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1 <br /> <br /> <br />Item No. 7A <br />Meeting Date: January 27, 2003 <br />Type of Business: EDA <br />WS: Work Session; PH: Public Hearing; <br />CA: Consent Agenda; EDA: EDA Business <br /> <br />City of Mounds View Staff Report <br />To: Mounds View City Council <br />From: Aaron Backman, Economic Development Coordinator <br />Item Title/Subject: Discussion on the Use of Tax Increment Financing (TIF) by the <br />City of Mounds View <br />Date of Report: January 27, 2003 <br /> <br /> <br />Background <br /> <br />Tax Increment Financing or TIF is a financing tool which captures and redirects new property <br />taxes paid by private development to promote development which would not occur “but for” <br />assistance. It is the ability to capture and use the increased property tax revenues from new <br />development within a defined geographic area. TIF districts must be located in a Project Area <br />or a Development District. A TIF district is a designated group of parcels where tax <br />increments can be generated. The City of Mounds View currently has three TIF districts (See <br />the attached map on p. 3 of this report). <br /> <br />When establishing a District, the City’s responsibilities include setting the boundaries of the <br />TIF District, writing the TIF Plan, notifying other tax jurisdictions, holding a public hearing, <br />justifying the “but-for” test, approving a TIF resolution, drafting and approving the developer <br />agreement, and administration. The TIF Plan controls the use of TIF. It is subject to specific <br />statutory criteria. The key contents are: district description, expected development and <br />contracts, findings, budget for costs and revenue sources, parcels to be acquired, maximum <br />debt to be incurred, duration, current and future tax capacities, estimate of tax increment, <br />impacts on jurisdictions, and studies. <br /> <br />There are six types of TIF Districts that are governed by different rules: Redevelopment, <br />Economic Development, Housing, Soils Condition, Renewal & Renovation, and Hazardous <br />Site. All three of Mounds View TIF Districts are redevelopment districts. The maximum <br />duration for our type of district is 26 years. Restrictions include that at least 90% of the <br />increments must be used to correct redevelopment issues. One way to describe TIF-eligible <br />costs is to say it is those activities that are related to public infrastructure or that enable the <br />designated site to be redeveloped. <br /> <br />Eligible uses for TIF include, but are not limited to land acquisition, demolition and clearance, <br />removal of hazardous substances, site improvements, relocation, installation of utilities, roads,