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How long can increments from a compact development district be collected?
The law permits increments to be collected for 25 years after the receipt of the first increment from a compact development district. Minn. Stat. § 469.176, subd. 1b(a)(4). Thus, counting the first year of increment, 26 years of increment may be collected.
How does this duration limit compare with that applicable to other districts?
The 25-year duration limit is the same as that applicable to housing and redevelopment districts. It is longer than all of the other types of TIF districts.
Where may a compact development TIF district be created?
An area certified as a compact development TIF district must consist of parcels, 70 percent of which are occupied by buildings that are classified for property tax purposes as commercial and industrial property. Minn. Stat. § 469.174, subd. 10c. In addition, the planned redevelopment must increase the square footage of the area’s buildings by at least three times. These buildings must be commercial-industrial buildings (e.g., residential buildings, such as apartments or condominiums do not qualify). The apparent goal is increase the density of commercial and industrial improvements in the area, even though the area may not be “blighted” (i.e., occupied by substandard buildings).
How does this compare to the blight test that applies to redevelopment districts?
The redevelopment district rules have a similar, but more flexible, “coverage” test. Minn. Stat. § 469.174, subd. 10(a)(1). Under this test, 70 percent or more of the parcels must be occupied by buildings or other types of improvements, such as roads, parking lots, sidewalks, utilities, and so forth. In addition, residential buildings–not just commercial and industrial–qualify.
What may compact development district increments be spent on?
The law allows increments from these districts to be spent on:
The law explicitly prohibits the use of increments for infrastructure intended to serve private passenger motor vehicles, such as streets, roads, and parking lots and ramps. This suggests the purpose of compact development districts is to encourage developments served by existing streets, roads, and parking or by public transit.
Does the authority to establish compact development district expire?
Yes, the legislature sunset the authority to establish these districts, effective July 1, 2012. Minn. Stat. § 469.175, subd. 2b. It is likely that the 2012 Legislature will consider whether the authority to establish these districts should be extended.
October 2010