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Abatement <br />What is it? How Does it work? <br />• Economic development tool <br />• Not an actual abatement or non-payment of taxes (misnomer) <br />• All properties identified pay taxes just like every other <br />property <br />• Created by Resolution <br />• Benefiting properties are identified and the city tax rate is <br />applied to the tax capacity <br />— the maximum annual levy allowed to be pledged to the <br />bonds <br />• Fixed levy for the term of the bonds to all properties <br />Springsted <br />Tax Abatement Constraints <br />• No back-to-back abatements <br />— Eight years must pass before a new abatement may begin <br />on the same parcel <br />• Cannot be applied within TIF districts, but can be <br />used after TIF decertification <br />• Maximum duration of 15 years if three participants <br />(City, County & SD), 20 years if two or fewer <br />— Expect City only participation <br />Springsted <br />Tax Abatement Constraints <br />• If Tax Abatement Bonds issued - principal may not <br />exceed the estimated sum of total abatements <br />• Maximum aggregate annual abatement for any taxing <br />entity is the greater of: <br />— 10% of the net tax capacity or $200,000 <br />• Maximum parcel abatement is subdivision's tax rate <br />times net tax capacity of parcel <br />S pring.sted <br />2 <br />