N.D. Supreme Court to decide city finance cases
By: By Dale Wetzel, The Associated Press, The Jamestown Sun
BISMARCK — North Dakota’s Supreme Court will hear two appeals next week on cases that could have broad implications for city finances and job development.
Robert Hale, a Minot attorney and businessman, and Bismarck businessman Curly Haugland filed separate lawsuits claiming the North Dakota Constitution’s prohibition on taxpayer aid to private business is being repeatedly violated. They appealed after their lawsuits were dismissed.
The Supreme Court will hear arguments in both cases Nov. 3 and issue a ruling later.
Hale sued the state, the city of Minot and individual members of Minot’s City Council over the administration of state and city grants given to businesses.
Minot sets aside a portion of its local sales tax for its “Magic Fund,” which provides economic development aid to companies in the city and the surrounding region. Hale said in court filings that the fund has given more than $30 million “to entities prohibited (by the constitution) from receiving taxpayer money.”
Haugland is contesting Bismarck’s administration of a “tax increment financing” district that has been used to develop downtown property.
The district has allowed the city to keep a portion of property tax payments that would otherwise go to local schools, county government and other entities that receive property tax revenue.
Bismarck adopted its current district plan in the late 1970s, and instead of dissolving it when the renewal work was done, it kept it going and built up a large surplus, court documents say.
The fund now has $17.8 million, Bismarck city spokeswoman Gloria David said Thursday. The Bismarck City Commission voted last month to distribute $9 million of the money to local taxing districts during the first three months of 2012.
The cases focus on a provision in the state constitution that says the state and local governments may not offer loans, donations or credit to individuals and businesses “except for reasonable support of the poor.” The provision also bars the state and local governments from buying ownership stakes in companies.
Lawyers for the state and the cities of Bismarck and Minot say the economic development programs are legal because they were undertaken for public purposes. The Supreme Court and North Dakota attorney general’s opinions have upheld this interpretation, they say.
Haugland is specifically challenging a Bismarck city program that uses money from the tax increment fund for low-interest loans; help in paying for signs, awnings and façade improvements for businesses; and architectural and engineering help.
“These programs were created to stimulate new development in the downtown area, and fund projects that will serve as the foundation for future downtown development and a healthy tax base,” Bismarck’s attorneys Randall Bakke and Shawn Grinolds wrote in a court filing.