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-19- ~DATIONS I I I ~14~Y, These re~a~dations h~lp shift the 9overnmental financing of private real estate development from: (a) ir~irect sources to direct sources, (b) entitl~ents to appropriations, (c) off-budge% to on-budget, (d) non-targeted assistance to that which is targeted specifically for renewal. The reo~tions reoognize that providing help for real estate assistance is mainly designed to influer~e business/job location, not business/job creation. We r~nd that the state.. I I I I Give each city government access to a redevelopment fund, a new mechanism for cities to use in investing in renewal of properties. The fund would be financed from direct revenu~ souroes ar~ repayments of assistance previously provided to c~ners/developers. Impose legislative restrictions on tax-increment financing to stop excess use and to encourage cities to shift to the redevelol~ent funds. Allow cities to use both redevelopment fur~s and tax-increment financing until a specified future date when tax-increment shculd be discontinued. I I 1. Establish Redevelopment Fund~ reoamuer~ that the Minnesota Legislature in 1986 pass a law permittirg any city government to establish a redevelopment fur~, set up according to provisions outlined below. The fund would give cities flexibility in use of dollars and access to new revenue sources. It would replace "pooling" devices now used by cities in tax-increnent financing. 2. Use redevelopment fund for public infrastructure, acquisition of real estate, ar~ ~rivate loans ar~ grants--A city goverr~ent should be allowed to use its redeve~t fund for the physical renewal of properties within its borders. T[~ followirg types of activities would be permitted uses of the fur~: (a) cc~lstruction of public infrastructure, includir~ sewer, water, streets, sidewalks, lighting, parkir~, skl~ays, ar~ parks, (b) acquisition of real estate, and (c) loans ar~ grants to private developers for renewal (new c0~structicn and rehabilitation) of properties, including reducing rte interest rate paid by de~elopers. Because it would.not be necessary to relate the amount of public assistar~e directly to likely growth in property taxes, this approach would give cities _-~_re flexibility than is allowed by tax-increment financing. City goverr~ents would not be limited to th~ redevelopment fur~ as a source for financing the oo~struction of infrastructure. Other traiitional forms of financing, sud~ as special assessments ar~ general obligation bc~ds, would oontinue to be allowed. 3. Authorize tony sources for a redevelol~ment fur~--~ Legislature should provide that a redevelopment fur~ include revenues from any or all these sources: General fund trarmfers--State law st~uld be ~ed to make it clear that cities can use their general revenues directly for redevelopment. This means a city council could make a conscious decision to enrich its redevelopment fur~ from general sources available for city operations.