Wisconsin 2023-2024 Regular Session

Wisconsin Senate Bill SB103 Compare Versions

Only one version of the bill is available at this time.

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3	3	2023 - 2024 LEGISLATURE
4	4	2023 SENATE BILL 103
5	5	March 1, 2023 - Introduced by Senators FEYEN, COWLES and QUINN, cosponsored by
6	6	Representatives PLUMER, ARMSTRONG, GUNDRUM, NOVAK, O'CONNOR, OHNSTAD
7	7	and SPIROS. Referred to Committee on Government Operations, Elections and
8	8	Consumer Protection.
9	9	AN ACT to amend 66.1105 (4) (gm) 4. c. and 66.1105 (6) (c); and to create 60.23
10	10	(32) (bm), 66.1105 (2) (ak), 66.1105 (9) (a) 1m. and 66.1105 (21) of the statutes;
11	11	relating to: developer-financed tax incremental districts.
12	12	Analysis by the Legislative Reference Bureau
13	13	This bill allows cities, villages, and certain towns to create developer-financed
14	14	tax incremental districts, which are excepted from the general rule that the
15	15	equalized value of taxable property of a new or amended tax incremental district
16	16	(TID) plus the value increment of all existing TIDs in a city or village may not exceed
17	17	12 percent of the total equalized value of taxable property in the city or village (12
18	18	percent rule) and the requirement that all areas of a TID be contiguous.
19	19	Under current law, cities and villages may use tax incremental financing (TIF)
20	20	to encourage development in the city or village. In general, under TIF, a city or
21	21	village pays for improvements in a TID and then collects tax moneys attributable to
22	22	all taxing jurisdictions on the increased property value in the TID for a certain period
23	23	of time to pay for the improvements. Ideally, after the period of time, the city or
24	24	village will have been repaid for its initial investment and the property tax base in
25	25	the TID will have permanently increased in value.
26	26	In general and in brief, a city or village makes use of TIF using the following
27	27	procedure:
28	28	1. The city or village designates an area as a TID and creates a project plan
29	29	laying out the expenditures that the city or village will make within the TID.
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34	34	SENATE BILL 103
35	35	2. The Department of Revenue establishes the “base value” of the TID. This
36	36	value is the equalized value of all taxable property within the TID at the time of its
37	37	creation.
38	38	3. Each year thereafter, the “value increment” of the property within the TID
39	39	is determined by subtracting the base value from the current value of property
40	40	within the TID. The portion of taxes collected on any positive value increment is
41	41	collected by the city or village for use solely for the project costs of the TID. The taxes
42	42	collected by the city or village on positive value increments include taxes that would
43	43	have been collected by other taxing jurisdictions, such as counties or school districts,
44	44	were the TID not created.
45	45	4. Tax increments are collected until the city or village has recovered all of its
46	46	project costs or until the TID reaches its statutory termination date.
47	47	This bill allows a city or village to create a TID designated as a
48	48	developer-financed TID. To create a TID as a developer-financed TID, the local
49	49	legislative body must adopt a resolution making certain findings, and the joint
50	50	review board must approve the creation of the TID as a developer-financed TID. The
51	51	following are the findings that must be included in the resolution:
52	52	1. That all project costs of the TID will be paid directly from tax increments or
53	53	financed by a developer.
54	54	2. That the aggregate of all payments made to a developer providing financing
55	55	for a developer-financed TID will not exceed an amount equal to 90 percent of the
56	56	estimated tax increments to be generated by the TID.
57	57	Under the bill, developer-financed TIDs differ from other TIDs in that:
58	58	1. The 12 percent rule does not apply.
59	59	2. A developer-financed TID may contain noncontiguous areas.
60	60	3. All project costs must be paid directly from value increments generated by
61	61	the developer-financed TID or financed by the developer.
62	62	4. A city or village may share not more than 10 percent of the positive tax
63	63	increments allocated for a developer-financed TID in a year with any other TID
64	64	created by that city.
65	65	5. If a developer secures a loan from a private lender to finance project costs,
66	66	the city and the parties to the loan must agree that the debt is the responsibility of
67	67	the borrower and not the city.
68	68	6. The city may not issue tax incremental bonds or notes for financing a
69	69	developer-financed TID.
70	70	Under current law, towns have much more limited authority to use TIF than
71	71	do cities and villages. This bill allows towns that are adjacent to a city and that have
72	72	a population of more than 4,000 to create developer-financed TIDs if the project costs
73	73	are used solely for the construction of housing-related infrastructure.
74	74	The people of the state of Wisconsin, represented in senate and assembly, do
75	75	enact as follows:
76	76	SECTION 1. 60.23 (32) (bm) of the statutes is created to read:1 - 3 -2023 - 2024 Legislature
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79	79	SECTION 1
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81	81	60.23 (32) (bm) 1. In this paragraph:
82	82	a. “Developer-financed tax incremental district” has the meaning given in s.
83	83	66.1105 (2) (ak).
84	84	b. “Town” means a town that is adjacent to a city and that has a population of
85	85	more than 4,000.
86	86	2. Subject to subd. 3., a town may exercise all powers of cities under s. 66.1105
87	87	to create a developer-financed tax incremental district. If the town board exercises
88	88	the powers of a city under s. 66.1105, it is subject to the same duties as a common
89	89	council that has acted under s. 66.1105 and the town is subject to the same duties and
90	90	liabilities as a city that has acted under s. 66.1 105 with regard to the
91	91	developer-financed tax incremental district.
92	92	3. The project costs for a developer-financed tax incremental district under this
93	93	paragraph may include only expenditures for the construction of housing-related
94	94	infrastructure, including highways and sewer and water facilities.
95	95	SECTION 2. 66.1105 (2) (ak) of the statutes is created to read:
96	96	66.1105 (2) (ak) “Developer-financed tax incremental district” means a tax
97	97	incremental district created under sub. (21) (a).
98	98	SECTION 3. 66.1105 (4) (gm) 4. c. of the statutes is amended to read:
99	99	66.1105 (4) (gm) 4. c. Except as provided in subs. (10) (c), (16) (d), (17), (18) (c)
100	100	3., (20) (b), and (20m) (d) 1., and (21), the equalized value of taxable property of the
101	101	district plus the value increment of all existing districts does not exceed 12 percent
102	102	of the total equalized value of taxable property within the city. In determining the
103	103	equalized value of taxable property under this subd. 4. c. or sub. (17) (c), the
104	104	department of revenue shall base its calculations on the most recent equalized value
105	105	of taxable property of the district that is reported under s. 70.57 (1m) before the date
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132	132	SECTION 3 SENATE BILL 103
133	133	on which the resolution under this paragraph is adopted. If the department of
134	134	revenue determines that a local legislative body exceeds the 12 percent limit
135	135	described in this subd. 4. c. or sub. (17) (c), the department shall notify the city of its
136	136	noncompliance, in writing, not later than December 31 of the year in which the
137	137	department receives the completed application or amendment forms described in
138	138	sub. (5) (b).
139	139	SECTION 4. 66.1105 (6) (c) of the statutes is amended to read:
140	140	66.1105 (6) (c) Except for tax increments allocated under par. (d), (dm), (e), (f),
141	141	or (g), or erroneous reporting of value increments as described in par. (h), all tax
142	142	increments received with respect to a tax incremental district shall, upon receipt by
143	143	the city treasurer, be deposited into a special fund for that district. The city treasurer
144	144	may deposit additional moneys into such fund pursuant to an appropriation by the
145	145	common council. No moneys may be paid out of such fund except to pay project costs
146	146	with respect to that district, to reimburse the city for such payments, to pay project
147	147	costs of a district under par. (d), (dm), (e), (f), or (g) or sub. (21) (e), to pay property
148	148	tax reimbursements as described under par. (h), or to satisfy claims of holders of
149	149	bonds or notes issued with respect to such district. Subject to par. (d), (dm), (e), (f),
150	150	or (g), moneys paid out of the fund to pay project costs with respect to a district may
151	151	be paid out before or after the district is terminated under sub. (7). Subject to any
152	152	agreement with bondholders, moneys in the fund may be temporarily invested in the
153	153	same manner as other city funds if any investment earnings are applied to reduce
154	154	project costs. After all project costs and all bonds and notes with respect to the
155	155	district have been paid or the payment thereof provided for, subject to any agreement
156	156	with bondholders, if there remain in the fund any moneys that are not allocated
157	157	under par. (d), (dm), (e), (f), or (g), they shall be paid over to the treasurer of each
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185	185	SECTION 4
186	186	SENATE BILL 103
187	187	county, school district or other tax levying municipality or to the general fund of the
188	188	city in the amounts that belong to each respectively, having due regard for that
189	189	portion of the moneys, if any, that represents tax increments not allocated to the city
190	190	and that portion, if any, that represents voluntary deposits of the city into the fund.
191	191	SECTION 5. 66.1105 (9) (a) 1m. of the statutes is created to read:
192	192	66.1105 (9) (a) 1m. Payment under sub. (21) (e) by the city from the special fund
193	193	of a developer-financed tax incremental district;
194	194	SECTION 6. 66.1105 (21) of the statutes is created to read:
195	195	66.1105 (21) DEVELOPER-FINANCED TAX INCREMENTAL DISTRICT. (a) A city may
196	196	create a tax incremental district as a developer-financed tax incremental district if
197	197	all of the following apply:
198	198	1. The local legislative body adopts a resolution finding all of the following:
199	199	a. That all project costs will be paid directly under sub. (9) (a) 1. or financed by
200	200	a developer and that any financing obtained by a developer to finance project costs
201	201	will be obtained through a private lender.
202	202	b. That the aggregate of all payments made to a developer providing financing
203	203	for a developer-financed tax incremental district will not exceed an amount equal
204	204	to 90 percent of the estimated tax increments generated by the developer-financed
205	205	tax incremental district.
206	206	2. The clerk of the local legislative body certifies the resolution under subd. 1.
207	207	and forwards a copy of the certified resolution to the department of revenue and the
208	208	joint review board.
209	209	3. The joint review board approves the creation of the tax incremental district
210	210	as a developer-financed tax incremental district.
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236	236	SECTION 6 SENATE BILL 103
237	237	(b) 1. All project costs for a developer-financed tax incremental district shall
238	238	be paid directly under sub. (9) (a) 1. from tax increments generated by the
239	239	developer-financed tax incremental district or financed by a developer.
240	240	2. All payments made by a city to a developer for financing a
241	241	developer-financed tax incremental district shall be made under sub. (9) (a) 1.
242	242	(c) If a developer secures a loan from a private lender to finance the project costs
243	243	of a developer-financed tax incremental district, all of the following apply:
244	244	1. The city and the parties to the loan shall agree that the debt is the
245	245	responsibility of the borrower and not the city. Notwithstanding this subdivision, the
246	246	city may agree with the parties that, upon default by the developer of its loan under
247	247	this subdivision, the city will make payments owed by the city to the developer
248	248	directly to the private lender.
249	249	2. The city may agree with the parties to the loan that the city will not remove
250	250	properties from the developer-financed tax incremental district before the loan is
251	251	repaid or the developer-financed tax incremental district reaches its unextended
252	252	termination date, whichever is earlier.
253	253	3. The estimated payments to be made to a developer providing financing for
254	254	a developer-financed tax incremental district do not exceed an amount equal to 90
255	255	percent of the estimated tax increments generated by the developer-financed tax
256	256	incremental district.
257	257	(d) Notwithstanding sub. (3) (c), the city may not issue tax incremental bonds
258	258	or notes for financing a developer-financed tax incremental district.
259	259	(e) A city may share not more than 10 percent of the positive tax increments
260	260	allocated for a developer-financed tax incremental district in a year with any other
261	261	tax incremental district created by that city.
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289	289	SECTION 6
290	290	SENATE BILL 103
291	291	(f) Notwithstanding subs. (2) (k), (4) (h) 2. and 11., and (18) (a) 2., a
292	292	developer-financed tax incremental district may include areas that are not
293	293	contiguous.
294	294	(END)
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