Economic development, property taxes topic of Chautauqua
Those who attended the recent monthly forum, Chautauqua, at the Crosslake Community Center learned that a solid base of property taxpayers helps attract business growth, and business growth in turn attracts employees who will pay property taxes.
Sheila Haverkamp, executive director of the Brainerd Lakes Area Economic Development Corporation (BLAEDC), explained the nuts and bolts of economic development and property taxes to 20 forum goers Wednesday, May 14.
BLAEDC is a 501c3 nonprofit with a mission of expanding business opportunities and growing jobs in the lakes area.
Haverkamp said most growth locally comes from established businesses, but attracting new businesses to the area is vital to healthy, economically diverse communities.
“If we’re not growing, we’re dying,” she said.
Haverkamp said the past 25 years have seen significant growth for much of Crow Wing County, which she said now adds an average of 500 jobs and 30 new businesses per year. According to a 2012 report by the Minnesota State Demographic Center, Crow Wing is one of seven counties that does not border the metro area projected to grow by more than 30 percent in population between 2010-40.
Numbers assembled by the Minnesota Department of Human Services show that while the state as a whole is expected to see a rise in the 65+ population by 7.7 percent to 20.6 percent by 2030, 27.6 percent of Crow Wing’s population will be over the age of 65 by then, an increase of 9.1 percent.
Haverkamp said that economic growth is important if the area is to retain and attract younger people.
“I think we can all relate in our young years of seeking a job opportunity that will provide a career path,” she said to the group of mostly retirees.
Engaging retirees to become a part of growing the local economy is an important aspect of BLAEDC’s mission. The 2-year-old Executive Initiative “taps into the enormously talented pool of retired or relocated business executives” in the area, asking them to mentor people with existing businesses and those looking to start one.
A strong property tax base is one of the factors business owners consider when seeking a location or considering expansion.
Haverkamp explained that the amount a property owner pays in taxes is based upon a three-part formula: the market value of a property as determined by a county assessor; the classification of a property into residential, commercial or industrial; and the taxes assessed by local units of government, including the city, county and school district within which the property sits.
Standard residential properties are not subject to state property taxes, but seasonal or recreational properties, i.e. lake cabins, pay these taxes as well.
Although the overall trend indicates the raising of property taxes in the state, Economic Development Region 5, which includes Cass, Crow Wing, Morrison, Todd and Wadena counties, has the lowest average rate of all 13 regions.
Crosslake property owners pay the lowest rate of many surrounding communities, including Breezy Point, Nisswa, Jenkins and Pequot Lakes. A Crosslake residential property owner who resides on a $500,000 property in the Pequot Lakes School District will pay $3,835 in 2014 property taxes, compared to $5,888 in Baxter and $8,695 in Crosby.
“Crosslake is really fortunate in the fact that you have significant value,” Haverkamp said. “That value makes it possible for the local city to provide a lot of services without having to tax a significant amount.”
Crosby, on the other hand, does not have the property value to leverage against compared to Crosslake, she said, while still needing to provide services to residents.
“(Crosby and Ironton) used to have a lot more population and a lot more industrial (tax) base when mining was occurring,” she said. “(There’s been a) decrease in tax value that they can spread their budgets around to.”
Haverkamp noted that the Cuyuna Country State Recreation Area and technological advances in mining allowing manganese extraction are both promising economic developments that may spur population growth in Crosby.
The high property value in Crosslake can be mostly attributed to the Whitefish Chain and the summer tourism industry. Attracting year-round employment in the city has proven to be a bigger challenge, although the establishment of companies such as Cross-Tech Manufacturing, New York Mint and Crosslake Sales are helping to buck that trend.
The Crosslake Economic Development Authority is working on initiatives to bring Crosslake to a “new level of business activity,” Haverkamp said. One of the tools used is a revolving loan fund, which is a fund that makes loans to small businesses and is self-sustaining through the collection of interest and loan payments.
An example of the fund in action is the Essentia Health St. Joseph’s Clinic in Crosslake, which was funded in part by a loan from Crosslake Communications. The utilities company received a grant from the U.S. Department of Agriculture’s Rural Utilities Service to fund the loan, and Essentia’s loan payments were placed in the revolving fund to be used in the community to support other new businesses.
Chelsey Perkins can be reached at firstname.lastname@example.org. Follow her at facebook.com/PEJChelsey and on Twitter @PEJ_Chelsey.