Mayor agrees it's a 'no-brainer' but says the details need to be hammered out

    Although they said they’ll need more details before they officially establish anything, members of the Crookston City Council and Mayor Wayne Melbye Monday night, at a Ways & Means Committee meeting, seemed to like what they heard when local property owners and developers John Bridgeford and Jeff Evers pitched the establishment of a “Renaissance Zone” to spur development in downtown Crookston.

    Bridgeford and Evers made their presentation as part of an update from the Downtown Crookston Development Partnership’s Economic Vitality Committee, to which they belong.

    At its heart are two main components:

    • A 15-year property tax exemption on buildings, structures, fixtures and improvements purchased or rehabilitated as a zone project for any business or investment purpose on the added value only, not the existing taxable value, Bridgeford explained, so there is no revenue lost by any of the taxing agencies, like the City of Crookston, Polk County, or the Crookston School District. Land is not exempt.

    • A five-year personal tax exemption on income derived from a business or investment location within the zone. Property tax breaks are aimed at property owners, Bridgeford said, but income-tax breaks are aimed at tenants such as businesses.

    There’s a third component as well, although Bridgeford and Evers didn’t touch on it at length Monday. It would involve historic preservation and renovation tax credits from state income tax for up to 25 percent of the amount invested in the zone project, up to $250,000. Any unused credits can be carried forward for up to five taxable years.

    Interested developers would need to complete an application detailing their downtown Crookston Renaissance Zone projects, which would be reviewed by the Downtown Crookston Development Partnership, CHEDA and/or the city council.

    Renaissance Zones have been and continue to be a major economic development driver in cities across North Dakota, Bridgeford and Evers said, but have been slow to take off in Minnesota. Fergus Falls is the most recent city to launch a similar initiative, Bridgeford said.

    “I feel we need to have a better offer for people who come in and want to spend their money,” Bridgeford said. “We need to show people that we have a real program out there, and make it clear that we want people.”

    Bridgeford said applying for a Renaissance Zone project could be a more comfortable option for developers who aren’t necessarily eager to make their business plan and personal financial information public.

    “This would show we’re open for business,” Evers said. “There’s a lot of business development waiting to happen right now.”

    “I know of a few people interested in spending money on their properties right now, but they don’t want to get smashed right away with taxes as soon as they’re finished with their building,” Bridgeford added. “It’s zero cost to the city; no one is asking for a handout and you’d keep collecting the taxes being collected right now.”

    Although Renaissance Zone projects would likely increase building and property values over time and, thus, increase revenue coming into the City, Evers and Bridgeford said the City’s focus can’t always be so focused on expanding the tax base. “Maybe we shouldn’t focus on the money part right away and instead focus on developing our downtown first, and see what comes,” Evers said. “Businesses look at what’s offered here and they just go elsewhere. …If our offer here is worse, if we keep doing the same things we’ve been doing we’re going to get the same results.

    “We need to make the offer strong enough so that businesses will come,” he continued. “There’s pent-up demand, literally millions of dollars out there if we just make the offer strong enough. …Right now, our price of admission is higher than everyone else.”

    Both Evers and Bridgeford said Crookston could potentially be a “poster child” for Renaissance Zones that leads to more being established in other Minnesota cities.

    “If our historic buildings don’t get any love, they go away,” Bridgeford said. “We’ve seen that before, and we don’t want to see it any further. Let’s get these buildings back in use, get the tax revenue down the road, see increased building values and more sales tax from new businesses, and more people, and more property tax revenue from homes.”

    Melbye said the council is open to further discussing a development incentive package like a Renaissance Zone. “We want it to be something viable, something we can live with, and something guys like you could grow into,” he said. “It’s a no-brainer, I understand that, but we need the concept put together and packaged up.”

    DCDP facilitator Dillon Fenno said the next step will be to formulate a “nice, tight bundle” for the council to consider. “It’s nice knowing the council is open to this,” he said.