10-28-2015 Council Packet - Laserfiche WebLink

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CHAPTER 13 - ECONOMIC DEVELOPMENT AND SPECIAL PROGRAMS The state aid offset was repealed, effective for taxes in 2002. The offer provided for a reduction in the local government aid or homestead and agricultural aid that was paid to the municipality that approved the TIF district. The amount of the reduction was based on the amount that state school aid would have gone down if the TIF district's captured value were used in state school aid formula. The offset amount varied by the type and age of the TIF district. Tax increment financing act (or the act) refers to the 1979 act, and subsequent amendments, that govern the establishment of tax increment financing and collection of tax increments. M.S.§ 469.174 - 469.179. The development authority acts (HRA, port authority, municipal development act, and so forth) also govern the purposes for which tax increments may be expended. The tax increment financing plan states the objective of a TIF district, the activities to be undertaken, the type of district to be created, the estimated costs, and other details of the proposal. M.S. 469.175, subd. 1. The TIF plan must be approved by the municipality after a public hearing. M.S. 469.175, subd. 3. The plan defines and limits the activities that may be undertaken with the increments collected from the district. The plan may be amended at any time. However, a public hearing must be held before significant changes such as modifications in the size of the district or increases in bonded debt are approved. M.S. 469.175, subd. 4(a). The geographic area of a TIF district cannot be increased five or more years after the district was created. M.S. 469.175, subd. 4(b). Tax increment revenue bonds are payable only out revenues generated by the TIF district itself---i.e., the tax increments and other revenues such as the proceeds of land sales and other developer payments. M.S. 469.178, subd. 4. Tax increments or tax increment revenues include (1) the property taxes paid by the captured value of the TIF district; (2) interest or other investment earnings on tax increments; (3) proceeds from sales of property purchased with tax increments; and (4) lease payments from property acquired with tax increments. M.S. 469.174, subd. 25. The property tax component of tax increment (item (1) above) is determined by multiplying captured tax capacity by the tax capacity rate or for a post -1988 district, by the original local tax rate. M.S. 469.177, subd. 3. The three-year rule requires the development authority to do one of the following within three years after creating a TIF district: (1) acquire property in the district; (2) issue bonds; or (3) construct public improvements. M.S. 469.176, subd. la. Failure to satisfy this rule eliminates the authority of the district to collect increments. Tourism counties are counties in which economic development districts may be used for tourism projects. Qualifying counties must (1) have income at or below 85 percent of the state median and (2) be located in development regions 2, 3, 4, 5 OR 7E. TAX INCREMENT FINANCING 13.01 - 40 REVISION DATE: NOVEMBER, 2010