian Carey. vice overhaul. economic-development agencies are explor to the re s r,p s a(,i t of a few.othe' ublic assistancei ino alternatives. said,the deficiencies are going to have to be president of development at Bloomington- . .. ."; TIF alternatives include tax abatements. made 0 7 tools: tip scaling back the projects. based United Properties."But if the state and tax-exempt bonds.job incentive grants,ener- Particularly Vulnerable will be the affordable the cities want to develop these blighted ■ .Directsubsidles to businesses or gy credits and direct subsidies.Some of these housing and parking ramp components, he areas and want to promote smart dev'e'lop- developer#from local governments, are used already in Minnesota. but TIF — said,though a change in plans to include city ment,they're going to need to provide some f6qivable' loan; oan; where the increase in value from develop- ownership of the parking ramp could help. substitute tool."he said. ■Properly.- ment of a property is used to offset develop- "Municipalities are going to have to Jim Vos, principal at CRESA Partners, a `04 ,i ment costs— has been a widespread favorite. rethink some of their expectations given that real estate consulting firm in Minneapolis, a race-run That landscape changed when Gov.Jesse the developers don't have the same discussed the future of TIF this week with a p gramtrecentiy expanded;,. Ventura signed the tax reform package last resources to deal with,"Carland said. group from the Arrowhead Economic month. The package helped b4inesses Other developers said the cut in TIF Development Corp. in Duluth. techniaisdtootsgnd"community across the state by lowering properly taxes, potential may push them to consider other "Minnesota doesn't have that many good co eger but the action also bludgeoned TIF forms of financing or increases to rent or economic development tools or business TIF consultants in the Twin Cities esti- sale price for new developments. recruiting tools."Vas said. mate a 30 percent reduction of TIF's value For example,a planned housing develop- In the Twin Cities. Vos suggested, the 0r;o 6 PrgMrY`t'.prograq;- based on a combination of the lower overall ment at the Koch Mobil site along Shepherd Metropolitan Council could be.1 conduit for '-;'lio-iiibIjidrnInIfteked tiy.the property tax rates and new funding mecha- Road in St.Paul won't be badly hurt because redevelopment assistance. Heir q po 16 T,Co,u nisms for Minnesota school districts. strong housing demand will allow developer Brian Sweeney, director of the St. Paul N.Cr4ti.lbr,energy use.ii�used as an "TIF was Most Of Our tool chest." said Brighton Development of Minneapolis to Department of Planning and Economic e-c.onornic-developme4tooll In other states. Dave Carland, president of CSM raise the sale prices of units. "We can make Development,said the 30 percent cut from the Development Corp. in St. Paul. He said four tip a sizable part of the gap [created] by the top line of TIF need not be made up dollar-for- research. of his firm's planned redevelopment projects law change.-said Richard Brustad,a partner dollar with other incentives.The lower prop were turned on their heads when the tax at Brighton.0 erty tax will help spur new development,espe- announced: the Upper Landing o project, the reform bill was passed. forcing CSM to Jack Kryst, manager of project planning cially with apartment projects.Sweeney said. West Side Flats project and the Koch Mobil review financing options. and finance at the MCDA, said assessing "If you have less taxes. you have less site.All three will benefit from TIF and in 0 b y CSM's proposed Depot East office develop- how the new laws affect TIF has taken pri- total development costs and you need less all three cases the developers have agreed to ment,planned on Washington Avenue in downtown ority over finding new or alternative funding 0 TlFs,"Sweeney said. "take a little bit ON hit.-Sweenev said. ■ Minneapolis, now has a $3 million founding gap. sources. Already, he said, the change has St. Paul is going forward with three big 0 0 Sam Black can be reached at(6/2) 288- C.arland said He's working with the Minneapolis cooled interest in new developments. apartment projects that were previously 2 103 or sblack@bizjournals.com.