equalized value calculations, project costs, and local levy limits relating to tax incremental districts

Wisconsin Legislature: SB696: Bill Text

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SB696: Bill Text

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2025 - 2026 LEGISLATURE
LRB-4603/1
EVM:cdc&skw
2025 SENATE BILL 696
December 2, 2025 - Introduced by Senators
Spreitzer
,
Dassler-Alfheim
,
Drake
,
Habush Sinykin
,
L. Johnson
,
Ratcliff
,
Roys
,
Wall
and
Hesselbein
, cosponsored by Representatives
Anderson
,
Joers
,
Arney
,
Bare
,
Billings
,
Brown
,
DeSmidt
,
Emerson
,
Fitzgerald
,
Johnson
,
Mayadev
,
McCarville
,
Palmeri
,
Rivera-Wagner
,
Roe
,
Sinicki
,
Spaude
,
Stubbs
,
Subeck
,
Taylor
,
Udell
,
Haywood
,
Prado
and
Tenorio
. Referred to Committee on Government Operations, Labor and Economic Development.
SB696,1,11
1
An Act

to repeal
66.0602 (3) (dq), 66.0602 (3) (dv), 66.1105 (2) (f) 3., 66.1105 (4)
2
(h) 7., 66.1105 (4m) (b) 2m., 66.1105 (5) (de) and 66.1105 (5) (dm);
to amend

3
60.23 (32) (b) 4., 66.0602 (1) (d), 66.0602 (3) (dm), 66.0602 (3) (ds), 66.1105 (2)
4
(cm), 66.1105 (2) (f) 1. a., 66.1105 (4) (gm) 4. c., 66.1105 (5) (bn), 66.1105 (5)
5
(bo), 66.1105 (5) (bt), 66.1105 (5) (bu), 66.1105 (5) (d), 66.1105 (6m) (c) 8.,
6
66.1105 (10) (c), 66.1105 (12) (intro.), 66.1105 (12) (b), 66.1105 (16) (d),
7
66.1105 (17) (title), 66.1105 (17) (a) (intro.), 66.1105 (17) (a) 3., 66.1105 (17)
8
(d), 66.1105 (17) (e), 66.1105 (17) (f), 66.1105 (17) (g), 66.1105 (18) (c) 3. and
9
66.1105 (20) (b) (intro.);
to create
66.1105 (2) (f) 1. am. of the statutes;
10
relating to:
equalized value calculations, project costs, and local levy limits
11
relating to tax incremental districts.
Analysis by the Legislative Reference Bureau
This bill makes various changes to the statutes governing tax incremental financing (TIF), including increasing the percentage of a municipality’s equalized value that may be contained within a tax incremental district (TID) and specifying that costs of construction residential building may be included as project costs within a TID. The bill also repeals certain changes made in the 2023-24 legislative session relating to local levy limits and TIDs.
TIF generally
Under current law, cities and villages may use TIF to encourage development in the city or village. In general, under TIF, a city or village pays for improvements in a TID and then collects tax moneys attributable to all taxing jurisdictions on the increased property value in the TID for a certain period of time to pay for the improvements. Ideally, after that period of time, the city or village will have been repaid for its initial investment and the property tax base in the TID will have permanently increased in value.
In general and in brief, a city or village makes use of TIF using the following procedure:
1. The city or village designates an area as a TID and creates a project plan laying out the expenditures that the city or village will make within the TID.
2. The Department of Revenue establishes the “base value” of the TID. This value is the equalized value of all taxable property within the TID at the time of its creation.
3. Each year thereafter, the “value increment” of the property within the TID is determined by subtracting the base value from the current value of property within the TID. The portion of taxes collected on any positive value increment (the tax increment) is collected by the city or village for use solely for the project costs of the TID. Tax increments collected by the city or village include taxes that would have been collected by other taxing jurisdictions, such as counties or school districts, if the TID had not been created.
4. Tax increments are collected until the city or village has recovered all of its project costs or until the TID reaches its statutory termination date.
TID valuation limit (the “12 percent rule”)
Under current law, when creating a new TID or amending a TID, a city or village must make a finding that the equalized value of taxable property of the new or amended TID, plus the value increment of all existing TIDs in the city or village, does not exceed 12 percent of the total equalized value of taxable property in the city or village. The bill increases that limit to 18 percent.
Local levy limits relating to TIDs
The bill repeals the changes made in
2023 Wisconsin Act 12
to the calculation of local property tax levy limits with regard to taxable property located within a TID.
Generally, under current law, local levy limits are applied to the property tax levies that are imposed by a city, village, town, or county (political subdivision). A political subdivision may not increase its levy by a percentage that exceeds its “valuation factor,” which is the greater of either 1) 0 percent or 2) the percentage change in the political subdivision’s equalized value due to new construction, minus the value of any improvements that were removed (net new construction).
2023 Wisconsin Act 12
changed the calculation for determining the value of net new construction so that it includes only 90 percent of new construction that occurs within TIDs created after December 31, 2024. The bill repeals this change.
Prior to
2023 Wisconsin Act 12
, the statutes provided for an increase in a political subdivision’s levy limit upon the termination of a TID. If DOR did not certify a value increment for a TID for a year because the TID had terminated, the levy limit of the political subdivision in which the TID was located increased by an amount based on 50 percent of the previous year’s value increment for the TID.
Current law now provides that, upon termination or amendment of a TID created after December 31, 2024, the political subdivision’s levy limit is increased by an amount based on 10 percent of the TID’s lifetime equalized value increase. This levy limit increase may be further increased by an amount based on 15 percent of the TID’s lifetime equalized value increase if the TID terminates earlier than was anticipated at the time of the TID’s creation. The bill eliminates these changes that were made by
2023 Wisconsin Act 12
for TIDs created after December 31, 2024.
Project costs and expenditures for residential development
Under current law, the project costs of a TID must be enumerated in the TID’s project plan. These project costs are the expenditures that the city or village expects to make in carrying out the project plan. Current law limits the types of expenditures that may be included as project costs. For example, public works such as sewers, streets, and lighting systems; financing costs; and site preparation costs may be included. The costs of constructing administrative buildings, for example, may not.
Generally, under current law, project costs may, under certain circumstances, include expenditures for newly platted residential development. Currently, such expenditures may qualify as project costs only in TIDs for which a project plan was approved before September 30, 1995, or for mixed-use TIDs. With regard to a mixed-use TID, such expenditures qualify only if certain density or development quality standards are also satisfied.
The bill eliminates the restrictions on including expenditures for newly platted residential development as project costs and specifically provides that costs of constructing residential buildings may be included as project costs. The bill also adds the costs of developing, improving, or expanding parks as expressly authorized project costs.
Because this bill may increase or decrease, directly or indirectly, the cost of the development, construction, financing, purchasing, sale, ownership, or availability of housing in this state, the Department of Administration, as required by law, will prepare a report to be printed as an appendix to this bill.
For further information see the state and local fiscal estimate, which will be printed as an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:
SB696,1
1
Section

1
.
60.23 (32) (b) 4. of the statutes is amended to read:
SB696,2,3
2
60.23
(32)
(b) 4. The
12

18
percent limit described under s. 66.1105 (4) (gm) 4.
3
c. shall be 5 percent with regard to the town of Cable acting under subd. 2.
SB696,2
4
Section

2
.
66.0602 (1) (d) of the statutes is amended to read:
SB696,2,14
5
66.0602
(1)
(d) “Valuation factor” means a percentage equal to the greater of
6
either the percentage change in the political subdivision’s January 1 equalized
7
value due to new construction less improvements removed between the previous
8
year and the current or 0 percent.
For a tax incremental district created after
9
December 31, 2024, and for Tax Incremental District Number 10 created by the
10
common council of the city of Evansville, and for Tax Incremental District Number
11
14 created by the common council of the city of Stevens Point, the valuation factor
12
includes 90 percent of the equalized value increase due to new construction that is
13
located in a tax incremental district, but does not include any improvements
14
removed in a tax incremental district.
SB696,3
15
Section
3
.
66.0602 (3) (dm) of the statutes is amended to read:
SB696,3,4
16
66.0602
(3)
(dm)
For a tax incremental district created before January 1,
17
2025, if

If
the department of revenue does not certify a value increment for a tax
18
incremental district for the current year as a result of the district’s termination, the
19
levy increase limit otherwise applicable under this section in the current year to the
20
political subdivision in which the district is located is increased by an amount equal
21
to the political subdivision’s maximum allowable levy for the immediately
22
preceding year, multiplied by a percentage equal to 50 percent of the amount
1
determined by dividing the value increment of the terminated tax incremental
2
district, calculated for the previous year, by the political subdivision’s equalized
3
value, exclusive of any tax incremental district value increments, for the previous
4
year, all as determined by the department of revenue.
SB696,4
5
Section

4
.
66.0602 (3) (dq) of the statutes is repealed.
SB696,5
6
Section
5
.
66.0602 (3) (ds) of the statutes is amended to read:
SB696,3,19
7
66.0602
(3)
(ds)
For a tax incremental district created before January 1, 2025,
8
if

If
the department of revenue recertifies the tax incremental base of a tax
9
incremental district as a result of the district’s subtraction of territory under s.
10
66.1105 (4) (h) 2., the levy limit otherwise applicable under this section shall be
11
adjusted in the first levy year in which the subtracted territory is not part of the
12
value increment. In that year, the political subdivision in which the district is
13
located shall increase the levy limit otherwise applicable by an amount equal to the
14
political subdivision’s maximum allowable levy for the immediately preceding year,
15
multiplied by a percentage equal to 50 percent of the amount determined by
16
dividing the value increment of the tax incremental district’s territory that was
17
subtracted, calculated for the previous year, by the political subdivision’s equalized
18
value, exclusive of any tax incremental district value increments, for the previous
19
year, all as determined by the department of revenue.
SB696,6
20
Section

6
.
66.0602 (3) (dv) of the statutes is repealed.
SB696,7
21
Section

7
.
66.1105 (2) (cm) of the statutes is amended to read:
SB696,4,2
22
66.1105
(2)
(cm) “Mixed-use development” means development that contains
23
a combination of industrial, commercial, or residential uses
, except that lands
1
proposed for newly platted residential use, as shown in the project plan, may not
2
exceed 35 percent, by area, of the real property within the district
.
SB696,8
3
Section

8
.
66.1105 (2) (f) 1. a. of the statutes is amended to read:
SB696,4,11
4
66.1105
(2)
(f) 1. a. Capital costs including
, but not limited to,
the actual costs
5
of the construction of public works or improvements, new buildings,
including
6
residential buildings,
structures, and fixtures; the demolition, alteration,
7
remodeling, repair
,
or reconstruction of existing buildings, structures
,
and fixtures
8
other than the demolition of listed properties as defined in s. 44.31 (4); the
9
acquisition of equipment to service the district; the removal or containment of, or
10
the restoration of soil or groundwater affected by, environmental pollution; and the
11
clearing and grading of land.
SB696,9
12
Section

9
.
66.1105 (2) (f) 1. am. of the statutes is created to read:
SB696,4,13
13
66.1105
(2)
(f) 1. am. Costs to develop, improve, or expand parks.
SB696,10
14
Section

10
.
66.1105 (2) (f) 3. of the statutes is repealed.
SB696,11
15
Section
11
.
66.1105 (4) (gm) 4. c. of the statutes is amended to read:
SB696,5,3
16
66.1105
(4)
(gm) 4. c. Except as provided in subs. (10) (c), (16) (d), (17), (18) (c)
17
3., (20) (b), and (20m) (d) 1., the equalized value of taxable property of the district
18
plus the value increment of all existing districts does not exceed
12

18
percent of the
19
total equalized value of taxable property within the city. In determining the
20
equalized value of taxable property under this subd. 4. c., the department of
21
revenue shall base its calculations on the most recent equalized value of taxable
22
property of the district that is reported under s. 70.57 (1m) before the date on which
23
the resolution under this paragraph is adopted. If the department of revenue
24
determines that a local legislative body exceeds the
12

18
percent limit described in
1
this subd. 4. c., the department shall notify the city of its noncompliance, in writing,
2
not later than December 31 of the year in which the department receives the
3
completed application or amendment forms described in sub. (5) (b).
SB696,12
4
Section

12
.
66.1105 (4) (h) 7. of the statutes is repealed.
SB696,13
5
Section
13
.
66.1105 (4m) (b) 2m. of the statutes is repealed.
SB696,14
6
Section

14
.
66.1105 (5) (bn) of the statutes is amended to read:
SB696,5,16
7
66.1105
(5)
(bn) Notwithstanding the requirement that the total equalized
8
value not exceed
12

18
percent, as described in sub. (4) (gm) 4. c., if the village of
9
Union Grove created, or attempted to create, tax incremental district number 4 on
10
January 1, 2006, based on actions taken by the village board on February 27, 2006,
11
the tax incremental base of the district shall be calculated by the department of
12
revenue as if the tax incremental district had been created on January 1, 2006, and,
13
until the tax incremental district terminates, the department of revenue shall
14
allocate tax increments and treat the district in all other respects as if the district
15
had been created on January 1, 2006, except that the department of revenue may
16
not certify a value increment under par. (b) before 2008.
SB696,15
17
Section

15
.
66.1105 (5) (bo) of the statutes is amended to read:

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