LRB-2253/2
MES:cjs:kjf
2001 - 2002 LEGISLATURE
September 24, 2001 - Introduced by Representatives M. Lehman, Sykora, Musser,
Olsen and Ainsworth. Referred to Committee on Ways and Means.
AB510,2,5
1An Act to repeal 66.1105 (6) (e) 2.;
to renumber and amend 66.1105 (6) (a) and
266.1105 (6) (am) 1.;
to amend 66.1105 (2) (f) 1. i., 66.1105 (2) (f) 3., 66.1105 (4)
3(e), 66.1105 (4) (gm) 1., 66.1105 (4) (gm) 4. c., 66.1105 (4) (h) 1., 66.1105 (4) (h)
42., 66.1105 (4m) (a), 66.1105 (4m) (b) 2., 66.1105 (4m) (b) 2m., 66.1105 (5) (a),
566.1105 (5) (b), 66.1105 (5) (c), 66.1105 (5) (ce), 66.1105 (5) (d), 66.1105 (7) (am),
666.1105 (8) (title), 66.1106 (1) (e), 66.1106 (1) (f), 66.1106 (1) (g), 66.1106 (1) (i),
766.1106 (1) (k), 66.1106 (2) (a), 66.1106 (4) (intro.), 66.1106 (4) (b), 66.1106 (7)
8(a), 66.1106 (7) (d) 1., 66.1106 (9), 66.1106 (10) (a), 66.1106 (10) (b), 74.23 (1) (b),
974.25 (1) (b) 1., 74.25 (1) (b) 2., 74.30 (1) (i), 74.30 (1) (j), 74.30 (2) (b), 79.095 (1)
10(c), 79.095 (2) (b) and 234.01 (4n) (a) 3m. a.; and
to create 20.566 (1) (go),
1166.1105 (2) (f) 2. d., 66.1105 (3) (g), 66.1105 (4) (gm) 6., 66.1105 (4m) (am),
1266.1105 (4m) (b) 4., 66.1105 (4m) (b) 5., 66.1105 (6) (a) 5., 66.1105 (6) (am) 1. c.,
1366.1105 (6) (e) 1. d., 66.1105 (7) (ae), 66.1105 (8) (c), 66.1105 (8) (d), 66.1105 (15),
1466.1106 (1) (fm), 66.1106 (1) (jm), 66.1106 (1m), 66.1106 (10) (c), 66.1106 (10) (d),
166.1106 (11), 66.1106 (12), 66.1106 (13) and 73.03 (57) of the statutes;
relating
2to: making technical and policy changes in the tax incremental financing
3program based on the recommendations of the governor's working group on tax
4incremental finance and modifying the environmental remediation tax
5incremental financing program.
Analysis by the Legislative Reference Bureau
Under the current tax incremental financing (TIF) program, a city or village
may create a tax incremental district (TID) in part of its territory to foster
development if at least 50% of the area to be included in the TID is blighted, in need
of rehabilitation, or suitable for industrial sites. Before a city or village may create
a TID, several steps and plans are required. These steps and plans include public
hearings on the proposed TID within specified time frames, preparation and
adoption by the local planning commission of a proposed project plan for the TID,
approval of the proposed project plan by the common council or village board, and
adoption of a resolution by the common council or village board that creates the
district as of a date provided in the resolution. Another step that must be taken
before a TID may be created is the creation by the city or village of a joint review
board to review the proposal. The joint review board, which is made up of
representatives of the overlying taxing jurisdictions of the proposed TID, must
approve the project plan within specified time frames or the TID may not be created.
If an existing TID project plan is amended by a planning commission, all of these
steps are also required.
Once these steps are accomplished, the city or village clerk is required to
complete certain forms and an application and submit the documents to the
department of revenue (DOR) on or before December 31 of the year in which the TID
is created. Upon receipt of the application, DOR is required to certify the full
aggregate value of the taxable property in the city or village, which constitutes the
tax incremental base of the TID.
Also under current law, once a TID has been created, DOR calculates the "tax
increment base value" of the TID, which is the equalized value of all taxable property
within the TID at the time of its creation. If the development in the TID increases
the value of the property in the TID above the base value, a "value increment" is
created. That portion of taxes collected on the value increment in excess of the base
value is called a "tax increment." The tax increment is placed in a special fund that
may only be used to pay back the project costs of the TID. The costs of a TID, which
are initially incurred by the creating city or village, include public works such as
sewers, streets, and lighting systems; financing costs; site preparation costs; and
professional service costs. DOR authorizes the allocation of the tax increments until
the TID terminates or 23 years, or 27 years in certain cases, after the TID is created,
whichever is sooner. TIDs are required to terminate, under current law and with one
exception, once these costs are paid back, 16 years, or 20 years in certain cases, after
the last expenditure identified in the project plan is made or when the creating city
or village dissolves the TID, whichever occurs first. Under the exception, which is
limited to certain circumstances, after a TID pays off its project costs, but not later
the date on which it must otherwise terminate, the planning commission may
allocate positive tax increments generated by the TID (the "donor" TID) to another
TID that has been created by the planning commission.
This bill makes a number of technical and substantive changes to the TIF
program. Among the technical changes, the bill does the following:
1. Prohibits DOR from certifying a tax incremental base of a TID until DOR
reviews and approves the findings submitted by the city or village relating to the
equalized value of taxable property in the TID and the equalized value of all of the
taxable property in the city or village.
2. Allows a representative from a union high school district and a
representative from an elementary school district to each have one-half vote on a
joint review board.
3. Requires a city or village to provide DOR with a final accounting of TID
project expenditures, project costs, and positive tax increments received. If the city
or village does not provide this information to DOR within 60 days of the TID's
termination, DOR may not certify the tax incremental base of any other TID in the
city or village.
Among the substantive changes, the bill does the following:
1. Provides that, not later than five days after a joint review board submits its
decision on a TIF proposal submitted by a city or village, a majority of the members
of the board may request DOR to review the objective facts contained in the
documents submitted to the board by the city or village. DOR must investigate the
specific fact or item that the members believe is incomplete or inaccurate. If DOR
finds that the proposal contains factual inaccuracies or does not comply with other
statutory requirements, DOR must return the TIF proposal to the city or village for
correction and resubmittal.
2. Requires DOR to prepare and update a manual on the TIF program.
3. For a TID that is created on or after the effective date of the bill, the bill
increases from seven years to ten years the period during which expenditures related
to the TID may be made by the city or village after the TID's creation. Currently, the
ten year period only applies to TIDs created before October 1, 1995, and the seven
year period only applies to TIDs created after September 30, 1995.
4. Requires that before a "donor" TID may transfer positive tax increments to
another TID, it must have in its special fund sufficient revenues to pay for all
incurred or expected project costs. Under current law, the "donor" TID need only
have sufficient revenues to pay costs that are due in the current year.
5. Limits the inclusion in a TID of land that has been annexed by the city or
village.
6. Prohibits a joint review board from approving a TID proposal unless the
board asserts that, in its judgment, the development project described in the TID
documents would not occur without the creation of a TID.
7. Provides that an amendment to a TID's boundary may subtract territory
from the TID if the subtraction does not remove contiguity from the TID.
8. Allows a city or village to create a standing joint review board that may
remain in existence for the entire time that any TID exists in the city or village. The
city or village may also disband the standing joint review board. Currently, a joint
review board may vote to disband following the approval or rejection of a TID
proposal.
9. Specifically requires that an amendment to a project plan requires the same
findings by a city or village relating to the equalized value of taxable property in the
TID and the equalized value of all of the taxable property in the city or village as is
currently required for the creation of a TID.
10. Limits the life of a TID that is predominantly suitable for industrial sites
to ten years after the last expenditure in the project plan is made, or a total of 20 years
after its creation.
11. Authorizes DOR to impose a fee of $1,000 on a city or village to determine
or redetermine the tax incremental base of a TID. The money generated by the fees
goes to DOR to pay for staff and administrative service costs related to the TIF
program. The bill also creates a new position in DOR to perform auditing related to
TIDs.
This bill also modifies the environmental remediation tax incremental
financing program. Under current law, the environmental remediation tax
incremental financing program permits a city, village, town, or county (political
subdivision) to defray the costs of remediating contaminated property that is owned
by the political subdivision. The mechanism for financing costs that are eligible for
remediation is very similar to the mechanism under the TIF program. If the
remediated property is transferred to another person and is then subject to property
taxation, environmental remediation tax incremental financing may be used to
allocate some of the property taxes that are levied on the property to the political
subdivision to pay for the costs of remediation.
A political subdivision that has incurred "eligible costs" to remediate
environmental pollution on a parcel of property may apply to DOR to certify the
"environmental remediation tax incremental base" of the parcel. DOR is required
to certify the environmental remediation tax incremental base if the political
subdivision submits to DOR all of the following: 1) a statement that the political
subdivision has incurred some eligible costs, together with a detailed proposed
remedial action plan approved by DNR that contains cost estimates for anticipated
eligible costs, a schedule for the design and implementation that is needed to
complete the remediation, and certification from DNR that the department has
approved the site investigation report that relates to the parcel; 2) a statement that
all taxing jurisdictions with authority to levy general property taxes on the parcel
of property have been notified that the political subdivision intends to recover its
environmental remediation, costs by using an "environmental remediation tax
increment"; and 3) a statement that the political subdivision has attempted to
recover its environmental remediation costs from the person who is responsible for
the environmental pollution that is being remediated.
This bill makes technical changes to the environmental remediation tax
incremental financing program. These changes include creating a definition of
"project expenditures" and a definition of "environmental remediation tax
incremental district" (ERTID) that is somewhat similar to the definition of "tax
incremental district" under the TIF program; making changes to the definitions of
"environmental remediation tax increment," "environmental remediation tax
incremental base," and "taxable property"; creating procedures for the termination
of an ERTID that are similar to the termination procedures for a tax incremental
district under the TIF program; requiring that the final report under the program
include an independent certified financial audit; requiring that DOR be provided
with a final accounting of the ERTID's project expenditures and the final amount of
eligible costs that have been paid for an ERTID; and modifying certain provisions of
the program to apply to contiguous parcels of property or land, as well as a parcel of
property or land. Also under the bill, if a city or village annexes property from a town
that is using an ERTID to remediate environmental pollution on all or part of the
territory that is annexed, the city or village must pay to the town that portion of the
eligible costs that are attributable to the annexed territory. The city or village, and
the town, must negotiate an agreement on the amount that must be paid.
This bill takes effect October 1, 2002.
For further information see the state and local fiscal estimate, which will be
printed as an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB510, s. 1
1Section
1. 20.566 (1) (go) of the statutes is created to read:
AB510,5,52
20.566
(1) (go)
Administration of tax incremental financing program. All
3moneys received from the fees imposed under s. 66.1105 (5) (a) to pay the costs of the
4department of revenue in providing staff and administrative services associated
5with tax incremental districts under s. 66.1105.
AB510, s. 2
6Section
2. 66.1105 (2) (f) 1. i. of the statutes is amended to read:
AB510,6,27
66.1105
(2) (f) 1. i. Payments made, in the discretion of the local legislative body,
8which are found to be necessary or convenient to the creation of tax incremental
9districts or the implementation of project plans
, including payments made to a town
1that relate to property taxes levied on territory to be included in a tax incremental
2district as described in sub. (4) (gm) 1.
AB510, s. 3
3Section
3. 66.1105 (2) (f) 2. d. of the statutes is created to read:
AB510,6,64
66.1105
(2) (f) 2. d. Cash grants made by the city to owners, lessees, or
5developers of land that is located within the tax incremental district unless the grant
6recipient has signed a development agreement with the city.
AB510, s. 4
7Section
4. 66.1105 (2) (f) 3. of the statutes is amended to read:
AB510,6,138
66.1105
(2) (f) 3. Notwithstanding subd. 1., project costs may not include any
9expenditures made or estimated to be made or monetary obligations incurred or
10estimated to be incurred by the city for newly platted residential development for any
11tax incremental district for which a project plan is approved after September 30,
121995
, or for which an amendment of a project plan is approved after the effective date
13of this subdivision .... [revisor inserts date].
AB510, s. 5
14Section
5. 66.1105 (3) (g) of the statutes is created to read:
AB510,6,2015
66.1105
(3) (g) Create a standing joint review board that may remain in
16existence for the entire time that any tax incremental district exists in the city. All
17of the provisions that apply to a joint review board that is convened under sub. (4m)
18(a) apply to a standing joint review board that is created under this paragraph. A
19city may disband a joint review board that is created under this paragraph at any
20time.
AB510, s. 6
21Section
6. 66.1105 (4) (e) of the statutes is amended to read:
AB510,7,822
66.1105
(4) (e) At least
30 14 days before adopting a resolution under par. (gm),
23holding of a public hearing by the planning commission at which interested parties
24are afforded a reasonable opportunity to express their views on the proposed project
25plan. The hearing may be held in conjunction with the hearing provided for in par.
1(a). Notice of the hearing shall be published as a class 2 notice, under ch. 985. The
2notice shall include a statement advising that a copy of the proposed project plan will
3be provided on request. Before publication, a copy of the notice shall be sent by 1st
4class mail to the chief executive officer or administrator of all local governmental
5entities having the power to levy taxes on property within the district and to the
6school board of any school district which includes property located within the
7proposed district. For a county with no chief executive officer or administrator, notice
8shall be sent to the county board chairperson.
AB510, s. 7
9Section
7. 66.1105 (4) (gm) 1. of the statutes is amended to read:
AB510,8,1010
66.1105
(4) (gm) 1. Describes the boundaries, which may, but need not, be the
11same as those recommended by the planning commission, of a tax incremental
12district with sufficient definiteness to identify with ordinary and reasonable
13certainty the territory included in the district.
The boundaries of the tax incremental
14district may not include any territory that was not within the boundaries of the city
15on January 1, 2002, unless at least 3 years have elapsed since the territory was
16annexed by the city, unless the city enters into a cooperative plan boundary
17agreement, under s. 66.0307, with the town from which the territory was annexed,
18or unless the city and town enter into another kind of agreement relating to the
19annexation except that, notwithstanding these conditions, the city may include
20territory that was not within the boundaries of the city on January 2, 2002, if the city
21agrees to pay the town an amount equal to the property taxes levied on the territory
22by the town at the time of the annexation and makes such a payment for each of the
23next 5 successive years. The boundaries shall include only those whole units of
24property as are assessed for general property tax purposes. Property standing
25vacant for an entire 7-year period immediately preceding adoption of the resolution
1creating a tax incremental district may not comprise more than 25% of the area in
2the tax incremental district, unless the tax incremental district is suitable for
3industrial sites under subd. 4. a. and the local legislative body implements an
4approved project plan to promote industrial development within the meaning of s.
566.1101. In this subdivision, "vacant property" includes property where the fair
6market value or replacement cost value of structural improvements on the parcel is
7less than the fair market value of the land. In this subdivision, "vacant property"
8does not include property acquired by the local legislative body under ch. 32 or
9property included within the abandoned Park East freeway corridor or the
10abandoned Park West freeway corridor in Milwaukee County.
AB510, s. 8
11Section
8. 66.1105 (4) (gm) 4. c. of the statutes is amended to read:
AB510,8,1912
66.1105
(4) (gm) 4. c. Either the equalized value of taxable property of the
13district plus all existing districts does not exceed 7% of the total equalized value of
14taxable property within the city or the equalized value of taxable property of the
15district plus the value increment of all existing districts within the city does not
16exceed 5% of the total equalized value of taxable property within the city.
The
17calculations required under this subd. 4. c. shall be based on the most recent
18equalized value of taxable property of the district that is reported under s. 70.57 (1m)
19before the date on which a resolution is adopted under this paragraph.
AB510, s. 9
20Section
9. 66.1105 (4) (gm) 6. of the statutes is created to read:
AB510,9,221
66.1105
(4) (gm) 6. Declares that the district is a blighted area district, a
22rehabilitation or conservation district, or an industrial district, based on the
23identification and classification of the property included within the district under
24par. (c) and subd. 4. a. If the district is not exclusively blighted, rehabilitation or
1conservation, or industrial, the declaration under this subdivision shall be based on
2which classification is predominant with regard to the area described in subd. 4. a.
AB510, s. 10
3Section
10. 66.1105 (4) (h) 1. of the statutes is amended to read:
AB510,9,194
66.1105
(4) (h) 1. Subject to subds. 2., 3. and 4., the planning commission may,
5by resolution, adopt an amendment to a project plan. The amendment is subject to
6approval by the local legislative body and approval requires the same findings as
7provided in
par.
pars. (g)
and (gm) 4. c. Any amendment to a project plan is also
8subject to review by a joint review board, acting under sub. (4m). Adoption of an
9amendment to a project plan shall be preceded by a public hearing held by the plan
10commission at which interested parties shall be afforded a reasonable opportunity
11to express their views on the amendment. Notice of the hearing shall be published
12as a class 2 notice, under ch. 985. The notice shall include a statement of the purpose
13and cost of the amendment and shall advise that a copy of the amendment will be
14provided on request. Before publication, a copy of the notice shall be sent by 1st class
15mail to the chief executive officer or administrator of all local governmental entities
16having the power to levy taxes on property within the district and to the school board
17of any school district which includes property located within the proposed district.
18For a county with no chief executive officer or administrator, this notice shall be sent
19to the county board chairperson.
AB510, s. 11
20Section
11. 66.1105 (4) (h) 2. of the statutes is amended to read:
AB510,9,2521
66.1105
(4) (h) 2. Except as provided in subds. 3. and 4., not more than once
22during the 7 years after the tax incremental district is created, the planning
23commission may adopt an amendment to a project plan under subd. 1. to modify the
24district's boundaries by
subtracting territory from the district in a way that does not
25remove contiguity from the district or by adding territory to the district that is
1contiguous to the district and that is served by public works or improvements that
2were created as part of the district's project plan. Expenditures for project costs that
3are incurred because of an amendment to a project plan to which this subdivision
4applies may be made for not more than 3 years after the date on which the local
5legislative body adopts a resolution amending the project plan
or not more than the
6number of years in which expenditures may be made without an amendment to a
7project plan as specified in sub. (6) (am), whichever period is longer.
AB510, s. 12
8Section
12. 66.1105 (4m) (a) of the statutes is amended to read:
AB510,11,69
66.1105
(4m) (a) Any city that seeks to create a tax incremental district or
10amend a project plan shall convene a
temporary joint review board
under this
11paragraph, or a standing joint review board under sub. (3) (g), to review the proposal.
12The Except as provided in par. (am), the board shall consist of one representative
13chosen by the school district that has power to levy taxes on the property within the
14tax incremental district, one representative chosen by the technical college district
15that has power to levy taxes on the property within the tax incremental district, one
16representative chosen by the county that has power to levy taxes on the property
17within the tax incremental district, one representative chosen by the city and one
18public member. If more than one school district,
more than one union high school
19district, more than one elementary school district, more than one technical college
20district or more than one county has the power to levy taxes on the property within
21the tax incremental district, the unit in which is located property of the tax
22incremental district that has the greatest value shall choose that representative to
23the board. The public member and the board's chairperson shall be selected by a
24majority of the other board members before the public hearing under sub. (4) (a) or
25(h) 1. is held. All board members shall be appointed and the first board meeting held
1within 14 days after the notice is published under sub. (4) (a) or (h) 1. Additional
2meetings of the board shall be held upon the call of any member. The city that seeks
3to create the tax incremental district or to amend its project plan shall provide
4administrative support for the board. By majority vote, the board may disband
5following approval or rejection of the proposal
, unless the board is a standing board
6that is created by the city under sub. (3) (g).
AB510, s. 13
7Section
13. 66.1105 (4m) (am) of the statutes is created to read:
AB510,11,158
66.1105
(4m) (am) If a city seeks to create a tax incremental district that is
9located in a union high school district, the seat that is described under par. (a) for the
10school board representative to the board shall be held by 2 representatives, each of
11whom has one-half of a vote. One representative shall be chosen by the union high
12school district that has the power to levy taxes on the property within the tax
13incremental district and one representative shall be chosen by the elementary school
14district that has the power to levy taxes on the property within the tax incremental
15district.
AB510, s. 14
16Section
14. 66.1105 (4m) (b) 2. of the statutes is amended to read:
AB510,11,2417
66.1105
(4m) (b) 2. Except as provided in subd. 2m.
and subject to subd. 4., no
18tax incremental district may be created and no project plan may be amended unless
19the board approves the resolution adopted under sub. (4) (gm) or (h) 1. by a majority
20vote not less than
10 days nor more than 30 14 days after receiving the resolution.
21The board may not approve the resolution under this subdivision unless the board's
22approval contains a positive assertion that, in its judgment, the development
23described in the documents the board has reviewed under subd. 1. would not occur
24without the creation of a tax incremental district.
AB510, s. 15
25Section
15. 66.1105 (4m) (b) 2m. of the statutes is amended to read:
AB510,12,7
166.1105
(4m) (b) 2m. The requirement under subd. 2. that a vote by the board
2take place not less than
10 days nor more than 30
14 days after receiving a resolution
3does not apply to a resolution amending a project plan under sub. (4) (h) 1. if the
4resolution relates to a tax incremental district, the application for the
5redetermination of the tax incremental base of which was made in 1998, that is
6located in a village that was incorporated in 1912, has a population of at least 3,800
7and is located in a county with a population of at least 108,000.
AB510, s. 16
8Section
16. 66.1105 (4m) (b) 4. of the statutes is created to read:
AB510,12,239
66.1105
(4m) (b) 4. Not later than 5 working days after submitting its decision
10under subd. 3., a majority of the members of the board may request that the
11department of revenue review the objective facts contained in any of the documents
12listed in subd. 1. to determine whether the information submitted to the board
13complies with this section or whether any of the information contains a factual
14inaccuracy. The request must be in writing and must specify which particular
15objective fact or item the members believe is incomplete or inaccurate. Not later than
1610 working days after receiving a request that complies with the requirements of this
17subdivision, the department of revenue shall investigate the issues raised in the
18request and shall send its written response to the board. If the department of
19revenue determines that the information in the proposal does not comply with this
20section or contains a factual inaccuracy, the department shall return the proposal to
21the city. The board shall request that the city resolve the problems in its proposal
22and resubmit the proposal to the board. The board shall review the resubmitted
23proposal and vote to approve or deny the proposal as specified in this paragraph.
AB510, s. 17
24Section
17. 66.1105 (4m) (b) 5. of the statutes is created to read:
AB510,13,4
166.1105
(4m) (b) 5. The board shall notify prospectively the governing body of
2every local governmental unit that is not represented on the board, and that has
3power to levy taxes on the property within the tax incremental district, of meetings
4of the board and of the agendas of each meeting for which notification is given.
AB510, s. 18
5Section
18. 66.1105 (5) (a) of the statutes is amended to read:
AB510,13,116
66.1105
(5) (a)
Upon Subject to sub. (8) (d), upon the creation of a tax
7incremental district or upon adoption of any amendment subject to par. (c), its tax
8incremental base shall be determined as soon as reasonably possible.
The
9department of revenue may impose a fee of $1,000 on a city to determine or
10redetermine the tax incremental base of a tax incremental district under this
11subsection.