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County Board debates tax abatement for new BE Chamber building

By Staff | Sep 23, 2018

A hot debate on tax abatement.

That was the big topic for Faribault County’s commissioners at their regular board meeting on Sept. 18, as they listened to a tax abatement request from the city of Blue Earth.

Cindy Lyon, head of the Convention and Visitor’s Bureau (CVB) and Chamber director visited the commissioners to discuss the process of Blue Earth’s new visitor’s center and numbers from this year’s tourism.

“We had almost $10,000 in souvenir sales at the Red Barn this year,” stated Lyon. “And that was with all of the construction and what not going on at the Green Giant. It just comes to show how many folks travel through Blue Earth just to see our Green Giant.”

As soon as the visitor’s center is open, Lyon says she hopes to have at least one day a month dedicated to each town in Faribault County.

“We would have a Wells day, a Winnebago day, a Kiester day, and so on. It would give the entire county an opportunity to share their history with travelers,” said Lyon. “We would also invite anyone in their community to come visit for free and forego the $2 visitor’s fee.”

She, along with Blue Earth city administrator Tim Ibisch, proposed a tax abatement on the visitor’s center, with the hopes the commissioners would back the abatement proposal.

“We’re looking at a tax abatement request from the county. The city has opted to do a 10 year tax abatement,” said Ibisch. “We feel it qualifies under a number of categories: general economic development, construction of public facilities, improvements on blighted property, I think it would cover this structure. There’s very good justification for it.”

“We don’t see a lot of new buildings in Faribault County,” said Lyon. “If we don’t see new buildings, we don’t see growth. Perhaps this building will spark an interest in bringing more businesses to Faribault County.”

“We ask you to consider the tax abatement for this project for the future success of the property,” said Ibisch. “What we’ll do is end up abating the portion upfront and as the development goes, we collect taxes as normal, then if the board opts to do so, we’d work with the staff here to facilitate that abatement.”

Ibisch stated the abatement would not come close to exceeding the 10 percent abatement alloted for the county. He shared the Faribault County assessor’s office created a sheet of what the taxable numbers would be, based on the new valuation.

“The county is estimating it will be a $550,000 property once construction is completed which is quite an increase in that property tax base. Currently it’s valued at $50,000. The overall portion you would be covering is $3,500-$3,800 a year and the city opted to do a 10-year abatement for this property,” said Ibisch.

However, there were a few commissioners who felt abating one city building would cause a domino effect of requests for tax abatements.

“This part of the puzzle is what I’m trying to figure out,”?said commissioner chair Greg Young. “This isn’t a deal breaker for you, the project will move forward or not, but this abatement is to make it more palatable for the city?”

“We want to make sure this will be a successful project so the city opted to proceed with the project with the schedule that was laid out with the abatement requested at that time,” said Ibisch. “I do think it’s an important symbol for other economic projects in the county.”

“How can you call this economic development?” questioned commissioner Tom Warmka.

“It is increasing your tax base,” said Ibisch. “You’re seeing over a half million dollar increase in tax base and has potential to stimulate economic growth with jobs. It will help the county as a whole to see buildings be built.?That’s definitely where we see it as economic development. You’d be going to a full-time, year-round operation with three to five new jobs created. That’s where it has argument for economic development.”

“I’m still opposed to this,” said Warmka. “I’m not going to be in favor of it because we have economic development going on throughout the rural parts of our county. New hog facilities, new grain facilities, new structures for storage. Those people would like to come in and get a tax abatement, too. I think it will start a series of long lines of people wanting this. Now there’s economic development in the last 20 years in the county, it’s always been an economic base off of a farm implement dealers, processors, and I just can’t support that because I don’t think we’re going to have an appetite to do it on farm buildings. I?represent a farm area, that’s to my core.”

“I understand your perspective, we’re just not seeing many new buildings in the county overall,” responded Ibisch. “I mean, our studies with our bondsman says we’re not seeing a lot of new buildings, new housing. There may be some agricultural structures, I’ll give you that. You did abate the co-op west of town, and they stayed in the county because of that. I just see this as a tool, and ultimately it’s the board’s decision.”

“I am kind of with Tom in my concerns, too,” said commissioner Tom Loveall. “Does this mean every time we build a new building in the county we abate it? I know it’s a common tool, but we’d be setting a precedent.”

Debate between the commissioners and the representatives from Blue Earth continued. But one commissioner was silent until given his opportunity to speak.

“I’ve been hearing two arguments,” said commissioner John Roper. “We’re talking about a city developing and trying to get a business coming into it. The farm system is out there. If a farmer wants to stay in it, he has to build these agricultural facilities to keep his business going. The farm depreciates the equipment off. And there’s a process for them. But we, in Faribault County, need any kind of construction. Here’s an opportunity: we get people here 12 months out of the year instead of three or five. I’m perfectly in favor of doing this. This is something that has to be done if we are going to stay viable as a community.”

Lyon shared that the CVB and chamber picked up the bill for demolition of the old building on the property, polluted ground soil testing costs, as well as the unpaid taxes on the property. She shared with the commissioners that if the city would have been able to save the building that was there, the city would have, but due to mold, it had to be demolished. She stated the project received $270,000 from the Legacy Fund of Minnesota.

“It seems to me we have a lot of tax dollars involved in this already,” was Warmka’s final remark before the commissioners decided to look further into the legal process of the decision making.

The topic was officially tabled for future discussion.