Bills of Note: Mergers and the TIF Bill Package

This week in The Hamilton Consulting Group’s Bills of Note series, we provide you with an update on the status of each bill in the tax increment financing (TIF) bill package. In addition, we included an overview of the bill to merge the Wisconsin Housing and Economic Development Authority (WHEDA) and the Wisconsin Economic Development Corporation (WEDC), into a single entity called the Forward Wisconsin Development Authority.

TIF Bill Package

The tax increment financing (TIF) bill package is a product of the 2014 Legislative Council study committee on TIF. Since we last reported on the bill package, a number of bills have moved in the legislative process. 

Senate Bill 50 – Makes several technical changes including:

  • Modifies the industrial zoning requirements to only apply to industrial use tax increment districts
  • Changes the maximum review period the JRB has to approve a resolution on a TID from 30 days to 45 days;
  • Amends the notice requirement of the planning commission from a class 2 notice to a class 1 notice when it comes to announcing a notice of amendment
  • Deletes obsolete references in the current statute.

Status: Passed Senate Committee on Economic Development and Commerce unanimously and available for scheduling in the Senate.

Senate Bill 51 – Requires a standing Joint Review Board to be established in order for a TID to be created, and remain in existence during the lifespan of the TID. In addition, this bill modifies annual reporting requirements, incorporates penalties for not reporting annually and repeals the DOR process to review industry-specific town TIDs.

Status: Passed Senate Committee on Economic Development and Commerce unanimously and available for scheduling in the Senate.

Senate Bill 52 – Allows any type of TID to be a recipient TID and use tax increments. In addition, this bill excludes small taxing jurisdictions (such as lake, sanitary, or public inland lake districts) from donating to tax increments and removes these entities from the tax increment calculation.

Status: Passed Senate Committee on Economic Development and Commerce unanimously and available for scheduling in the Senate.

Senate Bill 53 – Allows a local entity, after the review and approval of the Joint Review Board, to make project plan amendments as well as extend the life of a TID by five years. Under the bill, the amendments and/or time extension is allowed if the annual or total amount of the tax increments over the life of the TID are negatively impacted by one or more of the following: (1) amendments to TIF law (§66.1105); (2) changes made by DOR to calculate the equalized valuation method; and (3) 2013 Wisconsin Act 145, which reduced technical college levies and replaced the funding with state aid.

Status: Public hearing was held in the Senate Committee on Economic Development and Commerce and an executive session will be held Wednesday, May 13.

Senate Bill 54 – Removes the restriction that property standing vacant may not comprise more than 25 percent of the area in a TID. In addition, this bill removes the requirement that all municipal owned land within a TID be assessed for property tax purposes and put in the base value calculations.

Status: Senate Committee on Economic Development and Commerce unanimously and available for scheduling in the Senate.

Senate Bill 55 – Increases TID value increments to total equalized value of taxable property in a city or village from 12 percent to 15 percent.

Status: Public hearing was held in the Senate Committee on Economic Development and Commerce and an executive session will be held Wednesday, May 13.

Senate Bill 56 – Replaces the October 1, 2015 deadline for declaring a TID distressed or severely distressed to October 1, 2020.

Status: Passed Senate Committee on Economic Development and Commerce unanimously and available for scheduling in the Senate.

Senate Bill 57 – Creates an alternative process for redetermining the base value of a TID 

Status: Passed Senate Committee on Economic Development and Commerce unanimously and available for scheduling in the Senate.

WHEDA and WEDC Merger

In his proposed 2015 -2017 budget, Governor Walker consolidated two state agencies, the Wisconsin Housing and Economic Development Authority (WHEDA) and the Wisconsin Economic Development Corporation (WEDC) and into a single entity, called the Forward Wisconsin Development Authority (FWDA). The proposed merger has generated a lot of discussion among the legislators, given that it was just a few years ago, in his 2011-2013 budget that Governor Walker created WEDC from the Department of Commerce.

In order to vet the merger carefully, Sen. Rick Gudex (R-Fond Du Lac) and Rep. Rob Hutton (R-Brookfield) are circulating standalone bill to merge WHEDA and WEDC. The bill does the following:

  • Merges WEDC and WHEDA into the new Forward Wisconsin Development Authority (FWDA)
  • Establishes a 12-person board of directors for the FWDA– with eight public members, nominated by the governor (with advice and consent from the Senate) to serve four-year terms. The board includes four legislative members (two Assembly representatives, appointed by the speaker – one majority party and one minority; and two senators, appointed by the senate majority leader – one majority member and one minority member).
  • Grants the governor the ability to appoint the CEO and COO of FWDA. The CEO must be approved by the board and with the advice and consent from the Senate. The COO is appointed and approved by the board.
  • Generally keeps intact the existing housing and economic development programs. However, The bill modifies the housing and economic development programs as follows:
    • Requires any recipient of a grant or loan under an economic development program administered by FWDA, regardless of the amount of the grant or loan, to submit to FWDA (under established time frames) an attestation verifying that the grant or loan funds and any matching cash or in−kind match were expended in accordance with the grant or loan contract
    • Requires the grant or loan recipient to make the documents supporting the attestation available for inspection by FWDA
    • Requires a recipient of an economic development grant or loan of at least $500,000 to engage an independent certified public accountant to determine whether the grant or loan funds and any matching cash or in−kind match were expended in accordance with the grant or loan contract
    • Exempts from all of these requirements a state department, independent agency, or authority and the University of Wisconsin System
  • Establishes a Wisconsin housing finance fund (under the control of the board). The purpose of the fund is to separate FWDA’s assets in connection with the FWDA’s housing-related purposes. Most of WHEDA’s assets are transferred to the Wisconsin housing finance fund.