WHAT IS TIF FINANCING???

As we move forward with developing the downtown Ripon-Boca Grande project, you will hear a lot about Tax Increment Finance (TIF). It can be a complicated and confusing concept, so a large part of this project will involve educating the public on what are we doing, why we are doing it, and what impact it would have on the public.

TIF financing is an economic development tool available to local governments in Wisconsin. The primary purpose of TIF is to allow cities to assist real estate development projects that would not be possible without public financial support. Under the TIF law, the city provides upfront funding, either in the form of grants or loans, for a project and repay these debts in future years by capturing the increased property tax revenues stemming from the development project over a number of years.

In order to create a TIF district, the city must create a detailed project plan for the development of a specific geographic area called a tax incremental district (TID). That is what the Plan Commission will review next Wednesday, Once the project plan and the boundaries of the district are approved by the city council, the Wisconsin Department of Revenue (DOR) will determine a year-one ‘base value’ for all property within the TID. As district increases in property values, the taxes on all property value growth above the base value – on what is known as the ‘value increment’ – are used to pay off the project’s debts.

What makes this complicated is the idea that the TIF money is different than the general property tax? There are some important facts to remember as we move forward:

* You will not see a line on your tax bills this winter to pay for the new TIF, just as your taxes have not been used to pay for the exisiting TIFs, unless you live or own property in the TIFs.
* When the TIF district is closed, the increased property values go back on the general tax rolls, which, in theory, will reduce the overall property tax burden. We are scheduled to close the original downtown TIF district, created back in the 1980s, in the next few years, which will put several million dollars of property values back on the tax rolls.
* We cannot spend any of the TIF money on projects outside the TIF, unless they are within one-half mile of the TIF's boundaries and have a direct impact on the TIF. For example, we could not divert part of the TIF money to fund the library or to pay city employees.
* All of our existing TIFs are financially sound, and have never missed a debt payment, and in some cases are generating income above and beyond what we projected when they were created.

As we move ahead in this process, I would encourage you to ask questions. I can be reached at home, via email - arkramer@charter.net - or right here on this blog. We are not trying to hide anything in this process, and want each and every person who is concerned to understand what we are doing. I look forward to hearing from you...