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Tax Increment Financing in Minnesota <br /> • <br /> Financing of Project Costs <br /> • In many cases, the City is required to fund project <br /> expenditures prior to development occurring. <br /> • City issues general obligation tax increment bonds to finance <br /> the project costs. The possibility exists for non-general <br /> obligation revenue bonds to be issued. <br /> • City receives tax increment revenues over a period of years <br /> and uses them to pay debt service on the bonds. <br /> • Tax increment bonds are repaid by: <br /> a) Tax increment revenues. <br /> b) General obligations: potential City-wide property tax <br /> levy. This situation can be dealt with through security <br /> guarantees by the landowner. <br /> • Financial limits on the City's ability to fund project costs <br /> dictated by the amount and duration of the tax increment <br /> revenues available. <br /> • In some cases the developer will pay all costs upfront and be <br /> reimbursed for eligible project costs over a period of time. <br /> This is generally referred to as "pay-as-you-go.° <br /> a) Reimbursements are made from tax increment <br /> revenues. <br /> b) This process significantly reduces City liability and risk. <br /> c) If development does not occur or does not reach the <br /> levels forecasted, increment is reduced and less money <br /> is available for reimbursement. <br /> • <br /> . r. <br />