Given how TIF has become an issue in this year's city races, I thought I'd
pass this on from the city of Minneapolis's legislative-watch update. -
David Brauer, list manager.
HOUSE PROPERTY TAX DIVISION BRUSHES UP ON TIF
The Property Tax Division of the House Tax Committee devoted an entire
meeting to the topic of tax increment financing (TIF). Joel Michael, House
Research, provided an overview of tax increment financing. Michael's
presentation included an expansion of how TIF works, charts on the extent of
TIF use, a discussion of restrictions on the use of TIF, and a comparison of
TIF and tax abatement authority.
During his discussion, Michael mentioned that the "but-for" test has been
criticized for the following reasons. It ignores a critical criterion of
the public benefits relative to the public costs; is too narrow in focus in
that it is limited to the district and ignores the effects outside the
district; is ambiguous; only applies to the initial decision to create a
district, and does not apply to later decisions to authorize new uses of
increments; and is difficult, if not impossible to enforce judicially due to
language that provides that a municipality's finding is conclusive.
Questions from members focused primarily on the "butt-for" test, the extent
of the use of TIF in the metropolitan area versus the balance of the state,
the interplay between fiscal disparities and TIF, and the permissible uses
of abatement.
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