In the past few years, the City of Edina has
experienced redevelopment at a pace not seen
for nearly five decades. The City has used TaxIncrement Financing (TIF) on just six of more than
50 large-scale construction projects in those years.
Most people aren’t experts in public finance tools,
so understanding TIF can be a challenge. To help
residents better understand TIF, this is the first
installment of a three-part series that will explain
what TIF is, how it benefits the community and
the projects it has helped create.
What is TIF?
TIF stands for Tax-Increment Financing. It’s a
financing method that allows the increased tax
value from a newly developed property to help
pay for a portion of that development or public
infrastructure related to that development.
Is it only used in Edina?
No. TIF is used by communities throughout the
United States. TIF was first used in Minnesota in
the 1960s and has been used in Edina a handful
of times since the mid-‘70s.
How does it work?
When a TIF district is created, the existing
property value is locked in as a base valuation.
The property taxes from this base value are
distributed to each of the taxing entities, such
as the City, Edina Public Schools and Hennepin
County. After the property in the TIF district is
developed or redeveloped, its value tends to
increase dramatically. The property tax money
above the base value, called the “increment,”
remains within the TIF district and goes to
paying debt or financial obligations necessary to
complete the project. Once that TIF obligation is
satisfied, the entire property value returns to the
tax rolls, benefiting all taxing entities.
Is TIF just taxpayer-funded subsidies for
The use of TIF could be viewed that way,
but that’s missing the big picture. In some
communities, TIF is the only way developers are
willing to take on certain projects or redevelop
blighted areas. In Edina, it’s used to deliver
public improvements in a project, such as
plazas, parks, open spaces or shared-use streets
that otherwise wouldn’t happen. It’s also used
to push for innovative, attractive development
instead of generic residential or commercial
buildings. Edina residents have demanded highquality projects, and TIF is one way to get them
without increasing the tax burden on current
Are there any rules on which projects TIF
can be used for?
TIF has a lot of rules. It’s governed by dozens
of pages of Minnesota laws – see MN Statutes
469.174-469.1799. In addition, the City’s use is
further restricted by policies established by the
City Council and the Housing & Redevelopment
Do developers get a tax cut from TIF?
No. Developers who receive pledges of TIF
support still have to pay the full property taxes –
the base and the incremental value when they
improve the site. Those tax payments aren’t
What risk does the City have from TIF?
Before TIF is allowed, it’s studied to ensure the
use is legal, justified and produces results with
limited risk to the City. The level of TIF assistance
is determined before the project begins.
Developers must complete the full project before
the full TIF pledge is made.