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NOTE 13 — TAX ABATEMENT AGREEMENTS The City, in order to spur economic development, housing and redevelopment will enter into private development and redevelopment agreements to encourage a developer to construct, expand, or improve new or existing properties and buildings or clean-up and redevelop blighted properties. The City has three private development agreements: two redevelopment and one housing that would be considered a tax abatement under GASB Statement 77 as of December 31, 2016. The City issued these three agreements through the economic development vehicle known as tax increment financing whereby tax increment revenue is generated on the incremental increase in value above a base established on the date that the tax increment district is created. Per these agreements, the developer shall initially pay for the development property and any site improvements with the City reimbursing these expenses through the issuance of a tax increment revenue note payable solely from the tax increments generated from the project. The City is authorized to create a tax increment financing plan under Minnesota Statute 469.175. Under this statute, the following criteria must be met: • Proposed development or redevelopment would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future; • The increased market value of the site that could reasonably be expected to occur without the use of tax increment financing would be less than the increase in the market value estimated to result from the proposed development after subtracting the present value of the projected tax increments for the maximum duration of the district permitted by the plan. The requirements of this item do not apply if the district is a housing district; • The tax increment financing plan conforms to the general plan for the development or redevelopment of the municipality as a whole; • The tax increment financing plan will afford maximum opportunity, consistent with the sound needs of the municipality as a whole, for the development or redevelopment of the project by private enterprise. For the fiscal year ended December 31, 2016, the City abated property taxes totaling $58,220 related to the following: • Housing Development: $20,700 abated towards a $711,000 Tax Increment Revenue Note issued in 2004 for the construction of a 31 unit townhome project. Final note payment date is February 2025 or sooner if the revenue note is retired. • Redevelopment: $15,899 abated for a $238,491 Tax Increment Revenue note issued in 2007 for the construction of an office and warehouse building Final note payment date is December 2028. • Redevelopment: $21,621 abated towards a $3,000,000 Tax Increment Revenue note issued in 2015 for the construction of a 230 unit apartment building. Final note payment date is February 2038. 90