Tax Incremental Finance (TIF) - Municipal Expenditures and Debt

  1. What is an expenditure?

  2. What is the expenditure period?

  3. Do eligible costs include capitalized interest, other costs of issuing debt and refinancing temporary debt for the Tax Incremental District (TID)?

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

  5. How are excess funds divided among the overlying taxing jurisdictions?

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

  7. What is considered an existing project?

  8. Can payments be made after the expenditure period?

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

  10. Can a municipality put money into a TID fund and repay itself later?

  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 considers an expenditure to include any eligible project cost at the point it is incurred. Debt payments may continue through the TID's maximum life.

    Example: A municipality's project plan includes sewer and street work estimated to cost $875,000. The municipality may use a bond to pay for this expenditure.

  2. What is the expenditure period?

    It is the maximum time period that a TID can incur expenses related to the project plan. Generally, it is five years shorter than the maximum life. A municipality cannot take 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. Do eligible costs include capitalized interest, other costs of issuing debt and refinancing temporary debt for the Tax Incremental District (TID)?

    Yes. These are eligible financing costs authorized in sec. 66.1105(2)(f)1.b., Wis. Stats.

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

    The date the local governing body approves the creation resolution.

  5. How are excess funds divided among the overlying taxing jurisdictions?

    According to state law (sec. 66.1105(6)(c), Wis. Stats.), excess funds should be paid to the taxing entities in the proportion to the amounts that belong to them. DOR recommends that the distribution be based on the most recent tax levy proportions. Contact lgs@wisconsin.gov for further assistance.

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

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

  7. What is considered an existing project?

    Existing projects:
    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

  8. Can payments be made after the expenditure period?

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

  9. 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.

  10. Can a municipality put money into a TID fund and repay itself later?

    Yes. It can also charge a reasonable interest cost for advances to a TID fund.

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

August 15, 2017