TIF Reporting Form Redesign Project
The Tax Increment Financing (TIF) Division is currently redesigning an updated TIF Annual Reporting Form for use in the future.
Project Overview
The Office of the State Auditor has been using the current format of the TIF Annual Reporting Form since reporting for 2010 activity in 2011. The TIF Division is seeking to develop an updated form that improves an authority’s ability to monitor and track key information in order to better comply with the TIF Act. At the same time, we are also taking the opportunity to update the function and style of the form.
In July of 2024 the OSA shared an initial vision of redesigned form and sought feedback by September 20, 2024. Below are the video (approx. 14 minutes) that we shared to introduce the initial vision as well as a link to the initial draft.
Update (10-16-24):
Thank you to all who provided feedback on our initial vision of a redesigned TIF Annual Reporting Form. We hoped that people would have ideas for improvements, and we were not disappointed!
Some of the feedback we received has prompted us to adjust the proposed form. In other areas, the feedback suggested users might benefit from additional clarification about areas of proposed change. We thought it would be helpful to share a summary of what we heard, highlights of what we plan to adjust as a result, and some clarifications.
Perhaps the two biggest concerns people had were related to parcel reporting and reporting project costs by obligation. Based on that feedback, we plan to significantly change and simplify the reporting of both.
- While plans are still evolving, we no longer intend to collect parcel information in a comprehensive manner. Instead, we will ask questions that may lead to follow-up inquiries or more limited reporting.
- We will also significantly simplify project cost reporting while still seeking adequate identification of in-district versus out-district uses. Such changes are a work in progress.
Another concern was about the timeline. Some felt that even though we are seeking input two years ahead of time, they needed an additional year to be comfortable with the transition. We can work with that. We still hope to share a beta version next summer, but now will target implementation for reporting 2026 activity in 2027.
Some of the other concerns that were voiced suggested misunderstandings that we would like to clarify:
Expanded Content
Perhaps the most misunderstood issue was the extent of new data entry required. There was a lot of fear about duplicate data entry and massive growth in content, with emphasis on tab counts.
However, a large share of the data is actually prepopulated, automatically copied from other tabs, or dynamically “greyed-out” when not applicable. The actual additions for most districts will be very minimal, although moderate for some. The redesign seeks to better summarize, present, and capture data, more than it seeks to expand data collection.
The alarm over additional tabs is largely misplaced as many need little or no entries or simply reorganize previous content. For instance:
- 4 tabs (Instructions, Debt Summary, Expenditure Summary, and Review and Submit) require NO entries.
- 3 tabs are greyed-out for many districts (EIC, Six-Yr Rule, and Parcels).
- 6 tabs (Spec Leg, Bonds, PAYGs, Loans, Lent Funds, Transfers, HSS) may involve as little as answering “No” to a question.
- 3 tabs (Returned Increment, Rev Exp Bal and ADS) require four entries or less.
- 2 tabs (Spec Leg and Revenues) have simply moved prior entries onto their own tabs for accessibility and logical flow reasons.
- The numerous data entry tabs for bonds, PAYGs, and loans are only required for as many obligations as exist and are meant for ease of data entry in neat columns, where a reviewer can ignore those tabs and digest that information on a single tab (the Debt Summary tab).
- Much of the added subject matter (the breakout of in-district and out-district uses, the Six-Year Rule tab, all alerts, and the “Administrative Expense Limit Monitoring” and “Overall Pooling Limit” sections on the Review and Submit Tab) is meant to improve understanding, tracking and compliance by authorities, and most of it does not require additional data entry.
Our aim has been and will continue to be to add content only if it serves an important purpose, and to do it in a way that is efficient. We intend to continue this critical review and trim items that we determine are appropriate to trim and work to enhance efficiencies as we work toward a beta version.
Costs and Consultants
While reporting time and costs could marginally increase, in no way do we believe reporting costs should double or skyrocket or stifle the use of TIF as some have speculated. In fact, many of those same commenters, in arguing for the elimination of the new content, have insisted that much of it doesn’t affect most districts. As noted above, the actual amount of additional entry should be rather small for most districts.
Some have said more authorities may need to rely on consultants, but that remains to be seen. It may, in fact, be that more authorities will be in a better position to address their TIF responsibilities directly, given that embedded in the enhancements to the form are beneficial alerts and improved compliance monitoring features. Change is always hard, but we suspect many enhancements will be much appreciated as time goes on.
“Regulatory Overreach” and GAAP
There were some misguided suggestions that proposed content amounted to “regulatory overreach.” Under the law, the state auditor is charged with the duty and authority of examining the use of TIF and making compliance findings with respect to any or all provisions of the TIF Act. Our oversight is not limited to auditing financial data as incorrectly asserted by some. While the reporting statute identifies that it should, “as nearly as possible,” be consistent with generally accepted accounting principles (GAAP), it also requires “full disclosure of sources and uses of tax increments” and goes on to identify a variety of required data, including any additional information the state auditor may require. As such, parcel removal information, or data related to any other requirement, falls well within the purview of annual reporting. Some of the complaints even labeled data specifically required by statute as “irrelevant data.”
Rulemaking Uproar?
An additional misrepresentation we heard was that this was a rulemaking endeavor warranting widespread pushback. Although our office has complete authority under the law to revise the forms we require for reporting, we feel it benefits everyone to communicate and get input and different perspectives on changes we are considering. This was simply a good faith effort to get input on an initial vision two years in advance of the earliest implementation.
Aside from the major concerns, and those that we felt were a bit overstated or misunderstood, there were many other notes and comments shared, ranging from simple, great suggestions to matters of opinion. A few notables:
Format
Some felt that an online form would be better than an Excel form. Stable internet access can still be an issue for some, whereas Excel is a standard, widely accessible application. We have kept future online conversion ideas in mind while developing the Excel form, and may go that direction in the future, but will stick with Excel for the near term.
Look and Feel
Some gave positive feedback on the look and feel while others felt it was visually confusing. There are parts that we intend to improve upon (most notably the Debt Summary tab), but the overall design appears satisfactory.
Printing
We anticipated the form would be shared in its original Excel format, but several respondents were concerned about printing the reports and/or creating PDFs. We will consider this as we move forward.
More Audits
We were surprised by suggestions that less reporting was preferred by some to more after-the-fact audit interactions. In our view, a report that helps authorities spot and understand compliance issues on their own, in a timely manner, is a better approach than surprise audits that catch issues after they have grown into major, more-costly problems. And let’s not forget that TIF authorities have a duty to prioritize compliance and proper handling of the public funds they’ve been entrusted with—reporting that fosters increased compliance serves all parties.
Thanks again for all the feedback! If you want to participate in reviewing the beta draft next year, please let us know.
Additional Feedback?
If you would still like to share some feedback, you may still complete the survey linked below, or you may email jason.nord@osa.state.mn.us.
If you would like to review and test the beta version when it is ready, please let us know.