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arrangements. Most TIF costs are incurred at the beginning of a project, typically to acquire land, demolish buildings, decontaminate brownfields, and/or install public improvements. When a city issues a bond, funds are provided to the project, and tax increments generated by the property each year are available to pay the principal and interest on the bonds. When a city issues general obligation tax increment bonds, they are secured by the full faith and credit of the community. This means that if the property owner defaults on the property taxes as they become due, the city must then levy taxes against all property owners within the community to meet the payment of the bonds. Many cities have used pay-as-you-go financing, in which the developer pays for the public costs of site acquisition and site preparation in advance of any subsidy. The developer is then reimbursed for TIF-eligible expenses when tax increment revenue is generated by the project. In pay-as-you-go situations, taxpayers are not at risk if the property taxes generated by the new development are not sufficient to repay the debt obligation. The developer assumes the risk, because the city's only obligation is to provide the developer with a percentage of the tax increment revenue, usually 90%; if tax increment revenues are not as high as anticipated, the city is not obligated to fully reimburse the developer. Cities may also use their own funds to support the preliminary costs of development. The mechanics of this type of internal financing can work in a number of ways. Cities may internally borrow money from their general funds, economic development funds, municipal utility funds, or federal grant funds (Legislative Auditor, 1996). Cities then use tax increments generated from development projects to repay the internal loans from these funds. Cities may also use pooled tax increments from an existing (and successful) TIF district to support the start-up costs in a new TIF district in the same project area, or to create a development fund, or to transfer money to various city improvement projects related to tax increment districts. Planning, Disclosure, and Reporting Requirements. By state law in Minnesota, prior to establishing a tax increment district, the city or development authority must prepare and 4