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City of Elk River, Minnesota <br />Baker Tilly Municipal Advisors, LLC Page 2 <br /> <br />Section B Statutory Authorization <br /> <br />See the Development Program for the Development District. <br /> <br /> <br />Section C Statement of Need and Public Purpose <br /> <br />See the Development Program for the Development District. <br /> <br /> <br />Section D Statement of Objectives <br /> <br />See the Development Program for the Development District. <br /> <br /> <br />Section E Designation of the TIF District as a Housing District <br /> <br />Pursuant to the TIF Act, the City seeks to create Tax Increment Financing (Housing) District No. <br />28 and adopt a TIF Plan for the TIF District. The City will review this TIF Plan prior to City <br />adoption. The TIF District is a housing district. <br /> <br />Housing districts are a type of tax increment financing district that consist of a project intended <br />for occupancy, in part, by persons or families of low and moderate income. Low and moderate <br />income is defined in federal, state, and municipal legislation. A project does not qualify if more <br />than 20% of the square footage of buildings that receive assistance from tax increments consist <br />of commercial, retail or other nonresidential use. <br /> <br />In addition, housing districts are subject to various income limitations and requirements for <br />residential property. For owner occupied residential property, 95% of the housing units must be <br />initially purchased and occupied by individuals whose family income is less than or equal to the <br />income requirements for qualified mortgage bond projects under section 143(f) of the Internal <br />Revenue Code. For residential rental property, the property must satisfy the income <br />requirements for a qualified residential rental project as defined in section 142(d) of the Internal <br />Revenue Code. <br /> <br />The TIF District meets the above qualifications for these reasons: <br /> <br />1. The planned improvements consist of the following: <br /> <br />a. Approximately 44 total units, for which one of the following will apply: <br /> <br />o at least 20% of the dwelling units shall be available for rent by persons whose <br />incomes do not exceed 50% of areawide median family income, as adjusted for <br />family size or <br /> <br />o at least 40% of the dwelling units shall be available for rent by persons whose <br />incomes do not exceed 60% of areawide median family income, as adjusted for <br />family size. <br /> <br />2. No improvements are planned other than housing and therefore no more than 20% of <br />the square footage of buildings included in the TIF District will consist of commercial, <br />retail, or other nonresidential uses. <br /> <br />3. The City will require in the development agreement that the income limitations for the <br />rental units in the apartment buildings will apply for the duration of the TIF District.