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Here is an update to a thread that started in March regarding the impact of
proposed legislative changes on the use of Tax Increment Financing (TIF) and
on the continued funding of the NRP.
Both the House and Senate have now passed versions of an omnibus tax bill. I
have not heard anyone directly engaged in the legislative venture an opinion
about what will emerge from the conference committee.
Below are some major items that impact either the amount of TIF that City
will receive or the uses to which TIF can be put.
? Unspent NRP funds - Approximately $60 million from the first half of NRP
that was appropriated and allocated to the NRP has not yet been spent
(reflecting among other things the time lag between planning, execution and
completion). The house bill establishes limitations on the use of unspent
TIF which would prevent these funds from being used for their intended
purposes unless language exempting them is added. They would be limited to
paying debt service on existing debt. The Senate bill has the appropriate
language. The House bill does not.
? House proposals for class rate reductions and shifting of school funding
to the State would result in an estimated annual reduction in TIF revenue to
Minneapolis of approximately $21,250,000. (Article 2 - House Tax Bill).
Class rate reductions proposed by the Senate are not expected to reduce the
amount of TIF revenue available for NRP. Note that this is a straight
forward 30 percent reduction in the City's community development revenue
from which the second half of the NRP is to be funded (as well as ongoing
programs such as affordable housing and commercial corridors) there is no
corresponding increase of revenues to the City's general fund.
? Redefinition of certain non-TIF revenue as TIF would eliminate the MCDA's
financial capacity to fund its planning and implementation costs of NRP,
approximately $1.5 million annually. Other non-TIF sources would need to be
identified, which would result in less funds available for programs.
(Article 12 - House Tax Bill)
? Elimination of pooling for Pre-90 TIF Districts would eliminate the MCDA's
ability to pool TIF revenue for any future activities within the Common
Project. (Article 12 - House Tax Bill)
Both the Senate and House bills place additional constraints on the use of
TIF although the Senate version provides the greater flexibility.
There is a lot of interest in the property tax revision, education funding
and tax rebate provisions and I would expect good press coverage of the
conference committee. There has been less than universal interest in the TIF
issues - go figure. I'll forward more information as it becomes available.
Jack Kryst
Another MCDA minion but also writing as Kingfield resident.
[EMAIL PROTECTED]
----- Original Message -----
From: "Jack Kryst" <[EMAIL PROTECTED]>
To: " Mpls list" <[EMAIL PROTECTED]>
Sent: Saturday, March 17, 2001 1:22 PM
Subject: Re: [Mpls] Legislative TIF discussions
> ----- Original Message -----
> From: "Michael Hohmann" <[EMAIL PROTECTED]>
>
> > Regarding current proposed legislation:
> >
> > Does anyone know the status of legislation that would limit the
> modification
> > of TIF district plans certified before May 1, 1990, thereby limiting the
> use
> > of such revenues for things like NRP? (SF#73; I forget the HF#)
> >
> > Why is this issue/legislation getting no discussion (here or in the
local
> > newspapers) given it's intended target is the city of Mpls? What is the
> > current status of negotiations (between the City -mcda/nrp/mayor/cc- and
> > state lawmakers)? How about an update from MCDA?
> >
> > Michael Hohmann
> > 13th Ward
>
> SF 73 (Rest et al) is currently in the Tax Committee. There has been
little
> formal action on it or its companion HF 187 (Abrams). This is not to
suggest
> that there won't be. A good web site for the status of bills (if you're
> fortunate enough to know their number) is
> http://www.leg.state.mn.us/leg/legis.htm
>
> Parts of the proposed legislation prohibit the modification of certain TIF
> district plans after April 30, 2001 (yes, that's next month) and parts
> severely restrict expenditures that can be me made after April 20, 2002.
>
> Since the effected districts are programmed to support the second half of
> NRP these sections if adopted as written would raise some substantial
> problems.
>
> The poster characterized Minneapolis as the intended target of the bill.
I'm
> not sure that is entirely true. The legislation impacts jurisdictions
> statewide although in magnitude the greatest effect is certainly here.
>
> My understanding is that there are statewide education and lobbying
efforts
> (e.g. MN League of Cities of which the City is a part) underway.
>
> I and other MCDA staff have fielded questions from the press and I
wouldn't
> be surprised if we start seeing articles in the very near future.
>
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