Tax Incremental Finance (TIF) - Project Costs

  1. What are eligible project costs?

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

  3. Who determines if project costs are eligible?

  4. Can a municipality reduce the costs of one project in a plan and use that amount for another project not in the plan?

  5. Can a municipality add projects without adding territory?

  6. For mixed-use TIDs, are there restrictions on the project costs' percentage?

  7. What are non-project costs?

  8. Can a municipality include projects within a half-mile radius of the TID?

  1. What are eligible project costs?

    Eligible project costs are those costs related directly to establishing and improving the Tax Incremental District (TID), including:
    • Capital development
    • Financing
    • Professional services (ex. consulting, accounting, legal services)
    • Organizational and administrative activities
    • Annual fees
    • Relocation

    TID project cost examples:
    • Contributions and payments necessitated by the project plan
    • Utility or street construction directly associated with the TID
    • Removal or containment of lead contamination
    • Developer incentive

    Under state law (sec. 66.1105(2)(f)1.k), improvements outside the TID can be eligible costs, but only to the extent that the improvement serves property in the TID (ex: water or sewage lines, treatment plants, and water towers).

  2. 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.

  3. Who determines if project costs are eligible?

    It is the municipality's responsibility to determine if a project cost is eligible under state law (sec. 66.1105(2)(f)1 & 2., Wis. Stats.). The municipality should consult its attorney for assistance on whether a specific cost is eligible. The Wisconsin Department of Revenue (DOR) does not review project costs or determine cost eligibility.

  4. Can a municipality reduce the costs of one project in a plan and use that amount for another project not in the plan?

    No. The municipality may not shift funds from a project in the plan to a project not in the plan until the municipality completes a project plan amendment to include the additional project.

  5. Can a municipality add projects without adding territory?

    Yes. This is possible if the municipality adopts a project plan amendment to add projects. See our web page on Project Plan Amendments.

  6. For mixed-use TIDs, are there restrictions on the project costs' percentage?

    No. For example, a mixed-use TID may contain 90 percent of the project costs for industrial projects and 10 percent for commercial projects.

  7. What are non-project costs?

    Non-project costs are public works projects, which only partly benefit the TID. A municipality may not pay these costs with tax increments.

    Non-project costs examples include:
    • A public improvement made:
      • Within the TID that also benefits property outside the TID. The portion of the total project costs allocated to the properties outside the TID is a non-project cost.
      • Outside the TID that only partially benefits property within the TID. The portion of the total project costs allocated to the properties outside the District is a non-project cost.
    • Projects started within the TID as part of the project plan implementation that are paid fully or in part by impact fees, grants, special assessments or revenues other than TIF increments.

  8. Can a municipality include projects within a half-mile radius of the TID?

    Yes. A municipality may include projects outside the TID but within a half-mile radius if the projects are documented in the approved project plan.

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