CCP 11-24-1997 - Laserfiche WebLink

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- 1"(11 I 12 Minneso(J Solutions I Definitions .. Sonds (or internal note): A financing method whereby the city provides up front funds for a I project. The funds are ether repaid by the annual taxes (tax increment) that is available as a result of the development or the general obligation from the city may be pledged I Slight: See "What is a redevelopment district?" "Sut for" test: The basic premise behind tax increment financing states that without municipal I assistance a proposed project would not occur, or would not occur within the foreseeable future. This premise is also known as the "but for" test, and all projects must satisfy it. I The "but for" test consists of two separate analyses. The first analysis involves two statements. The first statement assumes "that the estimated captured net tax capacity would I be available to the taxing jurisdictions without creation of the tax increment financing district" and the second assumes "that none of the estimated captured net tax capacity would be available to the taxing jurisdictions without creation of the tax increment financing district." The second analysis, adopted by the 1995 Legislature, requires the authority to determine I "that the increased market value of the site that could reasonably be expected to occur without the use of tax increment financing would be less than the increase in the market .. value estimated to result from the proposed development after subtracting the present value of the projected tax increments for the maximum duration of the tax increment financing district permitted by the plan." I Development agreement: The contract entered into among the city, county or authority and the private developer. It typically controls timing, description of public and private improvements, I guarantees. Tax increment financing district: The specific parcels within a "project area" from which tax I increment will be captured. Excess tax increment: Tax increment that is in excess of what is needed either to pay debt service I on outstanding tax increment bonds or to pay remaining public redevelopment costs. Excess increments are unlikely to be generated following the 1990 tax increment financing reforms. Five year rule: Within five years following certification of the tax increment financing district, I revenues derived from tax increments are considered to have been expended on activities within the tax increment financing district only if one of the following occur: I . the revenues are actually paid to a third party; . bonds, the proceeds of which must be used to finance the activity, are issued and sold to a third party and the revenues are spent to repay the bonds; I . binding contracts with a third party are entered into for performance of the activity and the revenues are spent under the contractual obligation; or .. . costs with respect to the activity are paid and the revenues are spent to reimburse a party for payment of the costs. November 19, 1997 I -..--