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News & Press: Legislative Memos to the Capitol

Support for SB 252

Thursday, September 19, 2013   (0 Comments)
Posted by: Megan Purtell
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TO: Members, Senate Committee on Workforce Development, Forestry, Mining, and


FROM: Mike Harrigan, Wisconsin Economic Development Association

DATE: September 18, 2013

RE: Support for SB 252 relating to authorizing a city of village to require the Department of Revenue to redetermine the value of the tax incremental base of certain tax incremental districts

The Wisconsin Economic Development Association is a statewide association consisting of over 450 economic development practitioners. WEDA supports state policies that strengthen our economy and create jobs. WEDA supports Senate Bill 252 which we believe will lead to more economic opportunities across the state.

Since 1975, Tax Incremental Financing (TIF) has been one of Wisconsin’s primary and most successful economic development tools. Statewide, TIF projects have revitalized urban corridors and bolstered industrial growth among rural areas throughout Wisconsin. Over the years, various TIF related changes have been implemented to reconcile or address shifting marketplace conditions. To respond to challenges associated with the recession, as well as inherent problems of reduced valuation created by property demolition, remediation and project timing, WEDA is urging the Legislature to consider this adjustment to current TIF law.

When a Tax Incremental District (TID) is created, the Department of Revenue (DOR) calculates the "base value” of the district. This is the equalized value of all taxable property within the district at the time it was created.

However, the redevelopment of blighted property or property in need of rehabilitation or conservation will often create a situation where the net value of the remediated or razed property results in a negative value or "decrement” vs. the original base value of a Tax Increment District. This problem is further magnified in cases of a flood, fire, tornado, or downturn in the economy. Unfortunately, under the current TID law, the property’s TIF base value does not reconcile these market factors; therefore, any new development or reinvestment associated with these properties must generate a substantially higher amount of TIF increment just to reach the established base value.

This bill allows DOR to redetermine the base value of a TID under certain conditions. If a city or village adopts a resolution, and the joint review board approves, DOR can redetermine the value of a TID if the TID has been in a decrement situation for at least two years. In the bill, a decrement situation would exist when the current aggregate equalized value of all the taxable property within the TID is at least 10 percent less than the current DOR determined base value.

By allowing the base value to be reduced, the timeframe associated with a TIF district’s ability to generate new taxable value would be accelerated. Given the anemic economy, allowing for base value adjustments can generate positive TIF increment more quickly, increase public-private development partnerships, and accelerate the stream of benefits for all of the impacted taxing jurisdictions (e.g. Local Unit of Government, County, Technical College and School District).

Thank you for your consideration of SB 252. The association looks forward to your support.

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