AB 546

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.

This bill allows the creation of a short-term TID. The procedure for creating

a short-term TID is generally the same as for creating a full-term TID, except that

the joint review board that must approve a short-term TID may not include a

representative of a school district. A short-term TID generally operates as a

full-term TID with three exceptions. First, a short-term TID terminates 14 years

after the short-term TID is created, but the termination date may, upon approval by

the joint review board, be extended to 27 years after creation. Second, tax increments

for short-term TIDs do not include the portion of taxes collected in the TID for school

districts, i.e. the school district taxes collected on the value increment continue to go

to the school district. Third, a short-term TID generally may not include as project

costs any expenditures for "enterprise transfer" for enterprises not currently located

in the municipality. The term "enterprise transfer" is defined to mean "the initiation

or operation in a location by the same or an affiliated enterprise that has closed or

substantially reduced operations in the same county or a contiguous county in the