SB 555

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 project costs of a TID, which are initially incurred by the

creating city or village, may 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.

This bill creates an exception that allows TID Number 2 in the village of Biron

to allocate its positive tax increments to TID Number 3 in the village.