SB 55

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 and counties 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. 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 certain limited circumstances, a TID that has paid off all of its project

costs but has not reached its mandatory termination date may become a donor TID,

continue to receive tax increments, and forward those increments to a recipient TID

created by the same city or village.

Currently, a city or village that acts before October 1, 2011, may designate a TID

that was created before October 1, 2008, as a distressed or severely distressed TID

(distressed TID) if a number of steps occur. The city or village must adopt a resolution

finding that its project costs incurred on the TID exceed the revenues the city or

village expects the TID to generate during its lifetime. The municipal clerk must

send to DOR and the joint review board a copy of the resolution and the related

financial data that the city or village used when it adopted its resolution.

Before the city or village may adopt the resolution concerning its project costs,

the common council must hold a public hearing at which interested parties may