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Allmendinger: 'Downtown projects lower taxes for everyone'

Mike Allmendinger, general manager of Kilbourne Group Fargo, stands near a parking ramp the group is building as part of a multi-use project that will house retail shops and apartments in downtown Fargo. IMAGE: DAVE WALLIS/FORUM NEWS SERVICE

The discussion around economic development incentives in the city of Fargo is lively, contentious, emotional, and at times, not based on facts. Kilbourne Group, along with countless other dedicated, local people who care, has used the Renaissance Zone to rehabilitate ailing historic buildings in downtown Fargo.

Of our 24 downtown Fargo projects, Kilbourne Group has used PILOT three times: The Woodrow Apartments, the Black Building and portions of Block 9, which has not yet started. The PILOT scales the Renaissance Zone to catalyze higher investment projects.

The Woodrow Apartments are a historic renovation and adaptive reuse project which transformed a vacant 100-year-old school building on University Drive into 34 character apartments and added a brand new 63-unit apartment building on the adjacent parking lot.

The $15 million dollar cost for this project is all private investment on a site that has generated zero property tax value for more than 90 years and was a vacant building set to decay over time. The city of Fargo did not invest a single tax dollar to build new infrastructure to make it happen. Our community did play an important role, however. By agreeing to wait to collect taxes while we work to build value on this property, the city made the project possible. When the PILOT expires, the property will generate $135,000 each year in property taxes.

• Cost to city = $0

• Long-term income for city - $135,000 a year

• Cost of doing nothing: blighted, vacant, decaying property in the heart of Fargo and loss of a piece of Fargo's history

When someone tells you that it costs you money as a taxpayer to do this, they are talking about hypothetical dollars that don't exist unless the project happens. Some believe the projects would happen anyway. Kilbourne Group would not have done this project if not for the PILOT program. It simply wouldn't happen. How many years are you willing to wait to see? What does your community suffer in the meantime? Do you recall a time when downtown Fargo was not a place you would celebrate?

Downtown projects lower taxes for everyone. According to the city of Fargo, our revitalized downtown pays $4.87 million more in property taxes. The property tax rate for Fargo property tax owners would be 4 percent higher without this growth in property taxes from downtown properties.

Downtown projects, like The Woodrow, will not move forward if the PILOT, TIF and Renaissance Zone are eliminated.

The city of Fargo hires a third-party consultant to represent its interests and verify when a PILOT is necessary for a downtown project to move forward before granting it. This is a vital step in the process that protects the city. We recommend more transparency for this process. In January 2017, city commissioners updated and approved the tax exemption policies. As they again review the policy, which will impact the future of our downtown, we encourage you to join the conversation.

Allmendinger is president of the Kilbourne Group.

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