Incentive programs should be part of the City of Minot’s economic development strategy, members of a review committee decided as they continued to work through recommendations Friday.

The Economic Development Plan Review Committee opted to support keeping the Renaissance Zone, the one-year Builders Property Tax Exemption and two-year Homeowners Property Tax Exemption on new construction along with maintaining participation in state matching funds programs such as Flex PACE.

City council member and committee chairman Mike Blessum shared misgivings on programs that offer selective tax breaks. When one taxpayer receives an exemption, other taxpayers pick up the bill because the city’s overall tax levy doesn’t change, he said.

“If we’re doing these, we need to run a tight ship. And I don’t mean that we’re not doing so in a dollars fashion. I don’t have any worries whatsoever about that, but I think we want to be providing value as well as we possibly can if we’ve got these,” he said.

He also said the city should consider using some of its sales tax dollars for economic development to cover the cost of business tax breaks rather than have residents foot that bill on their property taxes.

Council and committee member Paul Pitner, who represents the city on the Renaissance Zone Committee, cited the benefit of the program in helping projects with tight margins pencil out. He noted the tax breaks are time limited, with properties coming back on the tax roll at much higher values. He listed one project that will pay for the tax break in 2.4 years of coming back on the roll and another that will pay back 3.1 years later.

However, he added, it is not just about getting a payback because there are quality of life issues associated with removing blight or providing a new business service.

Committee member Tyler Neether also noted the cost of infill development in a Renaissance Zone places much less of a burden on taxpayers than outward growth of the city.

“Regardless how we feel about these programs, you can’t argue that they’re not working,” Neether said. “Downtown has come a long way in the past 10 years.”

Committee member Jordan Nelson agreed the Renaissance Zone has benefits but said the public may not be seeing that. He suggested an analysis of completed projects to determine whether the increased valuations materialized as projected. If those valuations are being realized and more tax dollars are generated, do residents see a benefit on their property taxes or does it just add to city spending, he asked.

“If we did believe that the Renaissance Zone didn’t make sense for Minot anymore, we could cut it but we’re immediately uncompetitive with the rest of the cities,” Blessum said. “I tend to say that’s probably not as big a factor as some think that it is.”

Along with existing tax incentives, the committee is looking at advancing recommendations that suggest the city consider special assessments to fund infrastructure improvements on new developments and consider residential developer tax credits and rebates that eliminate the property tax for up to two years.

“It’s something that’s worth having the discussion on,whether it be the council level or even a committee with the Minot Association of Builders to see what are the barriers,” Pitner said. “The council shouldn’t be in the business of developing and building houses any more than we have to be. We should leave that for a free market. But, if there’s a barrier, and we can help get over that barrier, I think that’s a conversation worth having.”

“This is a workforce issue,” Neether said. “Residential construction is a workforce issue.”

He suggested rather than spending more money to address development incentives, the city look at sales tax dollars already allocated for economic development and reprioritize.

He also said competition with other cities is a factor.

“If other communities weren’t doing these programs and we weren’t competing against those other communities, I would say no, that we probably don’t have to dive in here,” Neether said. “But we’re competing with workforce. We’re competing against Bismarck, who does specials, Fargo that does specials, Williston and Grand Forks. I think we have to come to the table and compete.”