PRIORITY: Tax Increment Financing (TIF) Policy Changes

TIF is the primary tool that local governments in Wisconsin use to encourage economic development, and has been utilized successfully in hundreds of communities across the state, including Janesville. However, given Janesville’s difficult economic circumstances, Forward Janesville proposes the Legislature make the following modifications to TIF law:

TIF Pooling
TIF law should be altered to allow municipalities to pool the positive incremental taxes (also know as ‘increments’) from several existing TIF districts to help retain a large regional employer or attract other companies to replace the lost economic benefits of the departing employer. We ask that a ‘large employer’ be defined as an existing company with more than 1,000 employees and an annual payroll of over $40 million.

When a large employer announces its closure, there may be no local resources available to provide incentives for continued operation of the facility, either by the current or subsequent user(s) of the property. This change would give Wisconsin cities and towns another option to turn to when faced with a significant dislocation.

The change FJI envisions would allow Janesville to take the increment from a successful TIF (like our City’s TIF District No. 22) to help retain General Motors—or to provide financial support to attract replacement operations, even though the GM plant is not within that TIF District. TIF No. 22 has $49 million in new property value, which generates a tax increment of over $1 million annually. The idea is to capture that positive increment and redirect it to help retain a major regional employer or attract a replacement business base.

Base Value Reduction
FJI requests that TIF law be amended to allow for the reduction of a TIF district’s base value when property is demolished to make way for a redevelopment project. When a municipality establishes a TIF district, the current value of all the property in the district is included in its base value. If a city or business developer then decides to purchase a property in that district and demolish it, the property value in the TIF district may decrease significantly. When a new development is constructed on that site, the initial value of new construction does not create TIF incremental revenue; it simply brings the property value back up to the level it was when the city created the TIF district.

This change would allow the Wisconsin Department of Revenue to lower the base value of the TIF district when buildings are purchased and demolished for redevelopment projects. This way, all of the value from a redevelopment project could create incremental TIF revenue, enhancing TIF increments and allowing redevelopment costs to be recovered more quickly.