Possible Change to City Policy Could Impact Developers

The Manhattan City Commission is considering a change to the current application process for Benefit Districts.

Under the change, Deputy City Manager, Jason Hilgers said during Tuesday’s Work Session that the City would require property developers to submit two new forms, one certifying all tax payments to Manhattan are current, and the other disclosing the tax status of all companies that a developer has a 20 percent or greater interest in.

“All it’s really doing is alerting the governing body in the event a developer is delinquent on a previous or other project,” Hilgers said. “And then it adds to the list of facts that you (Commission) have to consider as you entertain a Benefit District.

The forms don’t guarantee that a developer will make good on a tax payment. In fact, Hilgers said the City prepares for delinquencies every year.

“We budget a certain percentage in our Special Assessment Fund for delinquencies and we do realize some delinquencies, but we also realize revenue from past years and it basically has balanced itself out in this community,” Hilgers said.

The reason the City can rely on eventually receiving back-taxes is that when property changes hands in Manhattan, all taxes must be made current.

So, what’s the point of tightening-up the City’s Benefit District policy?

“It’s incumbent upon us to have that fiduciary responsibility and to be cautious,” said Karen McCulloh, city commissioner.

As with any new rule change, someone or something is inevitably affected and not always in the best or most convenient way. commissioner, Rich Jankovich expressed concern that adding more paper work to an already complicated process, may cost property developers dearly.

“If a developer comes in and goes through this process and we say ‘no’ because they’re delinquent, but they’ve got $500 thousand invested in this already, that’s a pretty big hickey which then might slow down or stop that process from happening completely” Jankovich said. “I think it (policy change) needs to be very very early in our process, to have some kind of direction before they spend a whole lot of money.”

Tim Schultz, owner of Schultz Constriction, weighed in with his opinion that the language in the second form isn’t specific enough.

“I would like that developer that’s in front of you to have control over the entities he’s listing. And so you would know that, that developer’s keeping current on his own assets,” Schultz said. “The 20 percent seems a little low to me.”

Mayor, Wynn Butler countered by saying that the second form already takes care of Schultz’s concerns.

“The Commission’s going to be able to address that and say ‘okay, you only own 20% of it and it’s not relevant? so we disregard that’ or maybe somebody owes a couple of taxes on a rental management company that has just no relation so you just throw it out,” Butler said.

Although Tuesday’s work session didn’t require a vote, all of the Commissioners agreed that the proposed policy change is necessary and, with a few tweaks, fair to developers.