AB 349

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

under certain conditions. Currently, a town or county also has a limited ability to

create a TID under certain limited 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 (JRB) 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.

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 project 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. Also under current law, a city or village may not generally

make expenditures for project costs later than five years before the unextended

termination date of the TID. Under certain circumstances, the life of the TID, the

expenditure period, and the allocation period may be extended.

Under current law, a city or village may adopt a resolution, subject to JRB

approval and not more than once during a TID's life, requiring DOR to redetermine

the tax incremental base of a distressed TID that is in a decrement situation that has

continued for at least two consecutive years. "Decrement situation" is defined as a

situation in which the current aggregate equalized value of all the taxable property

within the distressed TID is at least 10 percent less than the current value of the

TID's tax incremental base. DOR may charge the city or village $1,000 for the

redetermination.

Under current law, before a town board that is authorized to create certain

types of TIDs under the general TID law that applies to cities and villages may

approve a project plan, the town board must ensure that the project plan specifies