LRB-1068/1
MES:wlj:jf
2015 - 2016 LEGISLATURE
February 27, 2015 - Introduced by
Joint Legislative Council. Referred to
Committee on Economic Development and Commerce.
SB52,1,9
1An Act to repeal 66.1105 (6) (f) 2. (intro.), 66.1105 (6) (f) 2. a., 66.1105 (6) (f) 2.
2b. and 66.1105 (6) (f) 2. c.;
to renumber 66.1105 (14);
to renumber and amend
366.1105 (6) (f) 2. d.;
to amend 66.1105 (2) (i), 66.1105 (6) (e) 1. a., 66.1105 (6)
4(f) 1. a., 66.1105 (14) (title), 66.1106 (2) (c) and 66.1106 (7) (e) (intro.); and
to
5create 66.1105 (6) (h) and 66.1105 (14) (b) of the statutes;
relating to:
6modifying the requirements for sharing tax increments by tax incremental
7districts, limiting the participation of certain special purpose districts in tax
8incremental district financing, and authorizing any tax incremental district to
9use allocated tax increments donated from another tax incremental district.
Analysis by the Legislative Reference Bureau
This bill is explained in the Notes provided by the Joint Legislative Council in
the bill.
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:
Joint Legislative Council prefatory note: This bill was prepared for the Joint
Legislative Council's Study Committee on Review of Tax Incremental Financing.
Background
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. 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.
A TID is required to terminate, under current law and with some exceptions, once
its project costs are paid back. Under one of the exceptions, the city, village, town, or
county (political subdivision) may amend the TID's project plan to allow the positive tax
increments from the TID ("donor" TID) to be allocated to another TID ("recipient" TID)
also created by the political subdivision. Positive tax increments may not be allocated
from a donor TID to a recipient TID unless all of the following conditions have been met:
• Both the donor and recipient TIDs are in the same municipality and have the
same overlying taxing jurisdictions (county, school district, technical college district, lake
sanitary district, a public inland lake protection and rehabilitation district, and a town
sanitary district).
• The donor TID has first satisfied all of its current-year debt service and project
cost obligations.
• The allocation of tax increments is approved by the Joint Review Board (JRB).
If both the donor TID and recipient TID were created before October 1, 1995 (or
before October 1, 1996, for first class cities) the donor TID may, in general, allocate its
positive tax increments for up to 10 years if all of the following conditions are met:
• The donor TID and the recipient TID have the same overlying taxation
jurisdictions.
• The donor TID is able to demonstrate, based upon the positive tax increments that
are currently generated, that it has sufficient revenues to pay for all project costs that
have been incurred under the project plan for the district and sufficient surplus to pay
for some of the eligible costs of the recipient TID.
Also, under current law, not all types of TIDs may be a recipient TID and use
donated tax increments. Donated tax increments may only be used if one of the following
applies to the recipient TID:
• The project costs in the recipient TID are used to create, provide, or rehabilitate
low-cost housing or to remediate environmental contamination.
• The recipient TID was created upon a finding that not less than 50 percent, by
area, of the real property within the TID is blighted or in need of rehabilitation.
• The recipient TID is a mixed-use or industrial-use district that has been
designated as a distressed TID or a severely distressed TID.
• The recipient TID is an environmental remediation TID.
The Bill
Under the bill, for TIDs that exist on the effective date of the bill, such donor TIDs
may share tax increments notwithstanding the fact that they do not have the same
overlying taxation jurisdictions as the donee districts if the dissimilarity is because one
of the districts includes a lake sanitary district, a public inland lake protection and
rehabilitation district, or a town sanitary district (special districts). Also, for TIDs
created on or after the day the bill takes effect, special districts may not participate in the
financing of a TID. Lastly, this bill allows any type of TID to be a recipient TID and use
donated tax increments.
SB52,1
1Section
1. 66.1105 (2) (i) of the statutes is amended to read:
SB52,3,132
66.1105
(2) (i) "Tax increment" means that amount obtained by multiplying the
3total county, city, school and other local general property taxes levied on all taxable
4property within a tax incremental district in a year by a fraction having as a
5numerator the value increment for that year in the district and as a denominator that
6year's equalized value of all taxable property in the district. In any year, a tax
7increment is "positive" if the value increment is positive; it is "negative" if the value
8increment is negative.
With regard to a tax incremental district created on or after
9the effective date of this paragraph .... [LRB inserts date], the calculation of a tax
10increment may not include general property taxes levied by a lake sanitary district,
11as defined in s. 30.50 (4q), a public inland lake protection and rehabilitation district
12organized under ch. 33, or a town sanitary district organized under subch. IX of ch.
1360.
Note: This Section amends the definition of a tax increment to exclude general
taxes levied by lake sanitary districts, public inland lake protection and rehabilitation
districts, and town sanitary districts from the calculation of a tax increment for any TID
created on or after the effective date of this bill. The bill also excludes these general taxes
from the allocation of tax increments from a donor TID to a recipient TID.
SB52,2
14Section
2
. 66.1105 (6) (e) 1. a. of the statutes is amended to read:
SB52,3,1715
66.1105
(6) (e) 1. a.
The Except as provided in par. (h), the donor tax
16incremental district, the positive tax increments of which are to be allocated, and the
17recipient tax incremental district have the same overlying taxing jurisdictions.
SB52,3
18Section
3
. 66.1105 (6) (f) 1. a. of the statutes is amended to read:
SB52,3,2119
66.1105
(6) (f) 1. a.
The Except as provided in par. (h), the donor tax incremental
20district, the positive tax increments of which are to be allocated, and the recipient
21tax incremental district have the same overlying taxing jurisdictions.
Note: Sections 2 and 3 create a cross-reference to an exception to the requirement
that the donor and recipient TIDs must have the same overlying taxation jurisdiction in
order for positive tax increments to be allocated to the recipient. The exception is created
in Section 9 of the bill and applies to an existing TID.
SB52,4
1Section
4
. 66.1105 (6) (f) 2. (intro.) of the statutes is repealed.
SB52,5
2Section
5
. 66.1105 (6) (f) 2. a. of the statutes is repealed.
SB52,6
3Section
6
. 66.1105 (6) (f) 2. b. of the statutes is repealed.
SB52,7
4Section
7
. 66.1105 (6) (f) 2. c. of the statutes is repealed.
Note: Sections 4
, 5, 6
, and 7 repeal the language that allows an allocation of tax
increments to be used by a recipient TID only if one of the following applies: (1) the project
costs in the recipient TID are used to create, provide, or rehabilitate low-cost housing or
to remediate environmental contamination; (2) the recipient TID was created upon a
finding that not less than 50 percent, by area, of the real property within the district is
blighted or in need of rehabilitation; or (3) the recipient is a mixed-use or industrial use
district that has been designated as a distressed TID or a severely distressed TID.
SB52,8
5Section
8. 66.1105 (6) (f) 2. d. of the statutes is renumbered 66.1105 (6) (f) 5.
6and amended to read:
SB52,4,97
66.1105
(6) (f) 5.
The recipient district is an An environmental remediation tax
8incremental district created under s. 66.1106
may be a recipient district and may use
9any allocated tax increments that are allocated to it under this paragraph.
Note: This Section clarifies that tax increments generated from a TID created
under s. 66.1105, stats., may still be allocated to, and used by, an environmental
remediation TID.
SB52,9
10Section
9
. 66.1105 (6) (h) of the statutes is created to read:
SB52,4,1511
66.1105
(6) (h) With regard to a tax incremental district that exists on the
12effective date of this paragraph .... [LRB inserts date], positive tax increments
13generated by one district may be allocated to another district, as described under
14pars. (e) and (f), if the two districts do not have the same overlying taxation districts
15because either the donor or recipient district includes one or more of the following:
SB52,4,1616
1. A lake sanitary district, as defined in s. 30.50 (4q).
SB52,5,2
12. A public inland lake protection and rehabilitation district organized under
2ch. 33.
SB52,5,33
3. A town sanitary district organized under subch. IX of ch. 60.
Note: This Section creates an exception to the requirement that the donor and
recipient TIDs must have the same overlying taxation jurisdictions in order for tax
increments to be allocated to the recipient. With regard to a TID that exists on the
effective date of the bill, positive tax increments generated by one TID may be allocated
to another TID even if the two districts do not have the same overlying taxation districts
if their dissimilarity is because either the donor or the recipient TID has one or more
special purpose districts not shared by the other.
SB52,10
4Section
10
. 66.1105 (14) (title) of the statutes is amended to read:
SB52,5,75
66.1105
(14) (title)
Use of tax incremental financing for inland lake
6protection and rehabilitation prohibited, limiting participation of certain lake
7and sanitary districts.
Note: This Section amends the title of the section of the statutes to include
reference to the content created in Section 12 of the bill.
SB52,11
8Section
11
. 66.1105 (14) of the statutes is renumbered 66.1105 (14) (a).
SB52,12
9Section
12
. 66.1105 (14) (b) of the statutes is created to read:
SB52,5,1210
66.1105
(14) (b) For a tax incremental district that is created on or after the
11effective date of this paragraph .... [LRB inserts date], none of the following special
12purpose districts may participate in the financing of a tax incremental district: