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<br />MAR' 23 " 89 8 'It" 4, 2 8525 EDlINBlROOK PAGE . Q't"-D
<br />Summaq of Tax Increment FinanCing Bill, March 3,, 1989
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<br />VIRMFff r LAW
<br />Economic Development districts may be used to finance any type of development, CxCert for rctil rood and
<br />beverage, automo bile sialcis and service, golf course, tennis, clubs, hot tub,, and other sirriflar recrient icy n racifities
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<br />il the metropolitan area. Economic development districu are subjca to rtstricted, duration& of the 1C.S.Scir of' (1)
<br />81 years, from the date of collection of the first incremileint or (2) 10 years from crciation or Cho district.
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<br />The stated. purpose of' the ecoinomiic development d"I'strIcts i s to attract or retain, manufacturing or industry in
<br />Mancroota, increasc cmployment, or preserve or expand the tax bast.
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<br />i uni ic development 4stricts to, manufactu
<br />The bill"ll B its the. use of cconom I ring and warchousing,err distribution center
<br />project.s. Ten perccnt of the project (measured on the basis of square, foot,aige) may be used for nion-
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<br />manufacturing Purposes such as off s. The definition. of m anufactu ring 'is, taken from the redorni Jerinit ion for
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<br />vOt
<br />quawng small Issue,, PrIepurpose, tax c=mpt bonds,
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<br />The pnnicipal Soals, or economic development districts are to expand employment and tax, base and to C-mract
<br />and retain, inianulacturling operations in Minnesota.1 These goals are inconsistent nth use fair ct)rninercial
<br />projects,, such as retail, residential and offiec, developlinanitst Tililliese developments giantrally do 11*110c, to cxpand
<br />the overall level of employment or tax basic, in Minnesota. Therefore, the usc. of cliconomic duviclopmcnE districis
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<br />is restricted, toll"folotloosicm type fac*llitoles-alm�a,nut,actur*lnig and warehousing, and distribution fit cifilit IVS 10,
<br />EM sim�4vm
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<br />Housing, districts need not meet Might criteria„ but, at leasit. two-,thirds of the market via,lue or plroJiucts must be
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<br />t to subllsia= low and moderate incorne housing., The law does not contain spcciriic income dcrinitions or
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<br />guidelines for low and moderate M'come holusins, except, that the project must be 'intended ror oiccupancv by
<br />penons, or f&zillics of' low and moderate 'income" as defined under a Variety, of state and rcdcral Inw. , To, the
<br />I increme 1011 prosr
<br />extent that tax nts are used for 'Interest reduct" ams, state law does impose incomenind rent limits,
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<br />These districts stricts additi I owdly subject to is shortlicir, 12, year duTation limit.
<br />4 41 1 Mcnit t o t hosc undur r(gicral I,a%v
<br />Income Lrements
<br />71c, bill imposes requi for TIF finaneed housing diStricts equiv:
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<br />for housing Projects fmanced with tax exempt bonidsl. These limitations apply for the duration of the distract.
<br />Failure, to, Comply results in a, reduction of the housing diStrictiiii's durabon, firnih to that of im economic
<br />development. district. Thew restrictions will not, apply to districts that OMY PrOvidic interest rieductioni piragrams.
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<br />TIT is permitted to be used to, subsidize low and moderate income housing in areas i that dlo not meet the
<br />redevelopment criteriallill Available evidence, taken from, a, sample of housing district TIF phins on rile, w4 the
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<br />deplartmie�nt of trade and, economic deve,lopimenit, indicates that most cities have not 'implinscid inicnime limits nr
<br />6 11 1 ntiercst reduction prograinsiq since maic 101W, % .0
<br />guidelines, for thLs housing. The one exception us Onlirinsus inictime
<br />limits on thesi: progTiLms.,
<br />)a, order to be, sure, that the value of these subsidies primarily bencrit low and, rninderatc, incomc fialli'lliChill FLIMIC,
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<br />WCOMC limits arc. imposed. For cast of administration and to assure tar gruing, lio low incorne., filimilies. the 1edurf'.111
<br />tax extrnpit bond's limi are, adopted by references Cities and bond counsel are accustornud to complying %vidi
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<br />these limits for tax, exempt bond projects. The limits for rental projects are regairdcd as riclativC.1y strict.
<br />&Paindi�ing them to, include TI F housing distri I icts may encourage use of tax exempt blonds rinnnced hitittsing in
<br />=nJunction %"i TIF in"listanice, Al
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