1. Key Items Discussed Today
What is TID and how does TID work?
When can TID be used for housing?
One-year housing extension for TID
One-year housing extension examples

2. Your Primary Development Tool Since 1976
Several Changes From 1976
Interest Rates Year End Federal Reserve was 6.25% (Current 1.40%)
End Close Dow Jones Industrial Average was (Current 26,000)
Average Cost of new house was $43, (Current $206,300)
What Hasn’t Changed
TIF is still the primary economic development tool in WI.
The Minnesota Vikings still haven’t won a Super Bowl.
Wis. Stats (now renumbered ) enacted in the 1975/1976 legislative session to enable “TIF”

3. What is Tax Incremental Financing
Allows cities to capture incremental property tax revenue from growth in defined area and use that revenue to benefit that area
Key acronyms:
TIF = Tax Increment Financing (the tool)
TID = Tax Increment District (where the tool is used - boundary)

4. How Does TIF Work?

5. The “But For” Test
“But for” the use of TIF, the proposed development would not occur:
As proposed
Within the same/similar time period
With the same level of
Property value
Jobs
Amenities

6. TID Types At least 50% of land area in proposed TID is:
Blighted or in need of conservation/rehabilitation
Suitable and zoned for industrial use
Suitable for mixed-use development as determined by any combination of:
Industrial
Commercial
“Qualifying” Residential (limited to 35% of total area newly platted)
Property must represent contiguous area and cannot extend beyond corporate limits

7. Maximum Life
A district may remain open until the earliest of the following:
The district’s maximum life is reached, which varies by type of district and when created
When total tax increments (revenues) collected are sufficient to pay all of the district’s project obligations (expenses)
When the City/Village/Town passes a resolution to close the district, but no later than the anniversary date in the year of max life
At closure:
Remaining funds (surplus) distributed proportionately to taxing jurisdictions (shared benefit); OR,
Any unreimbursed project costs become general liability of the municipality (this risk not shared)

8. Expenditure Period
Maximum time period TID can incur expenses or obligate revenues related to project plan
Generally five years shorter than maximum life
After expenditure period ends, TID may continue to pay:
Debt service on existing obligations
Contractually-obligated expenses
Ongoing administrative expenses

9. TIF and Housing
Essentially three conditions when TIF is used for housing:
1) Mixed-Use District
No more than 35% of the total area limited to newly platted residential development
2) Within a blighted district, or rehabilitation or conservation district
3) A up to one year extension to the TIDs life for the improvement of housing stock

10. Affordable Housing Extension (AHE)
Added to TIF law in 2009
Statute (6)(g)
City or Village with a TID that has retired its debt and paid all of its project costs can extend the life of the district for up to one year
City or Village must use at least 75% of tax increments collected to “benefit affordable housing”
Costs can be incurred anywhere within the municipality
Any remaining portion of the increments must be used by the municipality to improve its housing stock

11. Affordable Housing Extension (AHE)
Affordable housing is defined as housing costing no more than 30% of the household’s gross monthly income
A household consists of an individual and his or her spouse and all minor dependents

12. Procedures for One-Year Housing Extension
Procedures for extending the life of TID for housing:
Municipality adopts a resolution extending the life of the District for a specified number of months (up to one year)
Resolution must specify how the municipality plans to improve its housing stock
Resolution must be forwarded to the Department of Revenue (DOR)
No action by the Joint Review Board (JRB) is required for approval
DOR must authorize the allocation of tax increments to the district during its extended life

13. One Year Housing Extension Examples
Since this option was added to TIF law, relatively few municipalities have taken advantage of this option
City of Milwaukee:
Since 2015 the City has extended seven TIDs for an additional year to benefit affordable housing
Over $2 million of increment realized to date for this purpose
Used to fund many of the programs within the City’s Strong Neighborhoods Plan

14. One Year Housing Extension Examples
City of Madison
Used the extension five times to help fund the City’s Affordable Housing Initiative Fund
Used to incentivize developers to purse Section 42 federal tax credits for affordable housing developments
Specifically encouraged to develop in amenity-rich areas with easy access to public transportation
Rent set at 30, 50, and 60 percent of area median income
The Initiative Fund has led to the funding of 486 affordable housing units over the last three years, equating to approximately $100 million in development
Supported largely by GO bonding, but when TID increment revenue is able to be used it is added to the Fund

15. One Year Housing Extension Examples
City of Fitchburg
Recently kept one of its TIF districts open to pay into a fund for affordable housing
$127,000 in increment generated
City is using $40,000 of those funds to begin Fitchburg Housing Goals, Strategies, Toolkit, and Implementation Plan with a focus on affordability

16. One Year Housing Extension Examples
City of Monona
Used the extension to keep TID #3 open an additional year to help fund a new program called “Renew Monona”
Housing stock renewal program created by its CDA and administered by the City
Program offers 0% interest loans to those purchasing or residing in a home in the City to make energy efficiency improvements and bring up to modern standards

17. One Year Housing Extension Examples
City of La Crosse
Used a combination of CDBG grants and TIF dollars from the affordable housing extension for purchase and resale of five energy efficient homes
Homes were in a struggling neighborhood and were sold to low-moderate income households at an average sale price of $154,000
City of Racine
Extended life the TID #8 by one year ($625,000 of increment) for:
Homeowner housing development
Homeowner code compliance grants

18. One Year Housing Extension Examples
City of Appleton
Extended TID #2 by one additional year
Used to pay for street repairs in a low-moderate income neighborhood
City of Oshkosh
Extended the life of TID #7
Created a Healthy Neighborhood Imitative
Utilized TIF revenue along with other revenue sources to help maintain or increase property values in transitional and distressed neighborhoods

19. Summary of Key Takeaways
Tax Incremental Financing is still the primary economic development tool in Wisconsin for attracting and retaining economic development
State Statute allows municipalities to use TIF dollars for the improvement of housing, primarily through the one year housing extension
Relatively few municipalities have taken advantage of the one-year extension, but it can be a valuable funding source to improve housing stock

20. Senior Municipal Advisor/Vice President
Jon Cameron
Senior Municipal Advisor/Vice President
(262)
Source documentation cited in this presentation:
(1) The examples cited in this presentation for the Cities of Milwaukee, Madison, Fitchburg, Monona, La Crosse and Appleton were taken from “Using TIF to Benefit Affordable Housing” as part of the January, 2018 publication of the Municipality Magazine. The article was prepared by Curt Witynski, J.D., Deputy Executive Director, League of Wisconsin Municipalities.