SB 223

This bill allows the project costs of a tax incremental district (TID) to include

an expenditure incurred for territory that is within a city, village, or town that is

adjacent to the city or village that created the TID, but only if the territory is within

one-half mile of the boundaries of the TID and the governing body of the adjacent

city, village, or town adopts a resolution expressing consent.

Under the current tax incremental financing program, a city or village may

create a TID in part of its territory to foster development. Once a TID has been

created, the Department of Revenue 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 the

property taxes collected from the TID that is attributable to the value increment 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, and generally expended within the TID, include public works such as sewers,

streets, and lighting systems; financing costs; site preparation costs; and

professional service costs. Project costs specifically do not include the cost of

constructing or expanding administrative buildings, police and fire buildings,

libraries, community and recreational buildings, and school buildings. Under

current law, expenditures may be included in the project costs of a TID only if they

are incurred for costs within the TID or for locations within the city or village that

are within one-half mile of the boundaries of the TID.