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#2 ¨³¸ ®¥ ¬²¤¸ %¢®®¬¨¢ $¤µ¤«®¯¬¤³ 0±®©¤¢³ &¨ ¢¨¦ 4®®«² TAX ABATEMENT Tax abatement works by capturing and redirecting local property taxes and applying them to eligible project costs. The portion of the local property taxes collected can be any combination of City, County or School District property taxes; and does not limit the captured portion of taxes to the increment created with a new project (like TIF). Often times, project costs include land/building acquisition and development improvements. Requires an abatement agreement. Unlike tax increment, tax abatement can be used to capture taxes on land and existing buildings as well as new improvements. The captured taxes must be used to offset the costs agreed to under an abatement agreement. Tax abatement does require Ramsey EDA and City Council approval. The benefits gained must equal or exceed the cost to the political subdivision, and the project must be in the public interest because it does one of the following: (1) Increases or preserves the tax base (2) Provides employment opportunities (3) Provides or helps acquire or construct public facilities (4) Helps redevelop or renew blighted areas (5) Helps provide access to services, or (5) Finances or provides for public infrastructure. Up to 100% of the respective jurisdiction's taxes on land and building can be captured through abatement for up to 10 years. Abatements cannot be back-to-back and cannot overlap tax increment districts. Public infrastructure financed need not be on or adjacent to the property from which the tax abatement dollars were derived. Similar to tax increment, tax abatement law provides for borrowing against anticipated future taxes through the issuance of bonds, including general obligation bonds. If multiple jurisdictions are abating, one entity can bond against the aggregate amount of taxes pledged by the other jurisdictions. The total principal amount that can be borrowed is limited to the estimated sum of abatements to be collected in the years authorized for abatement. Law does limit the use of bond proceeds themselves to benefiting public improvements, acquiring and conveying land or other property, reimbursing an owner for improvements made to the property, and paying costs of bond issuance. Section 469 refers to the capturing or deferral of property taxes due as "tax abatement." Under Minnesota law, taxes due on real property subject to tax abatement must still be paid when due. If tax abatement is in place, the appropriate portion of the taxes can be captured and applied to project costs. A participating city, county, and school district need to act separately on their own portion of the property's tax to capture them through abatement.