CCP 11-24-1997 - Laserfiche WebLink

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I TIF Talk '/'7 5 I In addition, to the extent that the "but for" test is valid for redevelopment. there is no ~ additional cost to the state or other taxing jurisdictions because the new development would not have taken place without the public subsidy. 6. Tax increment financing is used to lure businesses from one Minnesota citv to I another. Increments generated in a redevelopment district are used only to correct site problems and "level the playing field" between the redeveloped site and greenfield sites. Redevelopment districts, particularly subsequent to the 1990 changes In tax increment law I generally don't cover the costs associated with demolition, relation. site acquisition, etc., much less provide developer incentives. Economic development districts, however. are designed to provide developer incentives and can result in pirating businesses from one I Minnesota city to another. 7. Tax increment financing ties uo the tax base for too long. Redevelopment is costly and I time consuming. Following the changes to tax increment financing in 1990, it is unlikely that enough tax increment will be generated to cover the costs of redevelopment. It is even less likely that redevelopment districts will "cash fiow" in the wake of property tax reform and the I reduction in commercial/industrial class rates 8. There is no benefit to a community when a tax increment financino district is I established. If a tax increment financing district is certified to support redevelopment efforts in a city there are at least three benefits: . Even if property values had been declining within the tax increment financing district. the Ie amount of taxes will be "frozen" at the point the tax increment financing district is certified. . Spin-off development and a hall to the decline in property values I neighboring the tax increment financing district. . When the tax increment financing district is decertified, the enhanced tax base will provide a benefit to all the taxing jurisdictions that would not have been there without the public subsidy. I 9. Most of the benefit from an enhanced tax base accrues to the citv. so that unit of local oovernment should oav for it. This is clearly untrue. Upon termination of the tax increment I financing district. all of the local taxing jurisdictions enjoy the benefits of enhanced property values. In addition, the state contributes less to education costs than prior to certification of the tax increment financing district. The immediate effect of spin-off development. job I creation, affordable housing opportunities, and halting the spread of blight throughout a community. provide benefits to the state, county, schools and city throughout the life of the tax increment financing district, as well as following decertification. I 10. Cities make decisions that tie up the tax base for other taxing iurisdictions. but take none of the risk associated with their decision makino. If a city makes a fallacious "but I for" finding, they lose the same tax base as the other taxing jurisdictions. It is, therefore. in its best interest to be judicious in this regard. In addition, cities pledge the full faith and credit of the city when issuing general obligation bonds to finance improvements within a tax I increment financing district. I- 11. Tax increment financing districts cause orooenv taxes elsewhere in the citv to increase. To the extent that the city makes an appropriate "but for" finding, there is no impact on the property taxes in other parts of the city. I November 19. 1997 - ----------