Fiscal Note
The resolution accepts the recommendations of the Economic Development Committee regarding revisions to the city’s policies on use of tax incremental financing (TIF) for development projects.
Under state law, the city is authorized to establish tax increment districts (TID) based on blight conditions and an analysis that development in the district would not occur “but for” creation of the district. Property tax revenue generated by the growth in property values after the district is established are not available to the taxing jurisdictions for services, but are instead made available for grants and loans for development projects and infrastructure expenditures in support of additional development. Districts can be created for a maximum duration of 27 years, with project expenditures allowed within the first 22 years. Districts must be closed when all planned expenditures have occurred and any debt issued to finance those expenditures has been retired.
Approval of tax increment districts and a plan for expenditure of property tax revenues generated by the district is made by a joint review board consisting of representatives from the affected taxing jurisdictions (i.e., city, school district, county and technical college district). Actual expenditure of revenues generated within a tax increment district is subject to approval by the Common Council primarily through adoption of projects in capital budgets.
The recommendations call for added flexibility in defining eligible projects (the city’s “but for” test -- the development would not occur “but for” the tax incremental financing) and determining the amount of tax increment generated by a development that can be allocated to project financing (set at 50 percent under the current policy - the “50 percent” rule). Changes include incorporating any competing offers for project development from other communities (both adjacent to Madison and in the broader regional and national context) into th...
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