Bill introduced to help troubled TIFs

SOURCE: Milwaukee Journal-Sentinel
State legislation has been introduced to allow more time for financially troubled tax incremental financing districts to pay off their debts.

With a TIF district, a community typically borrows money to help fund a real estate development, perhaps by buildings roads and sewers to serve the new project. The project's property taxes are used to pay off that debt. Once the debt is paid, the taxes flow to the community, its school district and other local governments.

Lately, more TIFs are running into trouble, as I reported in July.

The main culprit is the recession, which has brought store closings, layoffs and a drop-off in travel. That affects the value of shopping malls, office buildings, hotels and other commercial properties.

Declining values result in lower property tax bills. So it takes longer for those property tax dollars to pay off city or village funds used to help finance commercial development.

A bill, introduced by Sen. Jim Sullivan (D-Wauwatosa) and Rep. Louis Molepske (D-Stevens Point), creates a process for TIFs created before Oct. 1, 2008, to be designated as "distressed."

That gives the district up to 40 years, from the date it was created, to pay off the debt. State law now limits districts to a maximum life of 27 years. The bill also allows a community to take revenue generated by a successful TIF to help pay off a distressed district's debt.

Supporters of the legislation say it will allow communities and their lenders more time to restructure debts.

For the record, NONE of the TIFs in Ripon are in distress.