Tax Increment Financing
The City of Austin has used tax increment since the first district was created in the 1970's. Most recently, tax increment financing (TIF) has been used as an incentive for businesses to locate within the city limits of Austin. This often involves creating a TIF district in an area that qualifies under Minnesota Statutes.
TIF is used by the City of Austin essentially to write down the cost of property. For example, Palleton Company needed approximately $66,000 of funding in order to landscape their property and create a nice parking lot. CRC has requested $225,000 of TIF in order to write down the cost of the improved land (land plus a new road servicing the area). This use of TIF is what company's such as CRC and Palleton need in order for them to move into our area. The incentive for the company is they can use the tax increments (property taxes) that they pay to the City in order to get land for $1, this is land valued at over $200,000. The incentive for the City is new jobs and new businesses are moving into the community. These new jobs translate into more housing purchases, and basically more dollars being invested into the community's other businesses. The other incentive for us directly effects the school district. Schools get funding from the State based on the number of students in the classroom. If a businesses such as CRC were to move into another community, many of the employees and their kids, would be leaving the district and therefore reduce the cash the school gets from the State of Minnesota.
The City cannot "waive" the tax increments (property taxes) for a businesses in a TIF district, but we can rebate the increments back to the company via a redeveloper agreement, as has been or will be done in the above two examples.
