Minutes - Council Work Session - 03/14/1984 - Workshop

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Outline Tax Increment Financing Holmes & Graven January 11, 1984 I. THE CONCEPT The .theory of tax increment financing is that the increase in real estate taxes paid by a facility which is constructed because of public inducements (such as land write-downs) will be used to pay for the public inducements. II. "PROJECTS" AND "DISTRICTS~ Municipalities, housing and redevelopment authorities, port authorities and counties all have the statutory authority to create districts and utilize tax increment financing within them. After August 1, 1979, each newly created tax increment district is governed by two sets of statutes: The statute which controls the establishment of the project area and authorizes specific types of public activities within it, e.g. the Municipal Development District Act, The Housing and Redevelop- ment Act, the Port Authorities Act, etc. The Minnesota Tax Increment t~inancing Act, Minnesota Statutes, Sections 273.73 to 273.78, which controls the financing mechanism to be used to carry out those public activities. Therefore, all tax increment financing necessarily involves the creation of- a project area under one statute, arid the overlaying of a tax increment district on all or part of the project area under another statute. Projects for which the tax increment certification was requested pursuant to law pr. lot to August 1, 1979,. are g.overned by prior law except as specifically covered by the Minnesota Tax Increment Financing Act, as provided in Section 273.78.. III. THE MECHANICS A. 'Each January 2nd the Assessed Market Value of real'property' is deter- mined. Through a statutory tax classification system, each type of real property is assigned an Assessed V. alue equal to an established percentage of Assessed Market Value. C. When a tax increment district is created, the Assessed Value is said to be "frozen."