A request by the owner of a downtown Fargo landmark has prompted the city's Renaissance Zone Authority to revisit the plan that dictates who receives tax breaks in the zone.
Lloyd Sampson, co-owner of The Black Building, 118 Broadway, told authority members Wednesday that the current development plan puts him at a disadvantage to other renters because his tenants can't qualify for state income tax breaks.
The Renaissance Zone law passed by state lawmakers in 1999 says those who lease property in a zone will receive a five-year tax break on income derived from the businesses.
However, Fargo's plan goes a step further, saying the city will entertain leased projects only in approved Renaissance Zone locations, said Fargo Senior Planner Bob Stein.
To qualify for the tax break, Sampson's only current option is to rehabilitate his entire office building, Stein said.
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Sampson said that's too expensive.
"What the problem is under your system, I have to think of the building as one project," he said. "Well, with 80 tenants, I can't do it without throwing them all out, and that's not practical or reasonable, and I'm sure you guys don't want me to do that anyway."
As a result of the city's more stringent requirements, Sampson said nearly all of his tenants are nonprofits or startup businesses. Established businesses rent offices elsewhere to obtain the income tax break.
"I'm actually operating with my hands tied behind my back trying to make this building work," he said.
Sampson pointed out that in Grand Forks, where he also owns property, the city grants the income tax exemption to Renaissance Zone tenants, regardless of whether they're in an approved building.
Stein said that's because many downtown Grand Forks buildings were already rehabilitated after the flood, and the city was trying to entice more tenants to downtown. Fargo, on the other hand, is more focused on improving the physical appearance of downtown, he said.
Fargo Planning Director Jim Gilmour warned the City Commission and state also may have concerns about giving state income tax breaks to businesses in a building that isn't receiving local property tax breaks from the city.
Still, authority members agreed it was worth taking a look at possible exemptions.
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"It seems to me what we need to do here is evaluate the plausibility of changing that," board chairman Roger Gilbertson said.
Doing so would be an arduous process, officials said. Any recommendation by the authority would need approval from the City Commission and the state.
In other business, the Zone Authority approved a Renaissance Zone application by DVAW LLC, which purchased the old Greyhound Bus depot at 415 4th St. N.
The building now houses Chemlawn, which was displaced by the Main Avenue construction project. A brick façade is being built over the white steel-panel siding to match the building to the nearby Great Northern Depot.
Readers can reach Forum reporter Mike Nowatzki at (701) 241-5528
