Mar 22, 2022 |
This article belongs to Session Daily. View the article on the Session Daily website here.
They call it a “circuit breaker.” Minnesota’s property tax refund program is intended to keep low-income households from becoming overloaded with tax burden, just as a circuit breaker is designed to keep electric circuits from being overloaded with energy.
But a lot of state residents believe the wiring needs an update. As housing prices are rapidly rising, so are property taxes, and household budgets are getting stressed.
That’s why the House Property Tax Division laid over two bills on Wednesday that would boost the size of most Minnesotans’ property tax refunds, altering the algorithm to get more money back into the hands of homeowners.
The larger increase would come courtesy of an amended HF3866, sponsored by Rep. Kristin Bahner (DFL-Maple Grove). It has no Senate companion.
It would increase the maximum refund by $500 for all income ranges currently eligible for the credit. And it would push the income cap to receive a refund up to $155,000 from its current $126,290. Co-pays for new claimants would be 50%, with income thresholds ranging from 2.6% to 2.8%. The bill would also increase the exemption amount for claimants who are seniors or have a disability.
“This bill has three main goals,” Bahner said. “To help our seniors age in place, to help with the expenses of a growing young family, and to help those with disabilities to stay in their homes, where they feel stable and independent.”
For those with household incomes under $46,720, the maximum refund would increase from the current $3,090 to $3,590. The maximum refunds would continue to decrease by gradations according to income, but would be $500 larger than under current law. Those with household incomes over $126,290, currently ineligible for refunds, would top out at a maximum refund of $350 for those with household incomes of $155,000.
The Department of Revenue estimates that the change would result in a reduction to the General Fund of $60.9 million for fiscal year 2024 and $66.3 million for fiscal year 2025. It estimates that about 441,000 property tax refund claimants would receive an increased refund.
Sponsored by the division chair, Rep. Cheryl Youakim (DFL-Hopkins), HF3518, as amended, would also increase the maximum refund, but by $300, not $500, and would cap refund eligibility at $126,290 of household income.
Its companion, SF3185, sponsored by Sen. Matt Klein (DFL-Mendota Heights), awaits action by the Senate Taxes Committee.
“The property tax refund is an important investment we make in all of our communities,” Youakim said. “I know a lot of members have been receiving emails from constituents asking for a little bit of help with their property taxes. Maybe it’s a young family trying to make ends meet with rising child care costs or school loans. Maybe from someone trying to downsize and facing a crazy housing market or a senior trying to age in place. This bill is a good place to start.”
“Property taxes are going up and it hits a lot of people on fixed incomes,” said Rep. Paul Marquart (DFL-Dilworth). “Regardless of your income, if you lost a spouse or your spouse lost a job, you still have that home. And you still have those property taxes even though your income has changed dramatically. So anything we can do to cut property taxes is a good thing.”
Mar 22, 2022 |
This article belongs to the Star Tribune. View this article on the Star Tribune website here.
Three of the most sleep-inducing words in the English language are surely “historic tax credit.”
But please, remain awake. This is important, because tax policy details have a sneaky way of dictating how our cities look and function, and they can underscore how we regard our past and preserve it for the future.
Rehabilitating historic buildings can be a financially risky undertaking for private developers. Fortunately, this is one instance where government intervention has proved to be a positive force. The federal government’s historic tax credit legislation is more than 40 years old, and Minnesota followed with a similar program in 2010.
Here’s how it works: Both the state’s and the federal government’s historic tax credits land at 20% of the project’s total cost. If a developer is engaged in a $1 million rehabilitation on a qualifying property, they can receive a $200,000 tax credit from the state, plus a $200,000 federal tax credit, when the project is completed.
The largest development to take advantage of the state’s program is the Dayton’s Project, the $214 million remake of the mammoth downtown Minneapolis department store into an office-retail complex.
“I can say pretty resoundingly that the project wouldn’t have happened without the state and federal historic tax credits,” said Cailin Rogers of Chicago-based Telos Group, one of the project’s partners. “The building has been completely reworked, from top to bottom. That’s not possible without time, expertise and resources, and you can’t possibly do that without state and federal tax credits.”
This being the government, there are reams of rules. The building has to be income-producing, so it doesn’t apply to private residences. The building also must be listed on the National Register of Historic Places — or applying for a place on the register — although it can be part of a district that’s on the register. And the rehabilitation has to be substantial, enough to pass certain measurable criteria.
“We refer to it as a ‘tax incentive program,’ ” said Natascha Wiener, historical architect at the State Historic Preservation Office. “It’s meant to be an incentive to do work that respects the historic character of the building, respects historic materials and makes compatible modifications.”
Over the past 10 years, the state’s historic tax credit has been applied to more than 100 projects all over Minnesota, and they run the gamut. The NorShor Theatre in Duluth was restored, a woolen mill in Faribault was refurbished and a Moorhead potato warehouse and a New Ulm school have been converted to housing.
In the Twin Cities, projects include the complicated remakes of the Schmidt Brewery in St. Paul and the Pillsbury A Mill in Minneapolis. Both feature housing, and Schmidt has a substantial retail component.
But not all historic tax credit projects are high-profile restorations of beloved landmarks. Some can be small apartment buildings requiring new boilers, or Main Street storefronts receiving much-needed upgrades.
“There’s a domino effect,” said Meghan Elliott, founder of New History, a Minneapolis consulting firm. “One building owner does it, and then their neighbor asks, ‘How did you do that?’ Once one project gets started, people start seeing the opportunity.”
Jobs, jobs, jobs
There’s just one problem with the state’s historic tax credit program, which is officially known as the Minnesota Historic Structure Rehabilitation State Tax Credit: It’s set to expire June 30.
Please, legislators: Don’t allow this happen.
And not just because preservation helps communities tell their stories, or because preservation is ecologically smart. Currently, a coalition of interested parties is taking a savvy lobbying approach by packaging a renewal of the historic tax credit as a jobs bill. Which it is.
“Preservationists have learned to talk more in terms of the economic benefits,” said Wiener. “In most new construction projects, the expenses come down to about 60 percent materials and 40 percent labor. But with preservation, it’s the reverse, which means that 60 percent of the money goes to the trades, to the people who live next door.”
Those wages get filtered back into the economy in myriad ways. According to an analysis of the state’s 2020 historic tax credit program conducted by University of Minnesota Extension, every dollar awarded through the program generates $9.52 in economic activity.
The numbers add up. There were 11 projects that qualified for historic tax credits during the state’s 2020 fiscal year — six in the Twin Cities, plus ones in Duluth, Fergus Falls, Mankato, Owatonna and Winona. Those projects involved $119.1 million in private developer investment and supported 720 jobs.
Over the past decade, the historic tax credit has accumulated $1.9 billion in private developer investment in Minnesota, supporting 18,660 jobs.
“If we lose this tool, we will lose projects and we will lose potential jobs,” said Elliott.
Smart public investment
Over time, the historic tax credit pays for itself, according to research from University of Minnesota Extension.
One example is the First National Bank-Soo Line Building in downtown Minneapolis. In 2014, the century-old office building was converted to luxury apartments, and the $76.4 million project was awarded $11.5 million in state historic tax credits ($57.7 million qualified for the tax credit).
The process of revitalizing historic buildings generates tax revenue in the form of sales and income taxes — from purchasing materials and paying wages — and because property values rise post-rejuvenation, the reborn buildings generate more property tax revenue.
The construction portion of the Soo Line project triggered nearly $6 million in state sales and income tax revenue, and post-construction, the building’s annual property taxes rose by nearly $900,000. Do the math: Over the course of seven years, the cumulative taxes generated by the project will have outpaced the state tax credits it received.
What happens if the state House and Senate don’t act, and the historic tax credit expires?
“It would really be a shame,” said Erin Hanafin Berg, policy director of Rethos, formerly the Preservation Alliance of Minnesota. “With so many people out of work, this is an economic stimulus that cannot be discounted. We are one of 38 states that have a historic tax credit of some sort, which means that most states recognize that this is excellent policy.”
Economic impact aside, think of the historic buildings that could fall into disrepair or meet the wrecking ball. The clock is ticking. The Legislature adjourns May 17.
Mar 22, 2022 |
This article belongs to the Star Tribune. View the article on the Star Tribune website here.
The Minnesota Legislature, in rare bipartisan fashion, in this session might pass a multiyear extension of the state’s 20% historic-building tax credit that has helped save underused and abandoned structures from Ely to Minneapolis and Winona.
The tax credit, first enacted in 2010 and renewed twice, generates some of the best returns on tax expenditure of any state program.
It also has spurred employment and neighboring investments, according to proponents and a January study.
“I’m optimistic that the legislation will be included in the House and Senate tax bills,” said Joe Bagnoli, a Winthrop & Weinstine attorney who represents nonprofit preservation groups. The League of Minnesota Cities and trade unions also support the bill.
A 2021 study by University of Minnesota Extension found the 170-plus projects done over the last decade under the credits generated an estimated $5 billion in economic activity, 28,480 jobs and $1.9 billion in related labor income.
That boils down to an estimated $11 return on every $1 in state tax credits.
A related mapping project showed 53% of projects located in Minneapolis, St. Paul and Duluth are in older, low-income neighborhoods.
Developers say most of those projects would not have happened without the tax incentive.
“The report by the University of Minnesota helps,” said Rep. Cheryl Youakim, DFL-Hopkins, who is chief author of the legislation in the House. “We have tax expenditures that never get reviewed.”
Besides the return, the review also showed that 85% of construction budgets went to labor, not building materials, she said. “There’s less energy and waste involved.”
Gov. Tim Walz has signaled his support, as have several key Republicans and Democrats in both chambers.
The House bill will soon to be joined by a similar Senate measure sponsored by Republican Dave Senjem of Rochester and DFLer Kari Dziedzic of Minneapolis. Both would extend the sunset date to 2030 and allow the credit to be taken in one lump sum, instead of over five years. The proponents were successful last year with only a one-year extension due to budget constraints.
Sen. Jeremy Miller, who leads the Republican caucus, is also a proponent of the historic-revitalization credits and is from Winona, which has benefited from them.
The economic analysis shows the value of the expenditure is recouped within a few years thanks to rising property values and increased state and local taxes, said Erin Hanafin Berg of Rethos, formerly the Preservation Alliance of Minnesota.
The projects, in aggregate, pay for themselves through increased property taxes within seven years, the extension study found.
For projects in progress in fiscal 2021, developers reported spending $890 million, including $693.4 million in labor wages that supported 9,660 jobs. The $124 million in tax expenses for the credits last year generated overall related economic activity of $1.4 billion in Minnesota, the study said.
The projects cover Minnesota.
The overhauls have included an old grade school renovated into housing in Winona, an abandoned high school and a YWCA that were renovated into apartments in Duluth, as well as the Faribault Woolen Mill.
The abandoned Ely State Theater building sold for $2,750 in 2014. By 2021, following redevelopment, the building’s assessed value had increased to $162,900.
The U Extension estimates the $2 million investment by the developer generated total economic impact of $4 million. The project was awarded slightly less than $400,000 in tax credits.
The biggest tax-credit project so far is the $375 million renovation of the former Minneapolis downtown Dayton’s department store building. That project has received about $70 million in state-federal tax credits.
The state-federal historical certification enables developers to sell up to 20% of the value of the project as federal and state tax credits to limited partners, typically financial institutions. The credits offset taxes over five years, and the credit-derived funds can only be used for materials, labor and services that preserve historic features.
Developers generally consider historic projects risky because the buildings often are in poor shape and require pricey investments — from structural reinforcement to new windows, HVAC systems and technology, as well as painstaking restoration touches.
“Without a significant extension of Minnesota’s historic tax credit, we stand to lose billions of dollars and tens of thousands of jobs,” said Meghan Elliott, founder of New History, a historic-project tax-credit consultant since 2011. “There are dozens of projects that will come to full stop if the Legislature does not act to protect the historic credit.”
Correction: An earlier version of this article had the wrong year that New History was founded.
Jan 16, 2022 |
A new program to help out firefighters and their families with resources was recently passed by the Minnesota Legislature.
On Thursday, July 15, the Minnesota Firefighter Initiative (MnFIRE) held a press conference at the Albertville Fire Department to announce the newly passed Hometown Heroes Assistance Program.
A driving force behind helping this legislation get passed was the Minnesota Firefighter Initiative (MnFIRE), which was established in 2016 when the need for resources and support for firefighters across Minnesota was recognized. The organization itself wanted to address the issues surrounding cancer, cardiac and emotional trauma.
George Esbensen, President of MnFIRE, has been with the organization since its inception in November 2016. He is responsible for the legislative and administrative duties for the organization, as well as fundraising.
“[When the bill passed] it was a feeling of relief that all these years of hard work and effort have paid off,” said Esbensen. “This bill will provide immediate benefits to roughly 20,000 firefighters in Minnesota from day one regardless of their work status or if they live in a small or big town.”
Two key members who have also been with the organization since the beginning are Vice President Mike Dobesh, who oversees the education that is delivered to firefighters and Treasurer John Wolf who is responsible for the peer supporters that firefighters can call on a toll-free number to get support if needed.
Representative Cheryl Youakim, Representative Tama Theis, Senator Jeff Howe and Senator Steve Cwodzinski were the driving force behind bringing the Hometown Heroes Assistance act to the Minnesota Legislature.
“Even though you hear about the back and forth of the two major political parties, this really was everyone coming together for the good of the Minnesota fire service,” said Esbensen.
The program will also provide annual training for medical and mental health providers so that when a firefighter walks into their office, they have the necessary background to address the challenges and unique experiences that firefighters endure.
In addition, every firefighter and their family members will have five visits with a mental health professional who is trained in the unique rigors of being a firefighter.
Emily Vollmer, the widow of Captain Jeffrey Vollmer of the Mayer Fire Department and mother of two, lost her husband in 2017 to a heart attack at the age of 40. Captain Vollmer was a second-generation firefighter who dedicated 12 years to the department.
Vollmer remembers her husband as a hands-on captain who advocated for his fellow members of the department. He would routinely check on those who were having a difficult time after a call and encourage them to get the support they needed.
“Calls that trigger or prompt PTSD are horrible and it’s hard to talk to people in your life who may not understand what a firefighter is going through after a call,” said Vollmer. “There is also the unfortunate stigma of being a man and a firefighter and the expectation of being able to handle things alone.”
When the bill passed, Vollmer was relieved that firefighters who volunteer their time and talents will finally receive the support they need to help themselves. Having a firefighter at their best, physically and mentally, is important so they can provide quality service to the community.
“I’m ecstatic that they can get better screening,“ said Vollmer.” “Some of these issues can be caught sooner and prevent tragedy from happening so other families and departments do not go through what we did.”
In their interviews, both Vollmer and Esbensen stated that they hope fire departments will utilize these new resources that are available to them and that the firefighters themselves will finally get the help and support that they need.
Jan 16, 2022 |
On behalf of the MSSWA Board of Directors and our members, it is my honor and privilege to once again present our MSSWA Legislator of the Year Award. This year we are honoring 2 influential advocates Senator Nick Frentz who serves Senate District 19, which includes portions of Blue Earth, Le Sueur, and Nicollet counties in the south-central part of the state and Representative Cheryl Youakim who serves House District 46B which includes the cities of Hopkins and St. Louis Park. Senator Frentz and Representative Youakim’s leadership in the Minnesota State Legislature has been instrumental in addressing various issues related to education funding that equitably supports all Minnesota students, access to affordable quality healthcare, access to affordable housing as well as being champions for increased school-based mental health services and resources for students such as school social work services.
Serving as Chief Authors of SF728/HF945, your persistence and advocacy to allow Federal Medicaid Reimbursement for School Social Work Services that are provided on an IEP or IFSP was pivotal during the 2021 Legislative Session. Senator Frentz and Rep Youkim’s ongoing efforts to ensure that Minnesota school districts have the funding and resources to meet the needs of our most vulnerable children is commendable. After engaging in conversations from MSSWA, MASE, PACER, and school district leaders in their communities regarding the lack of funding and the barriers facing districts in accessing vital Federal Medicaid dollars to provide critical mental health services for students with identified educational disabilities, they welcomed the opportunity to become Chief Authors of SF 728
and HF 945 a bill which proposed to modify third-party reimbursement for social work services for special education. This bill would have allowed school districts to maximize federal reimbursement, by seeking medical assistance (MA) reimbursement for health-related services that are provided as part of an Individual Education Plan (IEP/IFSP). Services – including speech-language therapy, occupational and physical therapy, mental and behavioral health services, school nurse services, vision and hearing screenings, diabetes and asthma management, and durable medical equipment – are reimbursable through Medicaid for eligible students. While school social work services are included under Minnesota statutes as health related services that can be billed to MA, our current practice in Minnesota does not allow for districts to bill for these services.
Due to their advocacy and support, SF728/HF945 successfully passed the Senate Education Finance and Policy Committee, House Education Policy and Education Finance Committees and the House Human Services Finance and Policy Committee. Although it stalled in the Senate Health and Human Services Finance and Policy Committee, Senator Frentz and Representative Youkim’s perseverance helped to move a revised version of the bill to the Education Omnibus Bill which did pass. As a result, MDE and DHS are in the process of developing recommendations which they must report back to the legislature that would allow the services we already provide on an IEP/IFSP to be reimbursed through federal MA $. MSSWA Board Members and Legislative Committee members were honored to have the opportunity to partner with Senator Frentz, Rep Youkaim, MASE and PACER to testify in support of these bills.
Senator Frentz and Representative Youakim recognize that school-employed mental health providers such as licensed school social workers serve in critical leadership roles related to school safety, positive school climate and providing critical school-based mental health services for all students including our most vulnerable students. Furthermore, they understand the vital role and mental health expertise of school social workers in not only providing direct services to students and families in the form of individual or group therapeutic support but how we also serve as a resource to administrators and other educators by providing consultation and training on identifying students with mental health needs and a referral process when additional services are sought.
Senator Frentz and Representative Youakim’s commitment to establishing crucial funding streams for districts to ensure access to necessary mental health services, their efforts to reduce barriers to educational success and for their dedication to
ensuring all students have the resources to be prepared and successful beyond graduation are just a few of the reasons why MSSWA felt it was essential to acknowledge their leadership. In addition, their openness to continue to access school social workers expertise as a resource is very much appreciated by our members. We look forward to continuing to partner with you. Please join me in thanking Senator Frentz and Rep Youakim for being a true champions and supporters of school social work services and values.
Read the MSSWA article
Jan 9, 2022 |
Rep. Cheryl Youakim, DFL-Hopkins, is one of 11 Minnesota House members who has won the Legislator of Distinction Award from the League of Minnesota Cities for 2021.
The league’s board of directors annually approves Legislators of Distinction. According to the league, the award recognizes “that to successfully serve commonly shared constituents, state and city officials must work together to meet the unique needs of rural, suburban, and urban residents across the state,” a statement from the league says.
“As a former Hopkins City Council member, I’m grateful for the League’s advocacy in the legislative process,” Youakim said in the statement. “Our state and city partnership is a critical component to the results we deliver for the communities we serve in the Minnesota House of Representatives.”
The League of Minnesota Cities, which is governed by a board consisting of local elected and appointed city officials, serves its more than 800 member cities through advocacy, education and training, policy development, risk management and other services.
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