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B. Amount. The LGA/HACA loss varies, but is usually about 30% of the tax increment collected annually when the maximum penalty applies. Note that the penalty does not change the amount of increment collected; it changes the amount of state aid the municipality receives. The amount of aid loss depends on the type of TIF District: 1. Redevelopment and Housing Districts and Hazardous Substance Subdistricts: the aid loss is phased in over time. For the first six years after the original assessment year of the district, there is no aid loss. Beginning in year seven, the loss is only 6.25% of the maximum possible loss. Each year thereafter, the loss increases in 6.25°A increments, until the full penalty applies in year 21. 2. Renewal and Renovation District: the same 6-year grace period applies, but in year seven the loss is 12.5 percent of the maximum loss, followed by an additional 12.5% annually until the full penalty applies in year 12. 3. Soils Condition District and Economic Development Districts: the maximum penalty begins in the first year in which increment is collected. 4. "Qualified Manufacturing Districts;" these are economic development districts that: are requested for certification after June 30, 1991; provide assistance to manufacturing, research and development, or telemarketing (but not tourism facilities or warehousing); and are located in a city with a maximum population of 10,000. The aid loss is phased in with 20%percent of the maximum applied in year two, followed by an addition 20% • each year until the full penalty applies in year six. 1993 Change: the former requirement that the city be located outside a metropolitan statistical area has been eliminated. Thus, metro area cities under 10,000 population are now eligible for the phased in penalty. 5. 1993 Change — Qualified Housing District: this is a housing district for a residential rental project in which the only properties receiving TIF assistance meet all the requirements for a low-income housing credit under federal law, regardless of whether the project actually receives a housing credit. The tax credit requirements are generally more stringent than the income requirements otherwise applicable to a housing TIF District. There is no LGA/HACA penalty for a qualified housing district. 6. 1993 Change — Qualified Hazardous Substance Subdistrict: this is a hazardous substance subdistrict for which the municipality elects to pay at least 18% of the cost of developing and implementing the development action response plan. The 18% share must be paid by any sources of funds available other than tax increments. The election must be made at the time of certification of the district, and is irrevocable. There is no LGA/HACA penalty for a qualified hazardous substance subdistrict. C. Penalty Recapture. 1. For districts created between May 1, 1990 and July 31, 1993, the municipality may obtain reimbursement from the developer for lost aid. However, tax increment may not be directly expended to reimburse the general fund for such aid loss. • 2. 1993 Change: For districts requested for certification after July 31, 1993, new restrictions apply. If any agreement or "arrangement" provides for the developer to repay any part SJ364549 FIRM-2 -7-