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,I I I I I Interest inocme fn~ IRBs is tax free and represents a loss to the U. S. and state treasuries. The state Depar~ of Bevenue has estimated the fiscal impact of the lost interest inoome c~ state and locally issued bc~ds; included in t~se estimates is interest ~ ~ i~sued for private purposes, mass transit, enerHy facilities, pollution oontrol equipment, student loans, hospitals, both rental and owner-oocx~ied housirg, and other miscellaneous bonds. Interest on Nor~juaranteed State and Municipal Debt Fiscal Year Fiscal Impact I I I 1984 $71 million 1985 $77 million 1986 $92 million 1987 $104 million Aocordin~ to the U.S. Joint Coamdttee o~ Taxation, the federal revenue loss from IRBs is significant ar~ gmm~r~: Fiscal Year Federal Revenue Ioss I I 1984 $ 8.1 billion 1985 $ 9.3 billion 1986 $10.7 bi B) Tax Increment Financing (TIF) I i I I I ! I ! I What it is.--T]F is a financ~ tool that allows the public costs of a development project to be lmaid off with the taxes generated by the increased value of the developed property. Onoe a parcel is approved as a tax ir~r~t district, the assessed value of tl~ lmroper~ is essentially frozen. Any increase in the district '.s assessed valuation (the '.captured'. value), resulting fr(mn the develolmaent determ/x~s the tax increment available to lmay off the public costs of the dew~_lof~ent. Minnesota has three distir~t types of tax ir~renent districts. First, redeveloimmnt districts may be established when areas are found to be blighted or have deteriorated properties. Seocmxl, housirg districts are defined by the r~ to develop s(~e residential units for low and moderate income household. ~]%e third type of TIF district is called the eoc~cmic devel~ district, for which a finding of blight is not required. ~he public purlx~se is satisfied through increased tax base and increased employment. TIF districts ~,-~t meet the definitions of c~e of these three types of districts. Creating the TIF district must also be justified with a finding that '.but fDr'. public interventior~ private development would not occur in the forseeable future. No tax increment may be oollected in a redevelop~nt or hous~ district after 25 years frc~ receipt of the first tax incr~-nt, or after eight years from receipt of the first increment fr(~ an ecor~ic deve~ district. limitation does not relate to the tern of the bonds. Bow much money is in~olved?--~itles are turning m~re frequently ~ T~s. ~ties ~~ ~r $516 ~n ~ ~ ~at~de ~ ~ for ~ ~le ~ 19~, ~ is 3.55 ~ ~ ~ ~ ~~ ~ in ~ ci~ ~ ~g~at~.3 ~n ~net ~ ~y ~f ~ ~. (~ ~~ ~ ~37.2 ~i~ ~~ ~ 1~3, mpm~i~ 3.45 ~t ~ ~ ~~ ~ f~ ~ ~n of ~ ~r~ to ~y T~ ~).