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tca <br /> EHLERS <br /> & ASSOCIATES INC <br /> O To: City of Orono <br /> From: Rusty Fifield <br /> W Subject: Housing TIF Districts <br /> Date: December 7, 2000 <br /> This memo provides background information on the creation and use of tax increment financing(TIF) for <br /> housing projects. <br /> 1. Meeting statutory criteria for establishing a district. <br /> 2. Statutory limitations on use of tax increment from housing districts. <br /> 3. Determining"but for"test. <br /> 4. Setting terms of financial assistance. <br /> Criteria for TIF District <br /> There are four types of housing tax increment financing districts: qualified multi-family rental housing <br /> district,qualified owner occupied housing district, standard multi-family rental housing district and <br /> single family owner-occupied housing district(See Attachment A on Definitions of the Four Types of <br /> Housing TIF Districts). This memorandum explains rules and regulations of tax increment financing, <br /> relating to housing tax increment financing districts. <br /> QUALIFIED HOUSING DISTRICT—RENTAL AND OWNER OCCUPIED <br /> In 1993,the Legislature created a new type of housing tax increment district called a"qualified housing <br /> district." The criteria for establishing a qualified housing district are much more comprehensive that <br /> other types of tax increment financing districts in that it must meet federal low income tax credit <br /> guidelines. There are two sets of criteria under which to administer the TIF District(using MHFA Tax <br /> Credit Guidelines). Under the 40/60 criteria,first,40% of the units must have rents at or below$739 per <br /> month for a 1-bedroom unit and$886 per month for a 2-bedroom unit including utilities. Second,40% of <br /> the units must be reserved for residents with incomes at or below 60% of the area median income or <br /> $27,600 per year for one person families and$31,560 per year for two person families,using gross <br /> incomes. Under the 20/50 criteria, first,40% of the units must have rents at or below$616 per month for <br /> a 1-bedroom unit and$738 per month for a 2-bedroom unit including utilities. Second, 20% of the units <br /> must be reserved for residents with incomes at or below 50% of the area median income or$23,000 per <br /> year for one person families and$26,300 per year for two person families,using gross incomes. This <br /> income test actually encompasses a broad range of senior residents because it is generally an annual <br /> income test. The income levels and rent levels are annually increased by the Minnesota Housing Finance <br /> Agency(MHFA). <br /> LEADERS IN PUBLIC FINANCE <br /> 3060 Centre Pointe Drive 651.697.8506 fax 651.697.8555 <br /> Roseville,MN 55113-1105 rusty@ehlers-inc.com <br />