County rep appeals for limit in TIF reset bills

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By Dan Shaw

The Wisconsin Counties Association is urging state lawmakers to let governments reset the values of failing tax increment finance districts, but only if it means they will close sooner.

Kyle Christianson, the association’s research and legislative associate, told members of the Senate Committee on Workforce Development, Forestry, Mining and Revenue on Wednesday that county governments historically have opposed proposals to reset the values of TIF districts, which direct property taxes collected from new construction to pay for the redevelopment of blighted areas. The reason, he said, is that such a change reduces the ability of a county, school district or similar entity to provide future tax relief.

Still, Christianson said, his organization could support Senate Bill 252 and Assembly Bill 289, which are meant to salvage the roughly 100 TIF districts in the state that are failing to collect money to pay off bonds used for local improvements. But he had one condition: The authors of the proposal must agree to prohibit taxes collected in a salvaged district from paying off debts in a foundering one somewhere else.

Christianson said resetting the districts would help ensure debt taken on to make improvements can be paid off sooner. Obviously, he said, a district that is collecting no money at all will not be able to finance bond payments on schedule.

But, he said, he wants to ensure the durations of salvaged districts are not extended under another provision in state law that allows money to be taken from a successful TIF and transferred to a failing one.

“It couldn’t be a donor TIF going forward once a redetermination occurs,” Christianson said. “Then we are willing to live with the base redeterminations with the hopes that this TIF is going to close earlier.”

State Rep. Gordon Hintz, D-Oshkosh, and a co-sponsor of AB 289, said he is willing to consider an amendment with the prohibition Christianson proposed. At the same time, he said, the bills already contain a series of safeguards to prevent misuse.

For one, Hintz said, SB 252 and AB 289 would allow the resetting of only those TIF districts whose property has lost 10 percent or more of their original values for two years in a row. A local government also could not have a single district reset more than twice.

And, Hintz said, a particular TIF could not be reset without the approval of the taxing entities that would be affected by the resetting, which most of the time includes counties.

“You want there to be some accountability,” he said.

Hintz said the bill, which was written by Republicans, has support from members of both parties largely because the recent recession fell evenly on all legislative districts, many of which contain failing TIFs. One benefit of passing a far-reaching remedy, he said, is that it will prevent lawmakers from bringing individual bills forward to remedy particular TIF districts.

The Senate committee heard such a proposal separately Wednesday. Senate Bill 220 would lengthen the duration of a TIF district created in the village of Wales in southeast Wisconsin, helping local officials pay for sewer improvements.

None of the bills heard Wednesday were put to a vote. State Sen. Tom Tiffany, R-Hazelhurst, and chairman of the Senate committee, said a decision could be made as early as Sept. 25.

Given the alternative ways available to salvage TIFs, Christianson said, SB 252 and AB 289, with his proposed changes, probably offer the best solution to a bad situation.

“We do recognize you have to do something to prevent [TIF districts] from failing,” he said. “This has the potential to have them closing sooner than they would otherwise.”

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