Tax Incremental Finance (TIF) - Value Limit Test

  1. What is the equalized value limit (12 percent test)?

  2. What role does August 15 (release of equalized values) have in determining the 12 percent limit?

  3. Can a municipality create a new Tax Incremental District (TID) with a zero base value if the municipality's existing TIDs already exceed the 12 percent limit?

  4. Does the 12 percent value limit apply to amendments (adding/subtracting parcels), or do they only apply when a municipality is creating a new district?

  5. When a municipality amends an existing TID for the subtraction and addition of parcels, how does the 12 percent limit apply?

  6. When a municipality amends a TID using simultaneous creation and subtraction, how does the 12 percent limit apply?

  7. If a TID is in more than one county, must each county meet the 12 percent limit?

  8. Can a municipality amend a project plan to add projects when the value of the TID in the municipality is over the 12 percent limit?

  9. Does the 12 percent value limit apply to Town TIDs?

  10. If a municipality creates multiple TIDs in the same year, and all the TIDs are under 12 percent individually but collectively exceed the limit, can the TIDs be created?

  11. When calculating the 12 percent test, does the municipality need to include an increment for a terminated district?

  12. Are overlapped parcel values included in the 12 percent limitation calculation?

  1. What is the equalized value limit (12 percent test)?

    This limit indicates the maximum amount of a municipality's property value that can be included in TIDs.

    The equalized value limit is calculated by adding the equalized value of the district's taxable property as of January 1 of the creation or amendment year and the value increment of all existing TID districts (for that municipality). This value cannot exceed 12 percent of the total equalized value of taxable property within the municipality.

    For more information, review state law (sec. 66.1105(4)(gm)4.c., Wis. Stats.).

  2. What role does August 15 (release of equalized values) have in determining the 12 percent limit?

    The Wisconsin Department of Revenue (DOR) updates municipal equalized values annually on August 15. The date the TID was created or amended determines the values to use:
    • If the municipal resolution is adopted before August 15, use the equalized value from the previous year
    • If adopted on or after August 15, use the new equalized value

  3. Can a municipality create a new Tax Incremental District (TID) with a zero base value if the municipality's existing TIDs already exceed the 12 percent limit?

    No. Under state law (sec. 66.1105(4)(gm)4.c., Wis. Stats.), no new TID or boundary addition can be approved if the limit is exceeded.

  4. Does the 12 percent value limit apply to amendments (adding/subtracting parcels), or do they only apply when a municipality is creating a new district?

    The 12 percent value limit applies to new creations and amendments adding parcels. The value limit calculation is part of the required findings in the municipal resolution. Environmental Remediation TIDs and amendments subtracting parcels are not required to meet the 12 percent value limitation.

  5. When a municipality amends an existing TID for the subtraction and addition of parcels, how does the 12 percent limit apply?

    Addition amendment – the amendment value must meet the 12 percent limit check. The TID must remain under the 12 percent limit when completing the addition amendment per sec. 66.1105(5)(d), Wis. Stats.

    Subtraction amendment – the amendment is not required to meet the 12 percent limit check; the subtracted value does not affect the TID increment and the 12 percent limit until the following year.

    Example: A subtraction amendment approved by September 30, 2016, does not affect the increment value from the tax roll until 2017 taxes, payable in 2018.

  6. When a municipality amends a TID using simultaneous creation and subtraction, how does the 12 percent limit apply?

    Under state law (sec. 66.1105(17), Wis. Stats.), with the 12 percent limit finding, a municipality may complete a simultaneous creation and subtraction amendment without adopting a resolution. The municipality should submit both the creation and subtraction amendments together and must include a fair market value appraisal. These appraisals must show that the property value being removed in the subtraction amendment equals or exceeds the amount needed to ensure the proposed TID is under the 12 percent limit.

    A municipality may only complete a simultaneous creation and subtraction if no other TID created using this option exists in the municipality.

  7. If a TID is in more than one county, must each county meet the 12 percent limit?

    No. Although the values are developed separately in each county, the area is still considered one TID in the value limit calculation. Both county values are combined for the 12 percent limit test.

  8. Can a municipality amend a project plan to add projects when the value of the TID in the municipality is over the 12 percent limit?

    Yes. The 12 percent value limit only applies when a TID is created or territory is added.

  9. Does the 12 percent value limit apply to Town TIDs?

    No. Under state law (sec. 60.85(3)(h)5.d., Wis. Stats.), the limits are different. A town can only create a TID if it meets the 5 percent or 7 percent limit.

    5 percent limit – the district's value plus the value increment of all existing districts within the town cannot exceed 5 percent of the town's total equalized value.

    7 percent limit – the district's value plus the equalized value of all existing districts within the town cannot exceed 7 percent of the town's total equalized value.

  10. If a municipality creates multiple TIDs in the same year, and all the TIDs are under 12 percent individually but collectively exceed the limit, can the TIDs be created?

    Yes. Each submission stands alone. As long as each TID (created/amended) in the same year meets the 12 percent test individually, the TIDs can be created/amended. For more information, review state law (sec. 66.1105(4)(gm)4.c., Wis. Stats.).

  11. When calculating the 12 percent test, does the municipality need to include an increment for a terminated district?

    No. The value increment for the terminated TID should not be included as long as the municipality adopts the termination resolution before it adopts the creation/amendment resolution.

  12. Are overlapped parcel values included in the 12 percent limitation calculation?

    No. Under state law (sec. 66.1105(10)(c), Wis. Stats.), the parcel value of overlapped parcels are not included in the 12 percent test. Environmental remediation TIDs (sec. 66.1106, Wis. Stats.) may not overlap other TIDs.

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

​July 13, 2017