Tax Incremental Finance (TIF) - Base Value Redetermination

  1. When redetermining a base value, does the Wisconsin Department of Revenue (DOR) use the current Equalized Value or the lowest historic TID value to set the new base value?

  2. What years should we use to determine the Equalized Values two-year, 10 percent decline?

  3. The amended project plan requires selecting Option (3), (4) or (5) from sec. 66.1105(5)(i), Wis. Stats. What impact do these three options have on the project plan?

  4. In Option (4), do the "project costs which must be paid within 90% of the TID's remaining life" include debt service?

  5. In Option (4), how is the TID's remaining life calculated?

  6. In Option (5), do "expenditures" include debt service?

  7. What is the difference between "all project costs" in Option (4) and "expenditures" in Option (5)?

  8. If a municipality asks DOR to redetermine the TID's base value, would the adjustment affect the equalized value used for the apportionment of taxes?

  9. Can a municipality with an environmental remediation (ER) TID apply for a redetermination?

  10. Can a municipality with a distressed (or severely distressed) TID apply for a redetermination?

  11. Can we include new project costs with the base value redetermination amendment?

  12. When is the deadline to apply for a TID base value redetermination with DOR?

  1. When redetermining a base value, does the Wisconsin Department of Revenue (DOR) use the current Equalized Value or the lowest historic TID value to set the new base value?

    DOR sets the new base value to the current Equalized Value (on the date of the local legislative body's resolution).

  2. What years should we use to determine the Equalized Values two-year, 10 percent decline?

    Use the two most current years based on when the municipality passes the resolution.

    Example:
    If the resolution is passed:
    • By August 14, 2018 – use 2016 and 2017 values
    • Between August 15, 2018, and August 14, 2019 – use 2017 and 2018 values

  3. The amended project plan requires selecting Option (3), (4) or (5) from sec. 66.1105(5)(i), Wis. Stats. What impact do these three options have on the project plan?

Option 3
Option 4
Option 5
  • At least 51 percent of the public infrastructure improvement's value must be financed by a private developer or entity
  • Development agreement is required to receive cash grants which will solely repay the developer or entity for public infrastructure costs
  • All project costs are expected to be paid within 90 percent of the TID's remaining life
  • Expenditures may be made only within the first half of the TID's maximum life
  • Joint Review Board can unanimously approve additional expenditure(s) but not beyond the original expenditure period
  1. In Option (4), do the "project costs which must be paid within 90% of the TID's remaining life" include debt service?

    Yes. The amended project plan must demonstrate the TID will have sufficient revenue to pay off debt and all project costs within 90 percent of the TID's remaining life. After all project costs are paid, the TID terminates.

  2. In Option (4), how is the TID's remaining life calculated?

    The remaining life is based on the TID's maximum life and the redetermination year:
    1. Determine the TID's maximum life before extensions (contact DOR for assistance if necessary)
    2. Determine the TID's redetermination year:
      • Municipal resolution adopted January 1 to September 30 – the redetermination year is the year the resolution is adopted
      • Municipal resolution adopted October 1 to December 31 – the redetermination year is the year after the year the resolution is adopted
    3. Subtract the redetermination year from the maximum life year
    4. Multiply the difference by (.9)
    5. Add the result to the TID's redetermination year

    Example:
    1. Municipality adopted a resolution to create a mixed-use TID April 1, 2007; the maximum life is April 1, 2027
    2. Redetermination resolution is adopted April 1, 2017; this is a 2017 redetermination
    3. 2027 (maximum life) – 2017 (redetermination year) = 10 years
    4. 10 X (.9) = 9 years remaining life
    5. 2017 (redetermination year) + 9 years = 2026; the municipality must adopt a termination resolution by April 1, 2026

  3. In Option (5), do "expenditures" include debt service?

    No. With this option, the municipality may only take on project costs within the first half of the TID's maximum life. Debt payments may continue through the TID's maximum life. Also see the response to question #1 of the Municipal Expenditures and Debt Common Questions.

  4. What is the difference between "all project costs" in Option (4) and "expenditures" in Option (5)?

    Tax Incremental Financing law (sec. 66.1105, Wis. Stats.), does not provide a specific definition of expenditures; however, DOR considers an expenditure to include any eligible project cost at the point it is incurred. It does not include repayment of debt for an eligible project cost.

  5. If a municipality asks DOR to redetermine the TID's base value, would the adjustment affect the equalized value used for the apportionment of taxes?

    Yes. When the TID's base value is reduced through a redetermination amendment, this affects the municipal TID out value. This could result in a tax rate change to offset the increased TID increment.

  6. Can a municipality with an environmental remediation (ER) TID apply for a redetermination?

    Only an ER TID created under sec. 66.1105, Wis. Stats., after November 29, 2017, may apply for a redetermination. An ER TID created under sec. 66.1106, Wis. Stats., is not eligible.

  7. Can a municipality with a distressed (or severely distressed) TID apply for a redetermination?

    Yes. A distressed (or severely distressed) TID may apply for a redetermination.

  8. Can we include new project costs with the base value redetermination amendment?

    Yes. The municipality must submit a revised project plan as part of the base value redetermination application. The project plan may include new projects, but it must show the decrement calculation and select Option (3), (4) or (5). After the redetermination is complete, if new projects are added, the municipality must submit a project plan amendment to DOR. The new project plan must meet the requirements of the Option (3), (4) or (5) selected in the redetermination amendment.

  9. When is the deadline to apply for a TID base value redetermination with DOR?

    You must email the redetermination documents to DOR by October 31. DOR will certify the values the following year.

    Example: To re-determine a base value as of January 1, 2018, the municipality must adopt the redetermination resolution on or before September 30, 2018, and DOR must receive the redetermination documents on or before October 31, 2018. DOR will certify the re-determined value between January and March 2019.

    Redetermination documents include:
    • Decrement worksheet showing the two-year decline
    • Form PE-605B with required documents
    • Updated project plan

    See the Base Value Redetermination web page for additional information.

FOR MORE INFORMATION PLEASE CONTACT:

MS 6-97
WISCONSIN DEPARTMENT OF REVENUE
Office of Technical and Assessment Services
PO Box 8971
Madison, WI 53708-8971
Phone: (608) 261-5335 or (608) 266-5708
Email additional questions to ​tif@wisconsin.gov

May 4, 2018