Changes to North Dakota’s downtown development incentives drew attention in a Senate committee last week.
By MIKE JACOBS
Changes to North Dakota’s downtown development incentives drew attention in a Senate committee last week. Supporters of the tax breaks pushed back against the notion that most of the benefit went to the state’s larger cities.
The bill under consideration in the Senate Finance and Tax committee would end the income tax exemption for developers of property in so-called “renaissance zones.”
Rep. Rick Becker, a Bismarck Republican, argued that the income tax exemptions aren’t appropriate, since the loss of revenue has to be made up statewide. The other incentives, property tax exemptions, are made up locally.
The argument resonated in the House, which passed the bill, HB 1182, by a vote of 48-41.
The hearing before the Senate Finance and Tax Committee didn’t focus on the philosophical argument, however, but on the economic impact.
And much of it came from small towns.
Carol Goodman, Cavalier County Jobs Development Authority, argued that the income tax exemption helped attract developers for the 66 projects approved in Langdon, the county seat. That’s more projects than in much larger cities, such as Grand Forks, which has 53 approved projects. It also rivals the number of projects in Watford City, an oil boom town, which has 67, and in West Fargo, the state’s fastest growing community, which has 73 projects.
Statewide, a total of 55 communities have renaissance zone projects, according to Rikki Roehrich, renaissance zone program manager for the state Department of Commerce. Fargo has the most, 210. The cities of Cavalier, Hillsboro, Lakota, Munich and Park River have one each. Hope, population 258, has 13.
In her testimony, Roehrich argued that taxing income from leases would have a statewide impact.
“While lease projects can be a great tool to attract a diverse commercial base in downtown cities, we should not forget that these projects often serve to simply retain or allow for smaller rural communities to attract businesses that provide vital services to their population.” She said. “Without the lease and leasehold improvement tax incentives I believe you will see a substantial drop in the number of leases and commercial projects in downtown districts across the state. Those in less populated areas may never happen and those in the larger cities may move to the city’s peripheries where rent is less expensive.”
Roehrich also warned that the legislation could affect other development incentives, including the historic preservation and renovation tax credit.
Fargo City Commissioner Dave Piepkorn said the incentives had a major impact on downtown Fargo. ESPN wouldn’t have brought its Game Day programs to a “dilapidated downtown,” he said, and Fargo and the state would have missed out on the favorable publicity the programs generated.
Borrowing a sports analogy, he urged, “Let’s keep running the football.”
Bernie Dardis, a Fargo businessman, told the committee that the incentives “have ramifications.
“When you go to downtown Fargo, you don’t get to eat where you want to, drink where you want to or park where you want to. “
The downtown renaissance zone is that busy, he said.
Opponents of the incentives pushed the policy question: Is it fair to ask voters statewide to make up the taxes lost through these incentives?
That’s what the Senate must decide. Senators could pass the bill, sending it to Gov. Doug Burgum, who has benefitted from renaissance zone tax exemptions. They could kill it, ending the issue for this session, at least. Or they could amend it. The last would force a conference committee with the House.