RIVER FALLS — The River Falls Plan Commission hosted a lesson on Tax Increment Financing [TIF] and Tax Increment Districts [TIDs] at the Oct. 6 meeting, with both the commission and the public hearing a presentation on what they are and how staff feels they benefit the city.

City Economic Development Manager Keri Schreiner and Finance Commissioner Kristine Basom presented the item to the commission to provide them the knowledge of how projects are financed, how TIDs are formed and answer questions.

“Since 1976, Tax Increment Financing has been the most powerful economic development tool available to local governments in Wisconsin to stimulate targeted growth in infrastructure,” Schreiner said. “The TIF process allows a city to pay for public improvements and other eligible costs within a TID by using the future taxes collected on the TID’s increased property value to repay the cost of improvement.”

The city has 19 Tax Increment Districts, 13 of which are active. TIFs refer to the financing tool as a whole, while TIDs are the district boundaries where the tool is used. Schreiner said the districts promote development, redevelopment, job creation and tax base growth.

“You have the current base value of the property, which is frozen at the time that the TID is created or the district is created. The underlying taxing jurisdictions, so the county, the schools and the tech college, continue to receive taxes at that base value,” Schreiner said. “[The increase in property value] money is used to carry out projects within a half mile of the TID which are included in the TID plan.”

The 19 TIDs have a total base value of nearly $29 million, and a total increase in value of almost $216 million over the years. The beginning dates of the TIDs span from 1979 to 2023.

“The creation and start date of a TID is important, because the minute it’s created, the time is ticking on it. We don’t want to create a TID and then sit on it. We want to create a TID, have development done, have the city put in infrastructure so development can come in,” Schreiner said.

When a TID ends, the increase in tax revenue is shared with all of the taxing jurisdictions, and they start to receive the full property amount. Schreiner said without TIF, projects would not get done as planned, on time or with the same value, jobs and amenities. The end of the TID is where those frozen values for the school, county, etc. are supposed to see benefit through the increase to property value over time.

“People who are critical of the use of these funds often say, ‘Well, the other organizations [like the county, the school, the tech college and the municipality] are not getting their fair share of the taxes over time; however, the reinvestment is increasing exponentially the equalized value and therefore the taxation,” Mayor Alison Page said.

TIF cannot be used for municipal buildings, government expenses unrelated to the district or costs that come with newly platted residential development with a few exceptions. TID districts have different types, with the city’s 19 TIDs being either blight elimination, industrial or mixed use.

“TIF is a tool with some flexibility, but it also has specific statutory requirements,” Schreiner said.

In 2028, affordable housing can have its TID extended by two years. The increment collected over the two years would go toward affordable housing anywhere in the city. The change came after a recent state approval. The previous law allowed for a one-year extension, which was done at the TID 5 Whitetail Corporate Park area. A new Residential TID category was also put into law, which is designed for newly platted residential development.

Each TID must be approved by the joint review board, which is made up of a city representative, a county representative, a school district representative, a technical college representative and a public representative. Developers inside of the TID pay the same rate of taxes. There are a couple of different payment plans the developer and city can agree to.

“It allows us to provide, usually, public improvements. It also ensures that the developer has some sort of skin in the game,” Basom said.

Tattersall and The Sycamore were shared as examples of development that would not have come to the city without the backing of a TID.