With a 91-0 vote, the state House Tuesday passed a bill that allows cities and counties to revoke or reduce property tax breaks for commercial projects if a developer is untruthful or doesn’t meet guidelines set in the incentive agreement.
Under the proposal, a county or city may end or lower a property tax break agreement it authorized before if:
- Information provided by the project operator has been inaccurate or untrue when the incentive was negotiated.
- Use of the property by the project operator does not comply with reasonable expectations of the governing body at the time of the property tax exemption was made.
- The property has been improved substantially greater than the governing body reasonably anticipated at the time the incentive was approved.
- Ownership of the property changed since the property tax break was approved.
Existing state law allows cities and counties to issue a partial or up to a full property tax break for five years.
The measure also affects fees paid instead of property taxes on buildings, structures, fixtures and improvements of a project. The city or county governing board may revoke alternative payment agreements based on the same guidelines.
“This gives cities and counties some recourse. It clarifies things more,” said Rep. Jason Dockter, R-Bismarck. “This gives (them) the authority to revoke or suspend the incentives if the business didn’t fulfill what they promised.”
The measure now goes to the state Senate.
“We’ve already been taking steps to provide accountability and we have claw-backs in the agreements, but this provides additional security,” said Ellen Huber, business development director for the city of Mandan. She said the city’s new policy carefully monitors how business gaps are filled in the community, if job numbers are met, how high-paying jobs are and what quality of jobs a development brings. “They must give us timely reporting on their progress,” she said.
“I do not believe we have had instances where it has been an issue,” said Mandan City Administrator Jim Neubauer.