Sheboygan explores TID districts for industrial and mixed-use development

The Committee of the Whole meeting for the City of Sheboygan, held on May 16, 2025, focused on the intricacies of Tax Incremental Financing (TIF) districts and their implications for local development. The discussions highlighted the requirements and processes involved in establishing these districts, particularly in relation to land annexation and the definition of blight.

The meeting began with an overview of the necessity for contiguous boundaries when creating TIF districts, emphasizing that these boundaries cannot extend beyond corporate limits. The use of right-of-way was noted as a common method to achieve this contiguity. It was explained that land must be annexed into the community before a district can be created, a practice increasingly observed in areas like the Fox Valley, where farmers are transitioning out of their businesses and seeking city or county annexation for future growth.

Key points included the maximum lifespan of TIF districts, which can be up to 20 years for mixed-use and industrial types. Sheboygan currently has active districts of these types. A critical requirement is that at least 50% of the land within a district must be suitable for mixed-use or industrial purposes. The term "blight," which is essential for establishing certain types of districts, was discussed as being vaguely defined in statute, placing the onus on the community to clarify and support its definition in project plans.

The meeting also addressed the lesser-used categories of conservation, rehabilitation, and environmental remediation, which allow for longer periods—up to 27 years—to recoup costs associated with brownfield sites. The discussion underscored the complexities surrounding residential development within TIF districts, noting that only mixed-use districts permit residential development under current statutes. The definition of "newly platted residential" was identified as a point of confusion, particularly when distinguishing between undeveloped farmland and previously platted residential areas.

Further, the meeting outlined the project plan requirements mandated by statute, which must be approved by the Joint Review Board (JRB), the plan commission, and the city council. These requirements include detailed project costs and cash flow projections, which are crucial for understanding the financial viability of proposed developments. The importance of the "but for" test was emphasized, indicating that the proposed development would not occur without the creation of the TIF district.

In conclusion, the meeting provided a comprehensive overview of the regulatory framework governing TIF districts in Sheboygan, highlighting the need for clarity in definitions and processes to facilitate effective urban development. The discussions set the stage for future planning and development initiatives within the city, ensuring that stakeholders are informed of the requirements and implications of TIF financing.