EDSR INFORMATION #2 06-14-1999 Cav`
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E 1ortant plan. Moreover, the Auditor's position implies all pooling
Important p expenditures need to be explicitly authorized in the TIF
Developments plan.
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in TIF Overpayment of Increment.
The Auditor has taken the position that in instances
where the county auditor paid increment to a city after the
statutory maximum duration of a district, the city is
A s
most cities are already aware, in 1995 the required to repay the amount of overpayment.
Minnesota State Legislature granted the Office of
the State Auditor (OSA) the authority to oversee the use Budget Specificity (Line item Budget).
of tax increment financing (TIF) in the State of The Auditor has challenged a number of expenditures on
Minnesota.The OSA has begun to conduct audits of the grounds that they are unauthorized by the TIF Plan
municipalities that utilize TIE Although the results of the budget, which often includes only very general
initial audits have not yet been made public, early expenditure categories.
indications are that the OSA has taken positions on a
number of issues that will potentially have widespread Budget Authority After Bonds Paid.
ramifications for a number of communities. In some The Auditor has challenged a municipality's authority to
instances the GSA's position runs contrary to what has collect increment from a district after bonds or other debt
been standard TIF practice for years. obligations have been paid off-- even where budgetary
authority exists in the tax increment financing plan
A number of cities we work with have already begun to
inquire about the implications of these developments. Lobbying as an Administrative Expenditure.
The Auditor has challenged the validity of lobbying as an
illWe have outlined below our understanding of the administrative expenditure.
Auditor's position on several general issues that may
potentially impact your community. We suggest you make Land Acquisition.
note of the following issues and assess where your The Auditor takes the position that a city must acquire
community stands with respect to them. title to property to incur land acquisition costs.
Documentation of Expenditures Substandard Finding.
The Auditor has stated that all expenditures must be The Auditor has challenged the finding that a building is
supported with documentation. Unsupported expenditures "substandard"in redevelopment districts where such
must be repaid. finding is not supported by adequate evidence.
Pooling in'79-82 (Gap) Districts Retroactive Modifications.
The Auditor's position is that districts certified between The Auditor has questioned the validity of retroactive
1979 and 1982 are not allowed to"pool"increment modifications to tax increment financing plans.
(spend increment outside of the TIF district's geographic
boundaries). Although we are not in agreement with the Auditor's
position on some of these issues,we believe it is important
"Commingling" of Interest Earnings. that you are aware of them so that you may make informed
The Auditor takes the position that interest earnings must decisions in the future.
be segregated from increment funds annually. In addition,
funds transferred from accounts which are not segregated If you have questions about how the Auditor's position on
as non-TIF revenue cannot be called expenditure of non- any of these issues might impact your community or if you
TIF revenue without prior designation. would like to discuss a strategy to address current or past
practices that conflict with the Auditor's position please
•Transfers v.Expenditures. feel free to contact a member of Ehlers'TIF Team: Mark
The Auditor has taken the position that moving money Ruff 651.697.8505, Sid Inman 651.697.8507, Shelly
from one "fund"to another"fund"is a transfer,not an Eldridge 651.697.8504,or Mike LaFave 651.697.8516.
expenditure, and must be explicitly authorized in the TIF
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