Common Language Guidelines for Project Plans- Tax Incremental Financing (TIF)

Below are the subject areas and examplesyou mustinclude ina project plan, under state law(sec. 66.1105(4)(f), 60.85(3)(f) and 60.23(32)(f)2., Wis. Stats.).

  1. Statement of kind, number and location of proposedpublic works –this could include: a narrativedescribing the general goals of the tax incremental district (TID) byspecific project, a listing of major public improvementcategories and the reasoneach is needed

General category examples:

  • Sanitary sewer
  • Stormsewer
  • Water system improvements
  • Streets andamenities
  • Site preparation
  • Land assembly costs
  • Administrative and organizational costs
  • Relocationcosts
  • Financing costs

Note: Development incentivesand cash grants are eligible project costsonly if the developer and municipality bothsigned a development agreement.

  1. Economic feasibility study –there are several ways you can preparean economicfeasibility study, but there are certain items that must bein each case.

To verify the study's details, you must include the followingin your plan:

  • Information showing the municipality has theresources to finance proposed projects (ex: a general obligation borrowing limitprojection)
  • Projection of anticipated tax incrementrevenues and when you expect to receive them
  • List of non-general obligation securities you will use
  • List of anticipated new development andprojection of tax increment revenue you expect
  • Table showing the annual cash flowthrough the TID’s life.This could show one of the following:
  • That revenues should be sufficient to cover theanticipated expenditures
  • That shortfalls the municipality paidcould be recovered withinthe TID’s maximum life
  • Information on the municipality's general economicconditions – show howthe anticipated development fits into thepicture
  1. Detailed list of project costs (include financing costs in project costs)

Project list should include:

  • Estimated expenditures expected for eachmajor category of public improvements listed above
  • Specific improvementsbeing paid for with TIF increments
  • If available, the amounts thatwon't be paid with tax increments
  • Total costs paid and not paid with increments
  • For costs not paid with increment revenue, include details of the revenue sources you will use
  • Be as specific as possible
  • (ex: grants, special assessments, utilityassessments, other tax revenue or other sources)
  1. Description of the financing methods and the timeframe ofthese costs or monetary obligations –include a description of how you will finance the projects

Example – if the municipality intends to issue its securities to finance the projects, you could:

  • Show the security type and repayment schedule
  • Develop achart showing when you expect to complete each project
  • Plan a bond issue based on the total expenditures for each year
  • Budget a bond issue to pay for projects to be completed inmore than one year
  1. Proposed changes in zoning ordinances, masterplan, building codes, map and city ordinances –describe any proposed changes in zoningordinance, master plan, building codes, map, orcity ordinances. If none areplanned, include a note stating this.
  1. List of non-project costs–identifying non-project costs is a difficult part ofthe project plan process. State law (sec.66.1105(4)(f) or sec. 60.85(3)(f), Wis. Stats.),lists whatto include in aproject plan, but doesn't provide a definition ofnon-project costs.Sec. 66.1105(2)(f)2 and sec. 60.85(1)(h)2, Wis. Stats.,liststhe costs that are not allowable project costs, including:
  • Construction or expansion of administrative buildings
  • General government operating expenses unrelated to the TID development
  • Cash grants to developers without a signed development agreement

Allowable project costs – since1981, allowable project costs arelimited to the project amountthat benefits the TID.If the projectbenefits property outside the district, that part ofthe cost is not a project cost.

Non-projectcosts – are public works projectsthat only partly benefit the TID or are costs not eligibleto be paid with tax increments.

Examples of non-project costs:

  • Partially “non-project” – interceptorsewer serving property both in and out of thedistrict
  • Costs you cannot pay with TIF funds – amounts that arespecial assessments to property owners or paid withuser fees and general government operating expenses not related to the project
  1. Proposed plan for relocating any displacedpersons or businesses –ifyou expect to relocate any persons or businessesbecause ofa project, include:
  2. Description of how the municipalitywill comply with state law (sec. 32.19 and sec. 32.95, Wis. Stats.)
  3. Refer to thosesections, or contact themunicipal attorney to determine what actions you must take

Note: TIF does not relieve the municipality of itsresponsibility to pay relocation benefits. Since these benefits are an eligible project cost,the municipality can pay for them with tax increments.

  1. Indication of how the district’s creation promotesthe orderly development of the municipality–include adescription of how the district’screation promotes orderly development

Example:

  • By using TIFto offset some costs, the municipality can convincedevelopers to locate development in a desiredarea rather than the community’s outer fringeswhere costs may be lower
  • Developer canrealize the desired profit and the community getsthe kind of development it wants in a locationwhere it would not occur naturally
  1. Map – showing existing uses and conditions ofreal property in the district
  2. Map – showing proposed improvements and usesin the district
  3. Signed attorney’s opinion that the plan is completeand complies with the law
  4. Municipalityattorney or one the municipality retains for this purpose, can write the opinion that the plan is complete and complieswith the law
  5. Opinion must be on letterhead and signed
  6. For towns created under state law (sec. 60.23(32)(f)2., Wis. Stats.) –you must specify Option a, b or c and name a sewer service

PE-215 (R. 7-14)1Wisconsin Department of Revenue