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CHAPTER 1 S Minn. Stet. § 469.1771, s~bds.1, The state auditor may audit TIF districts. If the state auditor notifies a TIF 26. authority of an alleged violation, a copy of the notice is also forwarded to the county attorney. If no corrective action is brought within one year, the county 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. Stet. § 469.177, subd. 8; The TIF agreement with the developer is a complex document. Assistance Lake Superior Paper Indus. v. 6za N.w.2a zs4 (Minn. state from a financial advisor and the city attorney is necessary in order to , 2001); Broo~etd Trade center, anticipate the many potential problems. An agreement can establish a Inc. v. County of Ramsey, 609 minimum market value for tax increment assessment purposes, as well as N.w.2d s6s (Minn. 199s). provide that the developer pay a certain level of taxes regardless of any 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. Stet. §§ 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 Minn. Stet. §469.1791; Minn. Stet. § 469.1793; Minn. Stet. § to various statutes to accommodate the changes. These changes considerably 469.1799; and Minn. Stet. § reduce the continued viability of TIF in the future. 469.1814. Minn. stet. § a69.174. The law imposes a 180-day statute of limitations on actions to challenge the creation or modification of a TIF district. The law is complex including a "but-for" finding before a city approves a TIF plan and the creation of a TIF district. Cities must follow statutory requirements including but not limited to administrative expenses, plan modifications, reporting requirements, use of increment in pre-1979 districts, excess increments, pooling, decertification, and use of funds outside the district. Minn. star. § a69.17s. Before a district can be created, the law requires a detailed estimate of the impact of a proposed district on city-provided services, such as police and fire protection, public infrastructure, and borrowing costs attributable to the district, in addition to other complex estimations must be prepared. Walser Auto Sales, Inc. v. ciry of Cities should use extreme care in establishing a TIF district and should Richfera, 635 N.W.2d 391 ' follow all procedural requirements; otherwise a court may find the district d, 644 (Minn. Ct. App. 2001); aff N.w.2d 42s (Minn. 2002). was not properly established. In one case, a TIF district was not properly established where minimal effort was made to ensure the thorough inspection of the properties, inaccurate methodology was used to establish the condition of the buildings, and the buildings found structurally substandard were not reasonably distributed throughout the district. Chenoweth v. City of New In another case, a cause of action for inverse condemnation does not arise Brighton, 655 N.W.2d 821 where a city's involvement with an adjacent property owner's development (Minn. Ct. App. 2003). 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. 15:16 LEAGUE OF MINNESOTA CITIES This chapter last revised 12/1/2011