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Wft ef®rmi TIF 2 .7 Some unfinished work to do • Just the term "tax increment fi- fice shows that its use is now mostly nancing" is enough to glaze the for the purposes for which TIF was average citizen's eyes. Having some- originally devised—redevelopment of one get up and explain what it is and blighted areas, construction of low- how it works can be an effective meth- and moderate-income housing and od of clearing a crowded room. Even economic expansion. A previously sa, over the last 20 years, few govern- common but inappropriate practice mental activities in Minnesota have was to use TIF for new construction on been more bitterly attacked, more de- vacant land. terminedly defended, and more de- But if the TIF focus is now back serving of both, than this method of where it belongs, the Auditor's study providing public financial assistance found that problems remain in dis- to private development projects. tricts established before 1990. Some of That's because TIF, properly used, those are being kept in operation even can be a highly effective tool for com- after the original projects have been munity revitalization and economic completed, with the continued tax- redevelopment—one of the few avail- increment revenues being used as able for local government use. But TIF general funding for such public im- al$o has shown itself to be subject to provements as parks, community cen- widespread abuse and overuse. ters, freeway interchanges, bridges and Since the late 1970s, when the Leg- wastewater-treatment plants. islature first authorized the use of TIF In effect, this means that the coun- to subsidize development projects,363 ties, school districts and other taxing Minnesota cities and towns have es- jurisdictions that would normally share tablished almost 1,500 tax-increment in the tax growth are being forced to districts, capturing more than $200 help pay for municipal projects that are million in tax base—the equivalent of properly the responsibility of city gov- 8 percent of the total tax capacity in ernments alone.That's because,as long • - those jurisdictions.During one period, as a tax-increment district remains in in'the late 1980s, the amount of tax operation, all of the property-tax capacity locked up in tax-increment growth that occurs within its borders districts was increasing at an average goes to the city, supposedly to pay off rate of 24 percent a year. the project debt, rather than being Little wonder that the Legislature shared with other taxing jurisdictions. put the brakes on, most effectively in This may still be legal, but it's clear- 1990 when it imposed tough restric- ly improper. As the auditor's report tions that have since slowed tax-incre- concludes, recent changes in the TIF ment expansion to an average of just 2 law have been reasonable and appar- percent a year. Cities complain that ently effective. But here's one area TIl? is now too hard to use. But a new where the Legislature has work left to study by the Legislative Auditor's Of- do. SIG z �-arq e- \c:00�� W ��o 3\& < 10 tee Q � -