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redeveloping many different parcels and to assure the public's involvement in the planning and <br /> design stage. <br /> Q. How will the project be funded? <br /> A. The City received funding through a Livable Communities Grant form the Metropolitan <br /> Council to conduct preliminary planning and concept refinement for the downtown area. The <br /> City will continue to look for other grant sources but the project will be funded primarily by <br /> private developers. The City will provide additional assistance through Tax Increment Financing <br /> (TIF) as necessary for public improvements and the City has retained independent financial <br /> consultants to ensure that any assistance provided to the developer is only the amount that is <br /> justifiable and reasonable. <br /> Q. What is Tax Increment Financing (TIF)? <br /> A. TIF is a financing tool created by the Minnesota State Legislature in the 1970s to help <br /> encourage development and redevelopment of underutilized properties that ordinarily would not <br /> be revitalized without some financial assistance. Under TIF, property tax revenue equivalent to <br /> what the current property generates continues to go to all taxing jurisdictions. The portion of the <br /> tax revenue that results from the increased value of the new development, also called the "tax <br /> increment," is used to pay site costs such as acquisition, demolition, water, sewer and street <br /> improvements. Once the site costs have been paid, the tax increment goes to the taxing <br /> jurisdictions. <br /> Q. Why does the City need to establish a TIF District? <br /> A. Minnesota State Statute permits cities to establish TIF Districts as a method to assist with <br /> redevelopment. Establishing a TIF District allows the City to capture the tax increment created <br /> by the new development; then the City may use portions or all of the increment to provide <br /> financial assistance to the developer. The amount of the actual assistance provided is <br /> determined by an analysis by the City's independent financial advisor. The financial <br /> performance submitted by the developer will be analyzed to determine the gap or amount that <br /> would be necessary to make the development financially feasible. <br /> Q. Will providing TIF assistance to the developer impact my property taxes? <br /> A. The tax increment comes from only the increased value of the improved property within the <br /> district and the pre-existing level of taxes still continues to be paid to local governments (city, <br /> county, and school district). Increment is only provided to the extent it is determined necessary <br /> for the project to proceed. Therefore, there is no impact on your property taxes resulting from <br /> TI F. <br /> Q. Does the City own all the property included in the project? <br /> A. No, the City owns many of the properties along the western edge of Egg Lake but the <br /> majority of the property is privately owned. The City is not actively negotiating sales with the <br /> downtown property owners but rather has been slowly acquiring the parcels over time through <br /> tax forfeitures or when the owners decide to sell for various reasons. After the City enters into a <br /> development agreement, it will primarily be the private developer who will be responsible for <br /> negotiating with downtown property owners. The City may assist in the process to ensure that <br /> the ensuing relocation process is as smooth as possible for local businesses and residents who <br /> wish to remain in Hugo. <br /> Q. What happens if the property owners cannot reach an agreement with the private <br /> developer? <br />