Included in the jobs bill with the PACE program is an item proposed last year by the Coalition of Greater Minnesota Cities (CGMC), a Flaherty & Hood client, in a bill intended to improve land use and planning (H.F. 1035/S.F. 913).
In examining the challenges related to encouraging redevelopment inside cities, Flaherty & Hood senior policy analyst Steve Peterson and attorney/lobbyist Bradley Peterson hatched an idea for a new type of Tax Increment Financing (TIF) district known as a compact development district. The compact development district allows cities to create a 25-year district so long as 70 percent of the proposed district is currently occupied by buildings and that the new structure is at least three times the square footage of the existing building. Increments from the district can be used for land acquisition, site preparation costs such as demolition and removal of existing structures, and installation of infrastructure to serve the district excluding the costs of roads, parking facilities, or other amenities designed to serve private passenger motor vehicles.
When originally introduced in 2009, this provision found its way into the Senate omnibus tax bill, but was met with a cool reception from House conferees. With the jobs crisis growing this year and the need for creative solutions, this provision was re-introduced in 2010 in the original versions of both the House and Senate jobs bills. For cities, the biggest obstacle to taking advantage of this opportunity will be planning projects and authorizing TIF districts before the provision expires on June 30, 2012.
