BY COUNCILOR STAUBER:
RESOLVED, that the city of Duluth economic development tax abatement financing (TAF) policy, a copy of which is on file in the office of the city clerk as Public Document No. ____________, is hereby adopted.
STATEMENT OF PURPOSE: The purpose of this resolution is to adopt a policy for the city’s use of tax abatement financing (TAF) as a tool to spur economic development in the city and to inform potential developers and the general public regarding the availability and use of that tool.
Minnesota Statutes Sections 469.1812 through 469.1815 authorizes the various taxing jurisdictions to abate their portion of property taxes and to dedicate the taxes so abated to various types of economic development and housing projects. Unlike tax increment financing, each taxing jurisdiction maintains control over its taxes and must agree to their use to benefit any project.
Abatement is limited to a term of 15 years unless the county or the school district declines to participate in abatement for the project in which case it can extend to 20 years.
Projects qualifying for abatement are generally those where at least 50 percent of the payroll associated with the project will be involved in manufacturing, agricultural processing, mining, research and development, warehousing or qualified high technology.
Abated taxes can be used to reimburse a developer for expenses incurred in a project, can be used to reimburse the city or other public agencies for the costs of public improvements necessitated by a project or can be in the form of deferred property taxes with abatement of penalties and interest.
The policy echoes statutory requirements for TAF, such as an overall limit on its use, and also imposes additional limitations such as the living wage requirement and the job creation or tax base creation requirements.
The city had previously adopted a TAF policy for housing projects; this policy for its use in economic development projects is similar in all material respects.