ADVERTISEMENT

ADVERTISEMENT

Proposed tax discounts for Fufeng Group head to Grand Forks committee Wednesday, Jan. 12

Discounts are likely essential to securing a deal to build the factory on city's north side.

Grand Forks City Hall
Grand Forks City Hall
We are part of The Trust Project.

Grand Forks leaders on Wednesday plan to weigh proposed tax incentives for Fufeng Group, the agribusiness planning a major manufacturing plant on the city’s north end.

Those discounts are likely essential to securing a deal to build the factory, which could bring hundreds of jobs to Grand Forks.

They’ll appear before the city’s Local Government Advisory Committee, which includes membership from the four local public groups that rely on property taxes — the city, the school district, the county and the park district — and is designed to provide opportunities to collectively discuss tax incentives like these.

The group will not offer final approval or rejection for the incentives, but is expected to review and offer input before the matter is posed individually to the elected boards that represent those four public entities.

The meeting is set for 5 p.m. Wednesday in Council chambers.

ADVERTISEMENT

City leaders have previously said those tax breaks will discount 90% of local property taxes for 10 years, then discount 75% for an additional decade. Crucially, that discount would be on the new manufacturing plant — not the land itself, which would still be taxed normally.

In city documents the first year’s tax revenues are estimated at about $927,850 — split between the city, local schools, park district and the county and state. That would jump to more than $1.7 million after year 10, and after the full 20 years, to more than $5.8 million (that estimate uses constant, unchanging values over the full time span).

RELATED: Agribusiness company chooses Grand Forks for 'historic' project

In advance of the meeting, top City Hall leaders have cast that sum in a glass-half-full light (or, perhaps, 10% full) arguing that those tax revenues — while a fraction of what they might be without the incentives in place — are better than nothing, which is what the community would have if leaders whiff on the deal.

And multiple community leaders appear inclined to agree. County Commissioner Tom Falck contrasted Fufeng Group’s incentives with one that might come from a local business — perhaps someone trying to make a redevelopment project profitable. While a project like that might need the money to make a deal worthwhile, the tax perks for the China-based company don’t seem make-or-break for the project.

“It’s not as much of a need from this company, as they are wanting incentives to move into your community,” Falck said.

But it’s hard to say no.

“I’m inclined to support it,” he said on Monday. “The problem with companies like this is we’re in competition with other communities in the United States. If they’re willing to step up to the plate and we’re not, this company is going to move on.”

ADVERTISEMENT

Grand Forks School Board member Doug Carpenter also noted that it’s hard to pass on so much tax revenue, especially given the school district’s ongoing need for funding. He said that, in a perfect world, there wouldn’t be tax incentives — it would all be up to the market to decide where a new manufacturing facility goes.

“(But) it’s a thing you’ve got to take a risk on, because it is true economic development,” he said.”It’s generating new wealth within the region, and that’s good.”

After the meeting, the proposal will head before the School Board, the County Board and the City Council for a full vote (the Park District, considered part of the city of Grand Forks by state statute, will not vote separately on the matter).

The tax incentive is a key part of a broader negotiation package still being discussed by local officials with Fufeng Group, which will guide the city’s relationship through tens of millions of dollars in development. City Administrator Todd Feland said earlier this month that both City Hall and the agribusiness are still trying to untangle the question of safeguarding the city’s side of the project.

In short: the city is close to spending tens of millions of dollars to connect the new plant to the local infrastructure grid. If Fufeng Group eventually backs out of the deal, how much money does the city get for its expense?

But City Council President Dana Sande said he thinks negotiations could wrap in time to make details public next week, bringing the results of private negotiations out into the sun and giving local government groups the information they need to weigh the tax deal.

“We’re supportive and I’m supportive of the concept, but until we actually see the development agreement, we won’t be voting yes,” Sande said. “And I won’t be giving a blind yes until I see it. I’m supportive of the concept, but I need to see the details.”

What to read next
The South Dakota Department of Public Safety is releasing daily updates on crashes and crime in and around Sturgis for the duration of the nine-day rally.
The South Dakota Department of Public Safety is releasing daily updates on crashes and crime in and around Sturgis for the duration of the nine-day rally.
Golf outing held in memory in Lowell Schweigert and Wayne Westlund, long-time club members who were active in community causes
Students from every Grand Forks public school have received counseling services through the Access for All Scholarship Fund, administered by the Grand Forks Foundation for Education.