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What are the Different Types of TIF Districts? Redevelopment Districts — The primary purpose of a redevelopment district is to eliminate blighting conditions. Qualifying tax increment expenditures include acquisition of sites containing substandard buildings or improvements, demolishing and removing substandard structures, eliminating hazardous substances, clearing the land, and installing utilities, sidewalks, and parking facilities. Often this is referred to as 'leveling the playing field", allowing developed cities to compete for development with outlying cities with bare land. Redevelopment districts are intended to conserve the use of existing utilities, roads, and other public infrastructure and to discourage urban sprawl. Economic Development Districts — An economic development district is a short-term district that does not meet the requirements of any other type of district, but is in the public interest because it will (i) discourage commerce, industry or manufacturing from moving to another state or city, (ii) increase employment in the state, or (iii) preserve and enhance the tax base. Tax increment revenues from economic development districts are used primarily to assist manufacturing, warehousing, storage and distribution, research and development, telemarketing, and tourism. Commercial development (retail sales) is excluded, except in small cities. Housing Districts — The purpose of a housing district is to assist development of owner -occupied and rental housing for low- and moderate -income individuals and families. Housing can be constructed on bare land as long as the qualifying criteria are met. Pre -1979 Districts —TIF districts created prior to the enactment of the TIF Act are called Pre -1979 districts. All Pre -1979 districts have decertified but some continue to hold tax increment and will report until all tax increments have been properly disposed. Renewal & Renovation Districts — The purpose of a renewal and renovation district is similar to that of a redevelopment district except the degree of blight removal may be less and the development activity is more closely related to inappropriate or obsolete land use. Soils Condition District — The purpose of a soils condition district is to assist in the redevelopment of property which is not developable due to the existence of hazardous substances, pollution or contaminants. The presence of these materials must require removal or remedial action for the property to be used, and the estimated cost of the proposed removal and remediation exceeds the fair market value of the land prior to curative measures. Uncodified Law — Special law may be enacted for one or more municipalities permitting the generation of tax increment revenues from geographic areas not meeting the definition of a type of TIF district authorized under the TIF Act. Examples are housing transition districts authorized for the cities of Crystal, Fridley, St. Paul, and Minneapolis or the distressed rental properties authorized for Brooklyn Park. The authorities for these unique types of districts must make findings defined in their respective uncodified law. For more information, see our Training Opportunities page to find links to short educational videos on TIF, including a video on the types of TIF districts. How is Tax Increment Calculated? When a TIF district is created, the county certifies both the original tax capacity and the original local tax rate. The original tax capacity is considered the "base" value and the property taxes generated from the "base" value are distributed to the appropriate taxing jurisdictions. As the development occurs, the increase in the tax capacity is captured. This is referred to as the captured tax capacity. The property taxes generated from the captured tax capacity are paid to the TIF authority to be used for qualified TIF expenditures. For more information, see our Training Opportunities page to find links to short educational videos on TIF, including an introduction to TIF. Click here to go to the Department of Revenue website for additional information (pdf, 422k).