MODIFY THE EXISTING DEFINITION FOR 1C MA AND PA RESORT PROPERTY TAXES HF2096
Adjust The Tax Tiers- The legislature has recognized the problems high property valuations can place on family-owned resort properties and their ability to remain competitive. To combat the problem, the legislature amended the property tax code to tax resort value on a tiered approach and has adjusted those levels to address inflation and raising values. The legislature last increased the resort property tax tiers in 2008. We have seen a steady increase in assessor evaluations in the last 11 years. We are asking the legislature to again address the resort property tax tiers with an appropriate increase as outlined below:
Tier I is currently the first $600,000 of market value. This is proposed to increase to $750,000. This tier is taxed at .50 percent.
Tier II is currently the next $1,700,000 of market value. This is proposed to increase to the next $2,000,000 of market value. This tier is taxed at 1.0 percent.
Tier III is currently anything above $2,300,000 of market value. This is proposed to increase to $2,750,000. This tier is taxed at 1.25%.
Ownership Structure- We want to make sure that resorts do not inadvertently lose their tax classification when different ownership models are required for financing or estate planning. Making sure all ownership structures are recognized of resorts is a critical piece of the property tax code.
Workforce Housing- Resorts are often the only available local lodging in some areas of the state. Resorts have been approached about using their lodging during the winter months for construction housing, but current law limits resort use to 250 days per year. Allowing resorts to be utilized as temporary housing makes good sense and doesn’t detract from their traditional recreational uses.
It is important to point out that these changes do not impact revenues at the state level as property taxes are collected by each county. Therefore, these changes aren’t a monetary or budgetary consideration for state legislators except with respect to their consideration for county property tax revenues. In addition, with the numbers of Minnesota resorts declining, legislators need to be persuaded to favor these changes in order to keep resorts a viable part of the Minnesota tourism industry.
POST-LABOR DAY SCHOOL STARTS
The Community of Minnesota Resorts supports Minnesota law that requires schools to start after Labor Day. We as resorters are part of a broad industry of tourism attractions and venues that benefit from a tourism season that lasts through Labor Day. This in turn benefits the businesses in the communities that our resorts are a part of. Practically every year there is legislation proposed either by school districts to start before Labor Day, or there has been legislation proposed in the past to abandon Minnesota’s law requiring schools to start after Labor Day.
If schools started even a few days early, it realistically eliminates a full week of potential rental income at resorts throughout Minnesota. To quantify this for yourself, add all of your cabin rental rates together for a week in August. That is essentially the loss in rental income (not including other sales) if schools are allowed to start before Labor Day.
In addition to the lost revenue for resorts and the associated tourism industry, legislators need to be reminded that starting school prior to Labor Day also eliminates the last vacation opportunity for families to gather and getaway. Families need to have the ability to vacation with their children for the full summer up through Labor Day. Those who support starting before Labor Day have argued that student test scores will improve, but that fact has never been statistically proven.
CREATE A LEVEL PLAYING FIELD BY REGULATING SHORT-TERM VACATION RENTALS
The Community of Minnesota Resorts supports the regulation of short-term vacation rentals to create a level playing field in the Minnesota lodging industry. The business of short-term vacation rentals without regulation presents a threat to the public health and safety. Issues such as over-occupying a rental facility (resorts must provide 60 square feet per bedroom per person), septic system compliance, licensing, conflict in land use (residential versus commercial), proper liability insurance, and disruption to the neighboring lakeshore residents are just a few of the issues that need to be addressed. In addition, there is the question of ensuring proper sales tax compliance amongst these rentals. County Assessors have also begun to question owners of short-term rentals to ascertain how the use of these properties impact property tax classifications. The CMR supports a proper property tax classification, one which may not currently exist in today’s property tax classifications and definitions.
Explore Minnesota Tourism is a good investment for the State – and resorts!
CMR supports Explore Minnesota Tourism (EMT) advertising and promotional efforts to boost Minnesota as a tourism destination. EMT’s efforts have a positive and measurable impact on the tourism industry and the State’s economy. EMT is a cooperative and cost-effective partner for small tourism groups like CMR. Investing in Minnesota tourism provides a significant return. The CMR belongs to the Minnesota Tourism Growth Coalition, which on its website states that every $1 invested in state tourism advertising generates an estimated $9 in state and local taxes and $92 in traveler spending. Explore Minnesota Tourism promotes tourism state-wide and is critical for tourism success in greater Minnesota.
Event funding helps promote tourism at the local level and helps make Minnesota competitive for attracting visitors to our state. Working with industry to bring major events to Minnesota also promotes our state as a great vacation destination. Last year the New Events Grant allocation was $1 million and was reduced in the budget to $50,000. This year a state budget surplus exists, and the CMR along with tourism industry partners supports the Explore Minnesota Tourism request to obtain special funding to restore the New Events Grant funding back to its $1 million level.
SALES TAX EXEMPTION
The legislature frequently exempts capital investments from sales tax to promote projects, enhance infrastructure and promote investments that will yield long-term benefits to the state. Encouraging resorts to invest in their properties, which returns enhanced sales and lodging tax revenues to the state, makes good economic sense.
BROADBAND FUNDING Rural Broadband is vital to resorts too!
Minnesota’s push to enhance high-speed broadband service across Minnesota is a vital business development tool – even to tourism. With more companies accommodating flexible work schedules and remote telecommuting making certain that we are able to provide reliable internet service to guests is a must. Keeping it affordable is an understatement – we support the legislature’s and Governor Walz push for increased broadband funding.
AQUATIC INVASIVE SPECIES
The CMR supports efforts to reduce the spread of aquatic invasive species in every body of water in the state. We also support efforts to eliminate threats that negatively impact and threaten our forests and wildlife. Resorts make their living off the use of nature, and the protection of the natural resources of the state is of the utmost importance.
With the state and our communities at what the government terms “full employment”, resorts are having issues recruiting and hiring seasonal workers for jobs such as cleaners, mowers, and dock workers. We, as the CMR, have met with the Department of Labor and Industry (DOLI) with our concerns surrounding some of the regulations preventing youth employees from doing certain tasks at our resorts. Our hope is to work in conjunction with DOLI to review the prohibited tasks list for youth employees to determine if any of those prohibited tasks can now be allowed due to the evolution of equipment and the increased safety measures that have been created. In addition, we feel the uniqueness of resorts and our ability to manage injury exposure (due to our owner/operator presence working side by side with the youth as tasks are completed), presents opportunity for some of these tasks to be performed by specific aged youth with proper training, licenses or operator permits. Some legislation has also been proposed on some of these issues. However, the CMR currently believes that working in conjunction with DOLI is the most expedient way to address our concerns with respect to youth workers.