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I i I I I I ! ! I ! provided in the rest of Mimesota, where the e~nc~y is in serious trouble or declining. This raises the question of what oom~ection exists between the level of eooncmic activity in a region and the use of public financial assistance for real estate development. Areas that might be regarded amorg the most desirable development sites in the entire metropolitan area n~w are z~ceivirg public assistance, including Hwy. 12 ar~ F~y. 100 in Golden Valley; 50th St. and Frar~e Ave. in F. dina; 1-494 and Gedar Ave. in Blo0mirgton, and 1-494 and I~s. 212/5 in l~en Prairie. It is hard to identify a ~uiding political philosophy behir~ city government assistar~e to real estate development.--Tne oontroversies over whether and how public dollars should be used to provide ass istar~e to private real estate developments do not line up alorg oonventional lines of political philosophy. Strong s~pporters of aggressive in~)lvement are as likely to be liberal Democrats as conservative Bepublicans; conversely, opponents, too, are likely to fall in both camps. These programs seem not to be four, ed on any traditional philosophy of government ~r of ec~cm~c organization. Involvement in real estate has meant that city officials have developed new, complex, relationships with many interest 9roups.~yors, city council members, professional city staff, plus a host of financial advisers, oc~sultants, bond underwriters, bond att(xneys ar~ other private firms are workirg closely together as cities play active roles in stimulatin9 finar~ially-rewarding real estate activity. Lines between the regulation and promotion of real estate develq)ment are disappearing.--Today city governments are regulatil~ the use of real estate within their borders ar~ providirg infrastructure as well as promoting ar~ finar~irg de~lc-~_~ent of selected parcels. Consequently, city gove£~...ents may encounter conflicts as they impose regulations that apply to all properties ard provide public dollars to prcmote ~ de~lq~ent of a few properties. Ingenious financir~ mechanisms are employed.~ty governments have been able to offer assistar~e wittout usirg dollars from their own general revenue budgets, i~deral and state la~s haw made it possible for city gove£,..ents to provide assistance without havirg to make trade, frs with such c(~peting progr~,~ as fublic safety, p~rks, sewers, streets c~ libraries. This obviously has meant that they have not had to make politically difficult choices on allocation of funds. For e~mple, with ilxlustrial revenue bonds, cities do not use any Of their own money. Instead they issu~ tax-exempt bonds On behalf of businesses makirg capital improvements. With tax-exempt bonds the interest earned by the investors who purchase the bunds is exempt from taxation by the state or federal governments. ~herefore, a tax-exempt bond carries a lc~er interest rate than a taxable bond, thereby reducirg the (~ost to the affected businesses, fbwever, sud~ bonds reduce re%~_nue to the state ar~ federal governments. Cities are allowed to decide which businesses receive the help. ~hrough another program, tax-increment finar~irg, city gove~-~...ents can dedicate in advance all growth in property tax revenms from selected new developments for up to 25 years to pay for development expense. De~l~ expense is paid off before any of th~se funds ever is deposited in the general revenue budgets of the cities _tt~_~elves or the school districts and counties in which they are located.