April 1st 2008 Council Update

I wanted to discuss a few items from tonight’s Council agenda. Yes a Council meeting on April Fools day is ripe for more jokes than we could ever have time to tell.

The first item I want to discuss is the abatement policy we passed tonight. This an economic development tool I have wanted and the City has needed for quite some time. The situation Isanti faces with the cost of the development of the east side of 65 and roughly $6,500,000 in debt the City incurred needs to be paid through development. This is especially true of commercial development. I did not agree with the way the city built this infrastructure and believed then as I do now that the developer should have paid the way. We are however in the situation and as I have been quoting about this…sometimes you make the right decision and sometimes you make the decision right. My job as Mayor is to make the City’s past decisions right. This can only be done by developing our commercial property or raising taxes on individual home owners drastically …and regular readers of this blog know I will never do that.

I have written and spoken about Tax Abatement often and believe it will be an integral part of attracting a hotel/motel project to Isanti. I had asked last year that the Isanti City Partnership, which is a group, composed of Chamber of Commerce and EDA members, to make a Tax Abatement policy a priority. Several members of the ICP worked out a draft proposal that was then refined by city staff and me. We then brought this before the EDA with our changes and additions and received approval. Tonight the Council voted unanimously to support this policy. A quick example of how it will work is that a hotel project is built with a tax assessment of $60,000. The former empty lot paid $1,000. A hotel that scores high in the tax abatement policy would be eligible for an abatement of 50% of taxes or $30,000 in this example. This is a refund so the taxes have to be paid first, the empty lot that was paying $1,000 in now generating a net total of $30,000 in this example. The policy is for 5 years and steps down 10% per year so 2nd year 40%, 3rd year 30%, 4th year 20%, 5th year 10% and by the 6th year the total taxable amount is paid with no refund. It is not a silver bullet but does help considerably for those businesses that will be paying a significant amount in taxes. The tax abatement grading matrix our Community Development Director (CDD) and I developed from the original concept takes into account the follow criteria:

· Amount of jobs and wages paid
· Type of business
· Environmental and City services needed
· Tax base creation
· EDA priority businesses
· Location

The CDD and I ran this policy through many example situations to refine the process. We worked very hard on this policy and I would like to thank all those that participated along the way. This by the way is also a boon for the County and the school district which is facing tough economic times. The more business tax base we can develop the better it is for everyone.


This will be the first of two important economic tools the Council will be reviewing. The other economic development tool is the Revolving Loan Fund. I had asked the ICP, EDA and then the Council to support a RLF to help current and new businesses with low interest loans. Staff and I are currently reviewing the draft proposal from the ICP and will have this item ready for the EDA meeting at the end of April and then before the Council in May. I will keep you informed as we progress.

The City of Isanti has created a process to monitor homes going into foreclosure or are already in foreclosure. This is a difficult situation for everyone involved. Isanti has at this time 68 homes in foreclosure. Our interest is to maintain property values and protect our citizens from the adverse affects of this blight on our City, state and country. The mortgage crisis has not ended and unfortunately we will be facing more of these situations in the months to come. We believed it was incumbent upon us as City official to protect the interest of the City as a whole. This will mean making sure that homes that are empty are tracked so they do not become targets of vandals or target as party houses. This means in some instances that water or other services are cut off to avoid damage to an empty home. We are also looking at contracting the extra yard maintenance to keep City cost down as we are maintaining these properties. We will be charging for this service but will not get paid until the home sells at some future date. By contracting this service we save money and will be able to respond quicker to yards that become overgrown. The contracting option will be before the Council in the next month. We have just begun this process and will learn as we go but we are dedicated to keeping the City as a whole moving forward.

The last item I want to touch on is the City Administrator contract. We renewed our City Administrator’s contract with 3% pay increase which is exactly the same as our Public Works employees, non-union employees and the proposal before our Police Union. We are lucky to have an excellent City Administrator working for our City but we as a Council also have to live with the means of the City budget.