AB 416

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 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.

Under current law, the environmental remediation tax incremental financing

program permits a city, village, town, or county (political subdivision) to recoup the

costs of remediating contaminated property from property taxes that are levied on

the remediated property. The mechanism for financing remediation costs is very

similar to the mechanism for financing project costs under the tax incremental

financing program.

Initially, the governing body of a political subdivision adopts a resolution

creating an environmental remediation tax incremental district (ERTID) with

particular boundaries. This resolution is then reviewed by a joint review board made

up of representatives of the overlying taxing jurisdictions. If the joint review board

approves the ERTID, a political subdivision that has incurred eligible costs to

remediate environmental pollution on a parcel of property may apply to DOR to

certify the environmental remediation tax incremental base of the parcel. DOR is