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Council hears how Wisconsin Act 12 changes TID benefits and could affect future developments
Summary
Finance staff outlined how changes from Wisconsin Act 12 will reduce levy-limit benefits for tax incremental districts created after Oct. 1, 2024, and advised the council that multiple developers may request TIF assistance for upcoming projects.
City finance staff briefed Franklin City Council on state-level changes under Wisconsin Act 12 and how the changes could alter incentives for developers seeking TIF assistance.
Danielle, director of finance, told the council that Wisconsin Act 12, enacted in 2023, eliminated the personal property tax and provided supplemental state aid, but also changed the tax incremental district (TID) rules effective Oct. 1, 2024. She said TIDs created before Oct. 1, 2024, (for Franklin those are TID 5 through TID 9) are unaffected and will continue to generate levy limit increases equal to 100 percent of net new construction. By contrast, Danielle said TIDs created on or after Oct. 1, 2024, will provide only 90 percent of new construction on an annual basis and the one-time closure adjustment will be reduced from 50 percent of final incremental value to 10 percent of the new construction that occurred during the TID’s life.
Danielle illustrated the difference with an example: a hypothetical TID with $15 million in incremental value would produce a 1.5 percent levy increase under the prior rules but only about 0.2 percent under the post-2024 rules. She also explained a new incentive for early closure: if a TID is closed within 75 percent of its projected life, the final closure adjustment increases to 25 percent instead of 10 percent.
Staff told the council that SB Friedman has been doing feasibility and financial analysis for some potential developments and that Ehlers will continue assisting with TID creation. Danielle said the city currently has several projects — she referenced “at least four” potential developments — that may seek TIF assistance or TID creation though none have yet been formally brought forward.
Council members discussed how the reduced levy-limit benefits for new TIDs could make some development proposals less attractive and noted the law’s apparent emphasis on redevelopment rather than raw-land projects. Danielle said Ehlers has been asked to provide guidance at the state level and that conversations are ongoing about possible repeal or amendment of Act 12 provisions affecting TIDs.
Danielle said the city’s last created TID was TID 9 in October 2023 (the “Karma/76th Street” project in staff notes). She cautioned that closing a TID early to capture a larger closure adjustment may not be feasible for some projects that require the full planned life to realize returns.
Danielle and council members agreed to continue using Ehlers for TID creation and to work with SB Friedman on feasibility studies as projects solidify.
