EDSR INFORMATION #2 06-14-1999 - Laserfiche WebLink

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Cav` ------------ E 1ortant plan. Moreover, the Auditor's position implies all pooling Important p expenditures need to be explicitly authorized in the TIF Developments plan. --.,o."" in TIF Overpayment of Increment. The Auditor has taken the position that in instances where the county auditor paid increment to a city after the statutory maximum duration of a district, the city is A s most cities are already aware, in 1995 the required to repay the amount of overpayment. Minnesota State Legislature granted the Office of the State Auditor (OSA) the authority to oversee the use Budget Specificity (Line item Budget). of tax increment financing (TIF) in the State of The Auditor has challenged a number of expenditures on Minnesota.The OSA has begun to conduct audits of the grounds that they are unauthorized by the TIF Plan municipalities that utilize TIE Although the results of the budget, which often includes only very general initial audits have not yet been made public, early expenditure categories. indications are that the OSA has taken positions on a number of issues that will potentially have widespread Budget Authority After Bonds Paid. ramifications for a number of communities. In some The Auditor has challenged a municipality's authority to instances the GSA's position runs contrary to what has collect increment from a district after bonds or other debt been standard TIF practice for years. obligations have been paid off-- even where budgetary authority exists in the tax increment financing plan A number of cities we work with have already begun to inquire about the implications of these developments. Lobbying as an Administrative Expenditure. The Auditor has challenged the validity of lobbying as an illWe have outlined below our understanding of the administrative expenditure. Auditor's position on several general issues that may potentially impact your community. We suggest you make Land Acquisition. note of the following issues and assess where your The Auditor takes the position that a city must acquire community stands with respect to them. title to property to incur land acquisition costs. Documentation of Expenditures Substandard Finding. The Auditor has stated that all expenditures must be The Auditor has challenged the finding that a building is supported with documentation. Unsupported expenditures "substandard"in redevelopment districts where such must be repaid. finding is not supported by adequate evidence. Pooling in'79-82 (Gap) Districts Retroactive Modifications. The Auditor's position is that districts certified between The Auditor has questioned the validity of retroactive 1979 and 1982 are not allowed to"pool"increment modifications to tax increment financing plans. (spend increment outside of the TIF district's geographic boundaries). Although we are not in agreement with the Auditor's position on some of these issues,we believe it is important "Commingling" of Interest Earnings. that you are aware of them so that you may make informed The Auditor takes the position that interest earnings must decisions in the future. be segregated from increment funds annually. In addition, funds transferred from accounts which are not segregated If you have questions about how the Auditor's position on as non-TIF revenue cannot be called expenditure of non- any of these issues might impact your community or if you TIF revenue without prior designation. would like to discuss a strategy to address current or past practices that conflict with the Auditor's position please •Transfers v.Expenditures. feel free to contact a member of Ehlers'TIF Team: Mark The Auditor has taken the position that moving money Ruff 651.697.8505, Sid Inman 651.697.8507, Shelly from one "fund"to another"fund"is a transfer,not an Eldridge 651.697.8504,or Mike LaFave 651.697.8516. expenditure, and must be explicitly authorized in the TIF 4