LRB-4673/2
MS/JTK/RC/PK/JK/PG/RM:ch:km
1999 - 2000 LEGISLATURE
March 8, 2000 - Introduced by Representatives Underheim and Miller,
cosponsored by Senator Risser. Referred to Joint survey committee on Tax
Exemptions.
AB853,2,9
1An Act to renumber 66.04 (1) and 66.066 (5);
to amend 13.94 (4) (a) 1., 16.70
2(14), 19.42 (13) (a), 25.50 (1) (d), 32.02 (11), 32.05 (intro.), 32.05 (1) (a), 32.07 (2),
340.02 (28), 40.02 (36), 66.04 (2) (a) (intro.), 66.066 (1) (a), 66.067, 66.30 (1) (a),
471.26 (1) (bm), 71.26 (1m) (g), 71.36 (1m), 71.45 (1t) (g), 111.02 (7), 111.70 (1) (j),
5230.03 (3), 231.01 (4) (a), 231.01 (4) (b) 1., 231.01 (4) (b) 2., 231.01 (4) (c), 231.01
6(7) (a) 1., 231.01 (7) (a) 2., 231.01 (7) (a) 4., 231.01 (7) (c), 231.02 (6) (b), 231.03
7(5), 231.03 (7), 231.03 (8), 231.03 (11), 231.03 (13), 231.03 (14), 231.03 (15),
8231.03 (16), 231.03 (17), 231.03 (18), 231.03 (19), 231.04, 231.05 (1), 231.06,
9231.07 (1) (b), 231.07 (2) (a), 231.08 (5), 231.10 (1), 231.12, 231.13 (1) (intro.),
10231.13 (2), 231.16 (1), 231.20 and 231.23;
to repeal and recreate 40.02 (28);
11and
to create 24.61 (2) (a) 8., 24.61 (2) (a) 9., 25.17 (3) (b) 11., 25.17 (3) (b) 12.,
1266.04 (1a), 66.04 (2) (a) 3r., 66.04 (2) (a) 3t., 66.066 (5) (c), 70.11 (40), 71.05 (1)
13(c) 6., 71.05 (1) (c) 7., 71.26 (1m) (h), 71.45 (1t) (h), 77.54 (9a) (h), 219.09 (1) (e),
14219.09 (1) (f), subchapter V of chapter 229 [precedes 229.840], 231.01 (4g),
1231.01 (4h), 231.01 (5t), 231.03 (6) (g) and 231.03 (6) (h) of the statutes;
2relating to: authorizing the creation of a local cultural arts district; granting
3a property tax exemption for the district's property; granting a sales tax and use
4tax exemption for tangible personal property and services purchased by the
5district; giving a local cultural arts district the authority to issue bonds and
6granting income tax exemptions for interest income on bonds issued by the
7district; authorizing certain local cultural arts districts to acquire property by
8condemnation; and authorizing the Wisconsin Health and Educational
9Facilities Authority to issue bonds to finance certain cultural arts facilities.
Analysis by the Legislative Reference Bureau
Creation and dissolution of a district
This bill authorizes the creation of a local cultural arts district by a sponsoring
city, which is defined as a city with a population of more than 150,000 that creates
such a district. To create a district, the mayor of the sponsoring city must issue a
written proclamation declaring the need for establishing a district, and the
sponsoring city's common council must adopt a resolution that approves of the
proclamation and deliver a copy of the resolution to the governor. The resolution
must also prescribe the scope of the district's eminent domain power, if any. A district
is a local unit of government that is a body corporate and politic and that is separate
and distinct from, and independent of, the state and the sponsoring city. Under the
bill, a district's jurisdiction and powers remain fixed even if the population of the
sponsoring city subsequently declines below the minimum described.
In connection with cultural arts facilities, the powers of a district include
eminent domain authority; the construction, maintenance, management and
acquisition of the facilities; the issuance of revenue bonds to finance the construction
of the facilities; the authority to enter upon real property within its eminent domain
jurisdiction to make surveys and examinations before locating or constructing
cultural arts facilities, subject to certain limitations; the authority to enter into
partnerships, joint ventures, common ownership or other arrangements with other
persons to further the district's purposes; and the authority to acquire, lease or
transfer property within or outside of the district's jurisdiction. A district may also
set standards governing the use of, and the conduct within, the facilities, and may
set and collect fees for the use of the facilities.
With regard to contracts for construction work and professional service
contracts that are awarded by the district, it shall be a goal of the district that at least
5% of the aggregate dollar value of the contracts be awarded to minority-owned
businesses and at least 5% of the aggregate dollar value of contracts be awarded to
women-owned businesses.
The district is governed by a district board. If the sponsoring city is not a first
class city (presently only Milwaukee is a first class city), the board consists of, in an
ex-officio capacity, the governor, the mayor of the sponsoring city and the county
executive of the county in which the greatest percentage of the territory of the
sponsoring city is located or if there is no county executive, the board chairperson,
or the designees of these persons. If the sponsoring city is a first class city, the
common council shall determine the structure, qualifications and selection
procedures for the members of the board.
If the sponsoring city is not a first class city, the board consists of, other than
the ex-officio members listed above, three persons appointed by the governor, one of
whom shall be selected from a list of three to five names that is submitted by the
Board of Regents of the University of Wisconsin System; six persons appointed by the
mayor of the sponsoring city, all of whom may need to be appointed according to
procedures that may be required by the common council and one of whom must be
selected from a list of three to five names that is submitted by the principal school
board of the sponsoring city; and one person appointed by the county executive or,
if there is no county executive, the board chairperson of the county in which the
greatest percentage of the territory of the sponsoring city is located. Of the persons
appointed by the mayor, no more than three may be elective city officials.
In addition, the sponsoring city's common council may increase the size of the
board to include the mayor, village president or town board chair, or such person's
designee, of a city, village or town having territory that is located within 25 miles of
the sponsoring city's city hall and that provides substantial support to the district.
The common council may reduce the size of the board to exclude that member if the
common council subsequently determines that such a city, village or town no longer
provides substantial support to the district.
A district may be dissolved, subject to retirement of the district's bonds and
fulfillment of its other contractual obligations in one of the following ways: 1) By a
law enacted by this state; 2) If the sponsoring city is not a first class city, by the
unanimous action of the district board; 3) If the sponsoring city is a first class city,
by any means described in the initial resolution under which the first class city
created the district.
If a district is dissolved, its property may be transferred to the sponsoring city,
any state, any possession of the United States, any political subdivision of a state or
of the United States, the District of Columbia or to one of a number of tax-exempt
religious, educational, scientific or charitable entities that are described in the
Internal Revenue Code, except that in the case of a district created by a first class
city, the common council's resolution that created the district must specify the
specific entity to which the district's property will be transferred upon dissolution.
Under the bill, a sponsoring city may make grants, gifts or loans of any kind of
property, or provide any other form of assistance, to a district; expend public funds
to subsidize a district; borrow money to fund grants, loans or subsidies to a district;
fix and collect a sum to be paid in lieu of taxes by the district; or audit the financial
records of a district.
Bonding
The bill grants a district the power to issue revenue bonds for purchasing,
acquiring, leasing, constructing, extending, adding to, improving, conducting,
controlling, operating or managing a local cultural arts district. Under the bill, the
bonds issued by the district may be secured by district property and income placed
in a special fund. The bill specifically provides that neither the state nor the
sponsoring municipality is liable on bonds issued by the district and that the
issuance of bonds by the district does not obligate the state or the sponsoring city to
levy taxes for the retirement of the bonds. Under the bill, the state pledges to the
holders of bonds issued by the district that the state will not alter the rights vested
in the district by law until such bonds are fully retired, unless adequate provision is
made by law for protection of the bondholders' rights. Finally, with respect to bonds
issued by the district, the bill contains provisions authorizing certain state and local
government funds and certain regulated financial institutions to invest in bonds
issued by the district; provides that all moneys received by a district, including
proceeds from the sale of bonds, are trust funds to be held and applied solely for the
purposes provided in the bill; and limits the personal liability of members of a
district's board with respect to the issuance of bonds.
Under current law, the Wisconsin Health and Educational Facilities Authority
(WHEFA) may issue bonds to finance certain projects of health institutions,
educational institutions and, until May 1, 2000, child care centers, and to refinance
outstanding debt of health institutions, educational institutions and, until May 1,
2000, child care centers. Projects that may be financed include, among others, the
acquisition of a hospital, the construction or operation of an ambulatory surgery
center or home health agency, the construction, remodeling, furnishing or equipping
of a health or educational facility or related structure and, until May 1, 2000, the
construction, remodeling, furnishing or equipping of a building that is used
exclusively to provide child care services and that is not operated for profit. The bill
authorizes WHEFA to also issue bonds to finance a project undertaken by a local
cultural arts district for a cultural arts facility, or to refinance outstanding debt of
a local cultural arts district.
Condemnation
A district's eminent domain power may be used only within the area of the
sponsoring city specified in the resolution creating the district. The sponsoring city
may expand or contract that area by ordinance or resolution but may not contract the
area beyond that specified in the initial resolution. If the sponsoring city is a first
class city, the district does not have the power of eminent domain but may request
the city's redevelopment authority to exercise its power of eminent domain on behalf
of the district. A redevelopment authority's power to condemn property on behalf of
a district created by a first class city is not subject to the above limitations.
collective bargaining
The bill specifically exempts the local cultural arts district from coverage under
the Municipal Employment Relations Act (MERA). Under MERA, which covers
employment relations in municipalities, employes in collective bargaining units for
which a representative is recognized or certified may bargain with an employer over
wages, hours and conditions of employment to the point of impasse, at which point
the parties may be required to submit to interest arbitration. Under MERA,
however, employes do not have the right to strike. Instead, the bill provides that a
district is covered under the Employment Peace Act. The Employment Peace Act
generally covers all employers not covered under the National Labor Relations Act
other than the state and its political subdivisions. Under the Employment Peace Act,
employes in collective bargaining units for which a representative is recognized or
certified may bargain with an employer over wages, hours and conditions of
employment. Under the Employment Peace Act, there is no interest arbitration;
however, employes are granted the right to strike.
taxation
The bill creates a property tax exemption for the property of a local cultural arts
district. The property tax exemption, however, does not apply to the property of a
local cultural arts district that is not a part of the physical structure of a cultural arts
facility, if that property is used for a retail business or a restaurant, unless the retail
business or restaurant is operated by the local cultural arts district or by a nonprofit
corporation, organization or association. The exemption also does not apply to
parking lots or parking structures that are not used to support the operation of a local
cultural arts district.
Under the bill, the income of a local cultural arts district is exempt from the
income tax and the franchise tax, and the income and interest from the district's
obligations are exempt from the income tax. In addition, the income and interest
from bonds that are issued by WHEFA with respect to a local cultural arts district
are exempt from the income tax.
Under the bill, goods and services purchased by a local cultural arts district are
exempt from the sales tax and the use tax.
Finance
The bill permits the legislative audit bureau to audit the records of a district.
Under the bill, the joint legislative audit committee may review a district's
performance.
ethics
Members of a district board are subject to the statutory code of ethics for local
public officials. Like other local public officials, district board members are not
subject to periodic reporting requirements.
applicability of other laws
Numerous laws that currently apply to special purpose districts and local units
of government apply to a local cultural arts district, including, among others:
1. The district is subject to laws requiring, with certain exceptions, public
notice of and access to meetings of the district board and public access to the district's
records.
2. The district is subject to worker's compensation, unemployment insurance,
state minimum wage and hour and family and medical leave laws.
3. The district is subject to the law requiring the payment of prevailing wages
on local government public works projects.
4. The district is governed by laws regulating municipal administrative
procedures and rights.
5. The district is subject to laws restricting employers from testing employes
and prospective employes for human immunodeficiency virus (HIV) or an antibody
to HIV.
6. The district is subject to the tort and antitrust liability limitation that
currently applies to actions brought against local governmental units of $50,000 per
occurrence, and persons attempting to sue the district are subject to a requirement
to file notice of their claims within 120 days of their occurrence.
7. The district is subject to laws regulating buildings and safety.
8. The property of the district is subject to special assessment levies.
Under the bill, the district may participate in the local government property
insurance fund.
The bill provides that the district is not subject to:
1. Laws regulating generally the ways in which funds of local governments may
be invested.
2. The state public employe retirement plan and state-administered plans for
deferred compensation, health care benefits and disability and survivor benefits.
The bill provides also that the district may:
1. Contract with municipalities and federally recognized Indian tribes and
bands in this state for the receipt or furnishing of services or the joint exercise of
powers or duties.
2. Participate in the state-operated local government pooled-investment fund.
Under the bill, the assets and liabilities of a district are not assets or liabilities
of the sponsoring city.
