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H.F.2420 May 17. 1999 Version: Conference Committee Report Page 39 Section 2 TIF for social and recreational facilities. Prohibits spending tax increments to construct or renovate facilities for social, recreational, or conference facilities or a public park used as a commons area. This will prohibit use of TIF to build ice rinks, community centers, and other facilities that cities have typically financed with TIF. The prohibition does not apply to privately owned conference facilities. This section also prohibits the use of tax increments outside of the TIF district on improvements, equipment, and other items whose primary purpose is decorative or aesthetic or if the materials used or design cost twice that of more commonly used equipment and improvements. This prohibition does not apply to improvements related to rehabilitating historic structures on national register or in a historic district listed on the national register. The prohibitions under this section would be effective for expenditures made or binding contracts entered after January I, 2000. 3 TIF pooling authority. Authorizes municipalities with a deficit in a tax increment financing (TIF) district that was caused by the1997 and 1998 reductions in property tax class rates to transfer available increments from other TIF districts to eliminate the deficit. This authority is subject to a number of limitations and conditions. 0. Scope. The authority applies only to TIF districts for which the request for certification was made before enactment of the 1997 tax bill (i.e., the first round of class rate reductions). Qualifying deficits. Deficits are defined as the lesser of(1) increments from the district and any available increments,from other districts permitted by existing pooling restrictions less the district's obligations to pay pre-June 2, 1997 bonds or bonds issued to refund contracts entered before June 2, 1997 or (2) the reduction in the district's • increments that result from the 1997, 1998, and 1999 property tax class rate changes. • Transfers from_districts created by separate development authorities. The municipality may transfer increments between districts even if they were created by different types of development authorities (e.g., an economic development authority and a port authority). This authority is limited to development authorities • under the control of the municipality (defined by reference to appointment powers). Thus, a city could not transfer increments from a county HRA project, even if the TIF district was located in the city. Increments could not be transferred by the city of Duluth from the Seaway Port Authority. • ► Other pooling authority. The pooling authority under the bill applies notwithstanding the pooling limits under other laws--i.e., the percentage restrictions and the lack of authority for pre-1982 districts. Pooled increments under the bill's authority are to be deducted before calculating the percentage pooling limits for post-1990 districts. Thus, pooling will proportionately reduce both increments available for in-district - spending and pooling. Article 10: Tax Increment Financing