08-08-2007 Council Agenda - Laserfiche WebLink

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OTHER CONSIDERATIONS Geographic Restrictions Pooling Limits. For districts created after June 30, 1995, no more than 20 percent of the increment (25 percent in the case of redevelopment districts) may be spent outside the boundaries of the TIF District. However, increment from housing TIP districts may be spent to finance "housing projects" located anywhere in the broader Project area. Administrative costs are considered spent outside the district. Increment from districts created before May I, 1990 may be spent anywhere within the Project boundaries, which permits "pooling" of increment from more than one district. Time Restrictions (other than duration) 3 -year rule. Within three years after the date of certification, one of three things must happen for the district to remain alive: bonds are issued to aid the Project (excluding industrial revenue bonds); the authority acquires property within the TIF District; or the authority causes public improvements to be constructed within the TIF District. 4 -year knock down rule. Increment will not be collected from a particular parcel unless, within four years after the date of certification, demolition, rehabilitation or renovation of property or other site improvements has taken place by either the authority or the owner in accordance with the TIF Plan. Construction or major construction of an adjacent street qualifies as an improvement to a parcel, but utility improvements do not. If the parcel is "knocked- down" and later improved, it is re- instated in the TIF District but at the market value at the time of the reinstatement. 5 -year rule. For increment to be considered a spent expenditure within the TIF District, one of the following must occur within five years after certification of the district: (1) increment is paid to a "third party" for a TIF - eligible "activity"; (2) bonds, the proceeds of which are used to finance an activity, are sold to a third party and proceeds are reasonably expected to be spent within the five -year period (with certain limited exceptions); (3) binding contracts are entered with a third party for performance of an activity, and increment is spent under the contract; (4) costs are incurred by a "party" and revenues ar spent to reimburse a party; or (5) expenditures are made for housing purposes. The term "third party" excludes the party receiving TIF assistance and the "municipality or the development authority or other person substantially under the control of the municipality." Therefore, clause (4) permits the typical "pay as you go" reimbursement where the initial costs are incurred by the developer with the 5 -year period. See Section III.l3. Note: The 5 -year rule applies only to districts requested for certification after April 30, 1990. Parcels Excluded from TIF Districts (the "Green Acre Exclusion "). For districts filed for certification after June 30, 1995, parcels in the seven - county metropolitan area may not be included in a TIF district if they qualified for special tax treatment under green acre, open space, or agricultural preserves provisions in any of the five calendar years before the request for certification. Outside the metropolitan area, such parcels may be included in a TIF district if at least 85 percent of the planned facilities (on a square footage basis) are used in manufacturing. Legislation in 1996 changes this rule and makes it uniform statewide for districts filed for certification on or after August 1, 1996. Now, any parcel receiving special tax treatment mentioned above in the five years before the request for certification may be included in a TIF district anywhere if: (1) At least 85 percent of the planned facilities (on a square footage basis) are for manufacturing or distribution facilities (distribution facilities were added by the 1998 Minnesota Legislature); or (2) The district is a "qualified housing district." Ehlers & Associates, Inc. - TIF Basics 8