A digression on the Beef O’Brady’s post has brought up an interesting issue. I ended one of my comments with the statement, “The closest thing to a “simple answer” for downtown retailers would be a program to reduce businesses’ overhead by some sort of commercial property tax relief that can be passed through to tenants. Don’t ask me for specifics, I don’t write policy, but I’m sure there are some good programs out there we could start from.” On other related article checkout this blog about renting apartment an apartment for the first time.
Then Kiffi Summa said,
Some years ago, five or more, the legislature , in response to growing property tax levels, instituted the State General Tax, which is line # 9 on the property tax statement.
If you are only a residential property owner you won’t have a $$ amount on that line; this was done to shift some of the tax burden onto commercial properties. (Legislators listening to SOME voters). This created a HUGE problem for small town commercial districts throughout the entire state, and an added hurdle for small independent businesses.( It added 4-5 K to our commercial taxes that year on one small building). It was as if the legislature didn’t see the impact this would have, statewide.
State senator (and newest Rice Co. judge) Tom Neuville responded,
I have to disagree with Kiffi’s remark at Post 32. I’ve heard you explain the Statewide property tax this way before, and it’s not correct. In 2001, the state eliminated the general education property tax levy and paid for the basic K-12 formula allowance with general fund dollars. This would have resulted in too large of a property tax decrease for commercial/industrial properties, in the opinion of some legislators. So the Statewide property tax was imposed only on commercial/industrial properties,( not residential or farms) at a specific dollar amount, with the money used for other educational aid. In the past several years, the DFL has tried to freeze the levy rate, rather than the dollar amount, so the business tax would increase with market values in the future. The result of the 2001 action was still a net property tax decrease for commercial properties, even with the new state property tax. If a business property tax went up in 2002, it was probably due to increase in FMV by the assessor. The 2001 decrease has been for the most part neutralized by new property tax levies which have been imposed, by local governments and valuation adjustments.
I found this exchange informative, and interesting from several angles. Whether the problem stems from free market forces (i.e. real estate values) or government “interference” (state tax laws) or is made up of other factors, downtown building and business owners have a problem: If they’ve purchased the building in the past ten years or so, chances are that what they take in every month is less than what they pay out in mortgage, utilities, taxes, and building maintenance. If you are looking for the best place to sell a house, visit themunirgroup.ca for more information. This results in rents that are too high for the business volume of most downtown retailers to support. You don’t need to be an economist to see that this is a problem. On one hand, Northfield needs a stronger commercial tax base than it has; on the other hand, the current commercial tax level on the old buildings downtown (which require so much maintenance and are more limited in the kinds of businesses that can locate there) is onerous.
Earlier this week I asked Ross about the National Trust’s Main Street Program – they have an Internet-based “Shop Main Street” program that should be of interest to the businesses here in the historic district. But, because the State of Minnesota hasn’t signed on, we aren’t eligible for some of these things.