ar mae Oo Hy BOARD OF CITY COMMISSIONERS City Hall Phone: 701-241-1310 200 North 3rd Street Fax: 701-241-1526 Fargo, ND 58102 January 23, 2017 ‘Subject: Economic Incentives Including Renaissance Zones, TIFs and PILOTs While this letter does not represent the official stance of the Fargo or Bismarck City Commission, it does represent the stance of two Commissioners from the two largest cities in our state. Incentives are created to produce an intended outcome. As such, incentives by their very nature are to be limited in both time and scope. However, in North Dakota that is not the case. For over 20 years, North Dakota cities have been allowed to use, and certainly overuse, economic incentives like the Renaissance Zones, TIFs and PILOTS. Justifiably, many lawmakers have taken notice of how long these incentives have been going on and what the impact is to the taxpayer. While many local city leaders will cling tightly to incentives, it is important to recognize the real impacts incentives have. City Commissioners have unjustly been empowered to manage the mills of all local subdivisions and control state income tax. As a City Commissioner, when | exempt a property, | am not exempting them just from the city mills, | am in fact diverting money away from schools, parks, the county, our airport and exempting state income tax. Neither the other local subdivisions nor our state legislators have any say in how many, what kind, or for how long | can grant an exemption. This alone should be enough to shock legislators into action and begin phasing out these incentives. Unfortunately, there are many more problems. Incentives pit small businesses against large. The majority of small businesses don't quality for these exemptions. Additionally, when a large business like FedEx receive an incentive to move from Grand Forks to Fargo, small local competitors are directly impacted and truly pay FedEx's property tax bill for them, along with all property owners and ND income taxpayers. Speaking of FedEx, many Fargo leaders claim incentives brought FedEx to Fargo, meaning Fargo used a state income tax exemption to move FedEx from one ND city to another, Not a very wise investment. However, FedEx said they were coming to Fargo without the incentive at a public meeting, which of course means we gave tax dollars away for no reason what so ever. roa "i! Cpreecin teWhen the government picks winners and losers, all taxpayers lose. These incentives directly impact each taxpayer. On average, a property owner pays 7% of their total property tax bill directly to incentives. That is to say that we pay 7% directly to pay someone else's bill. To put that into context, Fargo's share of our total property tax bill is 17% and incentives are 7%. That is dramatic and illustrates how out of control these incentives are. Bismarck is no better. They boast the longest running TIF in the state! For nearly 50 years, those in the TIF district have not paid any additional taxes to schools, parks or the county. In Fargo, incentives are stacked on top of each other which means that a single property won't have to pay taxes in some cases for 25 plus years. These incentives represent an unjust and unsustainable tax system that you have the power to change. Incentives often lead to cronyism and favoritism which allows five City Commissioners to decide who wins and who loses. These incentives not only harm the state's budget, they divert money from schools and parks while directly impacting homeowners. City Commissions around the state have abused these incentives for long enough. It is time to retire the Renaissance Zone, and dramatically limit TIFs and PILOTs. Sincerely, Tony Gehrig Steve Marquardt Fargo City Commissioner Bismarck City Commissioner