Willmar council approves framework for $9.2 million tax‑abatement to finance open‑access fiber network

The Willmar City Council voted to authorize the framework for up to $9.2 million in general obligation tax‑abatement bonds to help finance an open‑access high‑speed fiber‑optic broadband network through a city‑only tax‑abatement.

Mikaela Hewitt of Baker Tilly told the council the ordinance and accompanying tax‑abatement resolution would allow the city to finance construction and related public infrastructure for an open‑access fiber network. Hewitt said the city‑only abatement could run up to 20 years and that proceeds may be used for private property improvements, public infrastructure and public facilities tied to the project.

Hewitt described the required findings the council must make before adopting the abatement, including that the public benefits are expected to at least equal the cost of the abatement and that granting the abatement is in the public interest. She also outlined statutory constraints, saying the annual tax‑abatement levy is limited to the greater of 10% of the city’s net tax capacity or $200,000. Hewitt said Willmar’s net tax capacity is roughly $21,000,000, which would make the 10% limit about $2,100,000.

Council members questioned how properties were selected for inclusion in Exhibit A (roughly 550 parcels were listed for phase 1), whether property owners had to consent and what would happen if later phases required additional funding. Hewitt said properties selected are chosen to be geographically proximate to project improvements and to limit the amount of property included so the city preserves flexibility for future abatements; she said statutory law and the proposed resolution do not require owner consent to include parcels in the abatement area and that the resolution can be modified later to remove parcels if the actual abatement amount is reduced.

On the financing mechanics, Hewitt said the expectation is that project revenues will pay debt service so that the abatement is largely revenue‑neutral; however, she warned that if project revenues fall short the bonds are general obligation and the levy would be similar to other city debt service levies.

After the hearings and questions, the council voted to adopt the bond ordinance and the tax‑abatement resolution. The public hearing drew no speakers. The council signaled next steps in the schedule Hewitt outlined: consideration of a bond resolution to authorize sale on March 2, Moody’s credit review in mid‑March, publication of the preliminary official statement in late March and a planned competitive sale in early April, with proceeds expected in April.

What happens next: the council will consider a bond sale resolution on March 2 and return to the financing schedule Hewitt outlined.

Quotation: “The proposed term of financing is up to 20 years,” Hewitt said, adding that the abatement is “the mechanism for which to finance the improvements.”