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• CHAPTER 16 Thus,the property owner in a TIF district continues to pay the full amount of property taxes. TIF involves only the increased property taxes generated within the district. It does not pre-empt the amount of property taxes currently derived from the redevelopment area, nor does it directly affect the amount or rate of general ad valorem taxes the city levies. The result of a TIF project is an increased tax base that will benefit all local taxing jurisdictions. Additionally,TIF districts usually create new jobs and help stimulate the economy. TIF is used to encourage four general types of private development: redevelopment,renovation and renewal, growth in low-to moderate-income housing, and economic development. Minn.Stat.§469.175,subs.5. The city using TIF must report annually to the county board,the county auditor,the school board, and the state auditor as to the status of the TIF district or districts and publish the report.The state auditor has established a uniform system of accounting and financial reporting for TIF districts. The city must annually submit to the state auditor a financial report in compliance with these standards. Minn.Stat.§469.1771,subds.1, The state auditor may audit TIF districts. If the state auditor notifies a TIF '-b' authority of an alleged violation, a copy of the notice is also forwarded to • the county attorney. If no action is brought within one year, the county 1 attorney must notify the state auditor,who then notifies the attorney general. If the attorney general finds a substantial violation,the attorney general will petition the state tax court to suspend the authority's power to use TIF for a period of up to five years. Minn.Stat.§469.177,subs.8. The TIF agreement with the developer is a complex document. Assistance Lake superior Paper Indus. v. from a financial advisor and the city attorney is necessary in order to Stare,624 N.W.2d 254(Minn. anticipate the many potential problems. An agreement can establish a 2001 . minimum market value for tax increment assessment purposes, as well as Brookfield v County of Ramsey, provide that the developer pay a certain level of taxes regardless of any 609 N.W.2d 868(Minn,1998). classification rate changes or levy decreases The agreement should be entered into before the assembly and acquisition of the land on which the completed improvements are to be located. See Minn.Stat.§§469 177, The 2001 tax reform legislation,which reduced class rates and provided for subds. lb,11;469 1771,subd.1; the state takeover of the general education levy, resulted in several changes 469.1791;469.1793;469.1799; and 469.1814. to various statutes to accommodate the changes. The continued viability of TIF in the future has been considerably reduced by these changes. • } HANDBOOK FOR MINNESOTA CITIES 16-17 This chapter last revised 12/15/2004