Tax Incremental Finance (TIF) - Value Limit

  1. What is the Equalized Value limit?

  2. What role does releasing Equalized Values on August 15 have in determining the 12 percent limit?

  3. If a Tax Incremental District (TID) is in more than one county, is the limit calculation separated by county?

  4. In calculating the 12 percent limit for creating a TID or adding parcels to an existing TID, does the municipality include the increment for a terminated district?

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

  6. Can a municipality create a new TID with a zero base value if the municipality's existing TIDs already exceed the 12 percent limit?

  7. If a municipality is creating 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?

  8. Does the 12 percent limit apply to amendments (adding/subtracting parcels), or does it only apply when a municipality is creating a new district?

  9. When a municipality amends an existing TID to add and subtract parcels, how does the 12 percent limit apply?

  10. Can a municipality amend a project plan to add projects when the municipality is over the 12 percent limit?

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

  12. Does the 12 percent value limit apply to Town TIDs created under state law (sec. 60.85, Wis. Stats.)?

  13. Does the 12 percent value limit apply to Environmental Remediation (ER) TIDs created under state law (sec. 66.1105, Wis. Stats.)?

  1. What is the Equalized Value limit?

    This Equalized Value limit is the maximum property value a municipality can have within Tax Incremental Districts (TIDs). It is calculated by adding the Equalized Value of the new TID's taxable property as of January 1 (of the creation or amendment year) and the value increment of all existing TIDs (for that municipality). This value cannot exceed 12 percent of the municipality's total Equalized Value.

    See state law (sec. 66.1105(4)(gm)4.c., Wis. Stats.).

  2. What role does releasing Equalized Values on August 15 have in determining the 12 percent limit?

    The Wisconsin Department of Revenue (DOR) updates municipal Equalized Values annually on August 15. The TID creation (or amendment) date determines which values to use. If the municipal resolution is adopted:
    • Before August 15 – use the previous year's Equalized Value
    • On or after August 15 – use the new Equalized Value

  3. If a Tax Incremental District (TID) is in more than one county, is the limit calculation separated by county?

    No. The entire TID is considered for the value limit calculation. TID values from both counties are combined when calculating the 12 percent limit.

  4. In calculating the 12 percent limit for creating a TID or adding parcels to an existing TID, does the municipality include the increment for a terminated district?

    No. The municipality does not include the terminated TID's value increment when calculating the 12 percent limit, as long as the termination resolution was adopted before the new creation or new territory resolution.

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

    No. Under state law (sec. 66.1105(10)(c), Wis. Stats.), the value of overlapped parcels are not included in the 12 percent limit calculation.

  6. Can a municipality create a new 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.), a new TID or boundary addition cannot be approved if the municipality already exceeds 12 percent.

  7. If a municipality is creating 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 limit individually, the TIDs can be created/amended. See state law (sec. 66.1105(4)(gm)4.c., Wis. Stats.).

  8. Does the 12 percent limit apply to amendments (adding/subtracting parcels), or does it 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 created under state law (sec. 66.1106, Wis. Stats.), and amendments subtracting parcels are not required to meet the 12 percent value limitation.

  9. When a municipality amends an existing TID to add and subtract parcels, how does the 12 percent limit apply?

    If a municipality is completing amendments at the same time, the value of the additional and the subtracted parcel values are combined. The resulting value is used in the value limit calculation. Subtracted parcels use the value as of the year they were added to the TID.

    Example 1: A municipality adds one parcel with a value of $100,000 and subtracts one parcel that had a value of $50,000 when added to the TID. The combined value is an addition of $50,000. The $50,000 total is used in the value limit calculation.

    Example 2: A municipality adds one parcel with a value of $50,000 and subtracts one parcel that had a value of $100,000 when added to the TID. Since the combined value is a subtraction of $50,000, the amendment is not required to meet the 12 percent value limitation.

  10. Can a municipality amend a project plan to add projects when the municipality is over the 12 percent limit?

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

  11. 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.), a municipality may complete a simultaneous creation and subtraction amendment without including the 12 percent finding in their resolution. The municipality must submit both the creation and subtraction amendment together and include a fair market value appraisal for each. The appraisal must show that the property value being removed in the subtraction amendment equals or exceeds the amount needed for the proposed TID to comply with the 12 percent limit.

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

  12. Does the 12 percent value limit apply to Town TIDs created under state law (sec. 60.85, Wis. Stats.)?

    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.

  13. Does the 12 percent value limit apply to Environmental Remediation (ER) TIDs created under state law (sec. 66.1105, Wis. Stats.)?

    Yes. However, the municipality can designate one ER TID created under sec. 66.1105, Wis. Stats., and exclude this designated TID from the 12 percent value limit.

    The municipality cannot change this designation to another ER TID. After the designated ER TID terminates, the municipality may designate another ER TID created under sec. 66.1105, Wis. Stats., and exclude from the value limit.

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