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CHAPTER 13 - ECONOMIC DEVELOPMENT AND SPECIAL PROGRAMS Duration Extension due to Deficits The TIF Act contains four special provisions for dealing with deficits in a TIF district. 1. Pooling Permitted for Deficits. The municipality of a TIF district may transfer available increment from other TIF districts located in the municipality, if the transfer is necessary to eliminate a deficit in the district to which the increments are transferred, This TIF Act provision is an exception to the multi -county use prohibition, and the amount of tax increment an authority is allowed to spend outside of a TIF district, The municipality may only use this authority, however, only after it has used all available increments from the receiving authority to eliminate the insufficiency and exercised any permitted action under Minnesota Statutes, section 469.1792, subd, 3. 2. Special Taxing District A city may establish a special taxing district within a TIF district only if it has determined that total increments from a TIF district will be insufficient to pay the amounts due in a year on preexisting obligations, and this insufficiency resulted from a reduction in property class rates enacted in the 1997 and 1998 legislative sessions. The city must also agree to transfer any available increments from other TIF districts in the city to pay preexisting obligations of the district allowed under the pooling permitted for deficits provisions discussed above. If the TIF district does not qualify under these provisions, the city may still establish a special taxing district. If the city elects this provision, increments from the TIF district and the tax proceeds imposed by this provision may only be used to pay preexisting obligations and reasonable administrative expenses of the authority. Minn. Stat, § 469.1792; Minn. Stat, § 469.1794. 3. Special Deficit Authority This special authority applies only to an authority with a preexisting TIF district for which: (1) the increments from the district are insufficient to pay preexisting obligations as a result of the class rate changes or the elimination of the state -determined general education property tax levy; or (2) the authority has a binding contract with a person and the authority is unable to pay the full amount of the contract, because of class rate changes or elimination of the state -determined general education property tax levy. An authority with a district that meets these requirements may elect that: (1) the local tax rate does not apply to the district; and (2) the fiscal disparities contribution will be computed under Minnesota Statutes, section 469.177, subdivision 3, paragraph, regardless of the election that was originally made for the district. The authority must meet these elections on an annual basis and notify the County Auditor by July 1 of the year before the year in which the election is to be effective. The authority must provide notice and conduct a public hearing before adopting a resolution approving either of these electives, TAX INCREMENT FINANCING 13.g1 29 REVISION DATE: NOVEMBER, 2010