FARGO — The city of Fargo has hired a company to study its property tax breaks for developers and businesses and compare them to other cities in the U.S.
Assistant City Administrator Mike Redlinger said the Maryland-based firm TischlerBise is an expert in analyzing tax breaks such as Fargo's Tax Increment Financing (TIF) District and Payment in Lieu of Taxes (PILOT) programs.
The two economic development programs, along with the Renaissance Zone program, are used frequently for new housing and commercial developments in the city as well as for companies looking to build or expand their facilities and add jobs.
TIFs and PILOTs provide property tax breaks for five years or more to help the companies afford projects. In TIFs, taxes businesses pay are used to finance infrastructure improvements — often in blighted areas.
The programs are not without their critics. City Commissioner Tony Gehrig always votes against the tax breaks, saying the developers and companies would likely move forward with projects regardless of whether they got them.
Other commissioners and Mayor Tim Mahoney are usually in favor of the incentive programs, although some have occasionally voted against the breaks.
TischlerBise will likely finish a report by January at a cost to the city of about $60,000. The study will compare Fargo's economic development incentives to those offered in other cities, focusing on the Midwest.
In addition, the company will also develop a tool to evaluate the performance of Fargo's tax incentives and provide training on its use for city staff.
Redlinger said the effort will complement work underway by one of the city's financial consultants, Baker Tilly, which is developing a 10-year plan on expected property tax growth and demand for city services in seven areas of Fargo.
Commissioner John Strand, who was the lone vote against the study, wondered where the idea to hire such a firm came from and why it wasn't put out for bids.
Redlinger said few companies have TischlerBise's skill set and knowledge of other cities' programs.
Mayor Tim Mahoney said it will be nice to see how Fargo compares nationally to incentives offered by other cities.
Commissioner Arlette Preston said she thinks the study "will give us a better sense of how we can target incentives" rather than give them to everyone who applies.
She added, though, she doesn't want to get rid of them as Commissioner Tony Gehrig favors.
Although Gehrig supported the study, he said he wanted to visit the company and asked if they had ever recommended that cities end tax incentives.
Gehrig said if the company has not done so, it's a "big problem" for him.