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Development Agency Reeling from Tax Reform

MINNEAPOLIS-The Minneapolis Community Development Agency says it will lose about $27 million in revenue each year as tax increment financing revenues shrink. It warns it will likely have to cut back or eliminate projects.

By Jim McCartney | Updated on July 18, 2001

MINNEAPOLIS-The Minneapolis Community Development Agency is warning that the sweeping changes to Minnesota property tax system enacted this summer will “severelyshrink funding for community development programs throughout Minnesota.” In fact, Steve Cramer, the executive director of the agency, claims Minneapolis is especially hard hit because of “our commitment to use development resources for neighborhood revitalization.”

Cramer says his agency figures the combined effect of property tax revisions and the statetakeover of school funding will reduce by one-third the amount of tax increment generated by current and future tax increment financing districts. This means the city will lose up to $27 million in MCDA revenue each year — about $226 million over the next 10 years.

“This means many projects and programs, especially those in neighborhoods, will be reduced or eliminated without an alternate revenue source,” according to an issue summary developed by the MCDA staff. The effect of property tax reform on large commercial development projects will be less severe, because they typically generate enough revenue to pay off their debts well within the limits imposed by state law.

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