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GAP STRATEGIES <br />NO. �.0 <br />Fiscal Disparities Outside Tax Increment District <br />When a metropolitan city establishes a taY increment district, it is required to make <br />an election regarding fiscal disparities. The city may elect to have the fiscal <br />disparities contributed from inside the taa� increment distr�ct, which has the effect <br />of reducing the amount of tax increment available, or the city may elect to make <br />the fiscal disparities contribution from outside the tax increment district, which has <br />the effect of making more tax increment available. For the City of Roseville, this <br />is a significant issue since the fiscal disparities contribution is 31.8268%. The <br />fiscal disparities contribution is only applicable to commerciaUindustrial property <br />and the amount of the contribution is dependent on the increase in the market value <br />of commerciaUindusirial property that has occurred within the City since 197 i. <br />The effect of taking the fiscal disparities contribution fi�m inside the tax increment <br />district is dramatic. The amount of captured tax capacity is reduced by <br />appro�mately $350,000 per year in the early years to as much as $675,000 per <br />year in the later years. <br />However, if fiscal disparities are taken from outside the tax increment district, thus <br />increasing the amount of taY increment available, it will have the effect of <br />increasing the tax levy on all classes of property within the City. This increase is a <br />result of the contribution of the tax capacity to the metropolitan area-wide pool. <br />This simply means that the City has less tax capacity upon which to levy. This <br />would also be true of the county and the school district. To measure the impact, <br />one has to make a number of assumptions which are described on the attached <br />charts. <br />If the City elects to take fiscal disparities from outside the tax increment district, it <br />may change its election only once during the life of the tax increment district. For <br />discussion purposes only, we analyzed the impact of taking fiscal disparities from <br />outside the tax increment district for a period of 13 years. The impact using the <br />�8 �F �� <br />