Shhh!... Legislature's $371 Subsidy Undermines Central Cities
From:
Bob DeBoer
Date:
May 01 17:30 UTC
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Anytime we subsidize developments that compete with other developments, we run
the risk of devaluing what we already have because the market may not have the
capacity to support the new, subsidized development other than simply shifting
capacity from elsewhere in the region. Rosedale did get a major reduction in
the value of its property and paid less in property taxes and the MOA was part
of the reason. There was work done in the late 1990s (which I need to locate
and review) that showed a 5-20 percent reduction in sales at other malls across
the region. Southdale was the hardest hit.
What is particularly loathsome about the current subsidy proposal is the use of
the fiscal disparities pool to fund a parking ramp to the tune of $200 million
so that everyone can have "free" parking. This is a gross violation of the
purpose of regional tax base sharing and will set an extremely bad precedent if
it occurs. Since the pool is meant to share tax base and reduce competition,
use of it would essentially force existing businesses to pay for their
competitor and devalue their own property at the same time. With the current
vacancy rates in our downtowns, this is truly destructive public policy.
The Senate tax bill has the fiscal disparities provision, the House does not,
so this is not a done deal. Legislators are focused on the construction jobs,
but House Tax Chair Ann Lenczweski has been politically courageous in her
opposition. She asked to see the developers books at a hearing last week and is
trying to get at how much subsidy is really needed.
The Citizens League (who I work for) strongly opposes this provision and you
can read more about it at www.citizensleague.org.