Under current law, when an industrial or commercial property experiences long-term vacancy; when the property has sustained damage from a natural disaster; or when a property has been demolished, the base value of the property in a Tax Incremental Finance District (TIF) remains the same even though the actual or market value may have seriously declined. This discrepancy between the base value and the actual marketplace value, known as decrement, often presents a serious development impediment. Sen. Gudex, Reps. Schraa & Hintz have introduced an important piece of legislation, SB252/AB289, designed to solve this problem.

By allowing DOR to reassess a decrement situation within a TIF that has continued for at least two consecutive years, the legislation would resolve this issue. The bill defines decrement as a situation where the current aggregate equalized value of all the taxable property within the TIF is at least 10% less than the current value of the TIF’s tax incremental base.

By permitting these base value adjustments, communities experiencing this decrement situation can generate positive TIF increment more quickly; increase the number of value-added public-private development partnerships; and accelerate the stream of benefits for all of the impacted taxing jurisdictions (e.g. Local Units of Government, Technical College and School District).