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V. DISTRICT TYPES <br /> <br />The Minnesota Tax Increment Financing Act creates three types of tax <br />increment districts: "redevelopment districts," housing districts" and <br />"economic development districts.~' <br /> <br />1. Redevelopment district <br /> <br /> a. 50% physically substandard requiring substantial rehabilitation or <br /> demolition, or <br /> <br />b. 20% physically substandard and 30% "blighting influences", or <br /> <br />raw land, but cost to acquire plus cost to make buildable exceeds <br />fair market value afterwards, or <br /> <br />d. air rights over public property. <br /> <br />e. underutilized railroad right-of-way. <br /> <br />2. Housing district - subsidized housing. <br /> <br />3. Economic development district - discourage businesses from moving, <br /> increased employment increased tax base. .. <br /> <br />B.' .The cost of any improvement which could be specially assessed cannot be <br /> considered in applying the raw land test. <br /> <br />VI. LIMITATIONS <br /> <br />A. The Tax Increment Act imposes a series of limitations: <br /> <br />Durational limitation of 25 years for redevelopment and housing <br />districts, 8 years for economic development district. <br /> <br />2. Excess tax increment must be returned or used to prepay debt. <br /> <br />3. Only 10% of tax increment can be used for administrative costs. <br /> <br />Redevelopment contracts must be in hand before land acquisition <br />except in limited cases. <br /> <br />5. If. nothing done in a district for 3 years, district dissolves. <br /> <br />If nothing done on a parcel in a district for 4 years, the parcel drops <br />out of district. <br /> <br />B. These were adopted in response to alleged abuses of prior laws. <br /> <br />4 <br /> <br /> <br />