Tax Incremental Finance (TIF) - Territory Amendments

Secs. 60.85 and 66.1105, Wis. Stats.

1. How many times can a municipality change the boundaries of a Tax Incremental District (TID)?


2. How does a subtraction amendment differ from an addition amendment?


3. Does all property in a boundary amendment have to be in the same area?


4. If a municipality adds territory to a TID, does the total area of the TID (original parcels and added parcels) have to meet the 50% minimum property type based on its original TID type?


5. What should the map and the metes and bounds (boundary legal description) show in a Territory Amendment?


6. Can a municipality discuss multiple amendments (to update projects, add/subtract territory, allocate to another TID) at the same public hearing?


7. Can a municipality complete a territory addition amendment and update the project plan with new projects at the same time?


8. When territory is added to a TID, does this change the base value of the existing parcels?


9. Does adding territory affect the TID expenditure period?


10. Does a municipality need to notify owners of blighted property prior to an amendment hearing?


11. Can a municipality amend the boundaries of a distressed or severely distressed TID?


12. If the municipality adds territory to an existing TID, does the TID include the new territory's personal property and personal property value in the base?


13. If a municipality is over the 12% value limit, can the municipality add and subtract territory simultaneously?


14. A municipality is subtracting a parcel from a TID. The parcel did not exist when the TID was created. The parcel being subtracted was a portion of a larger parcel that was divided after TID creation. How is the base value of the parcel being subtracted determined when adjusting the TID's base value?

1. How many times can a municipality change the boundaries of a Tax Incremental District (TID)?
   
   

   A municipality may complete a territory amendment to change TID boundaries up to four times during the TID's life. If a municipality completes an addition and subtraction in the same year, it counts as one of the four territory amendments. Parcels within the TID must remain contiguous (geographically connected) when adding or subtracting parcels.



2. How does a subtraction amendment differ from an addition amendment?
   
   

   Subtraction amendment – decreases the number of parcels in the TID. The value of the removed parcels (at the time they were added to the TID) is subtracted from the base value.

   Addition amendment – increases the number of parcels in the TID. The value of the additional parcels (in the amendment year) is added to the existing base value.



3. Does all property in a boundary amendment have to be in the same area?
   
   

   No. As long as added or subtracted parcels are contiguous with the original TID parcels, the added or subtracted parcels do not have to be in the same area.



4. If a municipality adds territory to a TID, does the total area of the TID (original parcels and added parcels) have to meet the 50% minimum property type based on its original TID type?
   
   

   Yes. After a TID is created and declared a specific type, it must remain that type throughout its life. If a municipality adds parcels, 50% of the total TID area must meet the TID's original type. If a municipality subtracts parcels, 50% of the remaining property must meet the TID's original type.

   To calculate the percentage when adding parcels:

   • New parcels added – use the current type designated
   • Existing parcels – use the type designated for each parcel when the TID was created
   • Recalculate the percentage of all parcels designated at the original TID type (blighted, industrial etc.). The percentage must be at least 50%.
   
   

   To calculate the percentage when subtracting parcels:

   • Subtract the acreage of the removed parcels from the original total acreage originally designated as the specific TID type (blighted, industrial etc.)
   • Recalculate the percentage of the remaining parcel acreage designated at that TID type. The percentage must be at least 50%.


5. What should the map and the metes and bounds (boundary legal description) show in a Territory Amendment?
   
   

   Map – must show the full TID's boundary and identify the added or subtracted parcels. The new boundary must show that the entire TID remains contiguous. Review Parcels Common Question #3 for more information on maps.

   Boundary legal description – must be revised to describe the updated TID outer boundary of the full TID, including the necessary revisions to account for parcel changes made in the amendment.



6. Can a municipality discuss multiple amendments (to update projects, add/subtract territory, allocate to another TID) at the same public hearing?
   
   

   Yes. However, the municipality must describe each action in a separate statement in the public hearing notice.

   See the Tax Incremental District (TID) Checklist.



7. Can a municipality complete a territory addition amendment and update the project plan with new projects at the same time?
   
   

   Yes. A municipality usually updates the project plan during a territory amendment to add projects in the new territory. The municipality can also update the project plan with projects that do not relate to the new territory. In both cases, the municipality can complete and submit one set of forms to DOR.

   See the TID Checklist for the required forms and documents.



8. When territory is added to a TID, does this change the base value of the existing parcels?
   
   

   No. The base value of the existing parcels does not change; however, when territory is added, the new parcels' value is added to the TID's existing base value.

   Example: TID 2 was created in 2021 with a base value of $150,000. In 2022, the municipality adds 10 parcels valued (as of January 1, 2022) at $45,000. The $150,000 existing base value plus the $45,000 sum of additional parcels equals $195,000. In 2023, the TID's new base value is $195,000.



9. Does adding territory affect the TID expenditure period?
   
   

   No. Adding territory does not change the TID's expenditure period. All project costs (original and additional costs) must be incurred within five years before the TID's maximum life.



10. Does a municipality need to notify owners of blighted property prior to an amendment hearing?
    
    

    Yes. When adding parcels to a blighted or rehabilitation/conservation TID, the municipality must notify the owners of parcels being added and identified as blighted or rehabilitation/conservation 15 days before the public hearing.



11. Can a municipality amend the boundaries of a distressed or severely distressed TID?
    
    

    A municipality may complete a boundary amendment to subtract territory from an existing distressed or severely distressed TID; however, a municipality may not add territory to a distressed or severely distressed TID.



12. If the municipality adds territory to an existing TID, does the TID include the new territory's personal property and personal property value in the base?
    
    

    Yes. When amending a TID, a municipality must include any taxable personal property within the new territory. If taxable personal property is located in a TID, the taxable personal property value becomes part of the TID's new base value.



13. If a municipality is over the 12% value limit, can the municipality add and subtract territory simultaneously?
    
    

    If a municipality is over the 12% value limit, it can add and subtract territory in the same TID at the same time as long as the net change to the base value is negative. However, the value of the added and subtracted parcels is determined differently.

    Value of the:

    • Subtracted parcels – is the original value when the parcels entered the TID
    • Additional parcels – is the value as of January 1 of the amendment year
    
    

    See Value Limit Common Question #9 for additional information.



14. A municipality is subtracting a parcel from a TID. The parcel did not exist when the TID was created. The parcel being subtracted was a portion of a larger parcel that was divided after TID creation. How is the base value of the parcel being subtracted determined when adjusting the TID's base value?
    
    

    When the parcel was part of one larger original TID parcel, the assessor must determine the original prorated value of the parcel at the time it was included in the TID. For the land value, generally, this is based on the percentage of the current parcel to the original parcel. For the building/improvements value (if any), it may depend on whether they were located on the portion being removed. Provide an explanation of how the assessor determined the values on the TID Territory Subtraction Workbook.