AB 109

Under the current tax incremental financing program, a city or village may

create a tax incremental district (TID) in part of its territory to foster development

if at least 50 percent of the area to be included in the TID is blighted, in need of

rehabilitation or conservation, suitable for industrial sites, or suitable for mixed-use

development. Before a city or village may create a TID, several steps and plans are

required. These steps and plans include public hearings on the proposed TID within

specified time frames, preparation and adoption by the local planning commission

of a proposed project plan for the TID, approval of the proposed project plan by the

common council or village board, and adoption of a resolution by the common council

or village board that creates the TID as of a date provided in the resolution.

Also under current law, once a TID has been created, the Department of

Revenue (DOR) calculates the "tax increment base value" of the TID, which is the

equalized value of all taxable property within the TID at the time of its creation. If

the development in the TID increases the value of the property in the TID above the

base value, a "value increment" is created. That portion of taxes collected on the

value increment in excess of the base value is called a "tax increment." The tax

increment is placed in a special fund that may be used only to pay back the project

costs of the TID. The costs of a TID, which are initially incurred by the creating city

or village, include public works such as sewers, streets, and lighting systems;

financing costs; site preparation costs; and professional service costs. DOR

authorizes the allocation of the tax increments until the TID terminates or, generally,

20 years, 23 years, or 27 years after the TID is created, depending on the type of TID

and the year in which it was created. Under certain circumstances, the life of the TID

and the allocation period may be extended.

Under current law, a planning commission may adopt an amendment to a

project plan, which requires the approval of the common council or village board and

the same findings that current law requires for the creation of a new TID. Current

law also authorizes the amendment of a project plan up to four times during a TID's

existence to change the district's boundaries by adding or subtracting territory.

This bill authorizes a city or village to extend the life of a TID created by the city

or village for one year after all of the TID's project costs have been paid. Under the

bill, DOR is required to continue to authorize the allocation of tax increments for the

TID as if its project costs had not been paid off, without regard to whether the TID

would otherwise not be eligible to receive the increments, and without regard to

whether the TID would otherwise be required to terminate. The city or village must

use at least 75 percent of the increments received during the TID's extended life to

benefit affordable housing in the city or village. The remainder of the increments

must be used to improve the quality of the city's or village's existing housing stock.