10-28-2015 Council Packet - Laserfiche WebLink

Home Browse Search

CHAPTER 13 - ECONOMIC DEVELOPMENT AND SPECIAL PROGRAMS Typically, a request to waive or decline a tax increment payment occurs in an early year of a district when only a small amount of increment is generated. Tax increment is waived or declined in an attempt to delay by one or more years the maximum duration limit of the district, if the district's statutory maximum duration limit is based on the first receipt of tax increment. An action by the authority to waive or decline to accept a tax increment payment has no effect on a district's duration limit. The authority is deemed to have received a tax increment payment for any year in which it waived or declined to accept the payment, regardless of whether the increment was paid to the authority, In essence, for any year the increment is not settled to the TIF Authority, it can be referred to as being 100% shared. This provision only applies to new economic development, renewal and renovation, and soils condition districts with certification requests dates after June 30, 2000. As a result, the statutory maximum duration limits of economic development, renewal and renovation, and soils condition districts with initial certification request dates on or before June 30, 2000, may be affected by waiving or declining tax increment. As a practical matter, however, this law has no impact on the statutory maximum duration limit of many economic development districts, because their statutory maximum duration limits are frequently measured from approval of the TIF plan rather than first receipt of tax increment. The law also did not affect statutory maximum duration limits for housing or redevelopment districts with certification request dates after May 31, 1993, or hazardous substance subdistricts. The only way to delay receiving tax increment from such a housing or redevelopment district or a hazardous substance subdistrict, and thus the only way to affect the statutory maximum duration limits of these districts and subdistricts, was to have included a provision in the TIF plan setting a minimum market value. The authorization to include a minimum market value in a TIF plan, and thereby delay the receipt of the first tax increment from a housing or redevelopment district or a hazardous substance subdistrict, was repealed effective for TIF districts with certification request dates after July 31, 2001. Therefore, for redevelopment or housing districts or hazardous substance subdistricts with certification request dates after July 31, 2001, the statutory maximum duration limit cannot be adjusted by setting a minimum market value in the TIF plan or waiving tax increment. Minn. Stat. § 469.176, subd. 1(a) Minn. Stat. § 469.176, subd, la. TIF May Not Be Used For General Government Purposes Minnesota law generally prohibits local governments from using increments for general government purposes. For example, increments generally cannot be used to pay for providing police and fire protection, road maintenance, or similar operating costs. Rather, they may only be used for a limited set of "project costs" that are defined under the development authority enabling laws. M.S. 469.176, subd. 4. However, the TIF law also contains specific prohibitions intended to prevent use of increments for general government purposes, even if they qualify under the authority law as project costs. TIF captures the taxes imposed by all of the levels of government (i.e,, city, county, school, and special taxing districts). Cities and development authorities, however, have nearly total control over TIF. If cities were allowed to fund their general operations with increments, in some situations it could create TAX INCREMENT FINANCING 13.01 26 REVISION DATE: NOVEMBER, 2010