While Block 9 is a neat concept, the unprecedented tax waiver incentive package that was passed 3-2 last night set a new level of public assistance for privately owned structures.
From this point going forward, what do you think any developer that comes to build a large mixed use project in Fargo, (there are many waiting for the newly protected area by the riverfront) can expect for a tax waiver from the city?
In this case, the city bonds for a $7,000,000 parking structure that the private developer gets to use and own, using money they don’t have to pay in taxes, $625,000 a year in PILOT for 15-20 years. And the kicker is a 25 year TIF for 20 – $1,000,000 condos where the public tax increment that pays for a privately owned plaza they say the public will be able to use for certain events.
To this point, most downtown incentives have been justified. Not this one. There will not be additional property taxes paid to the schools, parks, county, or city for services for these buildings for 20 – 25 years. And when that time is up, these multi million dollar companies will own a publicly funded, privately owned and operated parking garage that will generate rental cash for as long as it stands.
We have a proven successful model for public/private developments that include structures for public parking. The Civic Ramp, the Island Park Ramp, and the soon to be built Roberts Street Ramp are all publicly owned and operated parking structures that increase available public parking. Each of those projects used a tax increment where the private developer pays taxes on the new development. Some of those taxes are then allocated to help pay the debt service on the public ramp along with parking rent revenues.
The Civic and Island Park Ramp are now paid for and generate net parking rental revenue of $288,000 a year at Island Park ramp and at the Civic Ramp $180,000. This public revenue helps fund public parking maintenance, improvements and operations and helps offset tax increases. That will not be the case with the Block 9 development. The private developer that didn’t have to pay taxes through the PILOT gets to own the structure and those parking rents for the life of the building
Here’s how the vote went at the Fargo City Commission Monday night:
Here are the votes in order (They had them bundled but I separated them to vote on each)
- I voted to approve a Renewal plan that could allow a formation of a TIF, but did not approve the TIF that was proposed on the final motion (#4 below) in the developers agreement. (eligible uses/amounts are determined in the Developers Agreement motion that I voted against)
- The only incentive I approved was the R Zone for 5 yrs.
- I voted against the motion for the PILOT
- I voted against the developers agreement that had the proposed 25 year TIF for 20 – 22 $1,000,000 condos
How would you vote? See online poll here.
Definitely not a good day for Fargo and downtown. We have to do much, much better.