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What is the term of abatement? <br />If all three taxing entities (city, county and school district) participate in tax abatement the <br />maximum term is 15 years. However, if only one or two of the entities participate, the term is a <br />maximum of 20 years. The term of the abatement must be included in the adopting resolution. If <br />the resolution is silent to the term, the maximum term is 8 years. <br />What is the maximum amount that can be abated? <br />In any one year, the TOTAL amount a political subdivision may abate may not exceed the <br />greater of 10 percent of the entity's net tax capacity or $200,000. In addition, taxes on a parcel <br />may not be abated while the parcel is located in a tax increment district. The City's net tax <br />capacity is approximately $21.592 million, so its maximum total abatement capacity is <br />$2,159,000. Tax abatement bonds do not count against the City's debt limit. <br />How do abatements affect tax levies? <br />Abatements are special tax levies. The amount of the abatement must be added to the total levy <br />for the current year. The abatement amount must be included in the proposed levy for Truth in <br />Taxation as well as the certified levy. <br />Who has used tax abatement bonds for recreation purposes? <br />Buffalo I City of I MN T <br />Taxable Temporary General Obligation Tax Abatement Bonds, ' <br />', 3,000,000.00 _Golf course <br />Series 2004D <br />_..... . <br />...... <br />It is our understanding that the City of Savage and City of Woodbury are contemplating tax <br />abatement for recreation facilities. <br />Small issuers, in this context defined as an issuer of less than $10,000,000 of debt per calendar <br />year, enjoy slightly lower interest rates by making the bonds "bank qualified" or BQ. BQ bonds <br />in today's market trade about .15% to .25% lower than non -BQ bonds. <br />The IRS does allow a component unit of a local government to benefit from BQ status. <br />Therefore, if the EDA issued $9,000,000 in bonds for a project and the City issued $20,000,000 <br />in bonds in the calendar year, the ERA's debt could still be BQ. However, the ERA's debt does <br />count against the City's BQ limit. Therefore, if the EDA issued $9,000,000 in debt, all of its debt <br />could be BQ. However, if the City issued $8,000,000 in debt in the same calendar year, the City <br />