Policy revamped on property tax incentives for new, expanding businesses
The Mandan City Commission and its economic advisory arm, the Mandan Growth Fund Committee, recently completed a joint review of local policy and guidelines on commercial property tax exemption.
The result is a changed policy for 2013 with more minimum public benefit requirements and three levels of exemption depending upon a project’s ability to meet one or more thresholds in four key categories – jobs creation, job quality as measured by wages and benefits, generation of local use taxes or filling a market gap in the community or region.
The three levels of exemption are: 100 percent for years one and two; 100 percent for years one and two, 75 percent for year three, 50 percent for year four and 25 percent for year five; or 100 percent for years one through five.
Under local policy, the exemptions are typically considered only for new commercial buildings or additions to existing commercial buildings. These are structures that didn’t exist before, so no tax revenue is given up. Land remains taxed and generally increases in value, generating more tax revenue due to development.
Property tax exemption is one of the most common and lowest risk means that municipalities have for providing assistance to new and expanding businesses. Other tools available in Mandan are low interest loans through the Lewis and Clark Regional Development Council, interest buy downs and forgivable loans through the Storefront Improvement and Retail and Restaurant Incentive programs. The Renaissance Zone Program combines local property tax exemption with a state income tax exemption as a special enticement to re-invest in older properties to give downtowns new life.
Mandan officials are striving to increase Mandan’s commercial property base to assure that Mandan is more than a bedroom community. Commercial property currently accounts for 26 percent of taxable property in Mandan with residential property accounting for 73 percent. In contrast, 36 percent of Bismarck’s taxable value is commercial and 62 percent is residential. West Fargo, in a similar situation to Mandan as a sister to a larger city, has a 30 percent commercial property base.
For details on the revised policy, visit cityofmandan or call the Mandan Business Development Office at 667-3485.