Commission counters mayors neighborhood funding pitch

The group’s recommendation would fully fund a 2008-approved neighborhood revitalization plan, but it could mean a 22 percent property tax bump in 2011.

Minneapolis Mayor R.T. Rybak’s recent proposal to spend no more than $6.5 million per year on neighborhood revitalization between 2011 and 2020 didn’t sit well with members of the city’s panel in charge of community engagement.

The Neighborhood and Community Engagement Commission (NCEC) drafted a letter this month advising the mayor and City Council to fund neighborhoods at just over $13 million each year during the same 10-year period. The proposal would fulfill a neighborhood revitalization plan the City Council approved at the end of 2008, but it could spur a 22.2 percent jump in property taxes.

All of the funding in question is tied to a tax-increment finance (TIF) district the state Legislature approved last year to fund neighborhoods and pay off massive debt from the construction and ongoing maintenance of the Target Center. The system will replace a previous TIF district that has funded the city’s soon-to-be-defunct Neighborhood Revitalization Program (NRP) since 1991.

The City Council will soon decide how much property within the new district to certify. Any increase in the value of those properties due to redevelopment will be put toward neighborhoods and Target Center debt. Because of that, properties within the TIF district won’t generate the same tax revenue as outside property. So, more certification within the district means more taxes for properties elsewhere.

Rybak has proposed certifying no more than 50 percent of the district to alleviate the property tax increase, bringing the 2011 bump down to 15.7 percent. The NCEC wants 100 percent certification. Each proposal would split TIF income 50-50 for neighborhoods and the Target Center.

David Rubedor, assistant coordinator of the city’s Neighborhood and Community Relations Department, said the City Council would likely make its certification decision by the end of this year, as it finalizes the 2010 budget. A decision has to be made by the middle of next year at the latest to ensure funding for 2011.

Some neighborhoods — which have used NRP money in the past to revitalize housing stock, launch crime-prevention efforts and enhance public spaces, among many other efforts — are already low on funding, Rubedor said.

But the debate over how much of the TIF district to certify is just heating up.  

NCEC member Mark Hinds, who served on a task force charged with drafting the group’s funding recommendations, said he personally believes full certification is needed to make sure neighborhoods can continue the work expected of them. The funding increase would also help the city get rid of its Target Center debt — estimated at $120 million over the next decade — more quickly, so it can focus on other priorities.   

Hinds said the city’s estimated property tax increase doesn’t consider savings elsewhere. The burden should not have to be on property taxes alone, he said.

In a draft of the NCEC’s recommendation letter — a final version of which will go to neighborhood groups, the mayor and the City Council this month — the group claims 50 percent certification would force a minimum of $60 million in Target Center debt back onto the city’s general fund, cause a $45 million loss in revenue and create a $20 million hole in the city’s approved neighborhood funding plan.    

“If you don’t provide that money to have this really rich system of neighborhoods and civic engagement,” Hinds said, “a system that over time has shown how it’s able to leverage investment dollars in the city and leverage people’s volunteer time, where does that funding come from?”

So far, City Council members, focused on finalizing a heavily trimmed 2010 budget, have been undecided on the issue.

Reach Jake Weyer at 436-4367 or jweyer@mnpubs.com.