Tax Exempt Review Committee

Boards, Commissions & Committees

Tax-Exempt Review Committee - November 27, 2018

Regular Meeting Tuesday, November 27, 2018

The November meeting of the Tax Exempt Review Committee of the City of Fargo, North Dakota, was held in the City Commission Room at City Hall at 1:00 p.m., Tuesday, November 27, 2018.

The committee members present or absent are:
Present: Robert Wilson, Jim Gilmour, Jim Buus, Kent Costin, Dave Piepkorn, Bruce Grubb, Jessica Ebeling, Mark Lemer, Erik Johnson, Jackie Gapp
Absent: Joseph Raso, Chuck Hoge, Mayor Tim Mahoney, Ben Hushka
Others Present: Kati Wilcox

Commissioner Piepkorn called the meeting to order at 1:00 p.m.

Jim Buus made a motion to approve the minutes from the October meeting held on October 23, 2018. Kent Costin seconded the motion, which carried.

Review and Approve Changes to PILOT & TIF Policies and Downtown Housing Incentive Area Map
Jim Gilmour introduced the agenda item by explaining that the purpose of reviewing the policies is to streamline all aspects into one document. These changes also enable this specific committee to review and make recommendations on all tax incentive applications. Mr. Gilmour moved forward to discuss the redline version of the policies to reevaluate the proposed changes, inviting members of board to ask questions at any time.

Effective Date and Term
At Commissioner Tony Grindberg’s suggestion outside this meeting, wording was added clarifying that the current policy would remain in effect until the next review following the 2020 city election.

General Evaluation Objectives
Jim Gilmour explained the purpose of adding “For Job Creation and Retention Projects” to the general evaluation objectives is that it provides distinction between scoring for job creation and TIF projects. Mark Lemer asked for clarification regarding projects that are an expansion of existing businesses and have not allowed for an increase in available jobs due to automation. Mr. Gilmour explained these instances would fall under the retention aspect of the policy, similar to approving a PILOT application that allows an organization to maintain its presence in Fargo and consequently the employment levels it currently provides.

New Apartment Buildings Within Downtown Area Plan
Previous PILOT policy offered at 100% exemption for the first five years and 75% exemption for the five years following for new apartment buildings in the downtown area. The new policy has been updated to allow the exemption to be based on a financial review and “but-for” test for the latter five years. This allows developers to submit applications based on what they believe is feasible and the committee will decide the validity of the request.

Commissioner Dave Piepkorn requested input from Jim Buus regarding the policy changes for lower income apartment complexes, as they are significant. There is now an opportunity for an exemption of up to 100% of the improvement value, versus the flat amount granted in the previous policy. The definition of “lower income apartments” was also added. Jim Buus agreed that such an aggressive change is necessary for the city to provide much-needed low-income housing. Jim Gilmour also added that some of the wording changes allow the city more flexibility in creating low-income housing.

Objectives of PILOT Program in the University Mixed Use Zone
At the suggestion of a developer, an additional objective to create attainable housing options was added to the PILOT program in University Mixed Use (UMU) zones, versus strictly low income. This will assist those residents closer to the middle-income ranges also looking for housing.

University Mixed Use PILOT Policy and Guidelines
Policy number five was updated to mirror the TIF policy regarding land acquisition. This change will prevent developers from purchasing land far above market values with the expectation that cost will be reimbursed by the city.

Tax Increment Financing Policy
Jim Gilmour called attention to policy number 17 under the Tax Increment Financing Policy that states the city may require future reviews of financial performance on large-scale projects. The amount of TIF assistance may be altered based on the success of the project. Developers will know about the potential for this review before agreeing to the terms of the application. There was also discussion regarding follow-up reviews for job creation projects to audit and track job count.

After discussion regarding unclear wording between policies, Jim Gilmour suggested the city attorney review the language before final approval. Mark Lemer agreed, stating this process is not time sensitive so precaution should be taken to ensure accuracy and clarity.

Mr. Gilmour continued with the review of updates, pointing out two separate tracts for TIF assistance: developer requests and city initiated plans. Now, a developer may reach out to the city requesting assistance, or the city may see a need for larger project, such as Roberts Commons downtown, and have the ability to create a new TIF district before working with developers to begin work on the projects.

At Kent Costin’s request, wording regarding input from the Finance department will be removed per previous discussion relating to streamlining the application process to only the Tax Exempt Review Committee.

Jim Gilmour also focused on the number of objectives each application is now required to meet, variant on the type of project: housing (five of seven objectives), commercial (five of eight), or downtown or mixed use (seven of 11).

Following the discussion of the changes to the policy, Jim Gilmour stated he would make the final changes and bring the updates directly to the city commission after reviewing job creation audits with Ben Hushka and Erik Johnson. Commissioner Piepkorn clarified the opportunity for public comment at the City Commission meeting as well.

Dan Madler from Beyond Shelter Inc., and Austin Morris from Enclave Development both spoke briefly about encouraging more discussion on promotion and assisting low income housing projects.

Jessica Ebeling made a motion to approve the new policy with the pending changes, which Jim Buus seconded. The motioned carried. The meeting adjourned at 1:42 p.m., Tuesday, November 27, 2018.