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CHAPTER 13 - ECONOMIC DEVELOPMENT AND SPECIAL PROGRAMS Certification of Values and Rates Original Value Certifications & Base Adjustments When a TIF district is created, the county auditor certifies the current tax capacity of the properties in the district as the TIF district's "original net tax capacity," As the property in the district increases in value, these increases above the original net tax capacity are "captured." The law refers to this amount as the district's "captured net tax capacity," There are instances where the base classification and/or value are adjusted. Because of the many changes that can implemented by the Legislature to classification percentages and the dependency on minimum tax increment dollars to pay bonds that are issued, a mechanism by which changes to the base is provided. As well, parcels that are subject to a form of value exclusion are also subject to increases in the base value as exclusions are diminished or removed entirely. The following are circumstances where the County Auditor and County Assessor must adjust the base classification or value: Base Tax Capacity Adjustments 1. Classification law changes M.S. 469.177, subd, 7 provides that when there is a change in any law governing the classification of real property, the change is applied to both the base and current net tax capacities (and as a result - the captured net tax capacity). This applies to all TIF districts regardless of when they were created. Examples of legislative changes that would fit this statute would include: • A change in class rate • A change in tier thresholds • The elimination of a classification El NOTE Any changes made to law as suggested h.ere are year specific. 2. Changes in Exclusion Status 2003 Laws of Minnesota, Chapter 127, Art. 10, Sec, 17 amended M.S. 469.177, Subd. 1 so that if a property loses its green acre, open space, ag preserve or new plat law exclusion - both the current and base net tax capacities are changed to reflect the loss of the exclusion, This applies to all TIF districts regardless of when they were created. Note that the exclusion has to apply to the base year in order to require an adjustment to the base year net tax capacity under this section, 3. Changes in classification Same statutory reference as #2. Here's the scenarios: • Post May 1988: If the current classification changes on a parcel in a TIF district that was created after May 1, 1988 or added by a modification of a Pre May 1988 TIF district that occurred after May 1, 1988 - the base year TIF classification is changed to match the current classification. • Pre May 1988: a) If the current classification changes the parcel's use after December 31, 2002, the base year classification is changed to match the current classification; or b) For changes in use that occurred prior to December 31, 2002 or if the current classification has not changed from when the TIF district was created, the base TAX INCREMENT FINANCING 13.01 . 17 REVISION DATE: NOVEMBER, 2010