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MINNEAPOLIS-On the eve of the Minneapolis mayoral election, one of the biggest issues looming for the winner is how to approach community development in the aftermath of the historic property tax reform that the Minnesota Legislature passed last year. While challenger R.T. Rybak would consolidate city functions, cut costs and raise more private money for affordable housing efforts, incumbent Sharon Sayles-Belton advocates an additional property tax levy and more citizen input and coordination between city departments and development initiatives.

Shortly after the legislation passed, the Minneapolis Community Development Agency warned the sweeping changes would severely shrink funding for community development programs throughout Minnesota with Minneapolis especially hard hit because of itscommitment to use development resources for neighborhood revitalization. MCDA officials estimated they would lose $27 million a year tax increment generated by current and future tax increment financing districts. This means the city will lose up to $27 million in MCDA revenue each year — about $226 million over the next 10 years. The effect will be felt most severely in neighborhoods while large commercial development projects typically generate enough revenue to pay off their debts.

This shortfall compounds an anticipated financial challenge facing the MCDA, in which it had planned to use $20 million a year for 10 years in TIF dollars to finance Neighborhood Revitalization Program through 2009.

Rybak’s solution includes funding the NRP over 15 years instead of 10 years, and spending the full $16-million NRP affordable housing reserve fund in the first year rather than over four years. After that, find additional revenue from outside the city from other levels of government and private investors. He also advocates using money gained from refinancing the Hilton Hotel and Gaviidae Common refinancing for long-term reform, and scale back top-level city administration.

Sayles-Belton proposes funding NRP at a $10 million a year during its second phase.She also recommends a $6 million property tax levy next year to fund community development and neighborhood revitalization efforts. Rybak opposes this additional levy. Commercial properties valued at $1.05 million will have to pay an extra $590, forinstance.

Another major element of Rybak’s proposal involves merging the MCDA and planning departments, so that individual development projects fit the city’s broad vision not a case-by-case approach. Sayles-Belton opposes a consolidation, but recommends a realignment of their staffs. She would also replace Minneapolis city council members on the MCDA board with citizens, and merge the agency with the Neighborhood Revitalization Project.

In a recent St. Paul Pioneer Press poll, Rybak was leading Sayles-Belton by 12 percentage points. The election will be held Tuesday.

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