LRB-3137/1
MES:cjs&wj:pg
2003 - 2004 LEGISLATURE
November 5, 2003 - Introduced by Senators Stepp, Kanavas, Leibham, Darling,
Jauch, Brown, Roessler, A. Lasee, Schultz, Kedzie, S. Fitzgerald, Wirch,
Hansen, Zien and
M. Meyer, cosponsored by Representatives M. Lehman,
Wieckert, Albers, Nischke, Balow, Olsen, Freese, Boyle, Krawczyk, Huber,
Kreibich, Hebl, Musser, Loeffelholz, Steinbrink, Gunderson, Hahn, Van
Akkeren, F. Lasee, Van Roy, Ladwig, Petrowski, Townsend, Ott,
Hundertmark, Stone, Lothian, Vrakas, McCormick, Underheim, Weber,
Hines, Gottlieb, J. Wood, Jeskewitz and Gielow. Referred to Committee on
Economic Development, Job Creation and Housing.
SB305,2,3
1An Act to repeal 66.1105 (2) (f) 3., 66.1105 (4) (h) 3., 66.1105 (6) (a) 3. and 66.1105
2(6) (e) 2.;
to amend 66.1105 (2) (f) 1. i., 66.1105 (4) (e), 66.1105 (4) (gm) 1.,
366.1105 (4) (gm) 4. a., 66.1105 (4) (gm) 4. c., 66.1105 (4) (h) 1., 66.1105 (4) (h) 2.,
466.1105 (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 (6) (a)
64., 66.1105 (6) (c), 66.1105 (7) (a), 66.1105 (7) (ar), 66.1105 (8) (title) and 66.1105
7(8) (a);
to repeal and recreate 66.1105 (6) (am) 1. and 66.1105 (7) (am);
to
8create 59.57 (3), 66.1105 (2) (cm), 66.1105 (2) (f) 2. d., 66.1105 (3) (g), 66.1105
9(4) (gm) 6., 66.1105 (4m) (ae), 66.1105 (4m) (am), 66.1105 (4m) (b) 4., 66.1105
10(6) (a) 7., 66.1105 (6) (a) 8., 66.1105 (6) (e) 1. d., 66.1105 (6) (f), 66.1105 (8) (c),
1166.1105 (8) (d), 66.1105 (15) and 66.1106 (13) of the statutes; and
to affect Laws
12of 1975, chapter 105, section 1 (1) and (2);
relating to: making technical and
13policy changes in the tax incremental financing program based in part on the
14recommendations of the governor's December 2000 working group on tax
1incremental finance, authorizing certain counties to create tax incremental
2financing districts, and making a modification to the environmental
3remediation tax incremental 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 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 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. 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 bill 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. Authorizes a county that is not included in a metropolitan statistical area
to create a TID in a town, if the town board agrees, if all contiguous cities and villages
agree, and if the town and such cities and villages enter into a cooperative plan
boundary agreement.
3. 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.
4. Repeals a provision which currently prohibits 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 after September 30, 1995.
5. 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.
6. Allows TIDs to make expenditures for project costs at any time up to two
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.
7. 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.
8. Changes the period during which DOR may allocate positive tax increments
for TIDs created on or after the effective date of the bill, 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.
9. 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.
10. 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.
11. 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.
12. Limits the inclusion in a TID of land that has been annexed by the city or
village.
13. 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.
14. 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.
15. 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.
16. 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 bill 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 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.
Generally, this bill takes effect on the first day of the 4th month after the bill 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, s. 1
1Section
1. 59.57 (3) of the statutes is created to read:
SB305,5,72
59.57
(3) County tax increment powers. (a) Subject to par. (b), a county that
3was completely outside of a metropolitan statistical area, as defined in s. 560.70 (5),
4before the 2000 census may exercise all powers of a city under s. 66.1105. If a county
5exercises the powers of a city under s. 66.1105, the county board of the county is
6subject to the same duties as a common council under s. 66.1105, and the county is
7subject to the same duties and liabilities as a city under s. 66.1105.
SB305,5,108
(b) A county that wishes to create a tax incremental district as provided in par.
9(a) may do so only in a town that is contiguous to a city or village and whose board
10has approved the creation of such a district and only if all of the following occur:
SB305,6,3
11. The common councils of every city that is contiguous to the town and the
2village boards of every village that is contiguous to the town adopt resolutions
3approving the creation of a tax incremental district in the town.
SB305,6,54
2. The town and every city and village that is contiguous to the town enter into
5a cooperative plan boundary agreement under s. 66.0307.
SB305, s. 2
6Section
2. 66.1105 (2) (cm) of the statutes is created to read:
SB305,6,107
66.1105
(2) (cm) "Mixed-use development" means development that contains
8a combination of industrial, commercial, or residential uses, except that lands
9proposed for newly-platted residential use, as shown in the project plan, may not
10exceed 35 percent, by area, of the real property within the district.
SB305, s. 3
11Section
3. 66.1105 (2) (f) 1. i. of the statutes is amended to read:
SB305,6,1612
66.1105
(2) (f) 1. i. Payments made, in the discretion of the local legislative body,
13which are found to be necessary or convenient to the creation of tax incremental
14districts or the implementation of project plans
, including payments made to a town
15that relate to property taxes levied on territory to be included in a tax incremental
16district as described in sub. (4) (gm) 1.
SB305, s. 4
17Section
4. 66.1105 (2) (f) 2. d. of the statutes is created to read:
SB305,6,2218
66.1105
(2) (f) 2. d. Cash grants made by the city to owners, lessees, or
19developers of land that is located within the tax incremental district unless the grant
20recipient has signed a development agreement with the city, a copy of which shall be
21sent to the appropriate joint review board or, if that joint review board has been
22dissolved, retained by the city in the official records for that tax incremental district.
SB305, s. 5
23Section
5. 66.1105 (2) (f) 3. of the statutes is repealed.
SB305, s. 6
24Section
6. 66.1105 (3) (g) of the statutes is created to read:
SB305,7,6
166.1105
(3) (g) Create a standing joint review board that may remain in
2existence for the entire time that any tax incremental district exists in the city. All
3of the provisions that apply to a joint review board that is convened under sub. (4m)
4(a) apply to a standing joint review board that is created under this paragraph. A
5city may disband a joint review board that is created under this paragraph at any
6time.
SB305, s. 7
7Section
7. 66.1105 (4) (e) of the statutes is amended to read:
SB305,7,228
66.1105
(4) (e) At least
30 14 days before adopting a resolution under par. (gm),
9holding of a public hearing by the planning commission at which interested parties
10are afforded a reasonable opportunity to express their views on the proposed project
11plan. The hearing may be held in conjunction with the hearing provided for in par.
12(a).
If the city anticipates that the proposed project plan's project costs may include
13cash grants made by the city to owners, lessees, or developers of land that is located
14within the tax incremental district, the hearing notice shall contain a statement to
15that effect. Notice of the hearing shall be published as a class 2 notice, under ch. 985.
16The notice shall include a statement advising that a copy of the proposed project plan
17will be provided on request. Before publication, a copy of the notice shall be sent by
181st class mail to the chief executive officer or administrator of all local governmental
19entities having the power to levy taxes on property within the district and to the
20school board of any school district which includes property located within the
21proposed district. For a county with no chief executive officer or administrator, notice
22shall be sent to the county board chairperson.
SB305, s. 8
23Section
8. 66.1105 (4) (gm) 1. of the statutes is amended to read:
SB305,9,424
66.1105
(4) (gm) 1. Describes the boundaries, which may, but need not, be the
25same as those recommended by the planning commission, of a tax incremental
1district with sufficient definiteness to identify with ordinary and reasonable
2certainty the territory included in the district.
The boundaries of the tax incremental
3district may not include any annexed territory that was not within the boundaries
4of the city on January 1, 2004, unless at least 3 years have elapsed since the territory
5was annexed by the city, unless the city enters into a cooperative plan boundary
6agreement, under s. 66.0307, with the town from which the territory was annexed,
7or unless the city and town enter into another kind of agreement relating to the
8annexation except that, notwithstanding these conditions, the city may include
9territory that was not within the boundaries of the city on January 1, 2004, if the city
10pledges to pay the town an amount equal to the property taxes levied on the territory
11by the town at the time of the annexation for each of the next 5 years. If, as the result
12of a pledge by the city to pay the town an amount equal to the property taxes levied
13on the territory by the town at the time of the annexation for each of the next 5 years,
14the city includes territory in a tax incremental district that was not within the
15boundaries of the city on January 1, 2004, the city's pledge is enforceable by the town
16from which the territory was annexed. The boundaries shall include only those
17whole units of property as are assessed for general property tax purposes. Property
18standing vacant for an entire 7-year period immediately preceding adoption of the
19resolution creating a tax incremental district may not comprise more than 25% of the
20area in the tax incremental district, unless the tax incremental district is suitable
21for industrial sites under subd. 4. a. and the local legislative body implements an
22approved project plan to promote industrial development within the meaning of s.
2366.1101. In this subdivision, "vacant property" includes property where the fair
24market value or replacement cost value of structural improvements on the parcel is
25less than the fair market value of the land. In this subdivision, "vacant property"
1does not include property acquired by the local legislative body under ch. 32
or, 2property included within the abandoned Park East freeway corridor or the
3abandoned Park West freeway corridor in Milwaukee County
, or property that is
4contaminated by environmental pollution, as defined in s. 66.1106 (1) (d).
SB305, s. 9
5Section
9. 66.1105 (4) (gm) 4. a. of the statutes is amended to read:
SB305,9,106
66.1105
(4) (gm) 4. a. Not less than 50%, by area, of the real property within
7the district is at least one of the following: a blighted area; in need of rehabilitation
8or conservation work, as defined in s. 66.1337 (2m) (b);
or suitable for industrial sites
9within the meaning of s. 66.1101 and has been zoned for industrial use;
or suitable
10for mixed-use development; and
SB305, s. 10
11Section
10. 66.1105 (4) (gm) 4. c. of the statutes is amended to read:
SB305,9,2212
66.1105
(4) (gm) 4. c.
Either the
The equalized value of taxable property of the
13district plus
the value increment of all existing districts does not exceed
7% 12
14percent of the total equalized value of taxable property within the city
or the
15equalized value of taxable property of the district plus the value increment of all
16existing districts within the city does not exceed 5% of the total equalized value of
17taxable property within the city, except if a city subtracts territory from a district
18under par. (h) 2., the 12 percent limit does not apply to that finding. In determining
19the equalized value of taxable property under this subd. 4. c., the department of
20revenue shall base its calculations on the most recent equalized value of taxable
21property of the district that is reported under s. 70.57 (1m) before the date on which
22the resolution under this paragraph is adopted.
SB305, s. 11
23Section
11. 66.1105 (4) (gm) 6. of the statutes is created to read:
SB305,9,2524
66.1105
(4) (gm) 6. Declares that the district is a blighted area district, a
25rehabilitation or conservation district, an industrial district, or a mixed-use district
1based on the identification and classification of the property included within the
2district under par. (c) and subd. 4. a. If the district is not exclusively blighted,
3rehabilitation or conservation, industrial, or mixed use, the declaration under this
4subdivision shall be based on which classification is predominant with regard to the
5area described in subd. 4. a.
SB305,10,238
66.1105
(4) (h) 1. Subject to subds. 2.,
3. 4., and 5., the planning commission
9may, by resolution, adopt an amendment to a project plan. The amendment is subject
10to approval by the local legislative body and approval requires the same findings as
11provided in
par.
pars. (g)
and (gm) 4. c. Any amendment to a project plan is also
12subject to review by a joint review board, acting under sub. (4m). Adoption of an
13amendment to a project plan shall be preceded by a public hearing held by the plan
14commission at which interested parties shall be afforded a reasonable opportunity
15to express their views on the amendment. Notice of the hearing shall be published
16as a class 2 notice, under ch. 985. The notice shall include a statement of the purpose
17and cost of the amendment and shall advise that a copy of the amendment will be
18provided on request. Before publication, a copy of the notice shall be sent by 1st class
19mail to the chief executive officer or administrator of all local governmental entities
20having the power to levy taxes on property within the district and to the school board
21of any school district which includes property located within the proposed district.
22For a county with no chief executive officer or administrator, this notice shall be sent
23to the county board chairperson.
SB305,11,11
166.1105
(4) (h) 2. Except as provided in subds.
3., 4.
, and 5.,
not more than once
2during the 7 years after the tax incremental district is created, the planning
3commission may adopt an amendment to a project plan under subd. 1. to modify the
4district's boundaries
, not more than 4 times during the district's existence, by
5subtracting territory from the district in a way that does not remove contiguity from
6the district or by adding territory to the district that is contiguous to the district and
7that is served by public works or improvements that were created as part of the
8district's project plan.
Expenditures for project costs that are incurred because of an
9amendment to a project plan to which this subdivision applies may be made for not
10more than 3 years after the date on which the local legislative body adopts a
11resolution amending the project plan.
SB305, s. 14
12Section
14. 66.1105 (4) (h) 3. of the statutes is repealed.
SB305, s. 15
13Section
15. 66.1105 (4m) (a) of the statutes is amended to read:
SB305,12,1314
66.1105
(4m) (a) Any city that seeks to create a tax incremental district or
15amend a project plan shall convene a
temporary joint review board
under this
16paragraph, or a standing joint review board under sub. (3) (g), to review the proposal.
17The Except as provided in par. (am), and subject to par. (ae), the board shall consist
18of one representative chosen by the school district that has power to levy taxes on the
19property within the tax incremental district, one representative chosen by the
20technical college district that has power to levy taxes on the property within the tax
21incremental district, one representative chosen by the county that has power to levy
22taxes on the property within the tax incremental district, one representative chosen
23by the city
or, for a tax incremental district created by a county in a town under s.
2459.57 (3), one representative chosen by the town, and one public member. If more
25than one school district,
more than one union high school district, more than one
1elementary school district, more than one technical college district or more than one
2county has the power to levy taxes on the property within the tax incremental
3district, the unit in which is located property of the tax incremental district that has
4the greatest value shall choose that representative to the board. The public member
5and the board's chairperson shall be selected by a majority of the other board
6members before the public hearing under sub. (4) (a) or (h) 1. is held. All board
7members shall be appointed and the first board meeting held within 14 days after
8the notice is published under sub. (4) (a) or (h) 1. Additional meetings of the board
9shall be held upon the call of any member. The city that seeks to create the tax
10incremental district or to amend its project plan shall provide administrative
11support for the board. By majority vote, the board may disband following approval
12or rejection of the proposal
, unless the board is a standing board that is created by
13the city under sub. (3) (g).
SB305, s. 16
14Section
16. 66.1105 (4m) (ae) of the statutes is created to read:
SB305,12,1915
66.1105
(4m) (ae) 1. A representative chosen by a school district under par. (a)
16or (am) shall be the president of the school board, or his or her designee. If the school
17board president appoints a designee, he or she shall give preference to the school
18district's finance director or another person with knowledge of local government
19finances.