Podcast: EDA’s Rick Estenson on commercial property and Northfield’s business parks

Rick Estenson, Tracy Davis, Ross Currier Our guest this week: Rick Estenson, chair of Northfield’s Economic Development Authority (EDA).

Rick also is a veep at First National Bank Northfield and treasurer of the Northfield Rotary Club. He denies ever having shot a poodle.

The discussion was all about the availability of commercial property in Northfield, and the possibilities for business parks.

For more on the issue, see this week’s Northfield News article titled City wants to grow business.


Click play to listen. 30 minutes.

Our radio show/podcast, Locally Grown, usually airs Wednesdays at 5:30 PM on KYMN 1080 AM. You can also subscribe to the podcast feed, or subscribe with iTunes. We seek your comments and suggestions.

84 thoughts on “Podcast: EDA’s Rick Estenson on commercial property and Northfield’s business parks”

  1. Great show ! Question for the experts. The statement that residential demands services and that business pays a greater percentage of tax than residential towards these services keeps being made. What is the mix in the Northfield tax base between residential and business ? Don’t get me Wrong – I am 100% pro-business but I would think that in agregate residential would dwarf business in gross taxes in Northfield – is this true ? Does business actuall pay more in gross or just a higher return per land use ?

  2. Good question Dave and one that I don’t know off the top of my head. I believe Charlene and Brian are not in the office until next week to ask them to research for us. It would be good to see the trend for a couple years to that question as well if not too difficult to obtain. I will follow up with them when they return.

  3. David: The question you ask re: the tax rate on businesses vs. residences is one of the most important questions to the “saving” of small outstate downtown commercial districts.
    If you live in Northfield, and you own a residence with an estimated market value of 300,000. and also own a commercial building with the same 300,000. estimated market value, you will NOT pay the same taxes on both properties. The commercial is taxed at a significantly higher percentage than the residential. Ross can quote the exact percentage; I don’t want to make an error.
    This disparity is just one of the reasons that small downtowns all over the state are struggling. The building owners’ cost of doing business (especially commercial taxes) are not supported by the achievable rents.
    Legislators, if pushed, will tell you that the philosophy behind this structure is not just simply to have commercial support/subsidize residential; there are more VOTES in the residential group than there are in the commercial building owners group. So the philosophy of supporting home ownership (A good philosophy) comes at the expense of small commercial districts/downtowns, all over outstate MN (a bad, or at least non-productive philosophy, if you believe in sustaining small towns.)
    Do you want independent small towns? or do you want residential areas serviced by ubiquitous highway strips?
    I would be very pleased to see the bank I use, 1st Nat’l of Northfield, have an officer who focussed solely on this aspect of small town economic health, benefitting not only Northfield, but providing leadership for reform across the state.

  4. Minnesota uses a unique concept in its taxation of real estate called “tax capacity”. A local government establishes a tax rate and then applies it against a property’s tax capacity.

    The tax capacity of a homesteaded residential property is 1% of its assessed value up to $500,000. The tax capacity of any additional value of a homesteaded residential property over $500,000 is 1.25%.

    For a commercial/industrial parcel (C/I), however, the tax capacity is calculated differently. It is 1.5% of the first $150,000 of assessed value, followed by 2% of all assessed value over $150,000.

    So let’s do the math. If you own the home in which you live and it’s valued at $300,000 its tax capacity is $300,000 x 1% = $3,000. Now, let’s say that your city has a tax rate of 1.25%. Your tax bill would be calculated by multiplying the tax capacity by the tax rate: $3,000 x 1.25% = $3,750.

    Now, let say that you own a small business valued at $300,00. You calcuate your tax liability using the same formula, but with different factors. The tax capacity of the first $150,000 of value is 1.5%: $150,000 x 1.5% = $2,250. Assuming this property is in the same town as the residential example and the city has a tax rate of 1.25%: $2,250 x 1.25% = $2,812.

    But we’re not done yet. The tax capcity rate for the value over $150,000 is 2%. In this example there is an additional $150,000 (the total value we started with was $300,000). Take this $150,000 x 2% = $3,000. Take this tax capcity and multiply it against the 1.25% rate and get = $3,750.

    Add $2,812 to $3,750 and you get $6,562 in tax payable for this $300,000 C/I property compared to $3,750 tax bill for the $300,000 residential home.

    That’s the Minnesota property tax system.

  5. I found this property tax information on Minneapolis – it appears that commercial property, at least there, is paying for far less of the government services as a percentage of budget than in the past and residents are paying far more.

    “For taxes payable in 1997, Minneapolis commercial and industrial property paid 56 percent of the total taxes for the City; for taxes payable 2008 this
    declined to 34 percent of the City total. Corresponding percentages for residential property show that this class paid 32 percent of the City’s taxes in 1997; it is estimated that this percentage will be 57 percent for payable 2008. This represents a complete reversal in the share of the City’s tax
    burden between the two property types.”

  6. Both Scott Neal and David Henson are right in pointing out the complications in Minnesota’s method of taxing real estate. Each local government taxing unit has slightly different needs and tax levies. There are also different distributions of types of taxable property (commercial, residential, etc.) in a local unit.
    Scott’s example of a rate of 1.25% is based on what may be a typical city and is made up of county, city, school and special levy components. Research on the League of Minnesota City’s website indicates an average 2007 local tax
    rate for all Minnesota cites of 1.0225% with the average city rate being 0.3609%. The total local tax rate for Northfield was 0.9718% with the city’s rate being 0.3563%.
    In 2007, residential homestead taxpayers in Northfield had a market value (MV) of 70.64% of total MV and a tax capacity (TC) of 61.70% of total TC. Commercial-Industrial’s (C/I) MV was 14.05% of total MV and had a TC of 28.27%. So from a percentage standpoint, in Northfield, homestead properties pay over 2 times the taxes of C/I properties.
    Another factor in taxes is assessed value. For example a business located on Division St. may have their property assessed at $25.00 / square foot where a residential property of compariable size located one block away on Washington St. is assessed at $8.20 / sq. ft. With the higher tax rate and the higher assessed value, individual C/I properties usually pay a higher amount than indivudual residential properties.
    An arguement could be made that C/I properties require more services than residential propeties on an individual basis so their tax rates need to be higher. They often require public parking for customers and employees, they require a higher level of public safety (police/fire etc.), they demand more infrastructure so their deliveries, employees and customers can reach the business in a timely manner and the list could go on.
    Business also receives tax advantages when paying income tax which some folks consider a little more progressive than real estate taxes. Unfortunately, the tax arguement is often pits one method against the other without looking at the inpact on the whole.

  7. Thanks for educating us Scott and John.

    I was trying to explore the actual costs of services and what the police and fire breakdowns as percentages would be between residential and commercial. I could not find Police statistics but fire seemed about even although on an asset protection value (excluding life) one would think commercial is getting more risk protection.

    What really jumped out but is somewhat off topic is that: From 1996 to 2002, 36% of Minnesota’s fire fatalities had alcohol levels of 0.1 or higher.

    This probably won’t make me popular at Policy & Pint (with Norman anyway) but I keep wondering why Alcohol consumption does not require it’s own Alcohol consumption license. This way when someones abuse of alcohol has cost society in dollars (DWI, Domestics, Fire, etc.) their license to drink could be suspended. I consider myself a die hard libertarian but one just cannot ignore the huge cost to society of alcohol abuse.

  8. David, Interesting comment on the realtionship between fire fatalities and alcohol. Where is the statistic from and what is the basis for it?

  9. When TIP Strategies did the Comprehensive Economic Development Plan in 2006, part of their extremely thorough research included some deep digging to determine the REAL cost of infrastructure and services in Northfield, broken down by residential and commercial/industrial. The short, general answer is that residential did not pay its own way, C/I did. The city portion of residential taxes does not cover the cost of infrastructure and services they require. Hence, residential growth unbalanced by a tax increase or broader C/I tax base is a problem for Northfield.

    I don’t even know if I have that background data in my enormous archive or not, but it’s get-at-able. I will try to find it so I can post the numbers here.

  10. One area of Northfield property tax that seems to be “verboten” in all of our discussions is the fact that our two beautiful colleges don’t pay any property tax on all the land they own in Northfield. And each year, lot by lot, block by block, street by street, the colleges take more land off the city tax base. It’s perfectly legal by MN Statute, but the city built those streets with accompanying infrastructure, and approved the building permits, with expectations that the property would pay back the city for years and years. Once the college buys the property, takes it off the tax base, the city is shorted its planned long term revenue stream.
    I would like to see someone show the hard financial data that shows how much the colleges contribute to the city over and above the resulting loss of the residential tax base.

  11. Tracy:

    While you are getting your numbers, could you also get numbers on the amount of non-taxpaying land? I heard a statistic that almost 50% of the land within Northfield does not pay taxes.

  12. Larry and David:

    While you two are “evaluating” the colleges’ impact on the local economy, perhaps you should include an additional factor in your model…the number of jobs generated by Carleton and St. Olaf. They are the number three and number one employers in town. I believe that their employees comprise almost 25% of the the total jobs and if you add the jobs in town that really exist to supply and service the college employees and college students, I’m sure that a good one-third of all jobs in Northfield exist because of the colleges.

  13. When I first moved here in 1995, there was a rather vocal and what I thought to be extremely adversarial town/gown attitude expressed by some voices. I was surprised at that, because without the colleges, what would Northfield be? Lonsdale, minus the river? And I don’t mean to disparage Lonsdale; the colleges simply create a different atmosphere, by the magnitude of their presence.
    So, Larry and David, you seem to have an agenda in your questions re: non-taxpaying land, and if those questions are sincerely tied to economics then I think you should ask them more directly.
    I would ask you, how do you evaluate the benefits of the colleges as weighed against the non-taxpaying acreage? If that is what you are getting at, please make your case, rather than just putting an implication out there.

  14. Ross and Kiffi,

    I couldn’t agree more. Northfield simply would not be Northfield, in both size and character, without the colleges. In addition to the jobs and businesses that the colleges directly and indirectly provide (as Ross alluded to), how many homes are owned by people who might simply not be here if it were not for those two institutions? What do the colleges do for home value in Northfield? How much tax revenue is generated by those homes and by the value added to those homes by location in a college town?

    Would other businesses be drawn here without the colleges? Some would, some certainly would not.

    I think people look around, see Northfield as it is now, and wish the colleges paid property taxes to boost local revenues. Seems logical until you realize that a huge portion of Northfield would probably not even be here; indeed, you might be living in another town, perhaps a town that had a college or two to support a much larger tax base and larger population to support your profession. In that town, you could also look around and ask the same question, and get the same answer.

    The colleges have been intrinsic in Northfield’s development. They are linked to and inseparable from Northfield’s historic and future well-being.

    Obviously, businesses, like Malt-O-Meal, have been and continue to be an enormous benefit to Northfield in much the same way. MOM pays property taxes, the colleges do not, and I believe that’s because lawmakers prioritized supporting non-profit endeavors as tools for growing and maintaining our communities. That being said, many for-profit businesses are also frequently offered tax benefits and incentives for locating in certain areas and for developing new initiatives or operations in their existing locations. Someone with more knowledge than me about the rationale for non-profit tax exemptions and for-profit tax incentives should weigh in here.

    I hope that both the non-profit property tax exemption and for-profit tax incentives continue to facilitate responsible and healthy growth and development in Northfield.

    The “colleges should pay property tax” argument has no appeal to me.

  15. Ross, Kiffi, Brendon: Why is asking about non-taxpaying land a taboo question? I wasn’t asking specifically about the colleges, but if it could be broken down into which lands colleges, churches, etc need services, and which ones need minimal services parkland, wetlands etc., it might help a fruitful discussion about property taxes.

  16. David L.,

    I never said it was a “taboo question”. Ask away. The question, itself, does not bother me. I only gave my reasons why the colleges, part of your “non-taxpaying land” group, not paying property taxes does not bother me.

    I will admit that it would take an extraordinarily well-written, comprehensive and detailed argument to convince me that the colleges should be removed from the state-wide property tax exemption for non-profit educational institutions.

    Ross and Kiffi can defend their own statements, but I didn’t get the sense that they were saying you can’t or shouldn’t ask the question.

    So, convince me. I think the three of us offered up some “fruitful discussion” about why we think Carleton and St. Olaf should not be required to pay property taxes. That’s all.

  17. Not a taboo question, David; simply asking for an “endgame”……. One could explore the Cambridge Plan (Cambridge MA, at some point told Harvard and MIT that the city could no longer absorb the cost of services to those two institutions, and they devised a plan for compensation).

    Northfield city gov’t always seems to resist the idea of a “cost benefit analysis”approach; I just think the colleges make NF what it is, and would not want to see an adversarial relationship develop.

    Might it turn out that, all things considered , we “owe” them much more than they “owe” us?

  18. While I will in general side with Ross, Kiffi, and Brendan in this thread, I’ll jump in and say that Larry actually has a valid point when it comes to the slow accretion of the East Side neighborhood adjacent to Carleton.

    Several decades ago, the neighbors near Carleton organized and got the City to begin infrastructure replacement projects to replace failing sewers, water lines, sidewalkes, and streets in the oldest part of town.

    Now when my neighborhood, several blocks to the south wants to get the same upgrades, the City can’t keep up due to its financial woes. Meanwhile, the previous project area is becoming increasingly owned by Carleton which affects the pool of taxes that will support the still much needed infrastructure replacements. (Although, I wonder if the assessments need to be paid up once the property is removed from the tax rolls.)

  19. That’s certainly true, Steve, but it seems like, population being steady (actually rising in Northfield), each home purchased by Carleton would mean a “displaced” family would purchase or build elsewhere in town and add to the property tax roles.

    I know that’s simplistic, but it seems likely.

    I do wonder about the value-added idea. Property values in town being higher because of the colleges which would add a great deal more to the property tax pool. If infrastructure costs are not dependent on property value (my guess), then wouldn’t that represent a net gain for the city?

  20. Brendon,

    I would certainly agree that property values in town in general are higher because of the colleges, but I would add, and it seems to be proved true by the realtors I have spoken with, that the property values are higher near the colleges, especially so in the area between Carleton and Downtown.

    If Carleton continues to grow into this high value area, will the displaced families move to Dundas Heights, or whatever that area is called south of County 1? If they do move there, will this property be as valuable as that acquired by Carleton? It certainly has a different curb appeal…

  21. Don’t know for sure, Steve, but it seems reasonable to expect people to pay what they can afford, whether in the old neighborhoods or newer neighborhoods. In other words, if they could have afforded the inflated prices closer to the colleges, they would likely spend the same amount on a home in a different neighborhood. Sort of a zero-sum game there, or very nearly so, unless I’m missing something, which is entirely too likely.

  22. Steve: Larry’s point holds true for the whole town, not just the east side. If properties are not on the tax rolls, or are taken off, and the amount of taxes is to remain the same, the burden falls disproportionally on the C/I property. So, if taxes go up and I am a resident and business owner, I get hit once on my house, and again at 2 to 3 times the amount on my business.

  23. I think this is a very important discussion. The colleges do provide a huge benefit to the city, and they do make a voluntary payment in lieu of taxes. But Malt-O-Meal provides a huge benefit — and has no say in its tax rate.
    We have many fine nonprofits, from churches to nursing homes, and a fine tax-exempt hospital and tax-exempt clinics. In fact, 9 of the 15 largest employers in town are exempt from property taxes.
    We have had many demands to give downtown businesses a tax break. At the same time we are told the city needs to offer JOBZ, TIF and other support to new businesses. The schools need more money, the roads need work, we need a safety center and library and skate park and bike trails and ice arena.
    So Malt-O-Meal and McClane and Multek and Cardinal Glass and others are left to carry the load for others more deserving. These businesses can operate anywhere and have many offers to relocate. If they see the tax burden grow too large, we may find we’ve killed the geese who lay the golden eggs.

  24. Kiffi asks if Dave Luedesher and I have some underlying agenda about the colleges and their non-profit, no-tax status. No one questions the importance of the colleges’ value to Northfield and the Region.

    There is no agenda other than the fact that C/I businesses are complaining about their high tax rates and most residential owners are complaining about their high individual property tax rates. I think the State of MInnesota still lists Northfield as the city with the highest residential property tax rate outside the Twin Cities Metropolitan area.

    With all the wants we have in Northfield, someone has to pay the tax bill. The colleges pay no property taxes. They do contribute a small gift each Christmas Season to the City of Northfield. It is miniscule compared to the sizeable acreages that ST. Olaf and Carleton own in the city. And it has never increased each year to relate to inflation.

    So, the rest of us – both residential and C/I have to assume all the rest of the tax burden. Both colleges continually take residential property off the city’s tax roles. Most of these property owners are not relocating to Dundas as Brendon suggests. Most are estates whose heirs are selling to the colleges. In fact it would be an interesting legal case to determine whether a private college is, in fact, a non-profit institution, when they are “gifted” thousands of acres of farm land into their endowment fund.

    But Tracy is somehow convinced that Residential property doesn’t pay it’s own share of the city services, but C/I does. The residences pay property taxes for literally decades while C/I generally change every decade or so. Maybe Tracy can explain her reasoning?

    The only agenda I have is how much more can the residential tax base and the highly-stressed downtown businesses take on when our colleges, schools, parks, city facilities and churches don’t pay into the city tax pool?

  25. Larry,

    We have a discussion guideline that requires you to use the first-person tense when disagreeing with people who are participating here.

    So instead of you writing, “Kiffi asks if Dave…”

    you need to instead say something like

    “Kiffi, you asked if Dave…”

    and instead of “But Tracy is somehow convinced that..” and “Maybe Tracy can explain her reasoning”

    “Tracy, you seem convinced that…” “Tracy, can you explain your reasoning”

    Make sense?

  26. Larry, here are the reports on the Citizens League web site on Property Tax Studies:

    Every year, the Citizens League produces three property tax studies: the Residential Homestead Property Tax Survey, the Tax Increment Financing Report and the Fiscal Disparities Report. The reports and associated tables (beginning in 2003) are available here.

  27. If Carleton and St. Olaf cover their own costs of maintenance, security, sewer, garbage, campus roads etc without the benefit of property tax services then they sure do a nice job – maybe the answer is let the colleges run Northfield’s services. My favorite Northfield park is the lower arb – who pays for that ?

    Does anyone know the total Northfield residential property tax revenues and the total commercial property tax revenues (in raw numbers) ?

  28. Brendon,

    You are probably correct in the zero sum game in terms of how much will people pay for their house. From my perspective as a homeowner, I see 20 year old infrastructure improvements being incorporated into Carleton’s holdings and the new infrastructure being built for the new areas of town, but very little money left to keep working on the remaining older areas of town, or at least not nearly enough as the City Engineer says we have something like 17 miles of substandard infrastructure that needs to be replaced.

    My concern is less about the loss of the tax roll property as it is about my taxes subsidizing both the new growth and the past replacement projects that are being “taken out of circulation” yet my neighborhood has been on a “priority list” for the last nine years.

    Additionally, I think there is a real link between a downtown and its surrounding neighborhoods. They feed off of each other in terms of vitality and walkability, but if all the investment goes to downtown and the neighborhoods become “disinvested” then that causes downtown to suffer as well.

    Of course this is more anecdotal in nature, however, from my experience it applies to cities both large and small – perception doesn’t stop where the zoning map changes use.

  29. I don’t think it is likely that the colleges will begin paying property taxes anytime in the near future. I do think that the city should, whether by zoning or regulation, stop the spread of the colleges into residential and community areas. Whether to protect the tax base or the character of the neighborhoods…it seems like a good idea. I too, am very grateful that the colleges are here. But it seems to me the city could be more forceful in protecting its interests.

  30. Sorry to be late to this conversation, but I think it would be useful to correct an assumption that appears to be widely held and is not accurate. Carleton pays annual property taxes on the parcels that it owns in areas zoned by the City as residential and has for many years. This is the case whether the buildings are used for administrative or residential purposes. The college also pays the City of Northfield for the municipal services (sewer, water) that these properties require and use. The sum of these two numbers is a six figure total annually and is in addition to the annual voluntary contribution that Carleton gives to the City to use as it deems best.

    I can’t speak for St. Olaf since I don’t know whether its situation is the same in this regard.

    (Full disclosure: I’m a Carleton employee.)

  31. The colleges and commercial/industrial (C/I) land present the opposite ends of the spectrum on the property tax issue.

    One of the (many) reasons that the Chamber has been pushing for C/I land is that additional C/I land brings in more tax revenue as business expand and relocate. We believe that it generates more property tax than it expends in services (notwithstanding John McCarthy’s comments). The colleges do not pay any property taxes, and still require services.

    I don’t know what the percentages are. But, I look forward to seeing what Tracy digs up.

  32. I pulled out a copy of the Comprehensive Economic Development Report from the TIP Strategies June 2006 work and found a number of interesting facts relative to the reasons they recommended we focus on Commercial/Industrial development (you may wish to locate a copy of the 98 page report and thumb through it once again). On page 11 of the report you will find they mention of the cost of community services from a study of 70 Cities across the country by the American Farmland Trust. It states they found C/I land required on 29 cents in services for every $1.00 of taxes paid. By comparison, residential land is a net drain, requiring $1.15 in services for each $1.00 of tax collected. While they admit it can be criticized as an oversimplification of a complex issue, I think the main point remains….healthy communities need a good mix of business/jobs and residential.

  33. Some very good comments on taxes….thanks Scott, Kiffi, John and others. One thing you cannot forget in looking at commercial property is the fact that there is a ‘special’ line item for state general tax. This is something that residential properties do not pay. It sends a huge amount of money to the state to be redistributed.

    In regard to Kiffi noting that there are more votes tied up with residential property than commerical property, that may be something that some legislators consider (I did not) But I do know that there are many legislators that feel commerical property burdens are spread over a wide net, so it is easier—and some feel wiser— to get money from that sector. In other words, raise commerical real estate taxes by $1,000 and the owners pass along that cost to the consumers of their products, so the widgets have to increase by .0001 per unit….or a glass of beer has to go up a penny, etc.

    Everyone concerned about commerical property tax rates should remember that there were efforts underway last legislative session to both increase the state general tax from 10% to somehwhere around 15%. Efforts will most likely be working on this again this session.

  34. Dan: Your clarification on where Carleton pays taxes, i.e. for buildings they own in the residential area whether used for housing or administration immediately raises a question in my mind…….

    When the old Middle School is developed, by Carleton , as their new “Art Union” ( not sure of the name), will they pay property taxes on that multi,multi-million dollar building? Because if so, that is a HUGE bunch of tax dollars added to the community “pot”.

    Then those who feel the colleges don’t pay their share would certainly have to see that tax burden as a trade-off for moving out of the College Development Zone, and into the neighborhood.

  35. I glanced through Northfield’s 2006 Comprehensive Annual Financial Report. The report does not seem to break out tax revenues as residential and commercial. The report does show that the top 10 properties as a percentage of Northfield City Tax capacity dropped from 21.95% in 1997 to 11.43% in 2006. This seems significant. The list is on page 188 of http://www.ci.northfield.mn.us/assets/2/2006-Comprehensive-Annual-Financial-Report.pdf . The list is also striking in that in 1997 the high value properties were much more industrial than in 2006.

  36. The impact of the colleges has to be seen holistically, not just on the simple basis of the number of jobs the institutions “produce” or the taxes they do/don’t pay. Those items don’t provide a full or accurate picture.

    An interesting report would show how many of each college’s employees — broken down between exempt and non-exempt and also by annual salary cohorts — actually live in the local area. Of those, how many rent and how many pay local property taxes? in Northfield? in Dundas? in Nerstrand? etc.

    I would not be surprised the report (especially if one could run it for the past 5-20 years) shows that the number of college employees (particularly administrators and professors) who actually live in the local area — for the sake of example, specifically the defined Northfield municipal boundaries — has been decreasing over the last 20 years. But I’d like to be proved wrong if anyone can produce facts/evidence to the contrary.

    I also think it would be helpful for the City (not the colleges) to produce a report that shows exactly what parcels under the control of each college are “nonprofit” (nontaxable) and what parcels are taxable (comm? res?) and at what rate. What percentages of each college’s holdings are taxable? Perhaps the City already does this…

    There’s no denying that both colleges add great benefit to this city. That said, I think it would be appropriate — and in the best interests of the city and the colleges — to have an accurate accounting of these things so that the citizens and city government can make accurate determinations of the needs of this city. The full impact of these nonprofits on our city should be considered as important as those of our commercial and residential properties / citizens.

    As I think some others have mentioned, I would also be interested in seeing a report from the City (not the colleges) that breaks down exactly how much (both in money and time) of ALL services provided by Northfield (sewer, water, police, fire, emt, etc.) are actually being “consumed” by each of the colleges? Which of those services do the colleges pay for and how much (dollars and percentage)?

    If this kind of information is produced annually, the citizens of this city could have a better sense of what the colleges actually pay and if the “annual donations” of the colleges significantly offset the cost of providing the “unpaid” services to the colleges. If the colleges are truly paying “their share”, then there will be evidence to show that. If not, then perhaps the City and the Colleges need to rethink and possibly renegotiate their relationships for the benefit of the whole community.

    Lastly, I’m surprised that the City’s Comprehensive Financial Report does not break out revenue. I think it should in order for citizens to have a more accurate picture of the City’s economic health.

    (Full disclosure: I have been employed by each of the colleges at different times in my career — and am not currently employed by either. Like them both, but don’t think either is perfect…)

  37. Brendon, in #20 you say “each home purchased by Carleton would mean a ‘displaced’ family would purchase or build elsewhere in town and add to the property tax roles.”

    I think if a report was produced by each of the colleges, it might show that many of the residential properties now owned by the colleges were either left to or bought by the colleges from estates or from owners willing to sell to the colleges.

    So I think it is inaccurate to used the term “displaced” when referring to the prior occupants of most of the residential properties acquired by St. Olaf and Carleton near their campuses. In many cases, there simply were no occupants to be displaced and the sales to the colleges did not result in a family creating further tax revenue for the City in a new location. Some of these properties may have gone off the tax roles and never returned. In some cases, the colleges were left a house and then sold it to a another party, pocketing the sale price but leaving the property as residential and with a property tax paying occupant.

    Again, I do not know if any report exists that would prove this and I’d be happy to be proved wrong.

  38. So I think it is inaccurate to used the term “displaced” when referring to the prior occupants of most of the residential properties acquired by St. Olaf and Carleton near their campuses.


    That’s why I put “displaced” in quotes. I recognize it wasn’t the most accurate term to use, and that many houses purchased are actually empty or willed or estate properties. Maybe “replaced” would be better. My case was more general: population in Northfield being equal (actually rising), a family looking to move to Northfield (for whatever reason) that may have purchased one of those homes would then use that money to purchase or build elsewhere in town.

  39. And so MOM is negotiating to buy new warehouse space in Faribault, and the accompanying tax dollars will leave town (the existing operations will stay). Add that to the College City tax dollars and the Ryte Way dollars and others and it seems that the business park should be a higher city priority than liquor store or new wayfinding signs downtown. I’m not saying the other projects shouldn’t be done, but it’s going to be hard to keep paying when the folks with the checkbooks are depositing their tax money elsewhere.
    I know they wouldn’t be in the city limits, but it seems that distribution centers along I-35 make sense in cutting traffic, eliminating new road construction and creating sites that would work for tenants. Remember, while we would like new facilities in certain locations, that may not work for customers. Keeping money in the county is better than losing it completely.

  40. I’m still out of town, but I received an email from Brian O’Connell, the City’s Community Development Manager, in response to my request for information regarding the breakdown of taxes and services for C/I and residential land classifications.

    Brian told me that there was not an easy way to get at this information (“it is very complicated due to the way budgets are prepared and the way tax revenues are collected. Things are done in the aggregate and not by sub-land use category”) He said he’d look to see what data was collected by TIP and other sources and would get back to me.

  41. Tracy: The City can tell you what % of its tax revenues from from C/I property and what % comes from residential. They could even break the residential % down into signle family and multi family. But I would be skeptical of any city government that says it keeps track of its service costs to C/I vs. Residential parcels. I don’t know of any city that does that.

  42. Scott is exactly correct in describing how city government does not keep track of service costs / benefits to the various property classes in their jurisdiction. Rick quotes a study of 70 communities. I join Scott in being a skeptic concerning tracking the cost of services provided to different property classes. What were the definitions of the required service? If the study was nationwide, every city and state has slightly different ways of funding and providing service. Was education a service required by residences and not C/I? As Scott points out, the revenues from different property classess can be easily determined, but not the expenses.

    I believe an argument could be made that even within the commercial class there are different service requirements. Do big boxes pay more for services required than compact downtowns? This does not even take into account industrial which may the highest taxed of all for services required. What part of what street services C/I and what part services residential? And of course, how do exempt properties fit in?

    The table that is the quality of life in Northfield stands on many legs. I suggest it cannot carry all of the weight if the legs keep trying to support only the weight directly above them. As Rick said a couple of days ago ………healthy communities need a good mix of business/jobs and residential.

  43. Scott or John – am I reading the Northfield budget report correctly that revenues jumped from $21 million in 2005 to $29 million in 2006 ? Is this a true ongoing revenue gain or does government accounting create swings like this ?

    Also, can you shed light on the approx $5.0 million increase from “charges for services”, 2.5 million of these services are classed as “Governmental Type Activities” and 2.5 million as “Business Type Activities.” The business type activities had 2005 revenue of $7.8 million and expenses of $7.4 million – these same revenues were $10.5 million in 2006 with almost the same expenses of $7.4 million – THATS A GOOD BUSINESS! What are these services ?

    THANKS !

  44. I certainly hope that Northfield doesn’t lose this opportunity. If Northfield passes it up, I am going to recommend to the Chamber that we try to focus our efforts in Dundas.

  45. David: I find it difficult to see the productiveness of your position in your comment, #45. I go to almost all the council meetings, and I can honestly say it is only very rarely that I have seen the Chamber there advocating a position to the city council.

    How would you be benefitting Northfield and your NF Members, by advocating “concentrating your efforts in Dundas” ? That sounds like a purely punitive reaction.

    If the Chamber is working on advocating for a specific policy in Northfield, they must be doing it “behind closed doors”, and not directly, publicly, to the decision makers. Wouldn’t your members gain by a public expression of the policies you feel would benefit business in Northfield; that public understanding then building support for your position?

  46. Kiffi:

    The Northfield AREA Chamber passed a resolution almost three years ago advocating that at least 320 acres be dedicated for commercial/industrial land. We haven’t been keeping it a secret. The Planning Commission was aware of it in drafting the Comprehensive Plan. They chose to focus more on mixed used development.

    If that proves too difficult, or the Planning Commission is opposed based upon destroying the “small town feel”, then the Chamber has no choice but to look in the AREA for someplace else for our members and incoming business (as College City Beverage had to do).

    Many thanks to the EDA, Rick Estenson, and others for trying to move along the business park concept.

  47. There is a relatively new “business park” – actually less park and more business located in Mpls around the area of Stinson and 35W that is a horse shoe building with Semi Truck Service to the back inside the horseshoe. The building has been very popular from the moment it opened and has a look much more in keeping with Northfield than say the business park of Cedar Ave in Lakeville. I think the businesses actually prefer being close to each other for a host of reasons. Now that I think about it – what is the logic for the “park” in “business park,” is it just to use up more land or is there a real purpose ?

  48. Dave,

    At the risk of redundancy, I have to quote from the Economic Development Plan – research and advice from a company with an excellent perspective developed from intensive experience on a national and international level – which was adopted by the City council about 18 months ago:

    Because of current market considerations and the potential for negative impacts we recommend a site of no more than 120 acres. Accommodating the expansion needs of existing business should be the initial focus. Subsequent marketing of properties should be targeted to the industry sectors outlined in this plan. (emphasis mine)

    Size DOES matter; scale can make or break a building, a project, or a town. I am extremely concerned that a large 300+ acre “business park” be justified on grounds other than the very speculative “If you build it, they will come.” So far, I haven’t heard that justification.

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