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Erik Burgess, Published August 13 2012

Moorhead City Council considers tip credit system in bid to attract more restaurants

MOORHEAD – Some residents here are fed up with the city’s troubles at attracting new business, council members said Monday night.

“On hundreds of front porches, when we got done talking about the flood, the next thing that came up was, ‘Where are the restaurants in Moorhead?’ ” Councilman Mike Hulett said. “So I know that there are all kinds of people out there that are very, very concerned about this.”

In an attempt to alleviate these concerns and help Moorhead become a commercial magnet, the council voted Monday to allocate money toward studying ways to encourage business growth.

Plans include the possibility of implementing a tip credit system for food-service staff to keep up with restaurants on the North Dakota side.

“(The tip credit) is a huge advantage for North Dakota,” said Chuck Chadwick, executive director of the Moorhead Business Association. “It is one of those impediments for restaurants (and) companies to consider Moorhead.”

In North Dakota, hourly wages for servers are lower than minimum wage because tips are counted toward income.

In Minnesota, employers have to pay tipped employees a higher amount, which hinders restaurant growth in Moorhead, Chadwick said.

Many council members echoed the concerns of their constituents, saying new places to dine are very much wanted in the city.

“One of the five major complaints I get from Moorhead is the lack of restaurants,” Councilman Mark Hintermeyer said.

The council voted Monday to have a third-party firm analyze eateries on both sides of the river to see what sort of tip credit system would work well in Moorhead.

Wages here would not be lowered, Chadwick said, but instead the state would reimburse the employer in other ways.

The council also voted to create a new city website specifically for commercial growth. Demographic information culled from national data organizations would be made available on the new site for businesses considering the move to Moorhead.

“This is what that website is meant to do: give the folks as much information as possible,” Chadwick said. “And once they do the pluses and minuses, they’ll say Moorhead is a great place to do business.”

The two proposals would cost up to $50,000 taken from the Economic Development Authority’s Tax Levy Fund.

Both votes passed 6-1. Councilman Luther Stueland voted against both measures, stating that the money should be used to lower taxes instead.

“We’re taking money out of the pockets of people who are having a hard time just buying groceries much less worrying about what new restaurant they won’t be able to afford,” Stueland said.

Councilwoman Brenda Elmer was absent.

Readers can reach Forum reporter Erik Burgess at (701) 241-5518