Tax Incremental Finance (TIF) - Law Changes

2017 Acts

Summary of each bill:

Act 70/SB 173 Environmental Remediation (ER) Tax Incremental Districts (TID)
General Information - effective date November 29, 2017

  • ER TIDs created by a municipal resolution:
  • Currently – all ER TIDs must now be created under section 66.1105, Wis. Stats.

Requirements/Limits

  • Maximum life is 27 years with the possibility of a 3-year standard extension
  • Before creating an ER TID under sec. 66.1105, Wis. Stats., the municipality must obtain a certified Department of Natural Resources (DNR) site investigation report and email it to DOR
    To obtain this certified report, a municipality must provide DNR:
    • Description of the environmental pollution in the proposed district
    • Proposed remedial action plan
    • Cost estimates for expected project costs
    • Schedule for remediation (design, implementation, construction)
  • At least 50 percent of the TID area has significant environmental pollution
  • Project plan must specify either:
    • All project costs will be paid within 90 percent of the TIDs remaining life
    • Expenditures will only be made in the first half of the TID life; exception – expenditures for significant environmental pollution not identified in the certified site investigation report may continue for 22 years (5 years before the max life)
  • May only allocate excess funds to other ER TIDs (created under 66.1105 or 66.1106, Wis. Stats.)
  • A municipality may designate only one ER TID created under sec. 66.1105, Wis. Stats., as excluded from the 12 percent value limit. Once the excluded TID is designated, it cannot be changed.

TID Base Value

  • When an ER TID is created under sec 66.1105, Wis. Stats., DOR sets the base value to $1
  • If the ER TID is amended to add territory, the full value of the additional parcels as of January 1 of the amendment year is added to the existing $1 base value

Act 15/SB 51
Termination and Administrative fee deadline change

  • Effective January 1, 2018
  • Changes the deadline for TID terminations from May 15 to April 15
    • Example 1:  If a termination resolution is adopted from May 16, 2017, to April 15, 2018, the termination year is 2018 and TID number is removed from the 2018 tax roll
    • Example 2:  If a termination resolution is adopted from April 16, 2018, to April 15, 2019, the termination year is 2019 and TID number is removed from the 2019 tax roll
  • Changes deadline for administrative fee ($150 per active TID) from May 15 to April 15

TID Annual Report changes

  • Effective January 1, 2018 (for 2017 reporting year)
  • Sets maximum penalty of $6,000 for reports not filed timely
    • Penalty for late filing remains $100 per TID per day (applied beginning 60 days after report is past due)
  • DOR reduces shared revenue payments for any unpaid penalty
  • Removes the extra 30-day extension when an estimated report is filed

Base value for Town TIDs created under 60.85

  • Effective date retroactive to October 1, 2015
  • Excludes town-owned property from the TID base value calculation
  • Town TIDs are now consistent with municipal TIDs changed with 2015 Act 255

Notification to DOR of adopted amendments

  • Effective January 1, 2018
  • Removes a municipality's requirement to notify the Wisconsin Department of Revenue (DOR) of TID amendments during May 1 to May 21 each year
  • Keeps requirement to notify DOR within 60 days after the amendment is adopted

2015 Acts

All four bills are from the Joint Legislative Council's Study Committee on Review of TIF.

Summary of each bill:

Act 256/SB 50

  • Effective March 3, 2016
  • Changes Joint Review Board (JRB) review period from 30 to 45 days to approve municipality's TID resolution
  • Changes calculation of levy limit exception – municipality's equalized value for preceding year excludes value of any TID increments for year TID terminates
  • TID industrial zoning requirements only apply to industrial TIDs
  • Changes planning commission notice from Class 2 to Class 1 for TID amendments
  • One year life and allocation extension for new TIDs when the municipality adopts the project plan between September 30 and May 15
    • Example 1:  If the municipality adopted the project plan between September 30, 2015 and May 15, 2016, DOR will add one year to the life and allocation
    • Example 2:  If the municipality adopted the project plan between September 30, 2016 and May 15, 2017, DOR will add one year to the life and allocation

Act 257/SB 51

  • Effective dates:
    • October 1, 2015, for industry-specific town TID sections
    • October 1, 2016, for other sections
  • Requires standing JRB:
    • Must meet July 1 annually or as soon as the updated annual report is available to review
    • Remains in existence the entire time TID exists with same taxing jurisdictions
    • May disband following termination of all existing TIDs
    • Note: Includes industry-specific town TID and environmental remediation TID
  • Industry-Specific Town TIDs:
    • Repeals DOR's review and determination whether the money expended, or debt incurred, by an industry-specific town TID complied with law
  • Municipality must submit an electronic annual report for each existing TID to each overlying taxing jurisdiction. Annual reports are due to DOR starting July 1, 2016, for Town TIDs and July 1, 2017, for all other TIDs. The annual report must contain:
    • Name assigned to the TID
    • TID classification included in project plan and project scope
    • Developer in agreement with municipality receiving financial assistance from tax increments
    • Date municipality expects TID to terminate
    • Tax increment amounts to be deposited into a special fund for the TID
    • Contact person designated by municipality to respond to annual report
    • Analysis of TID special fund:
      • Balance at beginning of the fiscal year
      • Amounts deposited by source, including amounts received from another TID
      • Special fund's list of expenditures by category of permissible project costs
      • Balance at end of fiscal year, including breakdown by source identifying portion of balance required for payment of anticipated project costs
      • Portion of ending balance not identified for payment of anticipated project costs designated as surplus
  • DOR must:
    • Create format of annual reports in 2016
    • Post reports no later than 45 days after receipt
    • Determine whether to grant an extension if municipality provides evidence report is being completed
    • Post list of extensions, period of extension and whether municipality timely filed annual report within extension
    • Notify municipality annual report is past due if municipality does not timely file
    • Charge municipality $100 each day annual report is past due. Fees will be deposited in common school fund.

Act 254/SB 53

  • Effective March 3, 2016
  • Allows municipality to amend TID's project plan and request three-year extension to TID's life if tax increments are impacted by 2013 Act 145 that increased state aid to technical colleges
  • Requires DOR to indicate in a fiscal estimate if a bill will increase or decrease the increment collection for TIDs or if the effect is indeterminate

Act 255/SB 54

  • Effective for TIDs created or project plans amended on or after October 1, 2015
  • Removes restriction that vacant property may not comprise more than 25 percent of TID for creations after effective date
  • Revises TID base value calculation to exclude exempt city−owned property

Questions?