The Minnesota State Legislature allows cities, counties, and school districts to grant property tax abatements for economic development projects in exchange for creating a certain number of jobs or increasing the tax base.
An abatement allows government entities to refund a portion of a company’s property taxes for a set period of time, typically nine years in Shakopee. It is used when a company makes improvements on vacant land or a building that will result in higher property taxes being paid. The practice in Shakopee has been to abate the difference between the land/building’s original value and its value after the improvements are completed.
To apply for abatement consideration, businesses must submit a business subsidy application with information on number of jobs, average wage, and estimated value increases. The Economic Development Advisory Committee reviews each application and makes a recommendation to the Economic Development Authority/City Council, which has the final say.
The Minnesota Legislature allows certain government entities to create Tax Increment Financing (TIF) districts for the purpose of enticing development or redevelopment. It can also be used for financing public infrastructure related to the project.
Cities, housing development authorities, and port authorities front the cost for development or redevelopment projects using bonds, interfund loans, or pay-as-you-go financing. Once complete, the government entity (or developer in the case of pay-as-you-go financing) is reimbursed for the difference in property tax values between the original value of the property and the value after the project is completed.
To apply for TIF consideration, businesses must submit a business subsidy application with information on the number of jobs, average wage, and estimated value increases. The Economic Development Advisory Committee reviews each application and makes a recommendation to the Economic Development Authority/City Council, which has the final say.
- Signage
- Exterior wall lighting
- Exterior painting or surface treatment
- Decorative awnings
- Window and/or door replacements or entrance modifications
- Storefront replacements or enhancements
- Streetscape, outdoor patios, and decks
- Restoration of architectural features
- Landscaping expenses, when part of a larger project, may be included but should not exceed more than 10 percent of the total project costs.
- Any other items deemed appropriate by the city's Economic Development Authority
- Loan forgiveness takes place over a five-year period with 20 percent of the award forgiven annually.
- A typical award is up to $30,000. The EDA may consider increased awards for renovations to historic commercial properties.
- Awarding of loans depends on the availability of funding in a given year.