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Home My WebLink About1980 10-01 City caps tax-exempt notes THE REVIEW VOLUME 19,NUMBER 21 Publication#328680 RQP/. Maplewood, Minnesota . Copy 30 WED.,OCT. 1, 1980 Citycapstax-exempt tax-exem t notes • Officials adopt new criteria for businesses By MARY LEE HAGERT Tax-exempt financing totaling $2,525,000 was granted to proposed mini-warehouse will employ only a live-in janitor. Councilman Earl Nelson interjected,"I think our criteria are United Artists Theater Circuit for the construction of a new At the council meeting,Mayor John Greavu said he thought pretty flimsy.I'm in favor of pulling this thing in." Somewhat unknowingly the Maplewood City Council has movie house at the Maplewood Mall.Permission was granted the tax-exempt financing status should be granted to Gervais turned off the faucet on letting private companies and to Otto G.Bonestroo to obtain$700,000 in tax-free mortgage Associates for the mini-warehouses."I don't think we should The city manager told the council that the reason the state developers use the city's tax-exempt status on mortgage revenue financing for a racquetball club to be built along legislature allowed cities to give their tax exempt status to revenue note financing. Carlton Avenue near 3M. change the rules on him (Richard Schreier of Gervais businesses was in order to attract the companies to an area At its Sept.18 meeting the council voted to not allow the total Associates)in the middle of things. where they might not otherwise come and to increase jobs.The amount of the notes outstanding to not exceed five percent of The third request for the financing was given to Gervais "He (Schreier) was supposed to have been through the city is not supposed to be another type of lending institution, the assessed taxable valuation of property in the city. Associates for a mini storage warehouse facility.This Finan- Planning Commission with his request f or the financing earlier Evans said. At the time council members thought they were getting near cing request was$900,000. but he was held up by them(the commission)." "We are giving these businesses something that is very the five percent limit.After the city staff computed the amount The granting of the latter note went against a city Planning If the request for the tax-exempt status had been reviewed by valuable to them and I don't think we should give anything to of these tax-exempt notes already issued to developers,it was Commission recommendation. the Planning Commission a month sooner, the tax-free them." learned that the city has given out approved revenue notes financing would have been issued,Greavu said. Evans pointed out that Roseville does not give its tax exempt totaling 10 percent of the community's taxable valuation. THE COMMISSIONERS were worried about the city's broad Schreier stated that without the revenue financing,the mini- status to any companies."But yet that city hasn't had any project review criteria for granting this type of funding.The warehouses"wouldn't float." trouble getting businesses to locate there." These notes are issued for corporations through the city and city staff polled other communities in the metropolitan area The council decided to adopt most of the Planning Corn- are tax-free at the federal level.Interest is often three per- and learned their criteria standards were more stringent. ;. GREAVU TOLD the council that it is hard to get money in mission's recommendations.However,the council added that centage points below the going corporate bond rate. One of the recommendations made by the planning corn- private, conventional ways. "This (tax exempt mortgage the revenue financing notes must be at least$300,000 and the The issuance of this type of financing by municipalities is missioners was for new businesses to create at least 400 man= revenue financing)is the only way to get these things built,"he building for the business should be started within one year of increasingly being criticized.In Minnesota,a task force is hours per week of new employment on a year around basis.The stated. the granting. presently drafting legislation for the 1981 Legislature to ad- dress some government officials'concerns about the broad - -- criteria used by cities when granting this tax-exempt financing. "THERE WILL be no more commercial or industrial revenue notes issued unless the council changes its present criteria," said City Manager Barry Evans in a recent in- terview. The only request pending at the time the decision for this type of financing was made was for a McDonald's Restaurant, which is to be built at the intersection of Century and Min- nehaha Avenues. "I'm not even sure if it(the McDonald's request for the tax-exempt financing) has made it to the Planning Commission or not,"Evans commented. Before adopting its new criteria,on Sept.18 the council ap- proved tax-exempt financing for three proposed business ventures in the city.