County adopts tax abatement policy for businessesFirst Carlton County put together a Tax Increment Financing Policy for Townships, then a County Business Subsidy Policy. As of this week, it has a brand new Tax Abatement Policy for Economic Purposes as well.
By: Wendy Johnson, Pine Journal
First Carlton County put together a Tax Increment Financing Policy for Townships, then a County Business Subsidy Policy. As of this week, it has a brand new Tax Abatement Policy for Economic Purposes as well. All three economic development mechanisms are aimed at projects on track to make a positive economic impact on the county.
County commissioners unanimously approved its newest tax abatement policy at their meeting on Tuesday. According to Economic Development Director Pat Oman, the process of developing such a policy was first begun in 2012 after the county had received a request for tax abatement from the developer of the Walgreen’s store as it was building a new store in the city of Cloquet.
“There was no policy in place regarding [tax abatement] at that time,” said Oman, “so the board directed me to begin work on putting one together.”
Oman presented a completed draft resolution of the policy at last week’s meeting of the Committee of the Whole, whose members reviewed it and passed a resolution to forward it on to this week’s meeting of the board for its final consideration.
The purpose of the new policy is to establish the process and criteria for businesses proposing economic development projects in order to apply for tax abatement financing.
“The tax abatement policy will allow the county to review any business who wants to abate their taxes for the purpose of future development,” explained Oman.
Such applications, which Oman stressed must be submitted prior to the start of a proposed project, must first go to the county’s Economic Development Authority (EDA) and are then passed along to the county board. A public hearing will be required before any final decision is made.
Basically, this is how it works. If approved for tax abatement, a business undertaking a new economic development project in the county will pay its taxes up front but a percent of that amount will go back to the business as a revenue stream. The policy has a built-in payback formula — basically up to five years in the form of new taxes created, according to Oman.
Several guidelines are reviewed by the county in deciding if a project qualifies for tax abatement financing. The retail or service business must meet at least two of the following criteria: creation of quality employment; creation of tax base; providing or helping to acquire financing or construction of public facilities; helping develop or renew blighted areas; helping provide access to services for residents of the county; or retaining a business if it is at risk of relocating outside the county.
Businesses currently located in the county which are expanding and adding on to the space of an existing building will be given equal consideration to new businesses seeking to locate in the county.
Though Oman said there are no prospects at this time for tax abatement financing investment, the policy states that if and when there are applications pending, priority will be given to projects that create or retain jobs that pay wages in excess of those required under the Carlton County Business Subsidy Policy, those which include manufacturing, distribution or technology-based firms or businesses which employ a majority of professional or skilled labor, or projects with buildings of constructed of block, engineered concrete, brick or engineered steel which contain decorative accessory materials.
The county passed its Tax Increment Financing Plan for Townships last year, making it possible for townships to set up tax increment financing for projects within their boundaries through the county EDA. The Business Subsidy Policy requires a public hearing process before any type of subsidy can be granted to economic development projects, such as free land, zero-interest loans, etc. Any business applying for a loan of over $150,000 from the county also triggers a Business Subsidy review.
In other business to come before the board, commissioners received a communication from Enbridge Pipelines, indicating that the company’s Land Services Department will soon contact local landowners to notify them of upcoming route surveys and gain permission to enter their property for the construction of the company’s new crude petroleum pipeline from Tioga, N.D., to Superior, Wis. Construction is expected to take place between late 2014 and early 2016, and plans are for the pipeline to basically follow the route of the existing Lakehead Pipeline System. Some maintenance to the existing pipeline will take place as well.
Enbridge stated that no significant impacts to landowners are expected as a result of the project.
Another communication was received from Mark Roberts, chair of the Cloquet Area Trail Committee, a local group convened to work with the Department of Natural Resources to create a St. Louis River Trail Plan connecting the Munger Trail in Carlton to the city of Cloquet. Participating agencies include the Cloquet Area Chamber of Commerce and local and state governments.
The work of the group was forestalled following the completion of Phase One, from Carlton to the Scanlon Park-and-Ride lot, due to lack of funding. Roberts is now proposing that the committee be reconvened in order to try to put the project back on track. An initial kickoff meeting was held on Wednesday at the Cloquet Area Chamber of Commerce.