Tax-Exempt Review Committee - June 22, 2021 Minutes
TAX EXEMPT REVIEW COMMITTEE
Fargo, North Dakota
Regular Meeting Tuesday, June22, 2021
The June 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, June 22, 2021.
The committee members present or absent are:
Present: Dave Piepkorn, Mayor Tim Mahoney, Bruce Grubb, John Cosgriff, Kent Costin, Jessica Ebeling, Mike Splonskowski, Erik Johnson, Jim Gilmour, Joe Raso
Absent: Levi Bachmeier, Jim Buus, Jackie Gapp
Commissioner Piepkorn called the meeting to order at 1:00 p.m.
Minutes Approved
A motion was made by Mayor Tim Mahoney to approve the minutes from May 25, 2021. Kent Costin seconded, motion carried.
Application for PILOT for Tecton Products, LLC
Jim stated that this was an application that had been received previously. Initially they wanted to add 100,000 square feet which has been updated to 150,000 square feet. It would not increase the initial number of jobs, but could have the potential of greater number of jobs in the future. The 100,000 square foot addition has already received the full approval of both the city and the county. It needs approval for the additional square footage.
Tom Gohdes, Director of Operations at Tecton, stated based on the level of growth this year they plan on increasing to 150,000 square feet, all the same items are in play. They have increased their wage quite a bit, so all the jobs they are bringing to the region will be starting at $19.50 an hour rather than $16.50 an hour, including incentives all jobs are paying over $20 an hour.
Joe Raso stated the most recent labor numbers for Cass County, year over year show manufacturing wages increasing over 14%, which is probably one of the highest industry percentage increases of wages in any industry sector in our region.
Kent Costin moved to approve, John Cosgriff seconded, motion carried.
Discuss Economic Incentive Policy
The first item is a memo Jim put together focusing on the Economic Development Policy changes, these would be the changes for the primary sector jobs, there was some editing done. The editing firms up the language and states that the focus is on primary sector businesses that will bring jobs to the community. The policy had allowed for non-primary sector mixed use developments outside of the downtown to qualify for the PILOT, a couple of inquiries outside of downtown had been considered and neither was approved, so Jim removed that portion. Working with the EDC, it has been clarified that if someone is going to lease a space, that they don’t lease it before they apply for the incentive. If a lease is signed contingent on the incentive, it would be acceptable. Revisions to the scoring criteria would be looking at the number of jobs in year three in addition to year one, recognizing that it does take several years for a business to ramp up. The scoring would also require some benefits in addition to wages. Jim stated Commissioner Strand and Commissioner Preston would like to see some sort of scoring based on safety records of the company. They are also looking into greater points for larger capital investments in buildings, also including points for manufacturing equipment. Clarification was added as to when you qualify for the five year versus the ten year exemption.
Commissioner Preston introduced the following suggestions: the salary should be at $15 an hour, also regarding the single family housing she suggested reducing the exemption to $75,000 which is currently at $150,000 and suggested that we exclude houses that exceed $500,000 in value.
Dave Piepkorn stated that we need to be careful putting too many regulations on the tax exemptions because Fargo does not exist in a vacuum. He also stated, Fargo has competitors all around the area, all around this country and the world.
David Reed, President Elect of Home Builder Association, said that as a representative of HBA these tax exempt policies impact the entire economy. Specifically as Home Builders Association they want to address the proposed $75,000 limit, which they believe is low. The $150,000 was enacted in 2009 and they believe there is a case to be made for it to head in the other direction. Home builders are facing increasing prices. The average cost to build a home nationally has increased $36,000 since April of 2020. In February of 2021 the National Association of Home Builders released a report that stated, for every $1,000 increase in the price of a home, 200 purchasers lose the buying power to purchase a home in the Fargo area. Also from NAHB, Fargo’s home ownership rate is at 38%, compared to the regional area including West Fargo and Moorhead which is at 52.5%, the national rate is nearly 67%. In addition they want to state their position on the $500,000 limit, there is an argument to be made that, $500,000 is not a high-end home anymore, the state average is closer to $380,000 for a new home.
The meeting was adjourned at 1:54 pm.