Agenda - Planning Commission - 09/10/2015

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Minn. Stat. § 469.177, subd. 8. Lake Superior Paper Indus. v. State, 624 N.W.2d 254 (Minn. 2001). Brookfield Trade Center, Inc. v. County of Ramsey, 609 N.W.2d 868 (Minn. 1998). See Minn. Stat. §§ 469.177, subds. lb, 11, Minn. Stat. § 469.1771, subd. 1. Minn. Stat. § 469.1793. Minn. Stat. § 469.1814. Minn. Stat. § 469.174. Minn. Stat. § 469.175. Walser Auto Sales, Inc. v. City of Richfield, 635 N.W.2d 391 (Minn. Ct. App. 2001); all' d, 644 N.W.2d 425 (Minn. 2002) Chenoweth v. City of New Brighton, 655 N.W.2d 821 (Minn. Ct. App. 2003). CHAPTER 15 The TIF agreement with the developer is a complex document. Assistance from a financial advisor and the city attorney is necessary in order to anticipate the many potential problems. An agreement can establish a minimum market value for tax increment assessment purposes, as well as provide that the developer pay a certain level of taxes regardless of any classification rate changes or levy decreases. The agreement should be entered into before the assembly and acquisition of the land on which the completed improvements are to be located. The 2001 tax reform legislation, which reduced class rates and provided for the state takeover of the general education levy, resulted in several changes to various statutes to accommodate the changes. These changes considerably reduce the continued viability of TIF in the future. The law imposes a 180 -day statute of limitations on actions to challenge the creation or modification of a TIF district. The law is complex including a "but -for" finding before a city approves a TIF plan and the creation of a TIF district. Cities must follow statutory requirements including but not limited to administrative expenses, plan modifications, reporting requirements, use of increment in pre -1979 districts, excess increments, pooling, decertification, and use of funds outside the district. Before a district can be created, the law requires a detailed estimate of the impact of a proposed district on city -provided services, such as police and fire protection, public infrastructure, and borrowing costs attributable to the district, in addition to other complex estimations must be prepared. Cities should use extreme care in establishing a TIF district and should follow all procedural requirements; otherwise, a court may find the district was not properly established. In one case, a TIF district was not properly established where minimal effort was made to ensure the thorough inspection of the properties, inaccurate methodology was used to establish the condition of the buildings, and the buildings found structurally substandard were not reasonably distributed throughout the district. In another case, a cause of action for inverse condemnation does not arise where a city's involvement with an adjacent property owner's development consists of establishing a TIF district, entering into a contract with a private developer specifying the size and value of structures to be built, and providing for substantial city assistance to facilitate development. Given the complexity of the laws governing the use of TIF, cities or HRAs should not undertake this method of financing community development projects without the advice of an attorney and professional consultants. 15:16 This chapter last revised 12/1/2012 LEAGUE OF MINNESOTA CITIES