• Minnesota's net general fund receipts for FY 2012 are now estimated to total $16.450 billion, $336 million (2.1%) more than forecast in February.
• Receipts from the individual income tax, the sales tax, and the corporate income tax were all above projections.
• Net general fund receipts in fiscal 2012 are now estimated to be 5% greater than fiscal 2011.

• Business and commerce
• Energy
• Environment
• Health and human services
• Housing
• Military
• Public safety
• Transportation

• Is it true that every time spending rises or revenue from non-property tax sources falls that my property tax bill goes up?
• Shouldn't there be protection from tax bills growing faster than value increases?
• How can I know how much my local governments should be spending?

"...the project will show the Litchfield spends taxpayer dollars wisely. What better way to demonstrate that Litchfield and Meeker County are great places to do business."
--Dee Schutte, Executive Director, Litchfield Chamber of Commerce
Read the article

• Links with more information are provided
• Contact Kaye Rakow at kayerakow@harringtoncompany.com

Frank Dutke, President and CEO of United Properties, briefed Metropolitan Council members on May 2nd on commercial real estate development in the region.
The Met Council is in the process of working on the next generation of the Regional Development Framework and asked regional stakeholders to give their perspectives.

Frank gave a historical, current and projected overview of the commercial real industry, educating Council members on how the business works and what’s important to its ease and success.

To cite a few of his points:

• Cost and regulations really matter—must be supported by market rents
• Developers don’t create markets, they react to them
• Scarcity of public resources demands more cost-effective and efficient government service delivery
• Allocate resources to alternatives that are most likely to result in economic expansion
• The interplay between risk and a reasonable rate of return
• The impact of technology on job creation and the demand for space Thanks to Rick Collins and Pat Mascia for helping Frank prepare his remarks.
  
  More information on the Met Council’s Regional Development Framework

Matt Van Slooten, President of Carlson Real Estate Company, represents business property taxpayers on the Property Tax Working Group.
The Property Tax Working Group was established by the Minnesota Legislature in 2010. The specific goals of this working group are:

• to simplify the property tax system and make it more understandable;
• to shorten the two-year cycle from assessment through property tax collection; and
• to determine the cost versus the benefits of the various property tax components and to suggest ways to achieve some of the goals in simpler and more cost-efficient ways.

The group must report its findings to the Legislature by February 1, 2013.

More information on the Property Tax Working Group
David Bade, Director of Land Development Services at RLK Inc., represents commercial real estate developers on the Minimal Impact Design Standards (MIDS) Work Group, the next generation of storm water management.
Historically, the goal of storm water management was to move water off the landscape quickly and reduce flooding concerns. Now the focus is on keeping the raindrop where it falls.

The development of MIDS is based on low impact development (LID) — an approach to storm water management that mimics a site’s natural hydrology as the landscape is developed. Using the LID approach, storm water is managed on site and the rate and volume of predevelopment storm water reaching receiving waters is unchanged.

The Minnesota Legislature allocated funds to “develop performance standards, design standards or other tools to enable and promote the implementation of low impact development and other storm water management techniques.”

Members of the MIDS workgroup will provide guidance and recommendations to the MPCA on the MIDS project.

More information on MIDS

Brandon Champeau, Development Manager at United Properties, represents commercial real estate developers on the MIDS Linear and Redevelopment Technical Team, which is a sub-group of the MIDS Work Group, formed in February 2012.

More information on the MIDS Linear and Redevelopment Technical Team

Testifying at the Capitol:
Representing the Nexus Task Force and all property tax payers in support of NAIOP’s expenditure type reporting legislation:

• Paul Reinke, Senior Director – Development at Haugland Company, provided the perspective of a commercial property owner as well as a city council member.
• Mark Haveman, Executive Director of Minnesota Taxpayers Association, provided the perspective of good tax policy and transparency for all taxpayers.

• Mark Reiling, Senior Vice President, Principal, Cassidy Turley, provided the perspective of an owner/investor.
• Doug Fulton, Executive Director, Brokerage Services, Cushman & Wakefield/NorthMarq, provided the perspective of a site selector/lease negotiator.
• Pat Mascia, Senior Vice President-Minneapolis/St. Paul Operations, Duke Realty, provided an overview of the market both in Minnesota and nationally.
• Adding the perspective of a business owner and business property taxpayer, were Kevin Bador, Executive Vice President, Japs Olson Company, in St. Louis Park and Steve Wise, President of Cass Screw Machine Products in Brooklyn Center.

State view: Access to details would make local government budgets easier to trim
From the Duluth News Tribune, Wednesday, May 23, 2012

“Last week I wrote a letter to the lawmakers who sponsored a great idea that was included in the tax omnibus bill vetoed by Gov. Mark Dayton last week. The great idea was requiring cities — and, I hope, all units of government, including school boards, eventually — to post four years of budgets by expenditure type on their websites.”

“This would make city and other local government spending so much more comprehensible to voters and, frankly, to city council members. I know as a former city council member how dependent councilors can be on staff; you have to push to get behind the numbers. I could have done a better job with this kind of reporting. I can see greater accountability and leaner budgets as clear outcomes.”

Kim Crockett is chief operating officer, executive vice president and general counsel for the Center of the American Experience, a nonpartisan, tax-exempt, Minneapolis-based public policy and educational institution.

Eric Anderson, Vice President of Development & Facilities at New Perspective Senior Living and chair of NAIOP’s public policy committee, writing to Senator Julianne Ortman, chair of the Senate Tax Committee on the Expenditure type reporting provision:
“The result of this bill will allow taxpayers to better understand not just the costs of ‘programs’ that local government provides, but also how they spend the money to pay for the programs (salaries, services, equipment, etc.) ... The opposition to this appears to be more about not wanting the public to ask questions about how governments operate."

Read Eric's letter.

MNDOT’s New Corridor Investment Management Strategy (CIMS)
In the event you have an interest in MNDOT’s CIMS, which will be rolled out this spring, the following links provide necessary information:

• Invitation from MNDOT Commissioner Sorel
• Clarifying information from Mr. Schaffner, the project manager of CIMS
• CIMS meeting schedule (the first one is in the NE metro area on May 8)
• CIMS meeting strategy description

Duluth, St. Louis County retirees see six-figure pensions
A Chicago-based watchdog group shows that 17 retired city or county workers receive pensions of more than $100,000 a year.

• “At present, Public Employees Retirement Association of Minnesota (PERA) is only 76 percent adequately funded to meet its future commitments. The system would need another $4.4 billion to become fully funded.”
• "Solvency — or the assurance that 100 percent of potential pension payouts have money behind them — is mandated by state law by 2031. PERA is on track to reach that goal…”
• According to David Montgomery, chief administrative officer for the city of Duluth: “Minnesota is not the worst out there, by far. But there is an issue… It’s not an imminent, crisis-tomorrow issue, but if you let it go, the less time you have to make up any shortfall. And time is your best friend to make the impact of any change more moderate.”

From the Duluth News Tribune, April 22, 2012
The results of the 2012 University Challenge are in! ...

• University of Wisconsin - Madison takes 1st Place.
  
• Marquette University places 2nd place.
  
• University of St. Thomas takes third place.

Along with the University of Northern Iowa and the University of Minnesota, each of the five participating universities produced an impressive proposal for the 5-parcel, 1.91 acre CPM Development site on University Avenue. In a program enjoyed by more than 100 NAIOP members and with a fun reception at Brit's Pub, it was an exciting event that had the closest team scoring in the nine-year history of the competition.

TEAM PRESENTATIONS from the 2012 UNIVERSITY CHALLENGE
View the five team proposals from the University Challege competition on redeveloping a 5-parcel CPM Development site on University Ave adjacent to the University of Minnesota campus.

Click Here to access the University of Wisconsin - Madison presentation as a PDF file.
Also available, select resumes from the University of Wisconsin team.

Click Here to access the Marquette University presentation as a PDF file.
Also available, select resumes from the Marquette University team.

Click Here to access the University of St. Thomas presentation as a PDF file.

Click Here to access the University of Northern Iowa presentation as a PDF file.
Also available, select resumes from the University of Northern Iowa team.

Click Here to access the University of Minnesota presentation as a PDF file.
Also available, select resumes from the University of Minnesota team.

Because we view the world through eyes of our employer-tenants, NAIOP offers a unique perspective when advocating for a more business friendly environment in which to operate. As we listen to their stories every day, one message remains constant: costs really matter to them…and new, friendlier policies regarding business property taxes would go far in assuring their success and speeding economic activity and employment growth.
Pat Mascia, NAIOP Minnesota president, in a letter to Governor Dayton asking him to support the phase out of the State General Property Tax.

It’s time for NAIOP members to contact Governor Mark Dayton:
The Honorable Governor Mark Dayton
130 State Capitol
75 Rev. Dr. Martin Luther King Jr. Blvd.
St. Paul, MN 55155
(651) 201-3400

Read Pat Mascia's letter, sent to the Governor on behalf of NAIOP members and their tenants.
Talking points and background information on the State General Property Tax phase out.

Ramsey and Hennepin County Mortgage Registry and Deed Tax–Environment Response Funds
Both the Hennepin and Ramsey taxes are set to expire and the extension of these two taxes isn’t getting enough traction at the Capitol.

At the April 5th public policy committee meeting, the committee agreed that the money raised and spent on cleaning up polluted and contaminated land is important for redevelopment.

If you have utilized or plan to utilize these funds and feel that the money raised by the tax is vital to contamination cleanup and economic development, you should contact the Tax Chairs at the Capitol and urge them to continue to impose the mortgage registry and deed tax.

• House Tax Chair, Representative Greg Davids, rep.greg.davids@house.mn
• Senate Tax Committee Chair, Senator Julianne Ortman, sen.julianne.ortman@senate.mn

Lorrie Louder, St. Paul Port Authority, provides a background of the tax, its status at the Capitol, and other words of help in an April 5th email. Read her email on Environment Response Funds (ERF).
A meeting at the Capitol with Representative Davids is scheduled for the 16th and Lorrie asks that you send your emails as soon as possible.

Letter from the St. Paul Port Authority to Ramsey County re: ERF
Ramsey County ERF talking points
Facts about Ramsey County's ERF

• Urban commercial rankings and relative tax burdens rose significantly in 2011 and now rank among the top five in the nation, their highest level since 2000.
• Both urban and rural industrial tax burdens increased relative to national averages. Industrial property taxes are 10% or more above the national average for all but the lowest valued parcels.
• Complete elimination of the statewide levy in 2011 would have dropped Minnesota’s urban rank 11 spots (from 5th to 16th nationally for a $1 million-valued commercial property and 11th to 22nd for a $1 million-valued industrial property).
• Regionally, Minnesota’s tax burdens are higher compared to all other Upper Midwestern states.

• The pitter-patter of bipartisan feet
  "It is an itty-bitty piece" of legislation, if anything that "could be a baby step toward bigger bipartisan moves & this could be it."
  Lori Sturdevant, Star Tribune Opinion Exchange, Sunday, February 19, 2012
• Truth in Budgeting
  The legislature may require standardized reporting by counties and most cities beginning in fall.
  "Regardless of the political bickering and the hidden agendas-be they fictional or real-all sides should support greater transparency in government spending."
  Dale Kurschner, Editor s Note, Twin Cities Business Magazine, March 2012
• FOR IMMEDIATE RELEASE
  From NAIOP Minnesota, the Commercial Real Estate Development Association
  Proposed legislation would require "aggregated expenditure type" reports by cities with a population over 2,500 and counties.
  Read the full press release.
  
• More information on expenditure type reporting:
  • HF 1954
  • SF 1741
  • NAIOP s advocacy piece, which quickly and easily summarizes what we're attempting to do and why

• Mark Reiling, Senior Vice President, Principal, Cassidy Turley, providing the perspective of an owner/investor.
• Doug Fulton,Executive Director, Brokerage Services, Cushman & Wakefield/NorthMarq, providing the perspective of a site selector/lease negotiator.
• Adding the perspective of a business owner and business property taxpayer, was Kevin Bador, Executive Vice President, Japs Olson Company, in St. Louis Park.
• Rounding out the presentation was Kaye Rakow, Director of Public Policy, NAIOP Minnesota, giving a brief overview of business property taxes in Minnesota.
• Providing observation and support was Kim Ihle, CBRE.

• Growth trends in the Twin Cities metro region;
• Fiscal and economic conditions in the region;
• The basics of the Fiscal Disparities program, including what has been said about it in the past and today, what the trends have been regarding the program's impact on taxes and what the changes would be if the program were eliminated;
• The potential "overburden" on jurisdictions, cities, counties, schools from different types of land uses both under the current taxation system (with Fiscal Disparities) and a hypothetical scenario if the program were eliminated; and
• Major policy considerations addressing criticisms, issues and praise for the program.

• Executive Summary
• Full Report
• Technical Appendix F-Levels of Service/Cost and Revenue Factors

• "Republican legislative majorities say now's the time to begin a multiyear teardown of the 11-year-old statewide business and seasonal-recreational property tax."
• "Dayton would do well to give the GOP alternative serious consideration."

• "After the disastrous first two weeks of the 2012 legislative session and another recital of business complaints, this session already feels the same as the last one. If those tactics and attitudes continue, there is little to look forward to."
• "Bipartisan 'Jobs Now' legislation should be the Legislature's top priority. Other bills can wait until we have done our job to help put Minnesotans back on their jobs."

• Rep. Downey: "We need to understand the spending behind tax increases to understand what can be done."
• Paul Reinke: "With good information, citizens can plug in constructively and help us serve the needs of the community."
• "Property taxes are an issue of deep concern for local businesses, and we appreciate the work done by the Minnesota chapter of the commercial real estate organization NAIOP and the Minnesota Taxpayers Association."
  
  Read the editorial.
  

• Office Build-to-Suit, Less Than 100,000 sf:
  Allina Medical Clinic - Ramsey
  Entered by bdh + young interiors | architecture
  
• Office Build-to-Suit, Greater Than 100,000 sf:
  Open Systems International, Inc.
  Entered by CresaPartners
  
• Repositioned/Renovated Building, Less Than 25,000 sf:
  Emily Program
  Entered by RJM Construction
  
• Repositioned/Renovated Building, 25,000-75,000 sf:
  FROST
  Entered by Hillcrest Development, LLLP
  
• Repositioned/Renovated Building, Greater Than 75,000 sf:
  Best Western Plus at Mall of America
  Entered by Welsh Construction
  
• Special Purpose
  Two Twelve Medical Center
  Entered by M.A. Mortenson Company
  
• Mixed Use:
  5 Points Building
  Entered by The Ackerberg Group
  

• DFL Leaders: Our Minnesota Agenda
  By Sen. Tom Bakk & Rep. Paul Thissen
  Star Tribune, January 22, 2012
• GOP leaders: Our Minnesota Agenda
  By Rep. Kurt Zellers & Rep. Matt Dean
  Star Tribune, January 22, 2012
  

• House File (HF) 1914
• Senate File (SF) 1624
  

--COSTS MATTER--

...and the costs that matter most are the fixed costs they cannot control, such as the property taxes they must pay on the buildings they own or in which they lease space to office or operate. Read more.

Pat Mascia, Senior Vice President Minneapolis/St. Paul Operations, Duke Realty, 2012 President, NAIOP Minnesota

NAIOP Minnesota introduces its 2012 president and public policy team, along with its legislative priorities. Read more.

• Within a DEED designated Transit Improvement Area (TIA) or area eligible for TIA designation.
• Within a one-quarter mile radius along designated high frequency local bus lines.
• Within a one-half mile radius of a bus stop or station on designated high-frequency express routes.

• No levy increases over payable 2011.
• No changes to distribution of tax burden due to market-based valuation changes across property types.

• Consolidate the 11 existing watershed districts and water management organizations into 4 divisions based on hydrological boundaries.
• Grant taxing authority to all water organizations in Hennepin County.
• Improve coordination of water management planning between watershed districts/water management organizations and cities.
• Implement coordination, oversight or enforcement between watershed organizations and the state.
  
  Read the full report.
  

• What are the possible development opportunities along the line?
• Why is the building of this line important to the region, economic development, over all transportation plan, etc.?
• Where will the money come from for the capital costs of the line?
• What are the anticipated operating costs and what are the proposed sources of that money?
• Is anticipated that value capture methods or money from TIF districts will be used for any part of the financing? If so, how will that work? What approvals are necessary?
• What are political, financial, and other challenges at this time and moving forward?

• Senator Michel immediately called NAIOP, as the first line of defense for business property taxpayers at the Capitol, to arrange solid supportive testimony for his bill.
• NAIOP turned to Pat Mascia, whose testimony was  an important step in the demonstrating to many legislators the serious impact of property taxes on Minnesota businesses ability to compete and create jobs.

• Summaries of Legislation of Interest to Commercial Property Owners and Developers
• 2011 Property Tax System Law Changes

• Attending monthly retail recruitment meetings at Catalyst's office at 1200 W. Broadway.
• Reviewing and advising retail recruitment materials, strategy, targets, and messaging.

• Tax Transparency (June 2011)
• Minnesota Organizations Push for Transparency in Government Spending (April 19,2011)
• What's in your budget? We need to better understand how government is spending our money. (March 2011)
• We've dug ourselves into a really big hole (November 2010)
  

• Homestead taxes remain modest compared to neighboring states and are below the national average.
• Urban and rural $25 million commercial properties and rural $1 million commercial properties are all still ranked well within the top 10 nationally.
• Industrial burdens generally range from 10% below national averages to 20% above national averages depending on property values and location within the state.
• And, even though commercial properties in Minnesota have experienced significant competitive improvement since 1995, when comparing three different property values of commercial buildings in Minneapolis, property taxes payable are still 12-44% above the national average. When comparing three different property values on commercial buildings in Glencoe, property taxes payable are 19-54% above the national average.

• Steven Dornfeld: Local government aid  counterpoint. Republican state lawmakers have proposed slashing the 40-year-old program of state aid to Minnesota cities, while DFL Gov. Mark Dayton wants to preserve the status quo. Nobody seems to be talking about a more thoughtful and constructive option redesigning the program to make it more equitable, efficient and effective.

• Hamilton and Sheran: Property Tax assertions are misleading. Counterpoint to Tice's commentary.
• Tice: Reponse to "Counterpoint"

This 16-page report examines the issues impacting the ability of property taxpayers to make informed judgments about local spending and the use of their property tax dollars and identifies three requirements to enhance those judgments.
Read more

• Local Government Aid: There's a Catch. "It creates perverse incentives. It goes to the wrong places and pays for the wrong things. And we can't afford it." Star Tribune, Wednesday, October 6, 2010
• Redesigning State Government Isn't Easy. "Will our legislators and our next governor have the political courage to take on the serious public administration reforms needed to allow government redesign to thrive and prosper?" Finance and Commerce, Wed, Oct 6, 2010

• Description of the Supreme Court and its implications
• League response to the Supreme Court case
• Frequently asked questions about variances

• Read the technical explanation of the unearned income provision of the bill, prepared by the staff of the Joint Committee on Taxation.
• Read the actual language from the bill, CHAPTER 2A, UNEARNED INCOME MEDICARE CONTIRBUTION