Politics clouds fate of pollution cleanup fund

A pollution cleanup fund that helped pave the way for more than 100 housing, commercial and parks projects in Ramsey and Hennepin Counties is facing an uncertain future at the state legislature -- largely because of a quirk in timing.

The Environmental Response Fund helped clean up properties ranging from the Carleton Place Lofts in St. Paul to the Humboldt Industrial Park in Minneapolis. But the law authorizing the fund, financed by small mortgage and deed taxes, was phased out on Jan. 1.

So technically, the 10-year-old fund now represents a new tax, subject to the same opposition as others. Supporters grapple with semantics as they discuss one of their legislative priorities this session.

"We don't see this as a new state tax; it's an existing fee raised by local action," said Nick Riley, intergovernmental affairs specialist at Ramsey County.

But Gov. Tim Pawlenty opposes reauthorizing the fund.

"Increasing taxes on the housing market, especially at this time, is yet another bad tax hike plan advanced by the DFL," said Brian McClung, the governor's spokesman.

The fund was approved by the Legislature in 1997. It's particularly important for Ramsey County, said Riley, because the county has no more usable land available for development.

In the past two years, Ramsey County has awarded more than $3 million to eight cleanup projects.

The projects range from the Vadnais Heights City Center to Sholom Senior Housing in St. Paul to the Little Canada Business Center.

Meanwhile, Hennepin County, home to more than 25 percent of the state's Superfund sites, has more than 3,000 "sites of concern," said Rosemary Lavin, assistant director of Hennepin County Environmental Services. The sheer volume makes cleanup a priority.

Hennepin, which launched its fund earlier than Ramsey, has issued 170 grants totaling $21 million, Lavin said. Those grants leveraged $860 million in developments, county officials said.

Cleaned-up properties included a park in Brooklyn Park, Plymouth Avenue Townhomes in Minneapolis and the Robbinsdale Area Learning Campus.

The funds fill financing gaps that aren't covered by state or federal programs, which typically favor larger projects creating a lot of jobs and tax revenue, said Karl Batalden, community relations officer for Habitat for Humanity, which has received grants in both counties.

But cleaning up smaller sites is important too, he said, because pollution -- no matter what the amount -- travels to groundwater, and that has widespread impact. Plus, simply cleaning up an old gas station or dump site is a boost to communities.

The response fund helped pay for decontaminating soil at two Habitat properties in northeast Minneapolis and is now financing the removal of asbestos, oil residues and other chemicals in east St. Paul.

The funds aren't huge. Ramsey County generates about $1 million a year, while Hennepin grants run about $1.5 million a year. The money comes from a modest mortgage registry tax and a deed tax. For a home buyer taking out a $200,000 mortgage, it would amount to about $25, said Ramsey County officials.

But the Minnesota Association of Realtors believes even that is too much, given the housing market. It opposes the fund as well.

A reauthorization of the fund is included in the Senate tax bill and is likely to be in the House tax bill, said county officials, who have been closely monitoring the legislation. But no one is making predictions about the future.