Neighborhoods and taxpayers, working together

On Wednesday, the Minneapolis City Council Ways and Means Committee approved a set of amendments to the proposed 2011 City budget to provide tax relief to Minneapolis property owners, while balancing City leaders’ commitment to strong neighborhoods.

Minneapolis City leaders have been committed to investing in neighborhood revitalization, recognizing that the work done by neighborhoods is instrumental in strengthening our communities and providing a unique quality of life to our residents. However, the City faces tremendous budget challenges due to the downturn in the economy, skyrocketing pension obligations and $54 million dollars in cuts passed onto the City by the State in the past three years alone.

These factors have resulted in property tax increases in neighborhoods across Minneapolis, with many seeing double-digit property tax increases for 2011. Given this grim reality, Mayor R.T. Rybak and City Council Members collectively felt it was critical to find some measure of property tax relief on behalf of property owners.

The plan continues to provide funding for neighborhood organizations, while lowering the 2011 property tax levy, from the 6.5 percent maximum increase that taxpayers saw on their Truth in Taxation statement in November to a 4.7 percent increase. The plan, unanimously approved by the Council’s Ways and Means Committee, led by Council Member Betsy Hodges, takes a number of steps to cut costs within the City. In addition to those cuts, changes are proposed to the way neighborhood groups are funded.

The action:

  • Calls for the City to seek legislation at the state level consolidating neighborhood programs and eliminating the need for the Joint Powers Board (NRP Policy Board).
  • Directs the Finance and Neighborhood and Community Relations departments to allow neighborhoods to contract up to 50 percent of their NRP Phase II allocations. Neighborhoods that have contracted more than 50% of their Phase II funds will not be able to execute additional contracts.
  • Calls for the Neighborhood and Community Relations Department, working with the Neighborhood and Community Engagement Commission, to report back to the City Council by March 1, 2011 on how programs will be implemented moving forward, with an emphasis on mitigating equity issues among neighborhoods related to the suspension of new contracts.
  • Directs the City’s Finance Department to report back by Feb. 1, 2011 with a plan to provide property tax relief in 2012 and 2013 by capturing only 50 percent of the value of the properties in the consolidated Tax Increment Financing district that provides, in part, funding to neighborhood organizations.
  • Directs Finance to report on possible impacts to Target Center funding, which is also tied to the Tax Increment Financing district. The Finance Department will also identify other options for property tax relief for 2012 and 2013 if the legislature does not provide the City with the authority to consolidate neighborhood programs.

To learn more about the cuts from the state, skyrocketing pension obligations, and the details on property tax increases in the city, visit www.ci.minneapolis.mn.us/city-budget/truth-in-taxation.asp.

This action will be considered as part of the overall budget by the City Council at 6:05 on Monday, Dec. 13, prior to the adoption of a budget for 2011. The meeting is held in City Council Chambers, room 317 of City Hall.

There are several important facts to note.

  • First, this action does not affect any current contracts. Existing NRP/City contracts will be honored.  
  • This action also does not affect any NRP Phase I allocations, whether contracted or not.
  • Finally, the action does not affect future funding of neighborhood organizations anticipated from the Consolidated Tax Increment Finance District for 2011. Today, the City Council approved the Community Participation Program and these funds will be available to neighborhood organizations starting Jan 1, 2011.
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