Laserfiche WebLink
Functional Analysis <br />March 21, 2002 <br />Page 9 <br />other non - qualifying buildings to be included in the TIF district. Using these assumptions, it is <br />necessary to find that six (30 %) of the other buildings require substantial renovation or clearance <br />to remove existing conditions. The statute creates latitude for the city to determine the <br />conditions that justify this action. The statute lists "inadequate street layout" as one of the <br />eligible conditions. <br />The trade -off for greater flexibility in establishing a district is fewer years to capture tax <br />increment. Tax increment can be collected from a Renovation /Renewal District for 15 years <br />after the receipt of the first tax increment. <br />Tax Abatement <br />The name is misleading. Under the type of tax abatement authorized in Minnesota, the property <br />taxes are not abated. A local unit of government levies an additional property tax in an amount <br />equivalent to taxes that could have been abated on a parcel. The revenue from this levy can be <br />collected and repaid to the property owner, in which case it acts like an abatement. This revenue <br />can also be retained by the local unit and used in TIF -like programs. For this reason, some have <br />called tax abatement "TIF lite ". <br />Applications <br />Tax abatement revenues and bond proceeds can be used to finance the key public actions. These <br />uses include site assembly, site preparation, and public improvements. <br />Limitations <br />While tax abatement operates under less complicated rules than TIF, there are some important <br />limitations to the use of this option: <br />• Each local unit has independent authority over abatement. Each city and the County <br />make separate decisions on the use of abatement levies. For taxes payable 2002, a <br />combined city /county tax rate would be approximately 85% in Shoreview and Little <br />Canada and 82% in Vadnais Heights. <br />• The total annual amount of abatement authority is capped at the greater of $100,000 or <br />5% of the current year's levy. An abatement levy is outside of levy limits under the <br />current system. <br />• Property in a TIF district can be subject to an abatement levy. <br />• The abatement levy can only be collected for 15 years. <br />Advantages Over TIF <br />Tax abatement offers several advantages in designing an implementation plan for Rice Street <br />