2011 - 2012 LEGISLATURE
April 12, 2011 - Introduced by Representatives Murtha, Fields, Petrowski, Rivard,
Brooks and Petryk, cosponsored by Senators Harsdorf and Moulton.
Referred to Committee on Ways and Means.
1An Act to repeal
66.1105 (4e) (a) 4. of the statutes; relating to: expanding the
2number of tax incremental financing districts that may be designated as
3distressed or severely distressed.
Analysis by the Legislative Reference Bureau
Under the current tax incremental financing 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 conservation, suitable for industrial sites, or suitable for mixed-use
development. Currently, towns and counties also have a limited ability to create a
TID under certain circumstances. 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, approval of the city's or village's
proposed TID by a joint review board that consists of members who represent the
overlying taxation districts, and adoption of a resolution by the common council or
village board that creates the TID as of a date provided in the resolution.
Also under current law, once a TID has been created, the Department of
Revenue (DOR) calculates the "tax incremental 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 be used only 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, generally,
20 years, 23 years, or 27 years after the TID is created, depending on the type of TID
and the year in which it was created. Under certain circumstances, the life of the TID
and the allocation period may be extended.
Under certain limited circumstances, a TID that has paid off all of its project
costs but has not reached its mandatory termination date may become a donor TID,
continue to receive tax increments, and forward those increments to a recipient TID
created by the same city or village.
Currently, a city or village that acts before October 1, 2011, may designate a TID
that was created before October 1, 2008, as a distressed or severely distressed TID
(distressed TID) if a number of steps occur. The city or village must adopt a resolution
finding that its project costs incurred on the TID exceed the revenues the city or
village expects the TID to generate during its lifetime. The municipal clerk must
send to DOR and the joint review board a copy of the resolution and the related
financial data that the city or village used when it adopted its resolution.
Before the city or village may adopt the resolution concerning its project costs,
the common council must hold a public hearing at which interested parties may
express their views on the proposed distressed TID. Following receipt of the
resolution and financial data, the joint review board must evaluate the information
to determine whether designating the district as a distressed TID or allowing
increment sharing will likely enhance the ability of the city or village to pay its
project costs. The resolution adopted by the city or village may not take effect
without joint review board approval of the designation. The board may approve or
deny the designation. If the joint review board approves the designation, DOR must
certify the designation and notify all overlying taxing jurisdictions of the
A distressed TID may continue to exist and receive tax increments, as well as
contributions from a donor TID, for up to 40 years after the distressed TID was
created. A distressed TID may not amend its project plan to add any additional
project costs, add territory, become a donor TID, make any expenditures after its
original expenditure period ends, or expend funds outside of the TID's boundaries.
A distressed TID must terminate whenever all of its project costs have been paid off
or 40 years after it was created, whichever occurs first. A donor TID must terminate
upon the earlier of the distressed TID's termination or 40 years after the donor TID
This bill repeals the requirement that a TID must have been in existence for at
least seven years before the city or village may adopt a resolution designating the
TID as a distressed TID.
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:
AB87, s. 1
66.1105 (4e) (a) 4. of the statutes is repealed.