Dubuque Proposes Tax Increment Financing Rebate for Dupaco Community CU's Development Project

The City of Dubuque, Iowa has proposed tax incentives for the development of a property located at 1000 Jackson Street in the Historic Millwork District by Dupaco Community Credit Union.

Under the proposed agreement, the credit union will make a $38 million capital investment in the 82,800 square foot facility, which will serve as the credit union's headquarters.

The credit union will occupy the top three floors of the building and prepare the rest of the building for commercial tenants.

Dupaco Community Credit Union will retain its current 150 employees in Dubuque and add at least 40 full-time employees employees to its Dubuque operations by October 1, 2023.

As part of the agreement, the city will provide an Urban Renewal Tax Increment Revenue Obligation for 15 years of Tax Increment Financing rebates of property tax increases, which is not expected to exceed $2 million.

The credit union is also requesting state incentives for the project.

A hearing on the project is scheduled for January 22, 2019.

Read the documents.

Township Proposes Property Tax Exemption for Construction of New CU HQ

West Chester Township (OH) Trustees voted on October 9th to recommend to the Butler County Board of Commissioners an agreement to give Kemba Credit Union (West Chester, OH) a 75 percent property tax exemption on a new corporate headquarters for 7 years.

Kemba applied for the property tax exemption under the Ohio Enterprise Zone Program.

Kemba is proposing to build a 90,000-square-foot corporate headquarters in the township on 7 acres of undeveloped land it purchased in August near its current headquarter.

Read the story.

Orion FCU Receives Property Tax Abatement

Orion Federal Credit Union (Memphis, TN) will receive a 20-year property tax abatement for the renovation of a building into 75,000 square feet of office space.

The credit union is planning a $7 million renovation of the former Wonder Bread building.

Read the story.

Property Taxes and CU Managers Pay

The Star-Advertiser on April 16 ran a story on the lack of transparency regarding executive pay at the largest credit unions in Hawaii.

The story about executive pay has become entwined with the credit union industry's efforts to preserve its exemption from Oahu's property tax.

The article notes:

The secretive nature of management pay is raising questions at a time when the industry is lobbying to preserve one of its key public subsidies: an exemption from Oahu property taxes.

The 10 largest credit unions in Hawaii declined or did not respond to a Star-Advertiser request to voluntarily disclose compensation data for their five highest-paid executives.

All of Hawaii's credit unions are federally chartered. Federally chartered credit unions are not required to file Form 990s, like other tax exempt organizations. As a result, the pay package of top credit union management is not disclosed.

In addition, credit unions on Oahu are just not exempt from federal and state income taxes; but also exempt from property taxes. Regardless of the value of the property, credit unions only pay a minimum of $300 for each parcel they own. This amounts to real savings for credit unions.

Credit union advocates will contend that executive compensation and their exemption from property taxation are unrelated. I disagree. As tax exempt organizations, federal credit unions receive a valuable public subsidy and there is a need to ensure that this subsidy is going for its intended purpose and not excessive compensation.

Read the Star-Advertiser story (subscription required).

Commission: Repeal Honolulu's CU Property Tax Exemption

The Preliminary Report of the Real Property Tax Advisory Commission for the City and County of Honolulu has recommended a complete repeal of the property tax exemption for credit unions.

The Commission estimated that the tax benefit to credit unions operating in the City and County of Honolulu from the exemption was $1,473,000.

The Commission noted that it heard from credit unions imploring the Commission not to repeal the current exemption. Some credit unions justified not repealing the exemption because they provided "financial services to their memberships which normally cannot be accessed at traditional financial institutions."

Other credit unions claimed that the exemption allowed them "to enhance the earnings of their members and reduce the cost of loans made to their members." In other words, real property taxpayers are being asked to subsidize credit unions members.

The Commission believes that all real property owners who benefit from County services should pay something for those services. Therefore, credit unions real property should be subject to the property tax based on an assessment ratio of the fair market value of the credit union’s real property.

Comments on the Report are being accepted through January 9.

Read the Report.

Should Honolulu Credit Unions Pay More Than $100 in Property Taxes?

Currently, credit unions, as well as other nonprofit organizations, only pay $100 in real property taxes to the City of Honolulu regardless of the assess value of the property.

However,the Hawaii Credit Union League opposes a proposal by the City of Honolulu that would either eliminate or raise the minimum real property tax on credit unions and other nonprofit organizations to help address the city's $140 million budget deficit.

For example, HawaiiUSA Federal Credit Union's corporate office at 1226 College Walk are assessed at $16.9 million, but it only pays $100 in property taxes on this property. This $1.1 billion credit union's reported profits of $8.7 million for 2009.

I think HawaiiUSA FCU can afford to pay its fair share in property taxes.

After all, the only tax that federal credit unions are subject to is a real property tax and even that is contingent on local law.