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RELEVANT LINKS: <br />Minn. Stat. § 469.177, subd. <br />1. <br />State v. Wicklund, 589 <br />N.W.2d 793 (Minn. 1999). <br />Tax increment financing is a funding technique that takes advantage of the <br />increases in tax capacity and property taxes from development or <br />redevelopment to pay upfront public development or redevelopment costs. <br />The difference in the tax capacity and the tax revenues the property <br />generates after new construction has occurred, compared with the tax <br />capacity and tax revenues it generated before the construction, is the <br />captured value. The taxes paid on the captured value are called <br />"increments." Unlike property taxes, increments are not used to pay for the <br />general costs of cities, counties, and schools. Instead, increments go to the <br />development authority and are used to repay public indebtedness or <br />current costs the city incurred in acquiring the property, removing existing <br />structures or installing public services. <br />Thus, the property owner in a TIF district continues to pay the full amount <br />of property taxes. TIF involves only the increased property taxes generated <br />within the district. It does not change the amount of property taxes <br />currently derived from the redevelopment area, nor does it directly affect <br />the amount or rate of general ad valorem taxes the city levies. The result of <br />a TIF project is an increased tax base that will benefit all local taxing <br />jurisdictions. Additionally, TIF districts usually spur economic <br />development and redevelopment through creating jobs, removing blight, <br />and providing more affordable housing. <br />Amendments to TIF law in 2012, address changes caused by the market <br />value exclusion program. If the market value of a homestead property <br />within a TIF district reduces the homestead market value in the district, the <br />original tax capacity of the TIF district will be reduced by the same <br />amount. <br />Thus, the tax increment collected by the city will remain the same. If your <br />city has a TIF district with townhouses or condominiums, you may want to <br />verify that valuations are properly adjusted by the county auditor. <br />TIF is used to encourage four general types of private development: <br />redevelopment, renovation and renewal, growth in low- to moderate - <br />income housing, and economic development. Public financing using TIF <br />funding for a privately owned facility does not make public space in the <br />facility a public forum for free speech purposes. <br />A TIF district may involve compact development. Two major conditions <br />must be satisfied: <br />League of Minnesota Cities Handbook for Minnesota Cities 11/4/2014 <br />Community Development and Redevelopment Chapter 151 Page 16 <br />