TIF, or tax incremental funding, is used by municipalities in Wisconsin to improve the area and attract growth. Areas that receive funding are often “blighted,” or have a negative impact on the community. It’s easy to see how improving such areas can greatly benefit the community, but such improvements come with expenses. However, not all expenses related to the project are eligible as TIF expenditures.
How does TIF work in Wisconsin?
In order to receive TIF, a municipality must first define a tax increment district (TID). The TID is the physical location of the improvement area, including all parcels of land that make up the district. The TID then must follow a checklist created by Wisconsin’s Department of Revenue that includes forms, documents, project plans, and more in order to be approved for TIF. Before financing is approved, there are certain procedures that must be followed in order for the TID to be created.
Eligible TIF Expenditures in Wisconsin
Capital Costs
Capital costs include the cost of construction, demolition, or alteration of certain buildings, structures, and fixtures. It also includes necessary equipment and other costs required to clear and grade land, soil and groundwater restoration, and environmental pollution.
Financing Costs
Any financing costs, including interest and principal, may be counted as a TIF expenditure as long as it relates project costs in the TID. Loan repayments and any related costs are often included within TIF.
Real Property Assembly Costs
Wisconsin statutes define real property as the physical property as well as buildings, improvements, and fixtures that exist on that property. Certain costs to assemble real property within the TID may be eligible.
Professional Services Costs
Public improvement requires certain professionals such as architects, engineers, legal services, and planners. Some of these costs are eligible as TIF expenditures.
Organizational Costs
Creating a project plan requires special resources. Many costs related to organizing the project, like environmental impact studies, are eligible as a TIF expense.
Lead Treatment and Removal
Many TID projects are in areas where lead was used in construction materials. Because lead is hazardous, the cost to treat or remove lead within the district is a permitted expense.
Residential Development Costs
If the TID includes residential areas, TIF funding may be used to improve or construct residential developments.
Construction/Alteration Costs
In many instances, creating a TID requires construction or alteration of sewage and water treatment, environmental protection, storm and sewer lines, and other amenities. These costs are contained within TIF eligible expenses in most cases.
Other
Many other expenses, such as administrative costs, relocation, and more may also be eligible for TIF. Since all eligible costs aren’t explicitly defined by Wisconsin statutes, a Wisconsin lawyer is a great asset in knowing which expenses are eligible for TIF.
Which Expenses Aren’t Eligible for TIF?
Most TIDs created after July 31, 1981 are subject to certain expenses that aren’t eligible for tax incremental funding. Expenses like general government operational costs and construction of administrative buildings are not included in TIF eligibility.
TIF Attorneys in Wisconsin
At Atolles Law, we specialize in serving counties across Wisconsin with their funding needs. We provide legal services and TIF implementation strategies that ensure success within your community. Contact us today to consult with our lawyers to see how we can help with your public financing project.