AB 289

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.

Generally under current law a local planning commission may amend the

project plan of a TID, by adding or subtracting territory from the district, not more

than four times during the TID's existence. If a TID's project plan is amended,

current law authorizes DOR to redetermine the TID's tax incremental base. DOR

may charge a city or village $1,000 to determine or redetermine a TID's tax

incremental base or, if a project plan amendment both adds and subtracts territory,

DOR may impose a fee of $2,000.

Under this bill, a city or village may adopt a resolution, subject to joint review

board approval, and not more than twice during a TID's life, requiring DOR to

redetermine the tax incremental base of a TID which is in a decrement situation that

has continued for at least two consecutive years. The bill defines decrement situation

as a situation in which the current aggregate equalized value of all the taxable

property within the TID is at least 10 percent less than the current value of the TID's

tax incremental base. DOR may charge the city of village $1,000 for the

redetermination.