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CHAPTER 15 <br />Tax increment financing is a funding technique that takes advantage of the <br />increases in tax capacity and. property taxes from development or <br />redevelopment to pay upfront public development or redevelopment costs. <br />The difference in the tax capacity and. the tax revenues the property <br />generates after new construction has occurred., compared. with the tax <br />capacity and. tax revenues it generated. before the construction I is the <br />captured. value. The taxes paid. on the captured. value are called. <br />CC i mncreents." Unlike property taxes, increments are not used. to pay for the <br />general costs of cities, counties, and. schools. Instead., increments go to the <br />development authority and. are used. to repay public indebtedness or current <br />costs the city incurred. in acquiring the property, removing existing <br />structures or installing public services. <br />Thu.s, the property owner in a TIF district continues to pay the full amount <br />of property taxes. TIF involves only the increased. property taxes generated. <br />within the district. It does not change the amount of property taxes currently <br />derived. from the redevelopment area, nor does it directly affect the amount <br />or rate of general ad. valorem taxes the city levies. The result of a TIF prqj'ect <br />is an increased. tax base that will benefit all local taxing jurisdictions. <br />Ad.d.itionally, TIF districts u.sually spur economic development and. <br />redevelopment through creating job, removing blight, and. providing more <br />affordable hou.sing. <br />State. i,�. Wicklui7d., 589 N.W.2d <br />TIF is used. to encourage four general types of private development: <br />793 (Minn. 1999 . <br />redevelopment, renovation and. renewal, growth in low- to moderate-income <br />hou.sing, and. economic development. Public financing u.sing TIF funding for <br />a privately owned. facility does not make public space in the facility a public <br />forum for free speech purposes. <br />A new TIF district involves compact development. Two mqj'or conditions <br />2010 Minn. Laws ch. 216, § 26 <br />must be satisfied.: <br />amending Minn. Stat. § 469.174; <br />2010 Minn. Laws ch. 216, § 28 <br />0 Parcels consisting of 70 percent of the area of the district are occupied. <br />amending Minn. Stat. § 4 9.175 <br />by buildings or similar structures that are classified. as class 3a property <br />adding subd. 2a; 2010 Minn. <br />Laws ch. 216, § 29 amending <br />under state law. and. <br />Minn. Stit. § 46 9 .176, subd. lb; <br />iws <br />2010 M nn. La ch. 216, § 30 <br />0 The planned. redevelopment or development of the d.istrict, when <br />amending Minn. Stat. § 469.176 <br />completed., will increase the total square footage of buildings, classified. <br />adding subd. li: 2010 Minn. <br />Laws ch. 216�, § 31 amending <br />as class 3a under state law, occupying the district by three times or more <br />Minn. Stat. § 469. 176, ubd. 4c. <br />relative to the square footage of similar buildings occupying the district <br />Minn. Stat § 273.13.1, ubd. 24. <br />when the resolution is approved.. <br />The authority to establish or approve a compact development district expires <br />on June 30, 2012. <br />HANDBOOK FOR MINNESOTA CITIES 15:15 <br />This chapter last revised 12/2010 <br />