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7 things to know about the planned downtown special services district levy increase

October 12, 2018

Assessments that help fund the Rochester Downtown Alliance are slated to receive the maximum allowed increase next year.

The Rochester City Council is holding a public hearing during its 7 p.m. meeting Monday in council chambers of the city-county Government Center.

Here are a few things to know about the planned 8 percent levy increase:

1. The new levy will be double what was collected in 2006.

When the special services district was created to help fund the RDA, it collected $150,000 in property taxes, with plans for a 5 percent increase each year.

When the district was renewed in 2015, the tax increases were set to a scale from 4 percent to 8 percent, based on the change in the district’s tax capacity.

With the planned 8 percent increase, the tax next year will collect an additional $22,500 compared to this year, bringing the total to a little more than $300,000.

2. Rochester and Mayo Clinic provide a flat contribution.

When the RDA special services district was created, the city and Mayo Clinic agreed to provide half the initial funding, $75,000 each to match the $150,000 in property taxes.

According to RDA annual reports, that annual funding remained flat until being raised to $100,000 each in 2017.

3. The assessment has funded about a third of the RDA budget.

In 2016, the special services district was 34 percent of the organization’s revenue — $247,000 of a $722,000 budget. The alliance generated $325,000 in revenue through activities and events.

Last year, the $267,000 collected in property taxes covered 31 percent of the organization’s budget, with alliance-generated revenue climbing to about $385,000.

4. Properties, not businesses, are assessed.

Sarah Oslund, interim executive director for the RDA, said the number of businesses represented by the alliance can fluctuate as they open and close within the 44-block district.

Last year’s annual report showed a total of 320 businesses, but she said the number likely is closer to 340 today.

That said, the levy is split among property owners who have buildings in the district that house businesses represented by the RDA. It is up to the property owners to determine how the businesses contribute to the amount owed, Rochester Assistant City Administrator Terry Spaeth said.

5. Increase tax capacity is above levy increase.

Spaeth said the tax capacity of properties in the district grew by about 9.3 percent in the last year, as market values of properties continue to increase.

With the levy increase capped at 8 percent, 2019 will be the sixth time the tax capacity has outpaced the levy increase in 13 years.

6. RDA is striving to benefit all businesses.

While participation in events, such as Thursdays on First and SocialIce, offer specific advantages for some businesses, Oslund said the alliance’s board is working to bring added value to all businesses.

With 100 service businesses in the district, which includes dentists, lawyers and accountants, she said the organization has been collecting data that can help those businesses tap into emerging trends and attract new clients.

Additionally, she said marketing efforts aim to draw new downtown traffic that can benefit all businesses.

7. It is possible to be removed from the district.

While Rochester City Council members have expressed a hesitancy to approve changes to the district map, one business was successful in a quest to be removed.

In 2015, when the special service district was renewed for 10 years, Honest Bike Shop owner Paul Myhrom, a former city council member, successfully advocated to be removed from the district, citing a lack of benefit from the imposed tax.

At the time, the special district tax was $66.22 on a $282,600 property with a total tax bill of $5,294, and the council split 4-3 in supporting the change.

Oslund and Spaeth said no other businesses have expressed a similar desire to be removed from the district since 2015.

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