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<br /> I 3/17 <br /> TIF T.Jlk 1 <br /> " <br /> I <br /> ~ What is Tax Increment Financing? <br /> I Tax increment financing is a planning and financing tool which has been used by local units of <br /> government since 1973. Tax increment financing was originally designed by the Minnesota <br /> Legislature to replace the federal urban renewal programs of the 1960's which were gradually cut <br /> I back and eventually eliminated. <br /> Tax increment financing uses the increase in property taxes resulting from new development to <br /> I finance qualified public improvement costs related to that development It is this increase or <br /> difference between the current property tax on a parcel of land and the estimated property tax <br /> after development, that is the tax increment Other sources of revenues which are now classified <br /> I as tax increment include: <br /> . Proceeds from the sale or lease of property purchased with tax increment. <br /> I . Repayment of loans or other advances made with increments. <br /> . Investment earnings on increments. <br /> I <br /> Following is a graph depicting a possible economic development district. <br /> Ie Taxes on New taxes alter <br /> currently vacant vacant parcel is = 14.CCO of <br /> parcelll.COO developed 55.000 Tax Increment <br /> I TIF District Tax <br /> is created <br /> t=:> (>(>(> Increment <br /> I Fund <br /> I All tax increment financing districts are not created equal. Permitted uses of the tax increment <br /> generated vary according to the type of tax increment financing and the year during which the tax <br /> I increment financing district was certified. Following is a brief summary of each type of tax <br /> increment financing district, or groups of tax increment financing districts, and intended <br /> purposes. A more in-depth review appears later in this document: <br /> I Redevelooment districts. hazardous substance sub-distri"!!> and renewal and <br /> renovation districts: Redevelopment districts, renewal and rs . lation districts and <br /> I hazardous substance sub-districts are intended to correct a neg;:. :ive land value created by <br /> past uses. The public purpose is clear. Reuse of existing public infrastructure, job creation in <br /> older cities where social problems and unemployment are exacerbated by abandoned <br /> I industrial property, declining property values, and transportation and environmental issues all <br /> justify the public investment The private sector is not willing to undertake demolition, <br /> ~ relocation and remedial activities often required -- as well as the liability issues related to these <br /> actions -- when undeveloped sites are readily available. <br /> I November 19, 1997 <br />