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Wendy Reuer, Published August 13 2012

Moorhead looks to rebate taxes on new construction

MOORHEAD – In an effort to entice homeowners and build the tax base, officials here are hoping to rebate city, school and county taxes on new construction for two years.

City Manager Michael Redlinger and Community Service Director Scott Hutchins asked the Moorhead School Board on Monday to join in on a tax abatement plan that would refund two years’ worth of taxes on newly built homes.

Last week, Clay County officials granted the city a broad resolution of support. The resolution is designed so that other cities in the county may attempt a similar program, Redlinger said.

The program comes after a failed attempt by the city to persuade the Minnesota Legislature to either extend a former two-year tax abatement program or support local abatements. The state’s former tax exemption program was started to increase home construction after the 2009 flood and expired in December 2011. The premise of Monday’s proposed program is the same, but it would work slightly different.

“(Taxes) are collected and then returned. So it’s a little bit different than what we had from the state, where it was just an exemption and you didn’t pay anything in,” Redlinger said.

Redlinger said an incentive for the school district is not only an increase in the tax base over time but as more families move into the city, it increases the headcount in schools, a factor in state aid determinations.

Redlinger said the program is still in the planning stages and Monday’s attendance at the school board meeting was a preliminary step. For the program to take place, the City Council, school board and Clay County Commission would have to hold public hearings on the matter.

If the school board agrees to move forward with the program, the rebates will only be given on regular school taxes. Voter-approved school levies and watershed districts would still continue to be collected, Hutchins said.

The school board does not have to agree to the abatement program for the city and county to move forward with their own abatements, Redlinger said.

Board member Cindy Fagerlie said at one time her family was able to use a tax abatement program to buy a home.

“If that had not been available, I may not have built,” she said. “Is it fair to all homeowners in the community? Not initially, but I believe the positive things that will happen because of it will benefit the whole community.”

Redlinger and Hutchins said a cap on the home value that would receive abatement is still in discussion. If the program passes this year, it would offer abatements retroactively from Jan. 1 through 2013.

The retroactive start date is something school board Chairwoman Lisa Erickson took issue with.

Erickson said it is unlikely the proposed program would have an effect on residents choosing to build in Moorhead yet this year.

“I have a lot of things to work out in my mind,” she said Monday.

Redlinger said he hopes to have the program in place by September. The school board took no action on the matter Monday evening.


Readers can reach Forum reporter Wendy Reuer at (701) 241-5530