Gail Olson, Northeaster
October 23, 2002
Minneapolis city staff came out to meet Northeast residents two weeks ago, wanting to talk about potential cutbacks in Neighborhood Revitalization Program (NRP) funds.
And while neighbors had many questions and concerns, they also wanted to tell the city something.
Save the program.
As Skip Hyvare of the St. Anthony East neighborhood put it, "Our neighborhood is living proof that this program works." Since the program started, he said, three new home owners were able to build houses using NRP funds for gap financing.
About 28 residents who didn't qualify for home improvement loans through a bank were able to get their loans through St. Anthony East's NRP program at four percent interest, he said.
And using NRP funds, Hyvare added, St. Anthony East was able to partner with the Logan Park neighborhood to implement a new community health program.
City staff who attended the Oct 10 meeting at Logan Park included project coordinator Chuck Ballentine, MCDA head Steve Cramer, NRP executive director Bob Milier, city coordinator Kathleen O'Brien, and finance director Pat Born.
Ballentine told the group that recent action by the State Legislature changed the amount of money the city has available for community development.
Miller outlined the history of NRP, saying it was created after studies showed that many residents were planning to move out of the city,
NRP gave the city a way to invest money in its neighborhoods: The original plan was to spend $20 million a year for 20 years.
"The strength of the NRP is that it lets you take a plan and implement it," Miller said. "Here in Northeast, it has funded housing in St. Anthony West, the streetlights on Central Avenue, projects in the parks and along the river and a new community development corporation.
"But the next 10 years promises a different challenge," Miller added. The 2001 tax bill changed the revenue stream. The challenge now is that we have to use the revenue stream to implement program change."
Cramer said the legislative changes mean $25 million less a year for the city. "Tax increment financing has been an important part of the city's revenue and investment plan. We have to define the community development program in this city and downscale, to fund it and sustain it. We also need another revenue source in the mix."
Born said it was the legislature's change in the property tax law (not a change in tax increment financing) that created the tax increment funding reduction. Because the state now plans to take over the school district's portion of the property tax levy, tax increment districts will produce 20 percent less. "It's the school part, about $25 million, that we don't have any more for community development," Born said.
Another change, O'Brien said, is that commercial and industrial properties get a substantial decrease under the new property tax law. But for the homeowner, things got worse. Previous property tax statements have included two values: limited market value, which was used to determine their tax, and estimated market value.
"In times of inflation, when housing values are increasing quickly, the legislature had put in a cushion [the limited market value, so that property taxes couldn't increase more than 8.5 percent a year. But now the legislature has decided to phase out that kind of protection."
Under the new law, the limited market value will be phased out and will end by 2007. Property taxes will then be based solely on the market value.
Born said that in recent months, some cities have responded to the changes by increasing property taxes as much as 35 percent. (Hearing this, some residents joked that there might be "suburban flight" back to the city.)
"For some kinds of businesses, taxes in Minneapolis may look just fine. It could put us at a slight advantage to other suburbs," Born added.
But Cramer said that while Minneapolis may be becoming a more attractive place for investment, the city still needs public equity. "That's what's being reduced."
Minneapolis Mayor Sharon Sayles Belton has suggested funding the NRP at $10 million a year, rather than $20 million, he said.
Mike Rainville, president of the St. Anthony West Neighborhood Organization, said NRP funds have given his community the ability to hire a staff person, set up a web site, and keep in close communication with their own residents as well as other neighborhoods. They were able to fund a cops-on-bikes program, which increased safety in the neighborhood, and also build new houses through Greater Minneapolis Metropolitan Housing Corporation (GMMHC), a non-profit developer that works with the city.
"You can't choke off the innovation that comes from the grass roots," Rainville said.
Other residents, including Sue Bembenek of the Columbia Park neighborhood, said it took them nine years to develop the communication they've got with city staff and their neighborhoods.
"When the NRP began, the neighborhoods originally started with us all thinking very much within our boundaries. Now the trend is that we're starting to form groups, such as MEND [a collaboration between St Anthony West, Sheridan and Bottineau neighborhoods, and a new CDC (community development corporation). My neighborhood, Columbia Park, often works with the first ring suburbs on projects.
"I would not like to see less communication," she said.
According to city information, the next steps are to have more community meetings on the topic. "Staff will be consulting with the newly elected mayor and council to get more specific direction," according to one handout at the meeting.
For more information, contact Steve Cramer at MCDA, (612) 673-5095, Chuck Ballentine at MCDA (612) 673-5095, Bob Miller at NRP, (612) 673-5140, the city's finance department (612) 673-2577 or Kathleen O'Brien, City Coordinator, (612) 673-2032. The city's web site is www.ci.minneapolis.mn.us
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