1. At any time after the governing body of a municipality has approved a development or
renewal plan for any development or renewal area and has filed that plan with the
department of commerce division of community services, it may request the county
auditor and treasurer to compute, certify, and remit tax increments resulting from the
development or renewal of the area in accordance with the plan and any modifications
thereof, and the county auditor and treasurer shall do so in accordance with this
section.
a. For a tax increment district established before July 1, 2011, the base year for tax
increments computed for a development or renewal area under this section or
section 40-58-20.1 may not be used for more than twenty-five taxable years
without the governing body of the municipality establishing a new base year using
taxable values, established as of February first of the following year, which are
not more than fifteen years old. Regardless of length of the initial district, the new
base year may be used to compute tax increments for up to an additional fifteen
years after which time the tax increment district must be closed, except that the
original base year for tax increments pledged for an indebtedness incurred before
July 1, 2011, may continue until the indebtedness is paid.
b. For a tax increment district established after July 1, 2011, the base year for tax
increments computed for a development or renewal area under this section or
section 40-58-20.1 may not be used for more than twenty-five taxable years
without the governing body of the municipality establishing a new base year using
taxable values, established as of February first of the following year, which are
not more than fifteen years old. The new base year may be used to compute tax
increments for up to an additional five years after which time the tax increment
district must be closed.
2. The auditor shall compute and certify the original taxable value of each lot and parcel
of real estate in the area, as last assessed and equalized before the date of the
request, including the taxable value of any lot or parcel previously acquired by the
municipality or its urban renewal agency, as last assessed and equalized before it was
acquired. However, any real property acquired by the city or the city's urban renewal
agency prior to July 1, 1973, or more than five years prior to the approval of a
development or renewal plan for any development or renewal area, whichever is later,
is deemed to have an original taxable value of zero and the county auditor shall so
certify.
3. In each subsequent year, the auditor shall compute and certify the net amount by
which the original taxable value of all lots and parcels of real estate in the area, as
then assessed and equalized, including real estate then held by the municipality or
urban renewal agency valued at zero, has increased or decreased in comparison with
the original taxable value of all such real estate. The net amount of the increase or
decrease is referred to in this section as the incremental value or the lost value for that
year, as the case may be.
4. In any year when there is an incremental value, the auditor shall exclude it from the
taxable value upon which the auditor computes the mill rates of taxes levied in that
year by the state, the county, the municipality, the school district, and every other
political subdivision having power to tax the development or renewal area, until the
cost of development or renewal of the area has been reimbursed in accordance with
this section. However, the auditor shall extend the aggregate mill rate of those taxes
against the incremental value as well as the original taxable value, and the amount of
taxes received from that extension against the incremental value is referred to in this
section as the tax increment for that year.
5. In any year when there is a lost value, the auditor shall compute and certify the
amounts of taxes which would have resulted from the extension against the lost value
of the mill rate of taxes levied that year by the state and each political subdivision
having power to tax the development or renewal area. The amounts so computed are
referred to in this section as the tax losses for that year.
6. The county auditor shall segregate all tax increments from the development or renewal
area in a special fund, crediting to the fund, in each year when there is an incremental
value, that proportion of each collection of taxes on real estate within the area which
the incremental value bears to the total taxable value in that year.
7. Upon receipt of any tax increments in the fund, the county treasurer, at the times when
the county treasurer distributes collected taxes to the state and to each political
subdivision for which a tax loss has previously been recorded, shall also remit to each
of them from the tax increment fund an amount proportionate to the amount of that tax
loss, until all those tax losses have been reimbursed. Thereafter, at the time of each
distribution, the county treasurer shall remit the entire balance then on hand in the
fund to the municipality, until the cost of development or renewal of the area has been
reimbursed to the municipality as provided in this section.
8. The cost of development or renewal subject to reimbursement from the tax increment
fund for each development or renewal area must include all expenditures incident to
carrying out the development or renewal plan for the area and any modifications
thereof, not otherwise reimbursed in one of the ways referred to below, including all
expenses of the clearance, development, redevelopment, rehabilitation, and
conservation of the area, and all interest and redemption premiums paid on bonds,
notes, or other obligations issued by the municipality or urban renewal agency to
provide funds for payment of those expenses, subject to section 40-58-20.1 for the
purpose of determining eligible cost of development of industrial or commercial
property. From the total cost to be reimbursed there must be deducted, except as
provided below, all amounts received from the federal government or others, and all
special assessments, revenues, and other receipts except property taxes, which are
actually collected and applied to the payment of the cost or the bonds, notes, or other
obligations, at the times when those payments are due. However, if the proceeds of
tax increments or of bonds, notes, or other obligations are loaned to finance part or all
of the cost of a project comprising the restoration, reconstruction, and improvement of
a privately owned state historical site situated within the development or renewal area
or any buildings or structures thereon, as contemplated in section 55-10-08, or of a
property listed in the national register of historic places, as contemplated in section
55-10-11, in consideration of the grant to the city of a historic easement with respect
thereto, repayments of the loan may not be deducted from the cost of development or
renewal subject to reimbursement.
9. The tax increments from any development or renewal area may be appropriated by the
governing body of the municipality for the payment of any general obligation bonds,
special improvement warrants, or refunding improvement bonds issued by the
municipality to provide funds for payment of the cost of development or renewal,
together with interest and redemption premiums thereon, other than that portion, if any,
of such principal, interest, and redemption premiums which can be paid when due
from collections of special assessments, revenues, or other funds, excluding property
taxes, which are pledged for the payment thereof. When special improvement
warrants or refunding improvement bonds are issued to pay the cost of public
improvements of special benefit to properties within the development or renewal area,
the governing body may cause those special benefits to be computed, together with
the cost properly assessable against those properties, and may appropriate the tax
increments from the area to the payment of that cost, in lieu of levying special
assessments upon the property. In this event, the amount so appropriated, divided into
the same number of installments as the special assessments and with interest at the
same rate on the declining balance thereof, is deemed a part of the special
assessments appropriated for payment of the cost, within the meaning of section
40-26-08.
10. When the cost of development or renewal of any development or renewal area has
been fully paid and all bonds, notes, or other obligations issued by the municipality to
pay that cost have been retired, or funds sufficient for the retirement thereof have been
received by the municipality, the governing body shall cause this to be reported to the
county auditor, who shall thereafter compute the mill rates of all taxes upon the total
taxable value of the development or renewal area. Any balance then on hand in the tax
increment fund must be distributed by the county treasurer to the state and all political
subdivisions having power to tax property in the area, in amounts proportionate to the
amounts of the tax losses previously reimbursed to them.
11. As an alternative to the sale of bonds to be amortized with tax increments as provided
in this section, the governing body of a municipality may, in its discretion, grant a total
or partial tax exemption for the project in order to provide assistance to a project
developer in a development or renewal area, pursuant to agreement with the
municipality. However, if a developer of a development or renewal project receives a
tax exemption for that project pursuant to this subsection, that project developer may
not receive a tax exemption for that project under section 40-57.1-03, 40-57.1-04,
40-57.1-04.1, or 40-57.1-04.3. The amount of annual tax exemption under this
subsection is limited to the tax increment as defined in this section as it applies to the
development or renewal project and may extend for a period not to exceed fifteen
years. In determining the total amount of the tax exemption to be authorized, the
municipality shall give due consideration to the same elements as are involved in the
sale of bonds to be amortized by tax increments. The amount to be reimbursed, by tax
exemption, to the project developer must be all or a portion of eligible public costs
which have been paid by the project developer, plus interest on those costs at a rate
not to exceed ten percent per annum. The amount of tax exemption must be an
amount sufficient to reimburse the project operator for those eligible costs, amortized
pursuant to the agreement between the project developer and the municipality.
12. The governing body of a municipality with an active tax increment financing district
may at any time identify funds on hand that are in excess of the costs it determines
necessary to complete the activities included in the last approved urban renewal plan
for that district. The governing body shall cause the identified surplus to be transferred
to the county treasurer to be distributed to the state and all political subdivisions
having power to tax property in the area, in amounts proportionate to the most recent
five-year average of the property tax levy within the district.
40-58-20.1. Use of tax increment financing for the development of certain industrial or
commercial property - Public hearing - Eligible costs of development.
1. The governing body of a municipality may use the tax increment financing method
authorized by section 40-58-20 to assist a project developer in the development of
industrial or commercial property, as limited by this section, pursuant to an agreement
between the municipality and the project developer.
2. Prior to entering into an agreement with a project developer under subsection 1, the
governing body of the municipality shall consider the agreement at a public hearing,
which may be held in conjunction with the public hearing required by subsection 3 of
section 40-58-06, after providing written notice of the hearing at least fifteen days prior
to the hearing to potential competitors of the prospective industrial or commercial
enterprise, and may enter into the agreement only if it determines that the agreement
will not result in unfair competition and that the agreement is in the best interests of the
municipality as a whole.
3. For the purpose of determining costs of development of industrial or commercial
property to be reimbursed by tax increments under section 40-58-20, only the following
public costs necessarily incurred, by either the municipality or the project developer,
for the purpose of preparing the property for private development by the project
developer may be included in the agreement as reimbursable public costs of
development:
a. The cost of acquiring, or the market value, of all or a part of the industrial or
commercial property;
b. Costs of demolition, removal, or alteration of buildings and improvements on the
industrial or commercial property, including the cost of clearing and grading land;
c. Costs of installation, construction, or reconstruction of streets, utilities, parks, and
other public works or improvements necessary for carrying out the development
or renewal plan; and
d. All interest and redemption premiums paid on bonds, notes, or other obligations
issued by the municipality to provide funds for the payment of eligible public costs
of development.