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. (2) above only if the five year rule set forth in Minnesota Statues, Sections 469.1763, subdivision 3, has been satisfied; and beginning with the sixth year following certification of District No. 21, 80 percent of said tax increments that remain after expenditures permitted under said five year rule must be used only to pay previously commitment expenditures or credit enhanced bonds as more fully set forth in Minnesota Statues, Sections 469.1763, subdivision 4. AB. REDUCTION IN STATE TAX INCREMENT FINANCING AID Pursuant to Minnesota Statues, Section 273.1399, for tax increment financing districts for which certification was requested after April 30, 1990, a municipality incurs a reduction in state tax increment financing aid (RISTIFA) applied to the municipality's Local Government Aids (LGA) first and, Homestead and Agricultural Credit Aids (HACA) second, in an amount equal to a formula based upon the equalized qualifying captured tax capacity (QCTC) of the tax increment financing district. Pursuant to Minnesota Statutes, Section 273.1399, Subdivision 6, for tax increment financing districts certified after June 30, 1994, the City may choose an option to the LGA-HACA penalty. A tax increment financing district is exempt if the City elects at the time of approving the tax increment financing plan to make a qualifying local contribution. To qualify for the exemption in each year, the City must make a qualifying local contribution to the project of a certain percentage. The local contribution for an economic development district is 10 percent. The maximum local contribution for all districts in the City is limited to two percent of the City's net tax capacity. • The amount of the local contribution must be made out of unrestricted money of the City or Authority, such as the general fund, a property tax levy, or a federal or a state grand-in-aid which may be spent for general government purposes. The local contribution may not be made, directly or indirectly, with tax increments or developer payments. The local contribution must be used to pay project costs and cannot be used for general government purposes. The Authority elects to make the annual local contribution to the project to exempt itself from the LGA-HACA penalty. The City or Authority will pay for costs of the project described in this Plan, in an amount equal to 10 percent of annual tax increment for District No. 21, subject to the limitations described above, in any year in which such amount does not exceed 2 percent of the City's net tax capacity. Such contribution may be in the form of either lump sum or annual payments (in addition to tax increment payments) toward costs identified in this plan or other costs related to that development or redevelopment. The contribution may also be made in the form of public improvements financed by the City or Authority or other unit of government with unrestricted funds. AC. ECONOMIC DEVELOPMENT AND JOB CREATION To the extent applicable, the City agrees to comply with Minnesota Statutes, Section 116J.991, which states that a business receiving state or local government assistance for economic development or job growth purposes, including tax increment financing, must create a net increase in jobs and meet wage level goals in Minnesota within two years of receiving assistance (See Appendix C). IP Tax Increment Financing District No.21 Page II-15