Tax Incremental Financing (TIF)
What is TIF?
The Wisconsin Legislature approved the Tax Incremental Financing Law in 1975 to provide ways for cities to promote tax base expansion by financing public improvements in certain areas.
TIF districts are aimed at eliminating blight, rehabilitating declining property values, and promoting industry. Some typical activities include:
- Acquisition and demolition of blighted properties in a downtown, construction of parking facilities and street improvements to implement a downtown redevelopment program.
- Extension of sewer, storm sewer, and water mains, construction of a new well or elevated water storage facility to serve new industries.
- Waterway and public park improvements.
Benefits from a TIF program may come in the form of increased employment, an improved business climate and elimination of unsafe or unsightly areas.
How does a TIF work?
When a Tax Incremental Financing District (TIF) is created, the aggregate equalized value of taxable and certain city-owned property is established. This is called the Tax Incremental Base. All taxing entities receive their share of the annual taxes generated by the base throughout the life of the TIF.
The city then installs public improvements, development occurs and property values grow. Taxes paid on the increased value (growth) are called Tax Increments and are used to pay for public improvement projects undertaken by the city.
The county, school districts, and other taxing jurisdictions do not benefit from taxes collected on value increases in the district until project costs have been recovered. After that, the TIF is closed and the added value is included in the apportionment process and shared by all taxing jurisdictions.
What happens if TIF increments fall short?
TIF debt is backed by the city. Should revenues fall short, the city must utilize alternative revenue sources to pay the debt service.
My property has been identified as blighted. What is the definition of blight and will I be required to make improvements?
Wisconsin Statutes defines blight as: the presence of a substantial number of substandard or deteriorating structures or site improvements; inadequate street layout or faulty lot layout in relation to size, adequacy, accessibility or usefulness, or conditions which endanger life or property by fire and other causes, or any combination of such factors that impairs or arrests the sound growth of a city. This definition also includes an area that is predominantly open and which because of obsolete platting, diversity of ownership or deterioration of structures, impairs the sound growth of the community. Designation of blight also includes inappropriate use of land. This could include buildings in the flood plain, residential use in a commercial district, commercial use without appropriate parking and land use that is not compatible with the final use plan of an area.
Will I be required to make improvements?
The creation of the TIF District and the designation of blighted properties will not require you to make substantial changes or improvements. There will not be any changes to the existing building or health codes. However, if the structure does not meet current codes, you may be required to bring the property into compliance.
My property is manufacturing and is located in a Commercial Business District. Must I request a rezoning?
No rezoning will be required for existing uses.
What affect will a TIF District have on my property value?
The assessed value of property located in a TIF District (TID) will not be impacted by the creation of the district. The Constitution of the State of Wisconsin requires that all property be taxed uniformly. To accomplish this, Wisconsin Statutes require that all property be assessed at the fair market value of the property. Properties located within a TID are assessed based upon the same uniform standards as properties not located within a TID. The creation of a TID is usually for the purpose of financing public improvements or providing other development incentives. Taxes resulting from increases in the assessed value of properties located within the TID generate the incremental revenue to pay for the project costs.
Has my property been targeted for acquisition?
All properties located within TIF District will not be purchased. However, the North Barstow Redevelopment District is located within TIF boundaries. Much of the property within the redevelopment district will be acquired. You will receive a notice from the Redevelopment Authority if your property is needed for a redevelopment project.
What procedures are used if my property is purchased? All property acquired by the Redevelopment Authority (RDA) will be done in accordance with Wisconsin Statutes. The following briefly outlines the steps in acquisition:
- Determination made by RDA that property is required for a project + Notification to the property owner
- Appraisal of the property
- Completion of a Relocation Plan if property is occupied
- Second appraisal of property at the option of the property owner
- Evaluation of all appraisals
- Conclusion of acquisition
What benefits am I entitled to if I am an occupant of acquired property?
When a property is acquired through the use eminent domain powers, occupants may be entitled to certain relocation benefits. Those benefits include:
- Moving payment. The RDA will compensate for moving personal property to a new location. You may choose the actual cost or a fixed payment to complete the move yourself.
- Replacement housing (business) payment. This payment is to compensate for the difference between the acquisition price of your property and the cost of purchasing or renting a comparable replacement.
- Business re-establishment payment. Businesses that are required to move may be entitled to reimbursement for expenses related to re-establishing in a new location. Qualifying expenses are listed in the statutes and are discussed with business owners.
#2 -- RIVERFRONT LOT DEVELOPMENT
The Riverfront Lot Development Project was created in September 1983 for the purpose of the redevelopment of the 300-400 Graham Avenue located in the downtown business district. Private development included a six-story 40,000 square foot office building with a financial institution as a major tenant and a 44-unit apartment/condominium building. Through tax incremental financing the City constructed a two-level parking deck for 130 cars and improved access to the riverfront along the Chippewa River by reconstruction of the upper pathway and installation of landscaping, stairways, lighting, and street furniture. This district was closed effective January 1, 1998 and added $5 million of assessed value to the tax roll. The total TIF project cost was $1,175,000.
TIF #3 -- OAKWOOD HILLS BUSINESS CENTER
The Oakwood Hills Business Center Project was created in November 1984 to encourage industrial development and investment in the area. The District was located at the intersection of U.S. Highway 53, County Trunk Highway AA and Golf Road. This project provided 41 acres of land suitable for wholesale, distribution, warehousing and light manufacturing businesses. Through tax incremental financing, the City provided infrastructure improvements including water and sewer mains, storm drainage, streets and lighting. The total construction costs were $6.2 million. This district, including the Oakwood Hills development, was closed effective January 1, 1998 and added approximately $54 million incremental value to the tax roll.
TIF #5 -- GATEWAY NORTHWEST BUSINESS PARK
The Gateway Northwest Business Park was created in 1997 as a means of financing the infrastructure improvements necessary to facilitate the development of a moderate amenity industrial park. The area is located along the interchange of Highway 12 and the North Crossing adjacent to the northern boundary of TID #4. Public improvements are planned in three phases and include streets, water and sewer utilities, and storm sewer drainage. TIF #5 is currently active. Projected TIF construction costs are $2.7 million. To date the incremental value is $23.1 million.
TIF #6 -- NORTHEAST INDUSTRIAL AREA
The Northeast Industrial Area was created in 1997 to provide public improvements necessary to accommodate industrial development in an area comprised of approximately 104 acres located adjacent to CTH J and west of Highways 53 and 124. The primary uses for TID #6 are envisioned as high tech business, manufacturing, warehousing, distribution, wholesale sales and service, and research and development. The Leader Telegram relocated a major part of its operations within this TIF District. Public improvements are planned in three phases and include streets, water and sewer utilities, and storm sewer drainage. Projected TIF construction costs total $1.5 million. To date the incremental value is $7.2 million.
TIF #7 -- SOO LINE DEVELOPMENT AREA
The Soo Line Development Area was established in 1997 and consists of approximately 18.6 acres, located in the downtown area on the site of the former Soo Line Depot extending east of South Dewey Street and north of Doty Street to the Eau Claire River. Through the TIF, the City acquired and demolished blighted properties, installed utilities and street improvements, provided 103 spaces of surface parking and developed a riverfront trail and overlook. New development on the site consists of two new office buildings totaling 43,000 square feet. Projected costs in TIF #7 were budgeted at $1,705,000. To date, the incremental value is $3.4 million.