EDSR INFORMATION 08-11-1997 - Laserfiche WebLink

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BRIGGS AND MORGAN C. Redevelopment Districts: Subdivision 4i Limitations "Fixed". Section 469.176, Subdivision 4j, requires that at least 90% of the increment derived from redevelopment and from renovation and renewal TIF districts be spent on the types of conditions which will allow those districts to be established. That Subdivision goes on to state certain examples of uses that are permitted. The State Auditor had interpreted the enumerated list as exclusive, a viewpoint which garnered widespread disagreement. The law has now been clarified to state expressly that the permitted costs are not limited to the enumerated list and that they would also include, among others, the costs of rehabilitating structures and remediating hazardous substance or contaminated conditions. This provision is retroactive in the sense that it applies to all tax increment districts to which this 1989 rule ever applied and states that they conform to these requirements if they meet the new version of the Subdivision. D. Fiscal Disparities Must Now Come Out of Economic Development Districts. Effective for tax increment areas requested for certification after June 30, 1997, the fiscal disparities contribution must now come out of all economic development districts. Heretofore, the authority had the option to retain all of the captured tax capacity for tax increment purposes and effectively make the fiscal disparities contribution from properties outside of the district. This affects the metropolitan area and the Iron Range. It obviously reduces the amount of tax increment which such new districts can generate. It does not affect the ability of these cities to have fiscal disparities retained as increment in the other types of districts. E. Economic Development District: Inflation Factor. The base value of an economic development district is increased annually by the average percentage growth of the market value of the property during the five years prior to the establishment of the district, the so-called "inflation factor." This is an old rule which was presumably intended to counteract generating increment from"inflationary"increases in land and property values. However, in a number of instances it resulted in a huge inflation factor and the bizarre result that virtually no tax increment could be generated from the district even following the completion of significant building value. The change is that in computing this average percentage increase in the market value over the applicable five year period, market values are to be excluded which are attributable to new construction; extension of sewer, water, roads or other public utilities; or platting of the land. This is a very welcome and sensible change, effective for tax increment areas requested for certification after June 30, 1997. F. Interior Inspections of "Structurally Substandard" Buildings Required; Exception. For redevelopment and renewal and renovation districts, a certain percentage of the buildings must be "structurally substandard." The law now requires that this determination cannot be made unless there has been an interior inspection of the building. This requirement does not apply if the city or the authority is unable to gain access to the property after a "best efforts" attempt to obtain permission and if • the evidence otherwise supports a reasonable conclusion that the building is substandard. Such evidentiary support would include recent fire or police inspections, 357509.1 3