For the most part, landlords are concerned that Ventura's tax cut would largely be paid for by an extension of the 6.5% statewide sales tax to a wide variety of business services. That includes commercial real estate activities such as property management fees, legal and accounting services, andcommissions paid to leasing agents.
"We need a lower commercial property tax burden--we can't have that diluted by paying higher taxes on our services," says Kent Warden, executive director of the Minneapolis property owners group.
To be sure, they like Ventura's plan for $800 million in property tax relief for building owners and homeowners, as well as its push to have the state to take over a larger share of public school costs. They even might be able to live with a new statewide tax on business properties and cabins that is part of Ventura's plan, because even with the extra property tax, commercial property owners would still net a 15% cut.
Meanwhile, Minnesota building owners have complained year after year that they pay exorbitantly high property taxes compared with buildings in other states, and that puts the state at a competitive disadvantage. Warden fears that the state's persistently high property tax burden could hurt Minnesota businesses, especially in the face of rising global competition and a possible recession. Employers might pull back in Minnesota and expand in other states, Warden says.
A new comparative property tax study by Warden's group showed that the $8.73 per sf in property taxes on the Wells Fargo Center in Downtown Minneapolis was more than four times the $2.14 per sf paid by Wells FargoCenter in Downtown Denver. It's also significantly higher than the $2.12 per sf paid by Washington Mutual Tower in Seattle, the $2.38 per sf paid by 101 California in San Francisco, the $2.56 per sf paid by Fountain Place in Dallas, the $3.81 per sf paid by Firstar Center in Milwaukee, the $2.75 per sf paid by One Atlantic Center in Atlanta, and the $3.18 per sf 801 Grand in Des Moines.
Only in Boston, where the 125 High Street building pays $8.56 per sf, did the BOMA survey find a building that paid a comparable amount to Downtown Minneapolis--and that's due mostly to that city's far higher property values, Warden says.
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