City Council Meeting Lisa A. Kuss City Administrator May 10, 2011

What is Tax Increment Financing? Wisconsin’s principal economic development financing tool for local governments Program created by legislature in

Current Statistics § Beginning of 2009, 1,074 active TIDs (includes 2008 submissions) § Equalized Incremental value grew 16% (up 1 ½%) 3

Eligible Project Costs § Public works & improvements § Financing costs § Real property assembly costs (land write-down) § Professional service costs § Administrative costs § Relocation costs § Organizational costs § Pro-rated costs of utility infrastructure § Cash grants (requires developer agreement) § Environmental remediation 4

PROPERTY TAXES 5

PROPERTY TAXES-TID BASE VALUE 6

TWO PIES-ONE TAX BILL Total Tax Value $800,000 Value, $28 Mill Rate Total Tax Bill $22,400…..Pie One $1,400…Pie Two $21,000 City Spent Money to Build Road, Install Utilities, Development Incentive Payment Funds are Divided When Taxes Are Paid Base $50,000 FROZEN PIE Increment $750,000 NEW PIE BAKING FOR UP TO 26 YEARS

Tax Increment Financing – How it Works 8 Property Value Time Base Value Increment Value All Taxing Jurisdictions continue to receive their share of the tax levy on the base value. The TIF receives taxes on the increment value at the combined rate of all taxing entities.

Clintonville TIF City of Clintonville Active TIDs and Year of Creation TID 3 Industrial Park (1992) TID 4 Highway 45 Commercial and MultiFamily (1994) TID 5 Angelus Retirement Community (2002) TID 6/7 (2003/2005) Seagrave Fire Apparatus RETIRED TIFs #1, City Hall/Downtown #2 Morning Glory Dr. Cul de Sacs 9

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TID 3 Industrial Park Base Value $933,300 Increment Value Added $20,939,100 TOTAL EQUALIZED VALUE $21,872, Total Expense $4,964,227 Created 1992, Max Termination 2018 Projected Termination 2016 Expenditure Period Ends 2014

TID 3 Klein Coating Jepson Trucking 12

TID 3 Specialized Products Specialized Products Addition 13

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TID Values TID 4 Commercial/Multi-Family TID 5 Angelus Retirement EQUALIZED VALUE Base $253,700 Increment $2,254,600 Total $2,508,300 TOTAL EXPENDITURES $926,920 Created 1994, Expenses End 2016 Max. Termination 2020, Projected Termination2018 EQUALIZED VALUE Base $0 TAX EXEMPT HOSPITAL Increment $5,584,100 Total $5,584,100 TOTAL EXPENDITURES $1,988,799 Created 2002 Max Term 2028, Projected

TID #5 Angelus…Old Hospital Transformed 17 City Investment $1.9 million Tax Value Increase $5.5 million

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TID Values TID 6/7 Seagrave Fire Apparatus EQUALIZED VALUE Base $1,982,700 Increment $3,345,200 Total $5,327,900 TOTAL EXPENDITURES $1,812,926 Created 2004 Max. Term 2030, Projected

The “But For” Test § Key component of the TIF program is referred to as the “but for” test “But for” the use of TIF, the proposed development would not occur: as proposed within the same time frame with the same level of value 20

How is a TID Created or Approved? Joint Review Board Reps Entity creating the TID, Includes Reps From School District City County Technical College Public Member (appointment must be approved by majority vote of other members) 21

Final Approval § Final authority to allow creation or amendment of a TID is vested in the JRB Majority vote To approve creation or amendment of a TID, JRB must find that the criteria set forth in Wisconsin Statutes (4m)(c)1. are met 22

TID Boundaries § District Boundary Tests Parcels must be contiguous Equalized valuation test the value of any current TID increments plus the base value of the proposed district may not exceed 12% of the total value of the community. SO YOUR COMMUNITY CANNOT ALL BE IN A TIF Must also meet applicable test for type of District to be created: 23

Maximum Life § A District may remain open until the earliest of the following occurrences – The District’s maximum life is reached, which varies by type of District and when it was created (26 years norm) When total tax increments collected are sufficient to pay all of the District’s project obligations When the City or Village passes a resolution to close the District (any unreimbursed project costs become a general liability of the municipality) 24

Eligible Project Costs § As of March 18, 2008, Wis. Act 57 took effect allowing otherwise eligible project costs to be undertaken outside a TID provided: The project location is within ½ mile of the TID boundary The project location is within the city or village The JRB has approved the project 25

Amendments § Boundary Amendment Limit of 4 allowed during life of district May add and/or subtract property Must be in compliance with 12% test to add territory to a district § Project Plan Amendment No limit to number allowed (except maximum expenditure period) Used to amend list of TIF-eligible projects to be undertaken 26

27 Any Questions? Questions?