Overlapping Tax Incremental Districts in Wisconsin

September 15, 2009

The Wisconsin Tax Increment Law is routinely used by municipalities throughout the state as a method to spur economic development within the municipality. Wisconsin’s Tax Increment Law allows municipalities to provide a number of economic incentives to developers with respect to various projects that are consistent with the project plan adopted by the municipality for the area in question, for example, the Tax Incremental Financing (TIF) District. Many communities have several TIF Districts. Each district must satisfy independently the statutory requirements for creation.

Wisconsin’s Tax Incremental Law also allows municipalities to create overlapping tax incremental districts. The boundaries of an overlay district may overlap one or more existing TIF Districts. Districts created the same date may not have overlapping boundaries. The overlapping TIF District must not only satisfy all of the criteria for creation of a TIF district but also be subject to the agreement of any bondholders who hold obligations relative to any of the TIF Districts that are overlapped.

When creating an overlapping TIF District, municipalities must first determine how positive tax increments generated by the overlapping area are to be allocated. Wisconsin law provides that in determining how positive tax increments generated by an area within an overlapping district are allocated (but for no other purpose), the aggregate value of the taxable property, as equalized by the Department of Revenue in any year for each earlier created district, is the portion of the tax incremental base of the overlapping district attributable to the overlapped area.

The creation of overlapping TIF Districts is a valuable tool. However, it is not something that can be applied in each and every case. One size does not fit all, and the creation of an overlapping TIF District is dependent on an overall analysis of the economic and other factors associated with a project. In some instances, an overlapping district:

  • Provides additional revenues to complete projects within the earlier TIF District
  • Preserves increment in the earlier district
  • Provides additional time to complete projects

Again, what is right for any particular municipality is dependent upon the projects involved, the financing involved, and the goals and objectives of that particular municipality.

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For more information about "Overlapping Tax Incremental Districts in Wisconsin," contact Timothy D. Fenner at tfenner@axley.com or 608.283.6733.