Let me simplify this a bit. Tax increment financing works like this:
Assume you own a crumby building. It is in an area that is run down. You
would like to build a wonderful new building, but because this area is
blighted, it is not financially feasable. If you could build a new
building, it would spur redevelopment around it. Maybe the land also has
pollution on it or something. So you go to the City and say the following:
if you will pay to clean up the land and demolish the old building, I will
build a wonderful new building. The City says "Sure", sells bonds and
cleans up the property. Now your wonderful new building generates way more
tax revenues than the old one. All the new revenues, essentially the
difference between what you paid on your crumby building and what you pay on
the wonderful building is considered the "tax increment" or the additional
amount of taxes generated in this deal. Those revenues are used to pay off
the bonds used to clear the land. The tax base is no worse off because it
gets all the money it use to and there is a new wonderful building which
should help spur redevelopment around it.
So Minneapolis has done this deal many times. When it started doing them,
in the 80's, interest rates were high. Interest rates came down and it was
able to refinance, (like you can with your mortgage) and get lower bond
costs. The money it saved through refinancing its TIF bonds is what has
been used to fund NRP.
Carol Becker
Longfellow
----- Original Message -----
From: Rosalind Nelson <[EMAIL PROTECTED]>
To: Mpls list <[EMAIL PROTECTED]>
Sent: Thursday, February 08, 2001 6:34 PM
Subject: [Mpls] TIF funding NRP (was Kathy Thurber's withdrawal)
> Kathy Thurber's withdrawal letter:
>
> >What my opponents don't
> >understand is that Tax Increment Financing funds the NRP. It's
> >that simple.
>
> I hate to complicate simple concepts, but can someone elaborate on this?
>
> Rosalind Nelson
> Bancroft
>
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