Downtown Fargo’s renewal has been going on steadily for years now. Scores of old buildings, once grand but dilapidated with age, have been restored and impressive new buildings are rising from what once were drab parking lots.
The primary catalyst for this remarkable rebirth is the city’s Renaissance Zone program, which provides five-year tax incentives for real estate development project’s within the designated zone’s downtown boundaries.
The results are visible to the eye. But many of the benefits can’t be seen, although they’re very real. Many of these new or renovated buildings combine residential and commercial uses.
Downtown Fargo has been experiencing a housing boom. Most of the new apartments built in the last few years — hundreds of them — have been downtown, something that not long ago would have been unthinkable.
New jobs also are moving downtown, the shop clerks and office staff who work in the new stores and offices that have been built and now are filling in downtown’s blank spaces. More projects are on the drawing board. A lot more.
But because tax benefits go to selected businesses, some people just can’t see the big picture. The Renaissance Zone and tax-increment financing district program, another tax forgiveness program to develop property, are controversial. That's because a small, but very loud, minority squawk about them.
Numbers make a compelling case. The value of Renaissance Zone properties, according to city figures, is more than $270 million. What’s really telling, however, are the financial before-and-after snapshots of property values.
Before the incentives were tapped, and before the improvements were made, the renaissance properties had a value of $28.4 million. Now those buildings are worth $235.4 million — more than an eight-fold increase.
That’s a great investment of tax dollars. It’s even better than that.
The city’s financial tools to spur development have increased downtown Fargo’s property base, which actually declined between 2000 and 2001, by $328 million. Those property owners paid $4.87 million more in property taxes because of the increase in property values — meaning that other property owners paid $4.87 million less in annual property taxes.
The cost to other taxpayers, meanwhile, is slight, amounting to $1.06 per year for the owner of a $100,000 house.
There’s simply no question that once the incentive’s grace period ends, all taxpayers benefit from the huge expansion of the city’s property tax base -- and in the city’s core, where costly street, sewer and utility services already are in place.
But developing property downtown is more expensive than on the city’s fringe. Developers encounter added costs with environmental mitigation — dealing with underground tanks, asbestos removal, old foundations, building around power lines — and must bring century-old buildings up to current codes, for example.
Without incentives like the Renaissance Zone, the resurgence of downtown Fargo just wouldn’t be happening. Period.
Oddly, the huge cost of expanding thoroughfares and even building new elementary schools along the city’s southern fringe generates little controversy or even discussion by city leaders. Infill development, including downtown redevelopment, where public works already exist, is an efficient use of tax dollars.
Don’t believe it? Just talk to employers, including Microsoft, about how the housing and entertainment options in downtown help to draw and keep young talent. People are flocking to downtown as a place to live, work and enjoy life because it’s distinctive.
It’s an asset we must cultivate and preserve. Rejuvenation doesn’t happen by itself.