FARGO — After being rejected at a Cass County Commission meeting a day earlier, a Kilbourne Group downtown building project won the approval of a city committee for a property tax break on Tuesday, July 23.
The tax incentive is for a proposed multi-use structure in the midst of downtown Fargo between First Avenue North and Second Avenue North behind the Black Building called the Kesler Building.
The city's tax exempt review committee voted unanimously to move forward a proposal by Kilbourne for a Payment in Lieu of Taxes (PILOT) tax break for a portion of the six-story, 95-unit apartment complex with five retail store spots and underground parking.
The City Commission must also approve the tax break, as well as the Cass County Commissioners and Fargo School Board because they all are denied property tax dollars for a period of time.
The Cass County board, which rejected the tax break 3-2 on Monday, is still interested in seeking more information and is planning to meet with city officials and Kilbourne Group President Mike Allmendinger Thursday at 2 p.m. in City Hall to try to possibly work out some agreement.
Allmendnger said after the city committee meeting Tuesday that he has never had a chance to sit down with the county commissioners to discuss plans for any building and to address other issues surrounding tax incentives.
He said of the 24 projects Kilbourne has done downtown, he has only asked for PILOT funding for three of them.
"We don't ask for them (tax incentives) if we don't need them," Allmendinger said.
Two other downtown housing projects by Kilbourne, also on the west side of downtown, are also seeking PILOT funding. One is on the site of the former Nestor bar and the other at the site of an old antique business on the northwest side of downtown. County commissioners rejected tax breaks on those two projects, although they agreed to talk more with the city and Kilbourne officials about the developments. The tax exempt committee approved the tax breaks for those other two projects earlier.
City Strategic Planner Jim Gilmour said the city sold the city parking lot along Second Avneue North where the Kesler Building would be constructed to Kilbourne with the idea it would be developed. The project would include a private parking lot along First Avenue North.
He said although the PILOT would extend a tax break for part of the project, the city has a deal with Kilbourne that they would receive only a five-year Renaissance Zone tax break on the old city parking lot land. Thus, Kilbourne would be paying taxes on that portion of the $17.2 million project after five years of about $130,000 a year.
The PILOT tax break would provide a tax break from year six to 15.
After the 15th year, Gilmour emphasized that the city, county and school would share about $600,000 in tax money.
He said the tax money collected currently and for the past 25 years or more on the parking lots is basically nothing and would continue that way without the project.