Northfield Downtown Development Corporation

The Northfield Downtown Development Corporation (NDDC) would like to thank Representative Bly and Senator Dahle for introducing bills at the State Legislature that are intended to address the commercial property tax situation in downtown Northfield. It is encouraging for us to see some action on this issue that has such a significant impact for so many building and business owners in downtown. (more…)

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.

An editorial in today’s (August 4th) Star Tribune, A private sector fix for a downtown in need, supports the creation of a Downtown Improvement District for Minneapolis.

A Downtown Improvement District, or Business Improvement District, as they’re known in most of the country, or Special Services District, as they’re technically called in Minnesota, or Downtown Management District, as we’ve called it at the NDDC, gives building owners in a defined district the ability to assess themselves and then decided how the money is spent within that district. These Districts have been around for decades and are quite successful in giving property owners more control over their neighborhoods and moving the decision making on capital spending from the center to the periphery, where the leather meets the concrete.

The NDDC has spent considerable time researching BIDS and discussing them with downtown building owners. Last year, we were ready to move forward on the concept but another year of double-digit property tax increases led many building owners to request that we shelve the idea, at least temporarily.

Now that we appear to be making real progress on the property tax issue, it may be time to try again. In our previous work, Duluth and Rochester were valuable sources of information. Now perhaps Minneapolis will be able to offer us a few tips.

Almost two dozen downtown stakeholders attended a quickly assembled Special Block Head Gathering this morning at the Rueb-N-Stein. The topics could be categorized as relating to quality of life and included cleanliness, respect, safety, and friendliness.

The meeting was called by City Councilor Jim Pokorney and NDDC VP Joe Grundhoefer in response to recent experiences of graffiti and vandalism in downtown. Captain Mark Taylor of the Northfield Police Department was on hand as a resource and advisor. The examples brought up included rowdiness, noise, security, and mischief. Potential causes touched on inadequate lighting, insufficient patrols, poor visibility, and cheap beer. Current solutions shared mentioned calling the police dispatcher, calling the college deans, working with The Key, and the Police Department’s planned increase in foot and bike patrols.

We then moved on to possible additional steps to be taken. Joe Grundhoefer and Norman Butler are going to talk with other pub owners about tried and true ideas that they’ve developed over the years. Mark Taylor will be implementing the stepped-up patrols as early as this weekend. Jim Pokorney and Mark Taylor are going to work together on additional lighting and, potentially, surveillance cameras. Jim Pokorney is also going to check on extending the hours that key lights are kept on in priority areas. Josh Hinnenkamp and Judy Code are going to work together on intergenerational investments in infrastructure, believing that good activity drives out bad activity. Roger Kelm, Jim Pokorney and Mark Taylor are going to explore the “Citizens On Patrol” concept; Dean Kjerland, Norman Butler and Victor Summa offered to help. Mary Rossing urged everyone to share their stories about the costs of vandalism and advocated that all of us should work to form constructive relationships with the many different type of people that visit downtown. Finally, Jim Pokorney and I will develop and introduce a Code of Conduct for downtown…and the rest of the community.

It was great to have that many people show up on such short notice to discuss these issues. It will be even better to begin implementing some of the ideas raised.

…that persistence will lead to results.

The NDDC has been working on property tax relief for aging commercial buildings in older districts for some time. At times it has seemed like trying to wrestle an elephant…the issue is so big that it’s hard to know where to grab on.

We believe that it is a significant issue in many places in Greater Minnesota, presenting substantial economic challenges to these communities. The symptom of this issue is commercial property values rising year after year, with the corresponding double-digit annual increase in property tax bills, in a geographic area with rents that are already as high as the market will bear.

Members of the NDDC E R Team returned to St. Paul this morning to follow-up on plans to help address the adverse impacts of the issue. We finalized both our short-term and long-term plans.

In the short-term, we will urge local individual property owners to make contacts with leaders at both the County and State levels, detailing the financial realities that they have experienced over the past eight years. We will urge our regional partners to do the same. We are following up with with our advisors on details of the statutes that we believe will result in more realistic valuations. Our elected state officials will communicate this information to the county assessors in support of more economically feasible evaluations.

In the longer-term, Representative Bly is pulling together regional state representatives for a meeting with regional property owners. The goal is a legislative working group that will look at the larger issues over the summer, recommend meaningful changes, and then implement the necessary legislation. The bill will be introduced at the beginning of next session.

The NDDC believes that the State of Minnesota should develop a policy that preserves these older commercial districts throughout Greater Minnesota. These districts are the most visible indicators of community pride, along with economic and social health. They can be a key asset in the efforts to recruit and retain residents and businesses, as well as attract visitors and others to our communities. These older commercial districts can make essential contributions to the quality of life in our communities. Finally, these older commercial districts symbolize our communities’ heritage.