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Dist. 88 tax abatement process started

Will finance improvements of parking lots

May 10, 2013
By Kremena Spengler - Staff Writer , The Journal

NEW ULM - The District 88 Board of Education on Thursday approved a resolution to start a "tax abatement" bonding process to fund school parking lot improvements.

The project concerns parking lots at the main (high school/Jefferson Elementary School) campus and at Washington Elementary School.

The resolution allows the district to begin a process that would result in the issuance of up to $680,000 in 15-year bonds.

The district would levy the annual debt service through "tax abatement."

"Tax abatement" is an economic development tool, not an actual abatement, or non-payment, of taxes. It allows the levy of taxes for development purposes. Taxes are captured from properties that benefit from the tax abatement project.

The resolution approved Thursday is the first step in the tax abatement bonding process. Next, the district needs to submit "a letter of consultation" to the Minnesota Department of Education explaining the project; obtain a bond rating from a rating agency; publish a request for bids to determine the actual cost of the project; and hold a public hearing. (The hearing is at 7 p.m. May 29 at the District Administrative Center.) After these steps, the board will decide whether to move on with the project.

Fact Box

Tax abatement, as presented by consultants Springsted Inc:

Tax abatement is defined by Minnesota Statutes 469.1812 to 469.1815, explained consultants Springsted Inc. It is an economic development tool, not an actual abatement or non-payment of taxes. It permits levy of taxes for application toward development purposes.

In tax abatement as defined, taxes are captured from properties that benefit from the tax abatement project. The decision to use this tool is made by resolution at a meeting for which a notice has been given, and does not require property owner consent. The abatement resolution indicates terms: amount, length, public benefit, etc.

Tax abatement eligible costs include: improvements to private property; financing or providing public infrastructure; and acquisition or construction of public facilities.

If bonds are issued, eligible costs only include public improvements that benefit the property; acquisition or conveyance of land or other property; reimbursements to the property owner for the cost of improvements made to their property; or the cost of issuance.

Tax abatement constraints include: no back-to-back abatements (eight years must pass before a new abatement may begin on the same parcel). Also, the tool cannot be used within TIF (tax increment financing) districts, but can be used after TIF decertification. The maximum duration is 15 years if there are three or more participants (city, county, school district) and 20 years if two or fewer.

If tax abatement bonds are issued, the principal may not exceed the estimated sum of total abatements. The maximum aggregate annual abatement for any taxing entity is the greater of 10 percent of the net tax capacity or $200,000. (The 2011-12 District 88 taxable net capacity was $18,003,569.)

The maximum parcel abatement is the subdivision's tax rate times the net tax capacity of the parcel.

The parking lot has been overlaid and seal-coated half a dozen times and is in very poor condition, according to Facilities Director Scott Hogen.

If the project proceeds, the existing blacktop would be taken out, ground and as much as possible re-used, broken curbs repaired, drainage system issues fixed, and handicapped accessibility ramps added, according to Hogen.

The process involves a tax increase for properties in the district (see table). Sharon Gieseke, who has in the past objected to new taxes, was the sole board member to vote against it, although she did not specifically re-state her reasons during the vote.

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Approval of part-time teaching arrangement

The board approved a part-time teaching arrangement with long-term family and consumer science teacher Jill Curry, under a specific Teacher Retirement Association (TRA) Part-Time Teacher Program.

This program enables a qualifying teacher to work part-time and receive service credit as if it were full time. The teacher must meet eligibility criteria: he or she must have at least three full years of allowable service, and be compensated at the rate of 30-80 percent full-time equivalent.

The district financial responsibility includes a percentage of the salary and benefits. In Curry's case, it will be at 50 percent.

Curry will work full-time for the first semester. Once the second semester begins, she will not work and pay both the individual and the district TRA contributions. She will retire at the end of the 2013-14 school year.

Superintendent Harold Remme said administrators considered how Curry's position would be staffed during the second semester, and "we believe we can make the accommodations for it."

The board granted unanimous approval to the proposal.

Activities Director's


The board approved a new contract with Activities Director Chad Eischens for next year.

The main changes are a 1 percent salary increase, health insurance premium adjustments in line with the those made for most other district employees, and increasing his work days from 190 to 220.



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