Tax Increment Financing
Tax Increment Financing is a method local governments use to pay for the costs of qualifying improvements necessary to create new development, redevelopment, or public assisted housing. The financing of the qualifying improvements is paid from the increased property taxes generated from new development, redevelopment or housing development that would not have occurred without such assistance.
Tax Abatement is a municipal financing program that uses the increase in property taxes generated from new development and redevelopment to pay for qualifying improvements. To qualify for Tax Abatement, a project must meet a number of public interest benefits established by Minnesota State Statutes. Each local unit of government, i.e. city, town, county, and school district can grant a tax abatement for economic development purposes. The abatement for a parcel may be for any one of the following, but not a mixture of two or more of these types of abatements:
· A rebate of property taxes to the property owner;
· A reallocation of taxes to pay bondholders;
· A reallocation of taxes to pay for public infrastructure costs; or
· A deferment of property taxes.
Industrial Revenue Bonds (IRB's)
Pope County can use its bonding authority to help companies raise revenue for a project, and the money is passed through to a business which is responsible for repayment. Industrial revenue bonds are tax-exempt, and therefore, provide the borrower with the money at a lower interest rate. This type of financing is generally for larger projects because the up-front expenses incurred with this financing process require a bonding amount large enough to make the reduced interest rate and other benefits attractive.
The Pope County HRA has a small pool of loan funds that can provide businesses with direct loans, loan guarantees, and other financial assistance. Loan funds have been traditionally used to support and attract manufacturing operations, generally with higher paying wages and significant job creation/retention to support the economic vitality of the County and region.