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Os4 AAA4-eis IX. Attempts to Avoid Violations In 1997, the TIF Act was amended by adding a definition of"tax increment." Tax increment, for example,includes interest and other earnings from investing tax increment. Minn. Stat. §469.174, subd.25. This portion of the definition,however,is effective only for TIF dis .:th certification request dates after July 31, 1979 and investment earnings received afte' my 1, 199 Laws 1997, ch. 231, art. 10, sec. 2 and 25. TIF authorities have argued that the Legis ature s decision to make the definition of tax increment apply only to interest on tax increment received after the effective date means interest received before the effective date is not tax increment. The OSA has accepted this argument. Some municipalities have attempted to avoid violations of the TIF Act by arguing that the money their TIF authorities spent allegedly in violation of the TIF Act was interest on tax increment received before the effective date of the definition. Therefore,according to the TIF authorities,they did not violate the TIF Act by spending the interest,because the interest was not tax increment,and the requirements and prohibitions in the TIF Act apply only to tax increment or kinds of money treated like tax increment,such as proceeds of tax increment bonds. The OSA will accept this argument if the municipality can demonstrate that the money its TIF authority spent in a manner not authorized or prohibited by the TIF Act was non-tax increment rather than tax increment. It may be impossible,however,for a municipality to demonstrate that its TIF authority used non-tax increment for such expenditures,because frequently TIF authorities do not have systems of accounts that will allow them to determine which kind of money was spent on which expenditures.' In addition,when a TIF authority discovers that it has violated the TIF Act because it has spent tax increment in a manner not provided in the TIF plan,it frequently will respond by amending the TIF plan to authorize the previously unauthorized expenditures.' It is the OSA's position that a TIF-plan modification cannot be effective retroactively. Example 1 Facts: In late 1984, the New Dublin HRA creates Development District 3. According to the TIF plan for TIF District 3-1,certain redevelopment activities in Development District 3 are to be funded 2 It appears that many TIF authorities have failed to set up adequate systems of accounts for their TIF districts, even though the TIF Act requires TIF authorities to segregate tax increment from each TIF district in a special account separate from all other kinds of money. Minn. Stat. § 469.177, subd. 5 (1996) (originally enacted as Minn. Stat. § 273.76, subd. 5 (1979)). ' Tax increment from a TIF district may be spent or transferred only as provided in the district's TIF plan. Minn. Stat. § 469.176, subd. 4. Legal Compliance Issues 12