In June, the Minnesota Legislature passed historic property taxreform that will have a big impact on cities that use tax incrementfinancing to spur development. The reason: there are fewer propertytax dollars to capture to help subsidize developments.

Minneapolis has by far the largest dollar investment in TIF.Last year, Minneapolis captured $67.5 million in net TIF taxes, theamount of tax revenue the districts are actually eligible to keep.Last month, the city's community development agency characterizedthe impact of property tax reform on TIF as "damaging todevastating."

But some metro area suburbs may also be struggling because theyhave a larger percentage of their tax base tied up in TIF. Chaskaand Chanhassen in Carver County, two of the biggest users of TIF,both had more than 20% of their total net tax capacity set aside inTIF districts last year, compared to 14.5% in Minneapolis and 9% inSt. Paul.

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