First property-tax cut in 30 years — thanks to tough choices, Governor Dayton and you

It means an enormous amount to me that last night, the City Council unanimously passed my final budget as mayor — one that cuts our property-tax levy for the first time in 30 years.

This is the third budget in a row in which nearly 70 percent of Minneapolis residents will see a decrease, or no increase, in their property taxes. But to actually cut the property-tax levy is an extraordinary moment.

At the same time, I’m just as proud that my final budget makes major investments in Minneapolis’ future: in home-growing a City workforce of tomorrow that looks like Minneapolis; in improving all parts of our infrastructure, including by investing more in the Nicollet–Central modern streetcar line; in greening our city to meet the challenges of climate change; and in the jobs, housing and population that will help Minneapolis and our economy continue to grow.

Getting to this point was extremely hard, and we faced many challenges along the way. And on top of those challenges, there’s always inflation to take into account: even if we hadn’t made one change from the 2013 to the 2014 budget, our costs would have gone up 2.8 percent. But the City Council and I were able to deliver major new investments in our values and our future while cutting property taxes, and there are three main reasons why.

Tough choices

First, we were able to do it because we made a decade of tough choices to restore Minneapolis’ fiscal health:

  • We watched our own spending: in 2014, we will spend 16% less than we did in 2002.
  • We paid down $350 million in debt.
  • Against great odds, we reformed a broken closed-pension system that was draining taxpayers.
  • We restructured City government.
  • We delivered $5 million a year in property-tax relief through the stadium legislation, which for the first time also gave us practical control of sales and hospitality taxes generated in Minneapolis.

Meeting each one of these fiscal challenges involved dogged determination and great political courage, and had we not solved each one of them, our property taxes today would be 35 percent higher than they are. Every City Council member stood with me in solving one or more of these challenges, and I thank them all deeply for their support.

Help from Governor Dayton and the Legislature

Second, we were able to do it because this year, we finally got real help from the State of Minnesota. After a decade when the State routinely balanced its budget on the backs of property taxpayers, this year, Governor Mark Dayton and majorities in the Legislature changed course dramatically, and finally started investing in Minnesota and Minneapolis homeowners. The $12-million increase in Minneapolis’ Local Government Aid that they courageously won for us was a major factor in our ability to cut taxes this year. Every Minneapolis resident and business owes them a debt of gratitude.

You

Third, and most importantly, we were able to do it because for the last 12 years, we’ve had the partnership of people like you: the residents and businesses of Minneapolis. The bottom line is this: for many years when times were tough, we asked you to invest more to keep Minneapolis strong. Now that times are getting better, when Minneapolis is growing and is poised to grow even more, we are asking less.

For all that City and State leaders have done, both in recent years and over the past decade, to restore Minneapolis’ fiscal health, you — the residents and businesses of Minneapolis — are the real heroes of this story.

Thank you

When I became mayor 12 years ago, I never suspected that one of the best parts of the job would be pouring over countless spreadsheets and pulling together complicated, billion-dollar budgets, but in fact, it has been. And knowing that Minneapolis is now healthy and sound is about the best job satisfaction I can imagine.

I thank you for giving me the privilege, and I thank you for your partnership.

Biggest downtown investment in decades up for a vote this week

The biggest investment in office space and green space downtown in decades — and the greatest opportunity in four decades to transform a sea of parking lots in Downtown East — is coming up for a vote this week on the City Council. Below are the key facts about the City of Minneapolis’ participation in Ryan Companies’ proposed Downtown East redevelopment of five blocks between the downtown core and the new stadium. For the City’s help in financing — not subsidizing, but financing —  a small portion of the development, we will see up to 6,000 new jobs downtown, more than $120 million in local property taxes paid over 30 years, and a revitalization of an area that will finally live up to its promise.

The Project

This $400 million development will transform five blocks of Downtown East that are currently dominated by surface parking lots. The project will result in a new two-block public park and a Ryan Companies office development of 1.2 million square feet: the largest office development in Minneapolis in 22 years and the largest single commitment by a corporate owner in Minneapolis history. It also includes residential and retail components.  Wells Fargo will purchase the buildings from Ryan upon completion.

The project is estimated to generate about $1.1 million in annual property taxes to the City in the first year and an estimated $42 million over the first 30 years. In addition, over that period of time, Hennepin County is estimated to net about $50 million in property taxes and the Minneapolis Public Schools about $35 million.

The City’s role 

Under this agreement, the City will finance a two-block public park and a portion of the new Block 1 (McClellan) parking ramp.

The proposal is for the City to finance $18 million for the park, $33 million for the ramp and $4 million for limited site preparation. The bonds that are sold to finance these elements will be repaid by using parking revenue off the newly-constructed Block 1 ramp, and the existing Block 6 (Downtown East) ramp.

The ramp revenue that will be used to make bond payments over 30 years is based on reasonable projections: the projections assume that monthly parking leases at the new ramp would be slightly less than the lease rate today at the nearby Haaf ramp. In addition, because payments coming to the City from Ryan will cover the anticipated debt service in years 1–10, the City has no financial risk in those years.

The package includes money to acquire land for the park, mitigate the property and begin to build the park. Park design and construction will be enhanced with a private donation campaign, which has been started with a $1 million donation from the Minnesota Vikings. Park operations are intended to be covered by the commitment of nonprofit sponsorships within the park.

The City will also receive the proceeds for selling air and liner rights on the new Block 1 ramp.  These potential proceeds, as well as potential increased revenue from parking in the Haaf Ramp, would be extra City revenue above and beyond what’s factored into this package.

Since the project was first announced last summer, the project financing has been affected by an increase in bond interest rates. That gap was closed in the last month by a series of actions, primarily by Ryan Companies agreeing to take on $3.7 million in costs and fees that would have been paid for by the City.