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Minnesota’s 2016 Legislative Session: They’re Off to the Races

Written by Zander Fried, Retail Leasing Specialist

March 8th marked the day Minnesota’s lawmakers once again began session. A number of topics relevant to Minnesota’s commercial real estate industry are up for debate this year. These discussions will, however, be overshadowed by a unique set of circumstances. One is the upcoming election: all 201 seats in Minnesota's Republican controlled House and DFL directed Senate are up for grabs in 2016. Without keystone candidates leading each party’s ticket (the governor's office and seats in the U.S Senate/House will not be on the ballot this year), public perception will be a driving force of the 2016 session. Members from both parties will feel more pressure than usual to deliver on promises made during the last election cycle.

Another force at play is Minnesota's budget surplus, which has moved up to the $900 million mark. There will almost certainly be disputes on how to allocate these funds. Unfortunately, the combination of these two items could prove toxic; there is a good possibility 2016 becomes another year of political gridlock. Should this occur, agenda items important to our industry may very well be put on hold.

For example, a decrease in commercial property taxes may be delayed. The last significant reduction was in 2001. Since that time, Minnesota's rates have once again become some of the most expensive in the country. While there are proposals floating through both the Senate and House to reduce these taxes, leadership in both parties differ on terms and overall percentage reductions. Should this year’s showmanship factor outplay the ability to reach mutual terms, the debate will continue into 2017.   

A transportation finance bill is another agenda item relevant to the commercial real estate industry. Transit-oriented development has been a major public selling point for further expansion of Minnesota’s Light Rail Transit (LRT) system. With federal funding already ear-marked for the project, there’s quite a bit at stake in 2016.

The transportation budget is currently funded through $0.0025 (one quarter of a cent) in the general sales tax, a gas tax, vehicle registration fees and a sales tax on vehicle repairs. A political game of Tug of War will decide how to allocate these funds and where/if legislators increase taxes. The debate will then advance to a second tier where candidates must decide whether to funnel more money into road and bridge projects or capital improvements for the bus and LRT projects. Lastly, legislators must discuss target areas for these improvements: is there a greater need for more projects in the metro area or should legislators focus on advancing transportation improvements in greater Minnesota? A successful, bipartisan bill must address all of the above issues.

These debates will take place outside of the capital building as it remains under construction, with limited access to lavatories (again, the capital building remains under construction) and during a shortened 10-week session. Let’s hope our legislators can reach compromise, regardless of the circumstances.  

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Zander Fried | Retail Leasing Specialist
Mid-America Real Estate – Minnesota, LLC
5353 Wayzata Boulevard, Suite 650 | Minneapolis, MN 55416
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