by Dennis Dalman
editor@thenewsleaders.com
A March 14 public hearing has been scheduled concerning a tax-abatement bond up to the amount of $13.5 million for a community center and improvements to certain regional parks.
The hearing will take place at the Monday, March 14 Sartell City Council meeting, which will begin at 6 p.m.
In a memo to the Feb. 22 Sartell City Council, Sartell Administrator Mary Degiovanni stated the following: “The abatement would finance improvements to the city’s regional community center and to certain regional parks, including improvements of and amenities related thereof, collectively known as the Project.”
Degiovanni later explained the amenities, besides the community center, could include improvements to Pinecone Regional Park, such as at the Bernick’s Ice Arena, for example; or perhaps at other parks. Such improvements and/or amenities, she noted, must be considered “regional” in use to qualify for half-cent sales-tax revenue, which will be used to pay for the community center and any other amenities covered by the tax-abatement bond.
The improvements and/or amenities cannot be spelled out at this time simply because the council first has to specify them and approve them, Degiovanni noted.
The Sartell Community Center, now in the planning stage, is expected to cost $11.5 million of the $13.5-million amount.
The council has the authority to approve up to $13.5 million in tax-abatement bonding, but no more than that amount.
Many cities used tax-abatement bonds as a low-cost method of funding public improvements and/or facilities. Under the tax-abatement method of funding, cities, counties or school districts are authorized to rebate or redirect their portion of a parcel’s taxes for up to 20 years. The term “abatement” is misleading, however, as the tax is not forgiven or abated. What happens is the property owner pays the tax as any other property-owner would, but the amount levied by the participating jurisdiction is applied to pay the debt service on bonds issued by the political subdivision, in this case the City of Sartell.
In the case of a general-obligation bond, the city identifies a group of properties that pay enough taxes to make the principal amount of the bond issue and then uses those taxes to qualify as the abatement. The people in the bond-abatement area do not pay more taxes because of the bond.
Using tax-abatement bonds can save a city from paying higher interest rates for bonds, 1 or 2 percentage points less in some cases.
The taxes of the 31 city parcels of property in Sartell equal the amount needed to pay the bond debt. However, the city plans to use sales-tax money on an annual basis instead of the tax parcel levy so no property-tax impacts are projected from this particular debt.
