Funding for Neighborhoods

Last week, the Council passed the 2009 Minneapolis budget. But most of the discussion in the meeting focused on a funding question for 2010: how much money will the City devote to neighborhood groups?

At issue was the expected $24 million per year from the Tax Increment or Transformation districts whose existence the legislature approved to allow us (if we chose to do so) to use a portion of the property taxes on a number of properties for neighborhood revitalization activities and Target Center debt relief. This actually grew out of a resolution initiated by CM Scott Benson last March and represented a significant compromise that was able to unite all 13 Council Members, some who were desperately seeking ways to reduce Target Center debt; others, like myself, who were searching for a future funding mechanism for a next phase of NRP; and some who wanted to retain some funding for City-wide discretionary development spending. Although I was scrambling hardest to find a source for NRP phase 3 funds, I supported the other uses as well. In the resolution we stipulated that 100 million dollars (over 10 years) should go to pay Target Center debt and 100 million go to neighborhoods as follows:


:....That the City of Minneapolis urges the State of Minnesota to enact legislation to extend the pre-1979 tax increment financing districts in the Minneapolis Common Project.
Be It Further Resolved that the Intergovernmental Relations staff hereby is directed to work with the Hennepin County Board of Commissioners, and the Minneapolis Legislative delegation, and other partners in neighborhood revitalization efforts to develop a bill to extend the pre-1979 tax increment districts of the Common Project for the minimum time necessary to cumulatively provide over the period of extension:
(1) $100 million to allow the City to fund the administrative and programmatic needs of a neighborhood revitalization program that includes support for neighborhood organizations and neighborhood-directed action plans after 2009 in the City of Minneapolis);
(2) $100 million to fund repayment of the Target Center bonds and the capital improvements necessary for Target Center to remain a first class facility as required by contract; and
(3) Provide continuing support for discretionary development investments by the City of Minneapolis..."

Several months after passed that resolution and the state had empowered us to create a new Transformation District out of the old district, the Council voted to create the Neighborhood and Community Engagement Commission. The new resident commission will, among other things, monitor 3 important new funds that we also established: the Neighborhood Investment Fund (or programming dollars), and the Community Innovation Fund (programming dollars for nontraditional community engagement activities) and a Basic Citizen Participation fund.

During these discussions it was mentioned several times that the Basic Citizen Participation funding and the services that neighborhoods provide the City are so valuable and important that this would be something worth funding even if we did not have Tax Increment funding available.

But when the matter of the new Tax District returned this month for a next vote not only was the Basic Participation Funding wrapped into it (implicitly) but also a new funding item called a neighborhood commercial revitalization fund. Here is the way it was presented:


Redevelopment TIF District Establishment #16

Direct Finance staff to prepare and return to the Council with a proposed tax increment finance plan to establish a redevelopment tax increment financing district, as provided under Laws of Minnesota 2008, Chapter 366, Article 5, Section 37. The plan will be circulated for public review and comment, consistent with State statutes and City ordinances, and submitted to the Council for consideration no later than July 31, 2009. The plan should consider the following financial parameters:

a. annually provide after the administrative costs of the district:

i. At least $10 million to retire Target Center debt;
ii. No more than $14 million to be allocated as follows:
1. $2 million, if needed, to further expedite Target Center debt payment;
2. $8.5 million for general neighborhood revitalization purposes;
3. $3.5 million for neighborhood commercial revitalization;
4. Each of these three items would be proportionally reduced should their available revenues be less than $14 million.
”If this proportionate reduction occurs, the dollars for general neighborhood revitalization purposes (item #2 above) shall be allocated as follows:
a) Full funding for Basic Citizen Participation Services, as defined by the Neighborhood Community Engagement Commission, up to $3 million.
b) All other uses under general neighborhood revitalization purposes would be proportionately reduced.

iii. Revenues received in excess of $24 million can be applied to further expedite Target Center debt repayment or returned to the contributing tax jurisdictions. b. That parcels comprising up to 50% of the captured tax capacity of the district will be decertified and their captured tax capacity returned to the tax base when they are no longer needed for Target Center debt.

b. That parcels comprising up to 50% of the captured tax capacity of the district will be decertified and their captured tax capacity returned to the tax base when they are no longer needed for Target Center debt.


Now, while I was also general supportive commercial revitalization I was also concerned that the Target Debt relief was getting a larger portion of the fund and the amount devoted to implementing neighborhood plans was getting too small and being viewed as the lowest priority. So, here is the alternative I proposed. The bolding indicates a new language:

i. At least $12 million to retire Target Center debt;
ii. No more than $12 million to be allocated as follows:
1 $9 million for the Neighborhood Investment Fund;
2. $3 million for neighborhood Citizen Participation Services funds;
3. Should available revenues be less than $12 million, funds will be reduced in such as way as to maintain, first, full funding for Citizen Participation Services funds and second, the maximum possible for the Neighborhood Investment Fund.

iii. Revenues received in excess of $24 million can be applied to further expedite Target Center debt repayment, applied to the Neighborhood Investment Fund or returned to the contributing tax jurisdictions.

In the end I was unable to get the first portion of my changes passed. I did however get the second passed so that , should be end up with more money that we expect, some may be applied to the Neighborhood Investment Fund. I am convinced that this is the fund that will actually empower and energize neighborhoods to find creative ways to address their problems and improve their communities and make a new improved third phase of NRP, or neighborhood-based planning and implementation, possible.

I will continue to fight to see that this fund gets the resources it needs and encourage everyone who is concerned about the future of neighborhoods to follow and support the formation of an effective Neighborhood and Community Engagement Commission early next year. I know that I will be doing all I can to make it, and the formation of the new Neighborhood and Community Relations Department, as healthy and effective as possible.