AB 519

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. Currently, towns also have a limited ability to create a TID under

certain circumstances. 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, approval of the city's or village's

proposed TID by a joint review board that consists of members who represent the

overlying taxation districts, 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 incremental 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. 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. 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. Generally, project expenditures

may not be made later than five years prior to the termination date of the TID.

Under current law, a specific provision allows TID Number 6 in the city of

Sheboygan, which was created on January 1, 1992, to make expenditures up to 15

years after the TID was created, or through December 31, 2006. DOR is also

authorized by a specific provision to allocate tax increments to this TID for 16 years

after the last expenditure identified in the project plan is made.

Under this bill, the expenditure period for TID Number 6 in the city of

Sheboygan is extended to 26 years after the TID was created, or through December

31, 2017. The bill also allows DOR to allocate tax increments to this TID for 31 years

after the TID was created, which is the same as current law.