pf_03405 - Laserfiche WebLink

Home

the Minnesota Tax Increment Financing Act of 1979 and subsequent amendments have placed restrictions on the use of tax increment financing; however, some amendments have relaxed restrictions on the use of TIF. One of the most significant of these amendments was passed in 1982, when the relationship between tax increment districts, project areas, and the spending of tax increments was changed. This amendment allowed cities to pool tax increments collected from a tax increment district anywhere within the associated project area and allowed expenditure of the pooled increments on development outside the district but within the project area. In Minneapolis, tax increments from the "pre-1979" districts were pooled to provide financing for the Neighborhood Revitalization Program (NRP). The NRP, which was created under special legislation, uses the significant revenues generated by downtown development to finance renewal, renovation, and redevelopment in 66 distinct neighborhoods across the entire city. Minnesota's TIF Act of 1979 placed other significant restrictions on the use of tax increment financing. It limited the duration of districts, the geographic areas ithat may be designated for certain districts, and the type and amount of tax increment spEmding. The Act also required cities to develop detailed, written TIF plans and to make annual financial reports on their districts. The state legislature has enacted many additional restrictions since the passage of the TI F Act of 1979. These include: limiting the ability to capture tax increments 'from development not stimulated by TIF; stricter definitions and documentation of blight for redevelopment districts; requiring larger portions of increments generated by redevelopment districts ~o be spent on blighted properties; restricting the use of economic development districts to manufacturing and related activities; and limiting the ability of cities to pool increments from multiple districts. The legislature also reduced state aid paid to local governments as an offset to the increased education aid for schools that results from tax increment districts (Legislative Auditor, 1996). 16