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2003 - 2004 LEGISLATURE
SENATE SUBSTITUTE AMENDMENT 1,
TO 2003 SENATE BILL 305
November 13, 2003 - Offered by Senator Stepp.
SB305-SSA1,2,4
1An Act to repeal 66.1105 (4) (h) 3., 66.1105 (6) (a) 3. and 66.1105 (6) (e) 2.;
to
2renumber and amend 66.1105 (2) (f) 3.;
to amend 66.1105 (2) (f) 1. i., 66.1105
3(4) (e), 66.1105 (4) (gm) 1., 66.1105 (4) (gm) 4. a., 66.1105 (4) (gm) 4. c., 66.1105
4(4) (h) 1., 66.1105 (4) (h) 2., 66.1105 (4m) (a), 66.1105 (4m) (b) 2., 66.1105 (4m)
5(b) 2m., 66.1105 (5) (a), 66.1105 (5) (b), 66.1105 (5) (c), 66.1105 (5) (ce), 66.1105
6(5) (d), 66.1105 (6) (a) 4., 66.1105 (6) (c), 66.1105 (7) (a), 66.1105 (7) (ar), 66.1105
7(8) (title) and 66.1105 (8) (a);
to repeal and recreate 66.1105 (6) (am) 1. and
866.1105 (7) (am); and
to create 66.1105 (2) (cm), 66.1105 (2) (f) 2. d., 66.1105
9(2) (f) 3. a. to c., 66.1105 (3) (g), 66.1105 (4) (gm) 6., 66.1105 (4m) (ae), 66.1105
10(4m) (am), 66.1105 (4m) (b) 4., 66.1105 (6) (a) 7., 66.1105 (6) (a) 8., 66.1105 (6)
11(e) 1. d., 66.1105 (6) (f), 66.1105 (8) (c), 66.1105 (8) (d), 66.1105 (15) and 66.1106
12(13) of the statutes;
relating to: making technical and policy changes in the tax
13incremental financing program based in part on the recommendations of the
1governor's December 2000 working group on tax incremental finance,
2authorizing certain counties to create tax incremental financing districts, and
3making a modification to the environmental remediation tax incremental
4financing 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 percent 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 determine the full
aggregate value of the taxable property, and of certain city or village owned property,
that lies within the TID.
Once the aggregate value is determined, DOR certifies the "tax incremental
base" of the TID, which is the equalized value of all taxable property within the TID
at the time of its creation. If 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 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 project 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. Under
current law, TIDs are required to terminate, 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 substitute amendment makes a number of technical and substantive
changes to the TIF program. Among the technical changes, the substitute
amendment 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. Changes from 10 days to 60 days the time period in which a city or village
must notify DOR of a TID's termination.
4. 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 the time period agreed on
by the city or village and DOR, DOR may not certify the tax incremental base of any
other TID in the city or village.
Among the substantive changes, the substitute amendment does the following:
1. Authorizes a city or village to create a TID if at least 50 percent of the area
to be included in the TID is a "mixed-use development," which is defined as a
development that contains a combination of industrial, commercial, and residential
uses and in which the newly platted residential portion consists of no more than 35
percent, by area, of the real property within the district.
2. Specifies that, generally, the public schools representative to a TID's joint
review board is the school board president or the president's designee; that the
county representative is the county executive if there is one, or the county board
chair, or the executive's or board chair's designee; that the city or village
representative is the mayor or village board president, or a designee; that for a TID
created by a county in a town, the town chooses a representative; and that the
technical college representative is the director or the director's designee.
3. Expands a provision which currently allows the inclusion, as project costs,
of expenditures or monetary obligations for newly platted residential development
of a TID for which a project plan is approved before September 30, 1995, to also allow
the inclusion of such expenditures or obligations for mixed-use development TIDS
that have a certain housing density or are located in a conservation subdivision or
a traditional neighborhood development.
4. Changes the limits on how much of a city's or village's equalized value may
be contained within a TID, although the limit does not apply if a city or village
subtracts territory from a TID.
5. Allows TIDs to make expenditures for project costs at any time up to five
years before the TID's mandatory termination date. Currently, in general, TIDs may
make expenditures only for seven or ten years after the TID is created, depending
on whether the TID was created after September 30, 1995, or before October 1, 1995.
6. Extends from 23 years to 27 years the maximum life of a "blighted area" or
"rehabilitation or conservation" TID, and reduces from 23 years to 20 years the
maximum life of an "industrial site" or "mixed-use development" TID. In the 18th
year of an industrial or mixed use TID's life, however, the creating city or village may
ask the joint review board to extend the TID's life for five years. The city or village
may provide the joint review board with an independent audit that demonstrates
that the district is unable to pay off its costs within its original 20 year life span. The
joint review board may choose to approve or deny a request to extend a TID's life for
five years but, if accompanied by an audit, the board must approve a request for a
five-year extension.
7. Changes the period during which DOR may allocate positive tax increments
for TIDs created on or after the effective date of the substitute amendment, from 23
years to 20 years after a TID's creation if the TID is classified as a mixed-use
development or industrial TID, and from 23 to 27 years after a TID's creation if the
TID is classified as a blighted area or rehabilitation or conservation TID.
8. Authorizes a TID's project plan to be amended at any time during the TID's
life, up to four times, to allow the addition or subtraction of territory from the TID.
Currently, a TID's project plan may only be so amended once, and only during the
TID's first seven years of existence.
9. Requires that before a "donor" TID may transfer positive tax increments to
another TID, it must demonstrate that it has sufficient revenues to pay for all
incurred project costs and surplus revenues to pay for some of the "donee" TID's
eligible costs. Under current law, the "donor" TID need only have sufficient revenues
to pay costs that are due in the current year.
10. Subject to joint review board approval, allows a TID that has not otherwise
reached its mandatory termination date, to share its positive tax increments with
certain other TIDs that share its overlying taxing jurisdictions.
11. Limits the inclusion in a TID of land that has been annexed by the city or
village.
12. 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.
13. 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.
14. 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.
15. 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.
This substitute amendment also makes a technical modification to 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. Under the
substitute amendment, 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.
Generally, this bill takes effect on the first day of the 4th month after the
substitute amendment is enacted.
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:
SB305-SSA1, s. 1
1Section
1. 66.1105 (2) (cm) of the statutes is created to read:
SB305-SSA1,5,52
66.1105
(2) (cm) "Mixed-use development" means development that contains
3a combination of industrial, commercial, or residential uses, except that lands
4proposed for newly-platted residential use, as shown in the project plan, may not
5exceed 35 percent, by area, of the real property within the district.
SB305-SSA1, s. 2
6Section
2. 66.1105 (2) (f) 1. i. of the statutes is amended to read:
SB305-SSA1,5,117
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
10that relate to property taxes levied on territory to be included in a tax incremental
11district as described in sub. (4) (gm) 1.
SB305-SSA1, s. 3
1Section
3. 66.1105 (2) (f) 2. d. of the statutes is created to read:
SB305-SSA1,6,62
66.1105
(2) (f) 2. d. Cash grants made by the city to owners, lessees, or
3developers of land that is located within the tax incremental district unless the grant
4recipient has signed a development agreement with the city, a copy of which shall be
5sent to the appropriate joint review board or, if that joint review board has been
6dissolved, retained by the city in the official records for that tax incremental district.
SB305-SSA1, s. 4
7Section
4. 66.1105 (2) (f) 3. of the statutes is renumbered 66.1105 (2) (f) 3.
8(intro.) and amended to read:
SB305-SSA1,6,149
66.1105
(2) (f) 3. (intro.) Notwithstanding subd. 1., project costs may
not include
10any expenditures made or estimated to be made or monetary obligations incurred or
11estimated to be incurred by the city for newly platted residential development
only 12for any tax incremental district for which a project plan is approved
after before 13September 30, 1995
., or for a mixed-use development tax incremental district to
14which one of the following applies:
SB305-SSA1, s. 5
15Section
5. 66.1105 (2) (f) 3. a. to c. of the statutes are created to read:
SB305-SSA1,6,1716
66.1105
(2) (f) 3. a. The density of the residential housing is at least 3 units per
17acre.
SB305-SSA1,6,1918
b. The residential housing is located in a conservation subdivision, as defined
19in s. 66.1027 (1) (a).
SB305-SSA1,6,2120
c. The residential housing is located in a traditional neighborhood
21development, as defined in s. 66.1027 (1) (c).
SB305-SSA1, s. 6
22Section
6. 66.1105 (3) (g) of the statutes is created to read:
SB305-SSA1,7,323
66.1105
(3) (g) Create a standing joint review board that may remain in
24existence for the entire time that any tax incremental district exists in the city. All
25of the provisions that apply to a joint review board that is convened under sub. (4m)
1(a) apply to a standing joint review board that is created under this paragraph. A
2city may disband a joint review board that is created under this paragraph at any
3time.
SB305-SSA1, s. 7
4Section
7. 66.1105 (4) (e) of the statutes is amended to read:
SB305-SSA1,7,195
66.1105
(4) (e) At least
30 14 days before adopting a resolution under par. (gm),
6holding of a public hearing by the planning commission at which interested parties
7are afforded a reasonable opportunity to express their views on the proposed project
8plan. The hearing may be held in conjunction with the hearing provided for in par.
9(a).
If the city anticipates that the proposed project plan's project costs may include
10cash grants made by the city to owners, lessees, or developers of land that is located
11within the tax incremental district, the hearing notice shall contain a statement to
12that effect. Notice of the hearing shall be published as a class 2 notice, under ch. 985.
13The notice shall include a statement advising that a copy of the proposed project plan
14will be provided on request. Before publication, a copy of the notice shall be sent by
151st class mail to the chief executive officer or administrator of all local governmental
16entities having the power to levy taxes on property within the district and to the
17school board of any school district which includes property located within the
18proposed district. For a county with no chief executive officer or administrator, notice
19shall be sent to the county board chairperson.
SB305-SSA1, s. 8
20Section
8. 66.1105 (4) (gm) 1. of the statutes is amended to read:
SB305-SSA1,9,221
66.1105
(4) (gm) 1. Describes the boundaries, which may, but need not, be the
22same as those recommended by the planning commission, of a tax incremental
23district with sufficient definiteness to identify with ordinary and reasonable
24certainty the territory included in the district.
The boundaries of the tax incremental
25district may not include any annexed territory that was not within the boundaries
1of the city on January 1, 2004, unless at least 3 years have elapsed since the territory
2was annexed by the city, unless the city enters into a cooperative plan boundary
3agreement, under s. 66.0307, with the town from which the territory was annexed,
4or unless the city and town enter into another kind of agreement relating to the
5annexation except that, notwithstanding these conditions, the city may include
6territory that was not within the boundaries of the city on January 1, 2004, if the city
7pledges to pay the town an amount equal to the property taxes levied on the territory
8by the town at the time of the annexation for each of the next 5 years. If, as the result
9of a pledge by the city to pay the town an amount equal to the property taxes levied
10on the territory by the town at the time of the annexation for each of the next 5 years,
11the city includes territory in a tax incremental district that was not within the
12boundaries of the city on January 1, 2004, the city's pledge is enforceable by the town
13from which the territory was annexed. The boundaries shall include only those
14whole units of property as are assessed for general property tax purposes. Property
15standing vacant for an entire 7-year period immediately preceding adoption of the
16resolution creating a tax incremental district may not comprise more than 25% of the
17area in the tax incremental district, unless the tax incremental district is suitable
18for industrial sites under subd. 4. a. and the local legislative body implements an
19approved project plan to promote industrial development within the meaning of s.
2066.1101. In this subdivision, "vacant property" includes property where the fair
21market value or replacement cost value of structural improvements on the parcel is
22less than the fair market value of the land. In this subdivision, "vacant property"
23does not include property acquired by the local legislative body under ch. 32
or, 24property included within the abandoned Park East freeway corridor or the
1abandoned Park West freeway corridor in Milwaukee County
, or property that is
2contaminated by environmental pollution, as defined in s. 66.1106 (1) (d).