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� � � � � � � �� � � � � City of Roseville. Minnesota Revenue bonds are generally viewed as a tool carrying nsk for the City somewhat greater than PAYGO, but less than GO bonds. 4. Tax Increment Financing Bonds Tax increments generated from Tax Increment Financing Districts may be pledged to repay bond issues as explained in section A.I of this report. The City may choose to issue general obligation tax increment bonds if at least 20% of the debt service is paid from tax increments generated from the project being financed. Up to 80% of the debt service could be paid from other revenue streams or tax levies. Tax increment revenue bonds, without a general obligation pledge, are issued when there are sufFcient tax increment and other revenues to cover the costs without requinng a levy pledge. Cities may choose to levy if there is a shortfall, but there isn't a pledge to do so. The life af the bonds cannot exceed the life of the distnct, and annual debt service is structured to cover annual payments, in accordance with the projected TIF revenue stream. The measure of nsk for this tool is dependent upon whether the Tax Increment bonds are stnctly revenue based, or GO backed. 5. Abatement Bonds The abatement tool, as explained in Section 2 of this report, allows the City to levy outside of levy limits in an amount determined based on the properties to be abated. Unlike TIF, where tax is captured from the properties in the distnct, an abatement levy is certified based on the value of property taxes generated from properties benefiting from the improvement. The abatement term is fixed for up to ten or fifteen years, depending on participation from other taxing entities. Abatement can be used on existing property, as well as on new value. However, abatement of existing property may increase the tax rate on other properties in the junsdiction. The measure of nsk for this tool is dependent upon whether the Abatement bonds are stnctly revenue based, or are GO backed. 6. Tax-Exempt Financing — Conduit Debt (Minnesota Statufies Chapter 474A) � Tax-exempt financing is a form of financing in which the interest on the bonds issued is excluded for federal income tax purposes from the gross income of the owners of the bonds. A govemmental body, educational institution or entity that � qualifies as a"political subdivision" may qualify for tax-exempt financing. Such entities may include agencies, authonties, boards, commissions, hospital districts, and school distncts. Not-for-profit organizations created under Section 501(c)(3) of the Intemal Revenue Code do not qualify directly as issuers of tax exempt .� obligations, but can qualify in other ways. � Some features and benefits af tax exempt financing include: .� Offers low borrowing rates � Easy market access • Provides flexible structure to meet budget and cash flow needs SPRINCSTED �� 17