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CHAPTER 15 1v~~,~F~ a~~~ s~t~5, ~~~. v. Gizy of Cities should use extreme care in establishing a TIF district and should xi°""~~'~_ ~~~'~~~'~'`~ 3s1 follow all procedural requirements; otherwise a court may find the district (Mimz. Ct. app. 2001}, aff'd, 644 ~a.~~%.~d4?~ {Ntinn. 2c~t}z~. was not properly established. In one case, a TIF district was not proper y established where minimal effort was made to ensure the thorough inspection of the properties, inaccurate and unprecedented methodology was used to establish the condition of the buildings, and the buildings found structurally substandard were not reasonably distributed throughout the district. c~L~~,~Yt>~;t, ti~. ciry q(~i~tna~ In another case, a cause of action for inverse condemnation does not arise Z3ri.ghXnsr, 6:?4 N:Ch'.ad Sul , ~~lin:~. ct. Ahl>. 2c1~1~; where a city s involvement with an adjacent property owner's deve opment consists of establishing a TIF district, entering into a contract with a private developer specifying the size and value of structures to be built, and providing for substantial city assistance to facilitate development. Given the complexity of the laws governing the use of TIF, cities or HRAs should not undertake this method of financing community development projects without the advice of an attorney and professional consultants. F. Property tax abatement vlir~n. star. ~§ 46~.1s12 to A city may use this development tool to segregate some or all of the taxes 46~.1s1'~ (or the increase in taxes) it imposes on a parcel of property if the city expects the benefits of the proposed abatement agreement to at least equal the costs of the proposed development. The term "abatement" is somewhat misleading, as in most cases the tax is not forgiven; it is paid normally, but the amount of property tax levied by the city is used to pay for the bonds. The city must determine that the agreement is in the public interest because it will increase or preserve tax base, provide employment opportunities, provide or help acquire or construct public facilities, help redevelop or renew blighted areas, or help provide access to services for residents of the city. Property taxes in a TIF district cannot be abated unless the period of the abatement will not occur until after the district is decertified. A resolution must be adopted after notice and public hearing, specifying the terms of the abatement. A city may issue bonds or other obligations to provide an amount equal to the sum of the abatements granted for a specific property. The maximum principal amount of these bonds may not exceed the estimated sum of the abatements for the property for the years authorized. The bonds maybe general obligations of the city if the city council chooses to pledge the full faith and credit of the city in the resolution issuing the bonds. The law limits property tax abatements to 15 years. School districts and counties have similar abatement powers. A city, county, and school district can agree to abate their taxes on the same property. HANDBOOK FOR MINNESOTA CTTIES ls:l~ This chapter last revised 12/2010