Tax Incremental Finance (TIF)

Municipal Expenditures and Debt

  1. What is an expenditure?
  2. What is the expenditure period?
  3. Do eligible costs include the capitalized interest and other costs of issuing debt for the Tax Incremental District (TID)?
  4. Are the costs of refunding temporary debt to fund projects eligible to be paid from the TID fund?
  5. What date is used to measure the start of the expenditure period?
  6. How are excess funds divided among the overlying taxing jurisdictions?
  7. Can "new" project costs be incurred after the expenditure period?
  8. Can payments be made after the expenditure period?
  9. Are there any restrictions on the length of maturity for TID debt?
  10. Can a municipality put money into a TID fund and repay itself later?

  1. What is an expenditure?

    An expenditure may not be made later than five years before the unextended termination date of a TID. The term "expenditure" is found within the definition of "project costs" under state law (sec. 66.1105(2)(f)1., Wis. Stats.). The term "expenditure" is not explicitly defined, but the Legislature provided a non-exclusive list of possible expenditures in the form of actual payments or monetary obligations preceding the expenditure or actual payment. The example below is an illustration of an expenditure.

    Example: A municipality's project plan includes sewer and street work that is estimated to cost $875,000. The municipality pays for this cost with a bond and will repay this debt with increment from the TID over the life of the TID. Repayment of the bond is considered an expenditure.

  2. What is the expenditure period?

    It is the maximum time period that a TID can incur expenses related to the project plan. It is generally five years shorter than the maximum unextended life. Example: A mixed-use TID has a maximum life of 20 years, so the expenditure period is 15 years.

  3. Do eligible costs include the capitalized interest and other costs of issuing debt for the Tax Incremental District (TID)?

    Yes. These costs are financing costs authorized in sec. 66.1105(2)(f)1.b., Wis. Stats.

  4. Are the costs of refinancing temporary debt to fund projects eligible to be paid from the TID fund?

    Yes. They are financing costs authorized under sec. 66.1105(2)(f)1.b., Wis. Stats.

  5. What date is used to measure the start of the expenditure period?

    The date the local governing body approves the creation resolution.

  6. How are excess funds divided among the overlying taxing jurisdictions?

    According to sec. 66.1105(6)(c), Wis. Stats., excess funds should be paid to the taxing entities in the proportion to the amounts that belong to them. It is recommended that the distribution should be based on the most recent tax levy proportions.

  7. Can "new" project costs be incurred after the expenditure period?

    No. Existing projects may be finished but no additional improvements should be started during the last five years of the TID's maximum life.

  8. Can payments be made after the expenditure period?

    Yes. Payments for project cost debt service, repayment of advances or other liabilities and allocations to other TIDs are allowed under state law (sec. 66.1105(6)(c), Wis. Stats.).

  9. Are there any restrictions on the length of maturity for TID debt?

    The same restrictions for other municipal debt apply to TID debt and would likely not mature beyond the TID's maximum life.

  10. Can a municipality put money into a TID fund and repay itself later?

    Yes, and a reasonable interest cost can be charged for advances to the TID fund.

 

FOR MORE INFORMATION PLEASE CONTACT:

Wisconsin Department of Revenue
Attn: Office of Technical and Assessment Services
PO Box 8971, MS 6-97
Madison, WI 53708-8971
Phone (608) 266-5708
Fax (608) 264-6897
Email additional questions to tif@revenue.wi.gov

Page last updated July 10, 2014