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Summa f Tax IncremcnI F inancing 13'111 land silics. However, when the property is conveyed to the developer at less than fair markct value, the prefermial land sale essentially becomes a property tax abatement. Part, of the property tax paid by the devicliopment is, used to, purchase the sit,c (over and abovc the amount necessary to overcome the devc1optnIent difficulties that arc, attribu table to a redeve lop mcnt, rather than barn land; site). 'To reduce the possibilities for using T'IF as, a quasi-property tax, abatement, the bill rcquires, sales of property to be, made, at fair market valuc., This restriction applies, , however, only, to economic development districts. 0 PRESF24T LAW No, restrictions, are ='pois,ed on the number of tax icrement &tricts, amount of captured tax capacity, or TIF debt, that a city, may have 61 P IR The bill, *imposes a volume limit, on the, arnounLal cip2dity's captured, tax capacity. If the city is at or abovc 6 W I I ts volume limit, new districts and amendments to c)astI p� ans may be appTOvrd only if the county and school, district boards also approve the, plan., If new districts are, approved in excess of the limits? the captured tax capacity of the district wW be M*cltided in computation of the school, aid and, fecal government aid formulas. Each tit yis provided an filitial limit equal to 10 percent of the av"erage per capita tax capacity for all cities. This uuual it 'is adjusted upward, if' the ties actual per capita tax capacity is more than 5 percent below the state per capita averaged The m um, limit is, 15 percent of the state per capita, average. This m *mum limit axi applies, to cities vn*t,h per capita tax bases less than, one-half of the state avera i average. The initial limit s adjusted dowmward if the city's, per capita tax capacity exceeds the state average by 5 percent or more. The minimum 0, limit is, 5 percent of the stair. per capita tax capac,it U 9/4v, v City's Per Capita Tax Volume Limit as a Percent Capacity Relative to of the StateAide. Per Capita State%ide Averap, I Tax Canaciry 5o% 15.0�% 80% 12.0 100%, 10-0 1501%, 7.5 200%, 5.0 -a Cities with populations m* excess of 20,,000 and wit,b 25 percent or more of their, housing stock constructed before 1940 are "owed a, limit, that equals, the Weater of thC regular, limit, or 12.5 percent of their tax capacit), Pioplula,ti�on L's determined using, the, most recent estimiaites, while age of bousing stock is determined from the most recent federal, decennial census. Using 1987 population estimates and 19810 census data on the ace of the housing, Ilstock, this group *Includes, Austin, Duluth,, Mankato,, Minneapolis, Rochester, St. Cloud, St. p'ain't South St. Paul, and Winona. 106 61 The use of tax inCTIC.Mient fiinanc'mg contmues to grow at a, very rapid, rate. For taxes payable n 1989, 36 cities c 4 have aptured tax capacity in excess of ten percent of thei i r tax base. The use of tax increment IMPDSCS costs on other local governments and the state. Because TIF expenditure decisions arc, made outside of the city budeciary Process and because a substantial portion of the cost of'TIF 'is boir'ne by taxpayers outside of the city, thco Ip 0 0 structure of TTF decisions, undermines, lo cad government accountability for these spending decisions. The volume, limit addresses these concerns by requiring cities to treat the use of' TI as a scarce resource Mat must be budgeted,. Howevcr, a city that is at or above the limit can still proceed width new distriCL.S, if the cite 0' can convince the other local governments who arc likely to bear part of the cost to approve the district. This unil increase local accouniability for TIF decisions. Local accountability is, also enhanced by including the capturcd, tax capacity of these districts in the computation of school and local government aids. Thus, the local