5.0. 6.0. 7.0. 8.0. HRSR 04-24-2000

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• Background Tax abatement differs from TIF primarily in that each political body is given the option to "abate" its portion of the project's property taxes. Generally, this will result in less dollars being generated for the project than with TIF, although abatement is easier and less costly to administer. The tax abatement policy that staff has drafted is very similar to the revised TIF policy, and also includes a ratings worksheet. The primary difference between the tax abatement and TIF policies is that no minimum threshold for building value or size is stipulated in the tax abatement policy. This is due to the fact that the smaller amount of dollars generated with tax abatement, combined with less administrative time and costs, will make tax abatement more appropriate for smaller scale projects. The tax abatement policy emphasizes industrial development, however, certain redevelopment and commercial projects will be eligible to utilize tax abatement as well. The use of tax abatement for residential projects is not allowed under the proposed policies. However, staff has recommended and the council and EDA have concurred, that a separate 0 set of residential criteria should be drafted for the use of tax abatement in certain situations. It should also be noted that staff is proposing that tax abatement be referred to as Tax Rebate Financing (TRF), which more accurately reflects how the tool functions. Sherburne County, which is also drafting a tax abatement policy, is considering a similar name modification to avoid confusing the tool with other, more established forms of tax abatement. The EDA and City Council adopted the tax abatement policy after a public hearing on April 10, 2000. Staff proposes that the HRA consider adopting the policy after a public hearing at its May meeting. Requested Action Staff asks that the HRA review the proposed draft of the tax abatement policy and provide comments. •