City of Minneapolis Policy for the Limited Use of Tax Abatements To Fund Public Infrastructure Costs
I. Purpose of Policy
This Tax Abatement Policy identifies limited circumstances in which the City of Minneapolis will use Tax Abatement to fund public infrastructure necessary to achieve development objectives of the City.
II. Background and General Requirements
Pursuant to Minnesota Statutes Sections 469.1812 to 469.1815, the City of Minneapolis is authorized to grant abatement of all or a portion of the City property tax amount on specified tax parcels. The City of Minneapolis may abate taxes only after holding a public hearing and adopting an abatement resolution that stipulates the specific terms of the abatement agreement and the nature and extent of the public benefits that the City expects to result from the abatement.
The City Council must find that the expected benefits to the City of the proposed abatement agreement at least equal the costs to the City of the proposed agreement. The City Council must also find that the abatement is in the public interest because it will facilitate at least one of the following objectives:
1. Increase or preserve tax base;
2. Provide employment opportunities in the City of Minneapolis;
3. Provide or help acquire or construct public facilities;
4. Help redevelop or renew blighted areas;
5. Help provide access to services for residents of the City of Minneapolis; or
6. Finance or improve public infrastructure.
III. Restrictive Use of the Abatement Tool by the City of Minneapolis
The City of Minneapolis will limit the use of Tax Abatement under this policy to a more restrictive range of uses than authorized by the State Legislature.
1. Tax abatement will be used solely to fund public infrastructure necessary to achieve significant development objectives of the City. Public infrastructure may include roads, public utilities, public amenities, public parking facilities, public facilities, and the acquisition of land needed for public infrastructure.
2. Taxes will be abated only for public abatement agreements in which the abated taxes are retained by the City of Minneapolis or transferred to other authorized political subdivisions participating in the abatement agreement to pay for public infrastructure costs. Abatement is an effective tool for funding public infrastructure costs only if there is at least one other political subdivision participating in the public abatement agreement.
3. Taxes will be abated only for properties that are being decertified from established "pre-1979" tax increment financing districts. The abated taxes will include only tax revenues that otherwise could have been captured as tax increment over the full duration of the "pre-1979" Tax Increment District. A fiscal analysis will be performed showing the impact of the abatement on the City’s general tax base.
4. The term of the abatement will end no later than August 1, 2009, which is the duration limit for pre-1979 Tax Increment Districts.
IV. Evaluation Criteria
The following criteria will be considered in the evaluation of any proposal to use tax abatement to fund public infrastructure costs.
1. The extent to which the proposed use of tax abatement to fund public infrastructure to support major development objectives is consistent with City goals, City and MCDA development priorities, the City’s comprehensive plan and zoning code, and the MCDA strategic plan.
2. The extent of the direct and indirect public benefits and costs generated by the tax abatement and public infrastructure investment shall be determined and quantified to the degree possible.
3. The extent to which other local government jurisdictions support the project, including but not limited to participation in the public abatement agreement.
4. The extent to which other public assistance is being provided to the project.
April 27, 2004
Last updated Sep. 27, 2011