NDDC board members and staff traveled to St. Paul again this morning to give testimony on the commercial property tax issue in downtown Northfield. It was in support of a bill introduced by Senator Kevin Dahle.
It gave us an opportunity to provide the committee members with important details of the issue. We illustrated the changing economics of owning and operating a building in downtown Northfield.
Rent rates in downtown Northfield are at modest levels, most are in the 6 to 8 dollar per square foot range. With the mortgage costs at $3.00 or $3.50 per square foot, common area utilities at 75 cents per square foot, and insurance at 50 cents per square foot, there’s about $2.25 left for all other building costs. Since the year 2000, the average property tax cost has gone from $1.50 per square foot to $2.50.
In fact, I have seen the year-to-year operating expenses on about a half dozen buildings in downtown Northfield. Indeed, they have gone from producing positive cash flow to a point where the owners are now having to draw down savings to keep their buildings operating.
But it’s not just about the economics of old buildings. These older commercial districts are important to Minnesota. These districts are the most visible indicators of community pride, can be a key asset in the efforts to recruit and retain residents and businesses, serve as a focal point or gathering place for our citizens, and symbolize our communities’ heritage.
We thank all the Senators involved in today’s hearing for the opportunity to raise the awareness of the commercial property tax situation in downtown Northfield.