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TIP District Overview <br />5 Year Rule <br />(§ 469.1763 Subd 3) <br />Within 5 years of certification revenues derived from tax increments <br />must be expended or obligated to be expended. Tax increments are <br />considered to have been expended on an activity within the District if <br />one of the following occurs: <br />• The revenues are actually paid to a third party with respect to <br />the activity <br />• Bonds, the proceeds of which must be used to finance the <br />activity, are issued and sold to a third party, the revenues are <br />spent to repay the bonds, and the proceeds of the bonds either <br />are reasonably expected to be spent before the end of the later <br />of (i) the five year period, or (ii) a reasonable temporary period <br />within the meaning of the use of that term under §. 148(c)(1) of <br />the Internal Revenue Code, or are deposited in a reasonably <br />required reserve or replacement fund <br />• Binding contracts with a third party are entered into for <br />performance of the activity and the revenues are spent under <br />the contractual obligation <br />• Costs with respect to the activity are paid and the revenues are <br />spent to reimburse for payment of the costs, including interest <br />on unreimbursed costs. <br />• Any obligations in the Tax Increment District made after <br />approximately July, 2007, will not be eligible for repayment <br />from tax increments. <br />Page 3 <br />EHLERS <br />