Committee reviews Minot ‘Magic Fund’ sales‑tax allocations, balances and options for transfers and projects

The Minot Economic Development Plan Review Committee on Jan. 24 reviewed the city’s breakdown of economic‑development sales tax revenue — the so‑called "Magic Fund" — including current balances, permitted uses and constraints on moving money between buckets.

Dave (finance staff) presented the fund structure created by the city’s sales tax ordinance and the Magic Fund guidelines, describing six buckets for allocations: administration, legacy primary sector, state matching programs, City of Minot economic development projects, a small‑business carve‑out, and a flood‑control bucket. He reported preliminary year‑end balances as of Dec. 31: about $231,810 in program administration; just over $10,000,000 in the primary sector bucket; roughly $1,000,000 in the City projects bucket (about $700,000 of which is already committed under façade‑improvement agreements); and zero balances shown in the state matching, small business and flood buckets at year‑end. The 2025 budget includes a $1,000,000 allocation intended for state‑matching programs, Dave said.

"First portion is for program administration," Dave told the committee while walking through the slides, explaining that administration funds cover staff time, contract administration and reporting. He explained that the state‑matching bucket was set aside to seed programs such as FlexPACE and other Bank of North Dakota matching funds and that a portion of the primary sector bucket may be used for interest buy‑downs under qualifying primary sector projects.

Committee members pressed on transfer rules and limits. Finance staff said the updated Magic Fund guidelines permit limited transfers — for example, from the primary sector bucket to the state matching bucket in some circumstances — but funds collected before the 2019 ordinance change may be restricted to primary‑sector uses. Staff described a built‑in constraint intended to prevent unrestricted raiding of legacy funds.

Members discussed the Souris Basin Planning Council revolving loan program (referred to in the meeting as the "accelerator" or revolving fund). Panelists recalled earlier requests from Souris Basin that totaled more than $2,000,000 over multiple years but that guideline caps and prior allocations limited awards in early years to smaller amounts (the meeting cited an initial approximately $700,000 allocation tied to earlier guideline limits). Several committee members said they want clearer reporting and projections from Souris Basin on capital needs, revolving schedules and expected defaults before committing additional capital.

Committee members also tested broader uses of the sales‑tax penny. Several asked whether the city could redirect the 15 percent allocation to flood control under the ordinance and whether the Magic Fund guidelines would need amendment to prioritize different buckets. Staff replied that the ordinance gives the council wide discretion over future allocations but that guideline changes and public process are used to manage legacy funds and commitments.

Discussion ranged beyond the Magic Fund structure to options to boost housing and development. Committee members raised special assessments and up‑front city participation in infrastructure as one tool to increase buildable lots. City staff said the method of funding such upsizing or road construction depends on the project — possibilities include special assessments, refunding bonds, utility funds or sales tax proceeds; each approach carries risks and tradeoffs.

The committee also reviewed a Chamber/EDC contract report that had been presented to the City Council; Chamber representatives offered to bring a fuller presentation to the committee in subsequent meetings. Staff will prepare additional detail for the committee on recommended annual allocations and on the reporting Souris Basin should supply if the committee considers further recapitalization requests.

No formal appropriation or ordinance change was adopted at the Jan. 24 meeting; members requested follow‑up information and signaled possible policy options to consider during the budget cycle.