In 2008, the Legislature took up a proposal to provide a $200 million subsidy to expand the Mall of America in Bloomington. The primary mechanism to pay for the project was to dip into the “fiscal disparities” pool, a revenue-sharing program that benefits parts of the state with less lucrative commercial property tax bases.
Opponents of the plan, including the Minnesota chapter of NAIOP, the National Association of Industrial and Office Properties, were able to defeat the measure.
But last year, the Mall of America proposal was back, and NAIOP and its allies in the business community were unable to persuade legislators not to raid the fiscal disparities fund.
“We lost,” said Kaye Rakow, NAIOP Minnesota’s director of public policy. “Everything was just against us.”
During more than a decade of lobbying at the Capitol, Rakow has seen her share of victories and defeats. But she recently announced that she won’t be around when the Legislature starts its next session Feb. 25. Rakow will be retiring at the end of the year. NAIOP will be looking for a new individual to lead its public policy work in 2014.
“I don’t know what I’m going to do, quite frankly,” Rakow said. “I really don’t know.”
This is actually Rakow’s second stint as director of public policy at NAIOP. She was the first person to fill that position for the association in 1996. But she then left for three years to serve as president of the Twin West Chamber of Commerce. Rakow returned to the NAIOP post in 2000.
She earns plaudits from longtime Capitol observers — even those who haven’t always been sympathetic to the agenda of commercial property owners.
“I regard her as just a consummate professional. She is very forthright; she knows her issues,” said Sen. Ann Rest, DFL-New Hope, chair of the Tax Reform Division. “I have enjoyed that, even when we have not agreed … with regard to taxation of business property.”
Richard Forschler, a partner at the Faegre Baker Daniels law firm, has worked closely with Rakow on tax issues at the Capitol throughout her tenure at NAIOP. “She’s very bright and she has a tremendous amount of energy and enthusiasm,” Forschler said. “That goes a long way towards being successful.”
Beth Kadoun, director of tax and fiscal policy at the Minnesota Chamber of Commerce, cites an overhaul of the state’s property tax system in 2001 under Gov. Jesse Ventura as among the most important accomplishments of Rakow’s tenure at NAIOP. Those changes allowed the state to get rid of the dubious distinction of having the highest commercial property taxes in the country.
“She was very instrumental,” Kadoun said, of Rakow’s role in the property tax debate. “We’re no longer number one in the nation.”
NAIOP and its business allies are now preparing for another difficult campaign at the Legislature in 2014. They want to repeal a trio of business-to-business taxes that were part of the 2013 omnibus tax bill. A tax on warehousing services is of particular concern to NAIOP’s members. They fear losing business to neighboring states if it’s not repealed before the scheduled implementation on April 1.
“That is a major concern to us for a whole bunch of reasons,” Rakow said. “I know that the Legislature at the end recognized what a challenge this particular tax is going to be.”
But that change in the tax code is estimated to raise $95 million in the current biennium. Rest said that she’s open to repeal only if other revenue or cuts can be identified to offset those dollars.
“I think it’s still very much up in the air,” Rest said.
There will undoubtedly be a strong press from NAIOP and other business interests to get the warehousing tax repealed when the Legislature convenes in 2014. But for the first time in more than a decade, Rakow won’t be part of that lobbying effort.
“To get rid of that, I would suspect that is going to be right at the top,” Rakow said. “It’s an issue that has really galvanized our members.”