TIF District Objectives

Here’s a Tax Increment Financing (TIF) plan tailored for a 40-unit townhome for-sale project in Minnesota, with each unit valued at $350,000. This is a general TIF plan template and would need to be adapted to specific local government requirements. You should consult with a local municipal advisor or attorney for compliance with MN Statutes, Chapter 469.

DRAFT TIF PLAN

Tax Increment Financing Plan for Townhome Development Project in Chisago City Minnesota

1. Project Overview

  • Project Name: [Townhome Development Project] 
  • Developer: [Developer Name, LLC] 
  • Location: [Specific Address or Parcel Identification Numbers] 
  • Type of TIF District: Housing District (per Minn. Stat. § 469.174, Subd. 11) 
  • Number of Units: 40 for-sale townhomes 
  • Unit Value: $350,000 each 

Total Market Value at Completion: $14,000,000

2. TIF District Objectives

The purpose of this TIF district is to:

  • Increase the housing supply, particularly owner-occupied townhomes.
  • Support housing affordability within [City Name].
  • Leverage private investment with public support to address financial gaps in development feasibility.

3. Statutory Authority

This TIF district is established under the authority of Minn. Stat. § 469.174 – 469.1799, specifically for a housing TIF district, as allowed for projects that provide owner-occupied housing options.

4. Description of the Development Program

The development includes:

  • Construction of 40 for-sale townhomes.
  • Streets, utilities, sidewalks, and green space.
  • Some units may meet affordability thresholds under the 80% AMI level (as required by statute for housing districts).

5. Project Budget and Sources

Category

Land Acquisition

Site Preparation/Utilities

Construction (Hard Costs)

Soft Costs/Financing

Developer Fee

Total

Amount

$1,500,000

$2,000,000

$10,000,000

$1,000,000

$1,000,000

$15,500,000

6. Proposed Sources of Funding:

Source

Developer Equity

Private Financing (Bank Loan)

Tax Increment Financing

Total

Amount

$2,000,000

$19,500,000

$4,000,000

$15,500,000

7. TIF District Details

  • Base Tax Capacity: $0 (assumed vacant or underutilized land)

  • Projected New Tax Capacity: Based on $14,000,000 in total market value

  • Duration of District: Up to 25 years (standard for housing districts)

  • First Increment Year: [Insert Year – typically 2 years post-certification]

  • Total Increment Expected (Net Present Value): ~$4,000,000

  • Assumptions:

    • Tax rate of 1.5%

    • Market value growth of 2% annually

    • No inflation adjustment

8. Eligible TIF Uses

TIF funds will be used for:

  • Land acquisition and demolition
  • Public improvements (streets, sewer, water)
  • Site preparation
  • Affordable housing-related costs

Administrative expenses (up to 10% of increment)

9. Need for TIF

A financial gap analysis demonstrates that without TIF assistance, the return on investment does not meet the threshold required for financing. TIF is necessary to reduce infrastructure costs and allow pricing to meet workforce and moderate-income buyers.

10. Findings

  • The project conforms with the City’s comprehensive plan.
  • The TIF district is not economically feasible without public assistance.
  • The development would not occur “but for” the use of TIF.
  • At least 80% of the floor area will be used for housing.

11. Approval Process

  • Planning Commission Review: [Date]
  • City Council Approval: [Date]
  • Certification to County Auditor: [Date]
  • Developer Agreement to be executed concurrently.