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Tax Increment Financing 4111 The authority for cities to use tax increment financing is found in the Development District Act (M. S . 472A) . The complex procedures for using tax increment financing are the same no matter what type of project is envisioned . When using tax increment financing , a plan is mandatory and the number of years the tax increment may be used to repay the general obligation bonds issued to finance a project is limited . The Tax Increment Financing Act (M .S . 273 . 71 to 273 . 78 ) provides further restrictions on the use of tax increment financing . The three types of districts allowed by this Act and the various restrictions placed upon them are as follows . 1 . Redevelopment District - An area or areas of land in a city may be designated as a redevelopment district and receive tax increments for a period of 25 years if the following conditions are met. ( a ) 70 percent of the parcels in the districts are occupied by buildings and 20 percent of the buildings are structurally substandard and 30 percent of the buildings are non- conforming , i . e . , do not comply with the1111 . city' s housing code , are zoned different than the use or the city ' s Comprehensive Plan calls for a different use ; or ( b) unusual terrain or soil deficiences resulting in excessive constructon costs exist. ( c ) The land is vacant or under-utilized . 2 . Housing District - A housingdistrict consists of a project designed to provide housing for low-and moderate income persons as families and may receive tax increments for a period of 25 years . 3 . Economic Development District - An economic development district consists of a project ( s ) which do not meet the requirements for a housing or redevelopment district and which, ( a ) Discourage commerce , industry, or manu- facturing from moving to another state ; or ( b ) Increases employment in the municipality ; or ( c ) Preserve and enhance the tax base of the 111 municipality.