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Potentially far-reaching legislation would exempt institutions of public charity from an array of city fees and service charges, and shift costs to other properties.
(Published Mar 11, 2013)
The House Government Operations Committee on March 13 will consider HF 781, (Rep. Mike Nelson, DFL-Brooklyn Park), which would exempt some charitable organizations from paying certain city fees and charges.
The League will testify in opposition to the proposal based on 2013 legislative policies that support public infrastructure utilities (LE-6) and local revenue diversification (FF-20).
The bill would exempt institutions of public charity, as defined in Minnesota Statutes, section 272.02, subdivision 7, from paying fees or charges imposed by a city if that fee or charge is for a service provided by the city, and within the most recent five years, has been paid for in whole or in part from revenue raised from the city’s property tax levy. Churches, universities, and colleges are not currently covered by the bill.
No definition of ‘fee’ or ‘charge’
Neither the bill nor the statute being amended (Minnesota Statutes, section 426) defines the terms “fee” or “charge” and, therefore, it is not clear what “fees and charges” would be impacted. For example, the definition would likely impact storm sewer charges and street lighting charges, but it could also impact special assessments, water and sewer charges, waste hauling charges, and other current service charges.
In addition, even if a service provided by a city has been largely paid by fees or charges, any use of property taxes within the past five years to fund that service could trigger the exemption for nonprofit organizations. If enacted, the bill would be effective for charges or fees imposed on or after Aug. 1, 2013.
Council of Nonprofits supports the bill
The bill is supported by the Minnesota Council of Nonprofits (MCN), which has a legislative platform that raises concerns about local fees and payments in lieu of taxes. MCN has also joined a group of organizations that is opposing the street utility concept that is supported by the League of Minnesota Cities.
The MCN policy states that these local charges can have the same effect on nonprofits as state-level taxes, and the fees and charges can erode the ability of nonprofits to conduct charitable activities. MCN supports changes in state law to “create consistency between state and local property-based taxes and fees by requiring that local units of government exempt from local fees and levies any exempt organizations that meet the standards required for the statutory property tax exemption.”
What’s the effect on your city?
Please give the League information about the potential impact of this bill on your city. E-mail the information to Gary Carlson (see right) or provide it in the comment box below.
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Contact Gary Carlson
(651) 281-1255 or (800) 925-1122
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