Committee examines tax-free zones
Published 12:00 am Friday, February 28, 2003
ST. PAUL &045;
Some recent changes in the governor’s proposed tax free zone bill may be beneficial to Albert Lea, but some warn that the competition will be fierce &045; and still others feel the bill shouldn’t pass at all.
The bill would allow for 10 sites around the state that would get 12 tax-free years on up to 5,000 acres of property. Though the bill has no date for when applications will be due, designation would begin Jan. 1, 2004.
Thursday, Greater Jobs Inc. Executive Vice President Pam Bishop testified before the House Jobs and Economic Development Committee, addressing the benefits that Albert Lea might reap from such a program. She also gave insight on the broader issue of how the bill might help border cities like Albert Lea compete with cities in other states.
&uot;Year after year we’re reminded by businesses of their interest to expand their operations or start a company across the border, most often because of (Minnesota’s) taxes or the large sums of dollars (of tax incentives) Iowa is willing to offer,&uot; Bishop said.
Albert Lea has lost several hundred job opportunities to Iowa in the last 10 years, Bishop said, because of the differences in state taxes and economic incentives. She said she thinks a tax-free zone might help to build up more economic development advantage.
But if Albert Lea wants a chance at one of the 10 Job Opportunity Building Zones (JOBZ) that would be made available through the bill, they will have to get in line.
Rep. John Dorn, DFL-Mankato, said many cities around the state will compete for these zones and that Albert Lea is not nearly as poverty stricken or low on median income as many other areas.
The qualifications for being chosen include poverty rate, median family income, median housing cost, excessive job loss, the amount of deteriorated or under utilized property, and population loss. The state would also consider the presence of adequate infrastructure, economic development goals and strategies, innovative planning, and both public and private commitment.
In these respects, Albert Lea falls into the middle of the pack. It may qualify in respect to economic development strategies with Greater Jobs, severe job loss, population decrease, and existing infrastructure. On the other hand, its poverty levels and median family income don’t help it qualify, and there is not a long-term plan yet for economic development, though the Freeborn County Chamber of Commerce is working on facilitating one.
The commissioner of the Department of Trade and Economic Development, Matt Kramer, said the state would also be looking for strong relationships between area schools and government in looking at candidates for JOBZ.
&uot;These communities need to seek partnerships with higher education,&uot; he said.
Kramer also outlined what the possibilities would be for areas chosen for a zone. Up to 5,000 acres could be used in each zone and be split up into as many as six sub-zones. The areas could also be split up between cities or counties in a region.
Mayor Jean Eaton, who attended the committee meeting, said she has been in contact with Austin Mayor Bonnie Rietz about this possibility.
Another key for these zones would be central areas of cities for commerce, according to Kramer.
&uot;These regional centers act as catalysts for growth in these areas,&uot; he said.
Rep. Dan Dorman, R-Albert Lea, said another provision of the bill that could help Albert Lea is five agricultural zones that would be distributed across the state in addition to the 10 tax-free zones. He said after the meeting that he thought a meat-packing company or another farm-based industry might be able to use that.
Though there is much support for these tax-free zones from out-state legislators, some from the inner city are skeptical and see it as an unfair advantage for rural areas.
Rep. Karen Clark, DFL-Minneapolis, said the inner city, which is not included in the proposed bill, is deserving of these types of tax incentives as well.
Dorman and Doug Magnus, R-Slayton, who is the bill’s sponsor, defended the proposal, saying that the metro area already has extensive tax incentive programs and tax increment financing.
Tony Sertich, DFL-Chisholm, said some business owners who had poured their life savings into their shops were irked at the thought of new businesses coming to town and getting a &uot;free lunch.&uot;
Tim Mahoney, DFL-St. Paul, criticized the governor’s plan in light of deep cuts into other economic development programs such as the 21st Century Minerals Fund and the Minnesota Technical Incorporated program.
According to Dorman, who serves as the committee’s vice chairman, the bill is well on its way to passage. He expects the bill to through the committee Tuesday of next week.
&uot;We have the support right now to pass it,&uot; he said. &uot;But I think the chair (Bob Gunther, R-Fairmont) would like to get as many questions answered as he can before we do.&uot;
Eaton said it is important that Albert Lea begins planning on how to use the zone if selected.
This could be a great opportunity for Albert Lea,&uot; she said. &uot;It could just be the shot in the arm we need.&uot;