DRAFT 171ST STUDY 04-27-2009 - Laserfiche WebLink

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IMPLEMENTATION Use Limits Several specific statutory limitations will influence the use of tax increments on implementation of the plan. State law requires that at least 90% of revenues from a redevelopment TIF district be used to finance "the cost of correcting conditions that allow designation" of the district. The majority of redevelopment and public improvement expenditures in this plan meet this criteria. Several important limitations must be noted: » Tax increments cannot be used for "a commons area used as a public park". The plan takes a conservative position and assumes that this limitation precludes using TIF for proposed open space improvements. The statute does not de fine the term "public park". The City may wish to explore this issue with appropriate legal counsel. » Tax increments cannot be used f or public facilities used for "social, recreational, or con f erence" purposes. As with parks, the statute does not de fine these terms. Special rules apply to public improvements, equipment, or other items located outside o f the TIF district. Tax increments cannot be used f or these costs i f their purpose is primarily decorative or aesthetic. I f the items serve a f unctional purpose, tax increments can be used unless "their cost is increased by more than goo percent as a result o f the selection o f materials, design, or type as compared with more commonly used materials, designs, or types forsimilar improvements, equipment or items". To avoid this restriction, the right-of-way o f street to be improved should be included within the boundaries o f a TIF district. Other Public Finance Tools Although the planning process focused on tax increment financing, it is likely that other public finance tools will be needed to make long term redevelopment investments within the i7ist Avenue FAST. This section highlights potential tools and their application. Additional investigations will be undertaken as finance plans are prepared by specific public improvement and redevelopment projects. Tax Abatement The name "tax abatement" is misleading. No taxes are abated using this tool. In reality, tax abatement functions similar to TIF (see Minnesota Statutes Sections 46g.i8iz to 46g.i8i5). Each taxing jurisdiction (city, county, school district) has the ability to levy a property tax equivalent to taxes paid by a parcel of property. The proceeds of this levy can be used to finance any of the public improvements and other redevelopment activities discussed in this plan. Since tax abatement cannot be used for property in a TIF district, the best opportunity for this tool lies with locations that do not qualify for a TIF district.