EDSR INFORMATION 04-21-1997 - Laserfiche WebLink

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t INFO RMMTION New bill would impact cityability to use TIF P Y Andrea Atherton •A statement as to how the proposed State approval would also be re- district is to be financed; quired for new spending in pre-1990 A bill that would seriously impact •The number of years intended to col- districts if, at least five years after ap- cities'ability to use tax increment fi lect increment; proval of the original plan, some ac nancing was introduced last week by •The maximum amount of education tion is required to authorize such Representatives Ron Abrams (R- aid increment the authority seeks to spending (such as amending the TIF Minnetonka) and Ann Rest(DFL-New collect; and, plan, development plan,or agree- { Hope). In large part,H.F.2010 trans- •Other information requested. ment).The money is to be used to as- forms TIF into a state-approved pro- For housing districts, information sist private development,and the gram; sets an overall state TIF limit of on the number of units, income limita- amount to be spent has a present value 3.25 percent of the statewide net tax tions, expected rents, and supply and of$1 million. capacity (estimates are that we are cur- demand for the particular type of hous- Article 2-Property Tax Abatement: rently just below three percent, which ing in the area would also be required. The bill would allow cities,town- ; translates into approximately $10 mil- Approval would hinge on three ships,counties and school districts to lion available before the limit is findings: (1) that the TIF plan corn- abate their portion of the property tax reached); and allows political subdivi- plies with state law; (2) that authority (except on land) for any of the follow- sions to abate their property taxes for is available under the state budget ing purposes: up to 10 years. limit; and (3) that the proposal is in the •To increase or preserve tax base; tThe following is a detailed sum- interest of the state. •To create jobs; mary of the bill: Standards to determine whether •To acquire or construct public Article 1-Tax Increment Financing: proposals are in the state's interest facilities; The bill defines "education aid in- would include: clean-up of pollution, •To redevelop or renew blighted areas; crement"as that portion of increment better use of existing infrastructure, •To provide access to services for that is attributed to the imposition of elimination of improvements hazard- residents; and, the state equalization formula for ous to the public health, increased eco- •For other uses that provide public school levies. State approval (MHFA nomic activity, increased fiscal capac- benefits. for housing districts and DTED for all ity to local governments that have a The political subdivision would 41) other districts) would be required in significant gap between their needs grant the abatement by adopting a order for education aid increment to be and ability to meet them, increased resolution following 30 days published Ipaid to the development authority for state tax revenues, and other benefits notice and a public hearing. Issuance all new districts and for existing dis- determined by the agency.These stan- of bonds to provide an"up-front" 1 tricts adding new geographic area after dards would be generally weighed abatement, including the county and July 31, 1997. In approving a district, against the costs of the proposal to the school district portion if they agree, the first year increment is to be col- state. For housing districts, the benefits would be authorized. Bond proceeds lected, the maximum duration, and the would include: the extent the project could be used to pay for public im- total amount of education aid incre- meets a demand for quality,affordable provements, land acquisition or con- ment would be specified.Amounts housing; the extent of targeting to veyance; reimbursement to property would be allocated for each year the those with low-incomes: and the extent owners for the costs of improvements; k district is permitted to collect incre- to which the project prevents undue or the costs of issuing the bonds. Po- ment. Education aid increments would concentration of low-income housing laical subdivisions would be required , be paid to the state if approval is not units. to increase their levies by the amount I granted, or for districts that have For any given year, to total avail- of the abatements.Abatement amounts reached their total allocated state bud- able state TIF budget would be 3.25 could be reflected as a credit or refund get limit. percent of the total statewide net tax on the property tax statement,or col- Development authorities would capacity. The actual available capacity lected and remitted to the property submit applications for approval that would be reduced by all existing TIF owner or the bondholders'representa- would contain: districts.The bill allocates 7.5 percent tive. If bonds were issued, only the lat- •A copy of the TIF plan; of the annual limit to housing districts ter option would be available.Abate- •A budget of annual spending and 92.5 percent to non-housing dis- ments would increase the amount of 1 estimates; tricts, but the commissioners of DTED school taxes paid by other properties. •Identification of any commitments and MHFA could agree to reallocate Existing authority to partially abate from developers; these percentages as they deem property taxes would be repealed,ef- •A statement as to how the but-for test appropriate. fective June 1, 1997.The abatement 0 is satisfied; authority would be effective for taxes payable in 1998. r I. April 2, 1997 LAC e(-ii e-s ` t4 ilehl . Page 7 Y