Jill Schramm/MDN Pastor Larry Moll with West Minot Church of God speaks to the Minot City Council Monday during discussion on property tax exemptions for childcare facilities.

A revised proposal for a property tax exemption for childcare facilities fell short of what some Minot City Council members could support Monday. The proposed resolution went down on a tie vote of 3-3.

“Before we hand out a blanket tax break across the board, shouldn’t we decide if it’s really necessary for every single daycare?” council member Mike Blessum said. “We all want to have more access to affordable daycare, but let’s do it with some smarter solutions, without adding pressure to the rest of the tax base here in Minot.”

Two weeks previously, the council voted 2-4 against a property tax exemption for for-profit childcare centers. Council member Paul Pitner, who had opposed the exemption, offered a proposal Monday to provide the exemption for only four years.

The time limit was advocated as a way to give centers time to adapt to the change and to give the council information about whether tax exemptions might be helpful in retaining and creating more childcare slots in the city.

The temporary nature of the exemption didn’t sway the “no” votes of council members Rob Fuller, Scott Samuelson and Blessum. Nor was testimony from a daycare provider and pastors whose churches host childcare centers enough to shift the vote’s outcome.

Steve Oster, a pastor at Cornerstone Church, said he is deeply concerned about the potential consequence of taxing property used by daycares and preschools within buildings owned by tax-exempt nonprofit or charitable organizations.

“There’s potential for numerous disastrous impacts,” he said. “Some centers will be forced to close. Those who remain open will have to substantially raise their rates to cover this new expense they’ve never had before.”

He said his church has housed a preschool for more than 50 years without a property tax requirement. The church charges the preschool and daycare just enough to cover costs, he said.

“We don’t do this for profit. We do this to serve our city,” he said. “Now, we have to start questioning everything. My biggest fear for us as a local church and for churches in our community is: Whenever we’ve seen a need arise, the question has always been ‘How can we help?’ And if this goes through, I think the first question we’re going to ask is ‘Can we afford to help?'”

West Minot Church of God is approaching 50 years as host for a childcare center. Pastor Larry Moll spoke about tight margins that make it difficult to pay a competitive wage.

“If we have to close daycares because we can’t compete for employees because of the cost to do that, we create an even larger hole in our community, where the need for child care is already great,” Moll said. Exempting childcare centers from property tax won’t fix the problem, but every dollar counts, Moll said. An exemption could mean a center opens more infant slots or it could be an incentive to open a center, he said.

“Giving us the next four years to review the data and see what it looks like, and be prepared for that, is in the best interest, not only of the daycares, but in our community as well,” Moll said.

The proposed exemption would have run until Feb. 1, 2029. An exemption, which state law allows counties and cities to adopt, affects only centers, not daycares operated in private homes.

For-profit childcare centers located in tax exempt buildings in Minot, such as churches, currently aren’t taxed. The city tax assessor’s office, guided by state law, has determined exempt property used by for-profit entities is taxable. Taxing childcare centers that currently aren’t taxed – estimated to be at least 10 facilities – would generate about $133,000 a year, according to city information.

Adopting an exemption would result in a loss of $44,000 in property taxes, according to city estimates, because currently taxed for-profit childcare centers would no longer need to pay a bill.

“When we pass an exemption like this, it doesn’t mean the city brings in less money,” Blessum said. “All this does is move who pays that bill, including the very people it’s meant to help, which are the young families trying to find daycare. If they own a property, their property taxes will go up as a result of this.”

Sarah Seay, who owns two childcare centers in Minot, asked council members not to make operations harder for providers by imposing a tax.

“It’s going to impact our community negatively. It’s going to impact those children. It’s going to impact those families,” she said.

Nearly 84% of families in one of her centers qualify for the state’s childcare assistance program due to income. To ask them to absorb a property tax is a big burden compared to the small amount of increase individual taxpayers would see in absorbing the amount that for-profit centers would no longer pay, Seay said.

It was clarified at the meeting that childcare centers that operate as nonprofit are not subject to property tax. The city tax assessor’s office has stated there are two such centers currently in Minot.

Tax Assessor Ryan Kamrowski said if additional centers applied as nonprofits, his office would make the first determination of eligibility, but ultimately, that decision belongs to the city council or the courts. He said the state Supreme Court’s interpretation of the law has been to take a liberal view of what is charitable.

Blessum said a broad exemption gives the tax break not just to churches but to multi-millionaire, out-of-state property investors who may not pass it on to the facility.

“A broad exemption just makes absolutely no sense,” he said.

“GIving a blanket exemption to any daycare that is not in a church or in a nonprofit, I think that’s a policy we’ve really got to look at,” council member Rob Fuller said. “We’re going to shift the burden from the for-profit daycare centers to all the other businesses and homeowners here in Minot. You know that isn’t fair. It chips away at our local tax base.”

Pitner said he doesn’t support a blanket exemption into perpetuity.

“This was a compromise. We do it for other businesses to incentivize investment, incentivize growth,” he said.

He also said the issue isn’t just affordability but accessibility.

“It doesn’t matter how much money you have. It doesn’t matter how cheap it is or how expensive it is if you just can’t get in. We have a workforce issue, which, again, I don’t know if this is the solution. I really do not. But it’s the best we got at this point,” he said. “If this can incentivize someone to go from a home daycare to a daycare center, like some of the stories we’ve heard, and it allows someone to take from six kids to 40 kids, that’s a win.”