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TIF Selection Process Whitepaper <br />for Arden Hills <br />February 1, 2011 <br />Summary <br />We recommend that the City Council: <br />1. Establish long -term TIF assessment criteria <br />2. Develop a point-based assessment system <br />Background <br />TIF <br />The original argument made to legislatures to create TIF was that it created a way for cash - <br />strapped communities to finance the upfront costs associated with redeveloping blighted areas, <br />most commonly cleanup /remediation costs and infrastructure improvements. Subsidized <br />redevelopment in an area could then spur future, unsubsidized redevelopment. <br />TIF has long -term effects that need to be considered when making a decision about providing <br />TIF for a project. "Unlike property taxes, increments are not used to pay for the general costs of <br />cities, counties, and schools. Instead, increments go to the development authority and are used to <br />repay public indebtedness or current costs the city incurred in acquiring the property, removing <br />existing structures or installing public services." (League of Minnesota Cities) <br />FPAC Committee <br />Arden Hills already has TIF Districts and anticipates the need for more TIF financing. The <br />Financial Planning and Analysis Committee was asked to look at how the City selects TIF <br />projects and make recommendations about the process. The Committee addressed three broad <br />questions: <br />• How much of the city's tax base can it afford to have in TIF Districts? <br />• How does the city best allot its TIF dollars to support its long term goals? (First come, <br />first served may not provide the best outcome for the city.) <br />• Are there tools or methods that will help city leadership assess each TIF request? <br />The committee has reviewed cases and policies from other cities around the United States as well <br />as processes used in corporate America to evaluate long -term strategic options and projects. <br />TIF Decision Process Overview <br />There are many tools the City of Arden Hills can use to drive development in the city, including <br />preferential use of city facilities, loans, direct subsidies, property tax abatement, and Tax Increment <br />Page 1of6 <br />