According to the West Central Tribune…
Tax abatement bonds will be issued this spring to finance Kandiyohi County’s matching share of a $10 million private-sector project to bring broadband to some of the rural neighborhoods that need it most.
The County Board of Commissioners set the process in motion Tuesday with the adoption of a pair of resolutions. The first resolution sets a tax abatement hearing for 10:15 a.m. April 4. The second clears the way for the sale of $5 million in bonds.
The amount is the local match for a $4.9 million grant awarded earlier this year by the Minnesota Office of Broadband Development to Consolidated Telecommunications Company.
It’s the county’s first foray into the realm of tax abatement bonds, said Larry Kleindl, county administrator.
The article goes on to explain the tax abatement bonds…
Proceeds from the bonds will be loaned to Consolidated Telecommunications Company for the broadband project.
The debt service for the bonds will be paid from tax abatement revenues and property taxes which will be reduced or cancelled by the loan payments from Consolidated Telecommunications Company, explained Shelly Eldridge, senior municipal adviser with Ehlers.
“We believe that this is the most cost-effective way to finance this project,” she told the County Commissioners.
A fact sheet on Ehlers web site further explains that tax abatement, in practice, is a reallocation of taxes. All taxes are still paid in full, but the abated amount is redirected to a specific project rather than going to the general fund. Bonds may be issued to finance the project and repaid with proceeds of the abatement.
I think it’s helpful for other communities to see how it’s getting done. The Border to Border grants are a huge boost to rural broadband in Minnesota – but it’s only a piece of the puzzle. Generally the community and the provider hold a piece too.