State Auditor Julie Blaha Releases Tax Increment Financing Legislative Report - February 11, 2021
OSA Helps Return $8.6 Million to Counties
Saint Paul, MN – Earlier today, State Auditor Julie Blaha released the Tax Increment Financing Legislative Report. The Report was compiled from information received from development authorities currently exercising tax increment financing (TIF) powers in Minnesota. The Report summarizes information reported by 403 development authorities for 1,648 districts for the calendar year ended December 31, 2019.
“I’m happy to report that the OSA oversight helped return $8.6 million to county auditors in 2019. These resources get redistributed as property taxes to cities, counties, and school districts,” said Auditor Blaha.
Blaha continued, “In 2019, approximately $243 million of tax increment revenue was generated statewide, an increase of 6 percent over 2018 and greater than the total in each of the last seven years.”
The annual reporting summarized in the Report is an important component of the Office of the State Auditor’s (OSA) oversight activities, which seek to promote compliance and accountability in local governments’ use of tax increment financing through education and monitoring. The Report also provides a summary of the violations cited in the limited-scope reviews conducted by the OSA in 2020.
In addition, OSA oversight helps ensure that districts decertify (terminate) in a timely manner. At times, districts must decertify prior to their maximum statutory duration limit, which can be as long as 26 years.
From 2015 to 2019, redevelopment districts decertified early 63 percent of the time, and housing districts decertified early 79 percent of the time.
“Early decertification continues to be prevalent,” noted Auditor Blaha. “Decertification of a TIF district results in the previously captured value becoming available to support local property tax levies, which can help reduce property tax rates or expand levying capacity.”
TIF is a financing tool established by the Legislature to support local economic development, redevelopment, and housing development. As its name suggests, TIF enables development authorities to finance development activities using the incremental property taxes, or “tax increments,” generated by the increased taxable value of the new development. The Report describes the types of TIF districts, financing methods, and various statistics.