Tax Increment Finance Districts
TIF Economic Development Tool
The City of Whitewater created Tax Incremental Districts (TIDs) under the authority of Wisconsin Statute Section 66.1105 primarily to promote the orderly development and redevelopment of the city. The construction of streets and utilities are needed in order to provide incentives for industrial, commercial, and residential mixed-use growth, as well as to stimulate private sector development throughout the TID. The new development and redevelopment, which will occur as a result of the projects undertaken within the District boundaries, will provide the City with an additional tax base and provide employment opportunities.
Tax incremental financing (TIF) is the most effective tool Wisconsin cities and villages have to spur economic development and job creation. Municipalities have been using TIF successfully since 1975. The TIF process allows a municipality to pay for public improvements and other eligible costs within a designated area, called a tax incremental district (TID), using the future taxes collected on the TID’s increased property value to repay the cost of the improvements. The rationale behind TIF is that the public investment will promote private development, jobs, and tax base growth that would not otherwise occur absent the TID.
The success of TIF in Wisconsin is impressive:
• As of August 2015, there were 1,128 active TIDs in Wisconsin. Since their inception, these TIDs have generated a combined increment (growth in property value) of over $16 billion or $14.4 million per TID, with the mean TID age being 11.93 years.
• The average TID active in 2015 has added $1,214,776 to the tax base per year since its creation. (Note: this figure represents tax base generated within TIDs, and does not account for increases in value in neighboring areas occurring because of the TID growth.)
• Growth occurs at a faster rate in TIDs. The total equalized value of all active TIDs increased by 6.42% from August 2014 to August 2015. In comparison, state equalized value as a whole increased in value by only 2.42%.
• The overwhelming majority of TIDs have sufficient increment to pay off their project costs. Of the 1,128 TIDs, in 2015 only 62 (5.5%) were distressed, and only 10 (.88%) were severely distressed. While only 61 (5.4%) were decremented TIDs in 2015 (i.e., valued at less than 90% of the TIDs base value in 2014 and in 2015).
• Thirty TIDs were terminated in 2015 after generating $445,619,900 in incremental value during their lifetimes. The numbers for 2014 are very similar, the 31 TIDs terminated during that year created a combined $485,285,700 in increment.
• 447 TIDs have been terminated in Wisconsin since 2000, adding nearly $9 billion of new value to the tax base.