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City of Lino Lakes and Lino Lakes Economic Development Authority <br />includes sale of property at less than the cost of acquisition or fair market value, grants, ground or other <br />leases at less then fair market rent, interest rate subsidies, utility service connections, roads, or other <br />similar assistance that would otherwise be paid for by the developer or beneficiary. <br />Section R Excess Tax Increment <br />In any year in which the tax increments from the TIF District exceed the amount necessary to pay the <br />estimated public costs authorized by the TIF Plan, the City shall use the excess tax increments to: <br />(1) prepay any outstanding tax increment bonds; <br />(2) discharge the pledge of tax increments thereof; <br />(3) pay amounts into an escrow account dedicated to the payment of the tax increment <br />bonds; or <br />(4) return excess tax increments to the County Auditor for redistribution to the City, County <br />and School District. The County Auditor must report to the Commissioner of Education <br />the amount of any excess tax increment redistributed to the School District within 30 days <br />of such redistribution. <br />Section S Tax Increment Pooling and the Five -Year Rule <br />At least 80% of the tax increments from the TIF District must be expended on activities within the district <br />or to pay for bonds used to finance the estimated public costs of the TIF District (see Section E for <br />additional restrictions). No more than 20% of the tax increments may be spent on costs outside of the <br />TIF District but within the boundaries of the Project Area, except to pay debt service on credit enhanced <br />bonds. All administrative expenses are considered to have been spent outside of the TIF District. Tax <br />increments are considered to have been spent within the TIF District if such amounts are: <br />(1) actually paid to a third party for activities performed within the TIF District within five <br />years after certification of the district; <br />(2) used to pay bonds that were issued and sold to a third party, the proceeds of which are <br />reasonably expected on the date of issuance to be spent within the later of the five-year <br />period or a reasonable temporary period or are deposited in a reasonably required <br />reserve or replacement fund. <br />(3) used to make payments or reimbursements to a third party under binding contracts for <br />activities performed within the TIF District, which were entered into within five years after <br />certification of the district; or <br />(4) used to reimburse a party for payment of eligible costs (including interest) incurred within <br />five years from certification of the district. <br />Beginning with the sixth year following certification of the TIF District, at least 80% of the tax increments <br />must be used to pay outstanding bonds or make contractual payments obligated within the first five years. <br />When outstanding bonds have been defeased and sufficient money has been set aside to pay for such <br />contractual obligations, the TIF District must be decertified. <br />The Authority anticipates that a portion of the tax increments may be spent outside of the TIF District <br />(including allowable administrative expenses); and the Authority reserves the right to allow for tax <br />increment pooling from the TIF District in thebe. <br />raft <br />Baker Tilly Municipal Advisors, LLC Page 10 <br />