Rethos proposes new Cub Credit to boost Minnesota's underutilized buildings revival

Minnesota's Senate Committee on Taxes convened on March 27, 2025, to discuss pivotal tax incentives aimed at revitalizing underutilized buildings across the state. A key focus was the proposed "Cub Credit," which seeks to stimulate economic growth by providing a 30% tax credit for the conversion of vacant properties into productive spaces.

During the meeting, representatives from Rethos and Sherman Associates highlighted the success of the existing historic tax credit, which has proven to be a powerful economic development tool. Rethos' deputy director emphasized that for every dollar invested through the historic tax credit, the state sees a return of $9 to $10 in economic activity. However, the current program is limited to buildings listed in the National Register of Historic Places, leaving many vacant structures without support.

The proposed Cub Credit aims to address this gap by incentivizing the reuse of buildings that are at least 15 years old, regardless of their historic designation. This initiative is seen as essential for combating disinvestment and vacancy, particularly in light of rising interest rates and construction costs that have led to an 80% drop in building permits over the past two years.

Chris Sherman, president of Sherman Associates, reinforced the need for the Cub Credit, noting that it could catalyze the transformation of millions of square feet of vacant space into vibrant neighborhoods. He shared successful case studies demonstrating that converted properties can increase their assessed value significantly, thereby stabilizing the tax base and generating higher tax revenues.

Minneapolis Mayor Jacob Frey also voiced strong support for the proposed legislation, underscoring its critical importance for the city’s economic future. The committee's discussions reflect a growing recognition of the need for innovative solutions to address housing shortages and promote community revitalization.

As the committee considers the implications of the Cub Credit, stakeholders are hopeful that this initiative will unlock new opportunities for investment and development, ultimately benefiting communities throughout Minnesota.