The NDDC summarized the recent history of commercial property taxes in Northfield. Since 2000, commercial property taxes have increased by double-digit percentages annually. During this same period, rental rates have remained flat or, in many cases, even declined. As a result, with rising commercial property taxes, each year there are fewer dollars available for basic operations and maintenance, much less money for building improvements. In fact, commercial buildings have gone from producing positive cash flow to a point where the owners are now forced to draw down savings to pay their property tax bills. Several property owners shared their personal stories with the legislators.
The commercial property owners focused on the inequity of the Minnesota system. The tax rate (or class rate) for commercial property is essentially double that of the tax rate (or class rate) on residential property. Therefore, every time levies are raised or imposed to balance budgets, fund public projects, or build schools, the additional burden is far greater for the commercial properties. In addition, the State General Levy, added during the Ventura administration to pay for education, is only assessed against commercial property and seasonal property. The inequity between classes continues to grow with each additional increase.
Al and Kelby are well aware of the issue. Whether through personal or shared experiences, they have seen the economic destruction that can be caused by rising commercial property taxes.
The gathering of property owners urged three things of the new legislators: 1) don’t balance the budget on the backs of commercial property owners, 2) explore more equitable property tax class rates, 3) and distribute the General Levy more evenly between all the property classes.
Al and Kelby agreed to look into these ideas. The NDDC Board will send a formal request as a follow-up and the legislators will respond with an invitation to review the research and discuss possible actions.