City of Willmar to define tax abatement goals

WILLMAR -- Willmar City Attorney Robert Scott will draft a business subsidy agreement between the city and MinnWest Technology Campus that will spell out the capital investment and employment goals as required for the property tax abatement reque...

WILLMAR - Willmar City Attorney Robert Scott will draft a business subsidy agreement between the city and MinnWest Technology Campus that will spell out the capital investment and employment goals as required for the property tax abatement requested by MinnWest and approved Monday night by the City Council.
MinnWest requested an abatement of $41,600 per year over a 10-year period. The business subsidy agreement will better define the $8 million capital investment goal and the goal of creating 175 jobs during the abatement period. It will also define the level of abatement to be delivered by the city, explained Bruce Peterson, city planning and development director.
The agreement will contain a “clawback’’ provision. Under the provision, MinnWest will be required to repay a portion of the abatement if the campus fails to meet all of the goals, he said.
The business subsidy agreement is required by state law if the total amount of assistance being provided exceeds $150,000, according to Peterson.
He hopes Scott will have the agreement completed in time to be presented Dec. 17 to the council’s Community Development Committee. The committee would then present the agreement to the council for consideration.
Peterson said the council has acted on a number of business subsidy agreements in the past.
“Absolutely nothing new,’’ Peterson said.
He said abatements on three projects expired this year, “so we’re not increasing our total amount of abated taxes. It’s just going to different projects.’’
Under a tax abatement, a business pays the property tax bill but the company is reimbursed by the taxing jurisdiction for the abated amount. The abatement affects eight MinnWest parcels owned by two companies.
The council abated just the city portion of the total tax bill. MinnWest may request similar abatements from the Kandiyohi County Board for the county portion and the Willmar School Board for the school portion.
The MinnWest parcels will come out of the 10-year state Job Opportunity Building Zone program, a business incentive program that began statewide in January 2004 and expires Dec. 31.
In requesting the abatement, MinnWest President James Sieben said Life-Science Innovations and Nova-Tech Engineering have provided a $2.8 million subsidy since transforming the former Willmar Regional Treatment Center into the technology campus.
Sieben further explained in an email to the Tribune that over the 10 years that MinnWest has been in existence, to keep the company running “we have had to add $2.8 million over and above what the business has earned and borrowed to keep it running.’’
Sieben said it’s like robbing “Peter to pay Paul.’’
“If we did not have other companies to ‘steal’ the money from, MinnWest Technology Campus would not exist. In turn it lowers our growth capabilities in our other companies,’’ he said.
Sieben said total investment to date is $16.4 million and loans against the property total $5.6 million. Employment among the 31 companies on campus is more than 450, each with an average annual salary of $50,000. With a 3 percent annual increase and salaries moving through the community four times, Sieben estimated $3.2 billion in salaries will be circulated over the next 20 years.
“Given this, we ask for a continued partnership with our community,’’ he said.

Charter changes

In other action, the council set Dec. 21 as the date to hold a public hearing on three administrative amendments to the City Charter. The Charter Commission is proposing the amendments.
Interim City Administrator Kevin Halliday said the commission has met about five times in 2015 and assembled the amendments. Halliday said approval of charter amendments by the council requires affirmative votes by all eight council members.
Scott said the council has 30 days after holding the hearing to vote on the proposed amendments.
The first amendment would remove language that suggests examples of rules of parliamentary procedure. The council has already adopted The Standard Code of Parliamentary Procedure by Alice Sturgis, which was among the suggested sets of rules. Also, the amendment would require the council to adopt an “established’’ set of rules rather than an “authorized’’ set of rules.
The second amendment would remove certain language under the council recall provision. The language proposed for removal states, “None of the members of such committee shall accept any remuneration for the services performed on such committee, but the committee and its members shall be entitled to be reimbursed for and to expand a reasonable amount for legal services, supplies, printing and notarial fees.’’
The third amendment would remove the words “the office’’ in the oath of office administered to every council member and elected or appointed official, and board and commission members.


EDC board debates staff advocation of tax subsidies


Willmar City Council sets public hearing on MinnWest tax abatement

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