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4. An Authority may establish a guaranty fund to indemnity a person for liability for remediation costs under state or federal environmental law. The maximum term of the indemnity is 25 years, and the maximum amount is one-half of the remediation costs. The authority may deposit tax increments in the fund, and the municipality may also appropriate money for deposit in the fund. C. Geographic Restrictions. 1. For districts created after June 30, 1995, no more than 20% of the increment (25%, in the case of a redevelopment district) may be spent outside the boundaries of the TIF District. However, increment from housing TIF districts may be spent to finance "housing projects" located anywhere in the broader Project area. Administrative costs are considered spent outside the district. 2. Increment from districts created before May 1. 1990 may be spent anywhere within the Project boundaries, which permits "pooling" of increment from more than one district. D. Time Restrictions (other than duration). 1. 3-year rule: within three years after the date of certification, one of three things must happen for the district to remain alive: bonds•are issued to aid the Project • • (excluding industrial development revenue bonds); the authority acquires property within the TIF District; or the authority causes public improvements to be constructed within the TIF District. 2. 4-year knock down rule: increment will not be collected from a particular parcel unless, within four years after the date of certification, demolition, rehabilitation or renovation of property or other site improvements has taken place by either the authority or the owner in accordance with the TIF Plan. Construction or major construction of an adjacent street qualifies as an improvement to a parcel, but utility improvements do not. if the parcel is "knocked-down" and later improved, it is reinstated in the TIF District but at the market value at the time of the reinstatement. 3. 5-year rule: for increment to be considered a spent expenditure within the TIF District, one of the following must occur within five years after certification of the district: (1) increment is paid to a "third party" for a TIF-eligible "activity"; (2) bonds, the proceeds of which are used to finance an activity, are sold to a third party and proceeds are reasonably expected to be spent within the five-year period limited ); (3) contracts are entered with a third (with certain e,'tcept,o;ts�, tom, binding party for performance of an activity, and increment is spent under the contract; or (4) costs are incurred by a "party" and revenues are spent to reimburse a party. • The term "third party" excludes the party receiving T1F assistance and the "municipality or the development authority or other person substantially under the control of the municipality." Therefore, clause (4) permits the typical "pay as you SJB100909 7 FIRM-3