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S <br /> go" reimbursement where the initial costs are incurred by the developer within the <br /> 5-year period. See Section III.B. <br /> Note: the 5-year rule applies only to districts requested for certification after April <br /> 30, 1990. <br /> E. Parcels Excluded From TIF Districts (the "Green Acres Exclusion"). For districts filed <br /> for certification after June 30, 1995, parcels in the 7-county metropolitan area may not <br /> be included in a TIF district if they qualified for special tax treatment under green acres, <br /> open space, or agricultural preserves provisions in any of the five calendar years before <br /> the request for certification. Outside the metropolitan area, such parcels may be included <br /> in a TIF District if at least 85 percent of the planned facilities (on a square footage basis) <br /> are used for manufacturing. <br /> Legislation in 1996 changes this rule and makes it uniform statewide for districts filed for <br /> certification on or after August 1, 1996. Now, any parcel receiving special tax treatment <br /> mentioned above in the five years before the request for certification may be included in <br /> a TIF district anywhere if: <br /> (1) At least 85 percent of the planned facilities (on a square footage basis) are for <br /> manufacturing; or • <br /> (2) The district is a "qualified housing district" (described in Section IV.D.). <br /> III. TYPE OF FINANCING <br /> A. Bonds. Bonds secured by tax increments are issued when there is a need for initial <br /> capital to finance public or private improvements. Typically, the bonds are general <br /> obligation bonds backed by the full faith and credit of the municipality. As long as at <br /> least 20% of the debt service on the bonds is reasonably expected to be paid with tax <br /> increments, the bonds may be issued without election. <br /> If bonds are issued, the authority will typically require that the developer sign an <br /> "assessment agreement," which establishes a minimum market value of the improvements <br /> upon completion. Other types of security may also be required, such as a guaranty of <br /> debt service in the event of a tax increment deficiency, a letter of credit during the <br /> construction period, or other forms. <br /> B. Pay As You Go. An alterative to bond financing is a "pay as you go" arrangement with <br /> the developer. The developer pays for various TIF-eligible costs initially, and the <br /> authority promises to reimburse the developer from tax increment over time as it is <br /> generated. The developer (rather than an unrelated bondholder) bears the risk that the <br /> increments will be insufficient to repay the costs incurred. <br /> S7B100909 <br /> FIRM-2 8 <br /> 1 <br />