Why doesn’t the City of Edina use tax-increment financing (TIF) for more parks, road improvements, a community center or other resident wishes?

That’s a question City staff members hear from residents. The answer is quite simple: The law doesn’t allow it.

TIF is a heavily regulated financial tool available to cities in Minnesota. State law determines when, where and how TIF can be used. While those laws change from time to time, Edina’s use of TIF follows Minnesota law.

“While Edina’s staff has strong experience in the use of TIF, we engage legal and financial experts to ensure that we can achieve community goals all within the constraints established by the Minnesota Legislature,” said Economic Development Manager Bill Neuendorf.

TIF allows the increased property tax value from a newly developed property to help pay for a portion of that development or public infrastructure that supports the development.

How TIF can be used in Minnesota:

• To redevelop areas with blighted or substandard buildings
• To attract economic development such as manufacturing or research and development
• To build new rental housing for lower-income families

What TIF money can be invested in:

• Buying and holding land
• Site preparation, including demolition, soil correction and utilities
• Cleaning up environmental contamination
• Public infrastructure such as streets, intersections, bridges, water, sewer and sidewalks
• Building parking decks and parking garages
• Architecture, engineering and legal costs associated with eligible expenses
• Interest payments on eligible expenses

What TIF can’t be used for in Minnesota:

• Police and fire personnel and equipment
• Road maintenance like fixing potholes and street sweeping
• General government operations
• Public parks and park maintenance
• Government buildings like city halls and fire stations
• Conference centers

Edina’s TIF policy further restricts uses. For example, the City typically uses TIF only on a pay-as-you-go basis. The private developer bears the full financial responsibility to build the project and reduces the amount of public debt. Edina’s policy also allows the City to obtain permanent easements that allow the general public to use portions of TIF-funded projects at no cost.

The construction of Lorient Apartments at 4500 France Ave. is a current example of working within the rules to secure public amenities sought by the community. The City’s agreement with the developer obligates the owner to build, finance, operate and maintain shared public parking and shared outdoor space that can be used by the general public. The parking and outdoor space are two long-term goals identified in the 44th & France Small Area Plan.

“Edina is highly selective about when and how TIF is used. Of the 50-plus major commercial projects in development the past several years, TIF has been used only six times,” Neuendorf said. "And in each of those cases, TIF has been used to achieve a community goal and public amenities that would not otherwise be possible.”

To learn more, visit bit.ly/EdinaTIF or contact Neuendorf at bneuendorf@EdinaMN.gov.