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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 /> Issuer Name I' , IssueName. (: Amount 1 Purpose
<br /> Buffalo I City ofd MN Taxable Temporary General Obligation Tax Abatement Bonds, 3,000,000.00,Golf course
<br /> Series 2004D
<br /> Maplewood I City ofd MN General Obligation Tax Abatement Bonds,Series 2004C 5,025,000 00 Park and public improvements
<br /> Tracy I City of MN Temporary General Obligation Tax Abatement Bonds, 1,195,000 00 Swimming pool
<br /> Series 2005A
<br /> Chisago City I City of I MN General Obligation Tax Abatement Bonds,Series 2008B 1,550,000.00 Land acquisition for parks
<br /> Cloquet I City of I MN General Obligation Tax Abatement Bonds,Series 2009A 1 500,000 00 Swimming pool
<br /> St.Cloud I City of I MN Taxable GO Tax Abatement Bonds,Series 2010R 22,3 15 000 00'Civic Center
<br /> Duluth I City of I MN General Obligation Fax Abatement Bonds,Series 2012A 7,055,000.00 Spirit Mount recreation area
<br /> It is our understanding that the City of Savage and City of Woodbury are contemplating tax
<br /> abatement for recreation facilities.
<br /> Bank Qualification
<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 FDA's debt could still be BQ. However, the EDA'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
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