State Auditor Blaha Releases Annual Tax Increment Financing Legislative Report - February 14, 2022

Saint Paul, MN – Earlier today, State Auditor Julie Blaha released the annual Tax Increment Financing (TIF) Legislative Report. “This year's report identified significant increases in the rate of early decertifications of TIF districts,” said Auditor Blaha. “Early decertifications show that authorities are closing districts once planned costs are paid and getting the captured value from the development onto the property tax rolls.”

Tax increment financing is a financing tool for redevelopment, housing, and economic development projects that allows authorities to use the incremental property taxes (i.e. "tax increments"), generated by the increased taxable value of a development to help finance the development activities.

“The OSA's education and oversight activities help ensure that TIF authorities remain good stewards of tax increment financing by terminating TIF districts and returning tax dollars to counties, cities, and schools in a timely manner,” added Blaha.

Highlights and Trends

• In 2020, approximately $260 million of tax increment revenue was generated statewide, which is an increase of almost seven percent from 2019 and the largest total over the past ten years. (Pages 16 ‐ 19)
• In 2020, 394 development authorities submitted reports to the OSA for 1,661 TIF districts. The number of districts over the last five years has largely remained constant at between 1,648 and 1,665 districts. (Pages 9 ‐ 12)
• In 2020, 76 new TIF districts were certified, 21 fewer than the 97 new districts certified in 2019. In 2020, the number of districts decertified increased to 100, an increase of 52 percent from 2019. New certifications have largely been more steady over the last ten years, while decertifications have been more variable. (Pages 13 ‐ 15)
• In the latest five‐year period, redevelopment and economic development districts saw significant jumps in their rates of early decertification (i.e., prior to the statutory maximum duration of the district) compared to rates reported in previous years. Respectively, they decertified early 70 percent and 37 percent of the time during this period. The rate of early decertification for housing districts has stayed consistently close to 80 percent and was 78 percent for this period. (Page 16)
• In 2020, development authorities returned $8,388,322 in tax increment revenue to county auditors for redistribution as property taxes to cities, counties, and school districts. (Page 20)
• In 2020, there was a total of nearly $1.7 billion of outstanding debt associated with TIF districts. Pay‐As‐You‐Go (PAYG) obligations were the predominant type of debt, making up 66 percent of the debt reported (up from 64 percent in 2019). General Obligation (GO) bonds comprised about 16 percent of the total debt. Interfund loans (mostly from non‐tax increment accounts) made up 12 percent of total debt. (Page 22)

View the complete report, which includes an Executive Summary, graphs, and tables on the OSA website.