Tax Incremental Finance (TIF) - Municipal Expenditures and Debt

  1. What is an expenditure?

  2. What is the expenditure period?

  3. What date is used to measure the start of the expenditure period?

  4. Can "new" project costs be incurred after the expenditure period?

  5. What is considered an existing project?

  6. Can payments be made after the expenditure period?

  7. Are there any restrictions on the length of maturity for TID debt?

  8. Can a municipality transfer money from another fund into a TID fund and repay itself later?

  9. If a municipality incurs expenses before it creates a Tax Incremental District (TID), can these expenses be recovered?

  10. What expenses can be considered "planning" expenses?

  11. If a municipality purchased land before it creates a TID and sells the land to the Community Development Authority (CDA) after the TIF is approved, can the land be considered an expense?

  12. Can a municipality buy and improve land with TIF funds and place revenue from the improved land's sale into the general fund?

  13. Can a municipality use TIF funds to reduce special assessments to property owners after the improvements are installed?

  1. What is an expenditure?

    The term "expenditure" is found within the definition of "project costs" under state law (sec. 66.1105(2)(f)1., Wis. Stats.). "Expenditure" is not explicitly defined; however, the Wisconsin Department of Revenue (DOR) considers an expenditure any eligible project cost at the point it is incurred. It does not include repayment of debt for an eligible project cost.

  2. What is the expenditure period?

    It is the maximum time period a TID can incur expenses related to the project plan. Generally, it is five years shorter than the maximum life. A municipality cannot take on any new projects after the end of the expenditure period. An extension does not change the expenditure period.

    Example: A mixed-use TID has a maximum life of 20 years. Because the maximum life is 20 years, the expenditure period is 15 years.

  3. What date is used to measure the start of the expenditure period?

    The date the local legislative body adopts the creation resolution.

  4. Can "new" project costs be incurred after the expenditure period?

    No. Existing projects may be finished but no additional improvements can be started during the last five years of the TID's maximum life.

  5. What is considered an existing project?

    1. Project must be documented in the JRB approved project plan, and
    2. Either the physical project is started, or one of the following must be in place:
      • Established financing
      • Signed contract
      • Signed developer's agreement

  6. Can payments be made after the expenditure period?

    Yes. Payments for project cost debt service, repayment of advances or other liabilities and approved allocations to other TIDs are allowed under state law (sec. 66.1105(6)(c), Wis. Stats.).

  7. Are there any restrictions on the length of maturity for TID debt?

    No. The same restrictions for other municipal debt apply to TID debt and would likely not mature beyond the TID's maximum life.

  8. Can a municipality transfer money from another fund into a TID fund and repay itself later?

    Yes. It can also charge a reasonable interest cost for advances to a TID fund if made after the TID is created.

  9. If a municipality incurs expenses before it creates a Tax Incremental District (TID), can these expenses be recovered?

    If a municipality incurs expenses before it creates a TID, the municipality can only recover expenses directly related to planning the district. The municipality cannot incur other expenses until after the municipality adopts the creation resolution approving the project plan. (sec. 66.1105(6)(am)3, Wis. Stats.)

  10. What expenses can be considered "planning" expenses?

    State law does not define planning expenses; however, the consulting, legal, engineering, architectural or administrative costs required to develop and approve the project plan may qualify. The municipality should consult its attorney for assistance to determine if a specific cost is considered a planning expense.

  11. If a municipality purchased land before it creates a TID and sells the land to the Community Development Authority (CDA) after the TIF is approved, can the land be considered an expense?

    No. This purchase is not considered a TIF project expense. Before the TID is approved only planning costs can be recovered. When the municipality sells the land, the proceeds are considered TIF revenue and used to offset project costs.

    If a municipality purchases land within one year before the TID creation, when setting the TID base value the land must be valued as if the purchase did not occur. (sec. 66.1105(5)(e), Wis. Stats.)

  12. Can a municipality buy and improve land with TIF funds and place revenue from the improved land's sale into the general fund?

    No. A municipality cannot make a profit with TIF. It must use revenue from the sale of property purchased and improved with TIF funds to offset all other project costs.

  13. Can a municipality use TIF funds to reduce special assessments to property owners after the improvements are installed?

    No. Reducing special assessments is not an eligible expense, under state law (sec. 66.1105(2)(f), Wis. Stats.). If the municipality applied a special assessment for a particular project, it should not use TIF funds to pay for the same project. A project paid for with a special assessment is a non-project cost for the TID.

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