6.0. EDSR 07-08-2002 - Laserfiche WebLink

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City of Elk ..�.� River MEMORANDUM TO: Mayor & City Council CC: Economic Development Authority FROM: Catherine Mehelich, Director of Economic Developmen DATE: July 8, 2002 SUBJECT: Minnesota Property Tax Abatement - History of Use Attachments • Article: "Abatement...the new development tool of choice.",April 29, 2002 MN Real Estate Journal. • Staff Research of area communities • Background At the June 24, 2002 Council meeting Councilmember Dietz had inquired about the use of tax abatement in other Minnesota communities. Analysis According to the city's financial advisor, Sid Inman of Ehlers &Associates, tax abatement was introduced in 1997 and its use by communities has been limited to the last 3-years. Ehlers &Associates have experienced that tax abatement is not commonly used in metropolitan communities where redevelopment is prevalent and, abatement does not provide the same amount of benefits as a 25-year tax increment finance district. Ehlers has found that abatement is more commonly used in Greater Minnesota on economic and industrial development projects because of its simplicity and less restrictions than TIF. Abatement is also used on special and unique projects that the municipality strongly desires but the project would not qualify under statutory TIF requirements (e.g. office or retail/commercial development). Staff research of Anoka, Rogers,Ramsey, Otsego,Big Lake and Andover found limited to no use of tax abatement,nor a policy. The City of Golden Valley and Hennepin County did participate in tax abatement for the 400,000-square foot General Mills corporate office development. • Attached is a MN Real Estate Journal article written by Mr. Inman and Ehler's associate, Mark Ruff, `Abatement...the new development tool of choice." A copy of the article was provided in the May 13, 2002 EDA meeting packet. This article provides additional background on the history and issues related to the use of tax abatement.