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BRIGGS AND MORGAN • are effective only for post-July 31, 1979 TIF districts and for earnings received after July 1, 1997. Where does that leave increment (arid earnings thereon) from pre-1979 districts and earnings on increments (from post-1979 districts) received before July 2, 1997? There is a difference of opinion on that question. I have generally thought that earnings on increment should be accounted as such, which means that those dollars too are subject to all the rules applicable to the expenditure of tax increment. I have not necessarily changed that view, and strictly speaking I'm not sure an inference either way should be taken from this legislative action. The key element may be whether or not the State Auditor will cite violations in cases where authorities have accounted for such investment earnings as something other than tax increments. The effective date for items (2) and (3) above, dealing with money derived from the sale or lease of property purchased with increment and repayments of loans or other advances made out of increment, is also important. My view has always been that as a general rule such monies would not be reclassified as tax increments. " This change now means that some of them will be, specifically,the proceeds from the sale or lease of property which was purchased after June 30, 1997, and repayments of loans that were made after June 30, 1997, but this applies only to increment from districts requested for certification after June 30, 1982. Note that if the property were purchased or the loan were made on or before June 30, 1997, the revenues from the sale or lease thereof, or the loan repayments, would not be classified as . increment even if the actual receipt of those monies occurred after June 30, 1997. B. "Small Cities"Get A "Commercial"Break: Economic Development Districts. Small cities can now establish economic development tax increment districts to provide assistance to up to 15,000 square feet of commercial facilities, which is a use that otherwise would not generally qualify for economic development district treatment. "Small city" means a city having a population of 5,000 or fewer residents that is not located within 10 miles of a Minnesota city with a population of 10,000.or more. The distance between the two cities must be measured by drawing a straight line from the nearest municipal boundaries. Population is to be determined by the most recent federal census,a special census conducted by the United State Bureau of the Census, a population estimate made by the Metropolitan Council, or a population estimate made by the State demographer. A second exception which may benefit a few small cities is the establishment of economic development districts for "qualified border retail facilities,"w;.,ch means a shopping center or one or more retail stores located in the small city which is within one mile or less of the State line. The development must contain new buildings or substantially rehabilitate existing buildings that together contain at least 25,000 square feet of retail space. This sounds like special legislation in the garb of general law and will most likely have relatively rare applicability. These changes are effective for tax increment areas requested for certification after June 30, 1997. 357509.1 2