Tax Increment Financing Definition
Tax Increment Financing is a complicated tool not without its controversy. The City of Osseo uses it to spur commercial development. You can Google it HERE. As simply explained as I can, the new property generates increase tax earnings once it is improved. The City captures the new amount of money in EXCESS of what was previously being paid, to fund certain expenses eligible for repayment under State on MN Law. An example is City Connection Infrastructure such as some new Sewer and Water service installation costs. It is a reimbursement: the Developer pays costs upfront, but gets it back as a refund of the new property taxes it will pay. Banks can then lend upfront costs knowing there is a guaranteed income contractually in the reimbursement. There are Many Things that are defined in law that must be present to get this assistance.
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