Tax Incremental Finance (TIF)

Value Limit Test

  1. What is the equalized value limit or 12% test?
  2. What role does August 15th (release of equalized values) have in determining the 12% limit?
  3. Can a new Tax Incremental District (TID) with a zero base value be created, if the existing TID(s) already in the municipality exceed the limits?
  4. Do value limitations apply for amendments (adding/subtracting parcels), or only when a municipality is creating a new district?
  5. In amending an existing TID for the subtraction and addition of parcels, how does the 12% limit apply?
  6. When amending a TID using simultaneous creation and subtraction, how does the 12% limit apply?
  7. If a TID is in more than one county, does the 12% limit have to be met in each county?
  8. Can a project plan be amended to add projects when the value of the TID(s) in the municipality is over the 12% limit?
  9. Are the same limits on value applied to Town TIDs?
  10. If a municipality is creating multiple TIDs in the same year, and they all are under 12% individually but collectively they exceed the limit, can they be created?
  11. When calculating the 12% test, does an increment for a terminated district need to be included?

  1. What is the equalized value limit or 12% test?

    The equalized value of taxable property of the district as of January 1st of the year of creation or amendment, plus the value increment of all existing TID districts (for that municipality), cannot exceed 12% of the total equalized value of taxable property within the municipality. See sec. 66.1105(4)(gm)4.c., Wis. Stats., for additional information.

  2. What role does August 15th (release of equalized values) have in determining the 12% limit?

    Information is updated annually on August 15th and depending on when the TID was created or amended it will determine the values you will use. When calculating the 12% limit test, use the most recent information available. If the resolution was adopted prior to August 15th, use the values from the previous year. If adopted after August 15th, use the new values.

  3. Can a new Tax Incremental District (TID) with a zero base value be created, if the existing TID(s) already in the municipality exceed the limits?

    No. Sec. 66.1105(4)(gm)4.c., Wis. Stats., describes the 12% limit and no new TID or boundary addition may be approved if the limit is exceeded.

  4. Do value limitations apply for amendments (adding/subtracting parcels), or only when a municipality is creating a new district?

    Both new creations and amendments must meet the 12% value limitation and are part of the required findings in the local governing body resolution. Note: When completing a subtraction amendment, the 12% value limitation does not need to be met.

  5. In amending an existing TID for the subtraction and addition of parcels, how does the 12% limit apply?

    Sec. 66.1105(4)(gm)(h)2., Wis. Stats., allows a municipality to count as one amendment both an addition and subtraction amendment to one TID at the same time. However, the amendments are handled separately and the addition amendment must meet the 12% limitation check. The TID still needs to remain under the 12% limit when completing the addition amendment. The Department of Revenue (DOR) is bound by the value limits under sec. 66.1105(5)(d), Wis. Stats.

    The value subtracted does not affect the TID increment until the following year. As a result, a subtraction amendment approved before September 30, 2009, would not affect the increment value coming off the tax roll until 2010 taxes payable in 2011. The cycle to lower the increment takes a year to affect the value limits.

  6. When amending a TID using simultaneous creation and subtraction, how does the 12% limit apply?

    Under sec. 66.1105(17), Wis. Stats., a simultaneous creation and subtraction amendment can be done without adopting a resolution with the 12% limit finding. Both the subtraction amendment and creation are submitted together. Both submissions would include a fair market value appraisal. These appraisals should show that the value of property being removed in the subtraction amendment equals or exceeds the amount needed to ensure the proposed TID being created is under the 12% limit. Note, this option can only be exercised once during the life of the TID being created.

  7. If a TID is in more than one county, does the 12% limit have to be met in each county?

    No. Although the values are developed separately in each county, the area is still considered one TID for equalized value limits purpose; both county values will be combined for the 12% limit test.

  8. Can a project plan be amended to add projects when the value of the TID(s) in the municipality is over the 12% limit?

    Yes, the equalized value limits apply only when a TID is created or amended (territory is added).

  9. Are the same limits on value applied to Town TIDs?

    No. Under sec. 60.85(3)(h)5.d., Wis. Stats., the limits are different. The limit is met if the equalized value of taxable property of the district plus all existing districts does not exceed 7% of the total equalized value of taxable property within the town or the equalized value of taxable property of the district plus the value increment of all existing districts within the town does not exceed 5% of the total equalized value of taxable property within the town.

  10. If a municipality is creating multiple TIDs in the same year, and they all are under 12% individually but collectively they exceed the limit, can they be created?

    Yes, each submission stands alone. As long as each TID (created/amended) in the same year meets the 12% test individually the new districts can be created. See sec. 66.1105(4)(gm)4.c., Wis. Stats., for more information.

  11. When calculating the 12% test, does an increment for a terminated district need to be included?

    No, as long as the TID being terminated is terminated prior to the creation of the new TID or the amendment of a TID.

FOR MORE INFORMATION PLEASE CONTACT:

WISCONSIN DEPARTMENT OF REVENUE
Division of State and Local Finance
Office of Technical and Assessment Services
P.O. Box 8971 MS 6-97
Madison, WI 53708-8971
Phone: (608) 266-5708
Fax: (608) 264-6897
E-Mail Additional Questions

Last updated March 22, 2013