Tax Incremental Financing
Tax Incremental Financing (TIF) is a Wisconsin tool for economic development available to municipalities to promote industry, redevelopment and blight elimination. The intent of TIF is to help municipalities finance economic development projects that would not otherwise occur.
Projects are funded by using taxes collected in the district (created by the West Bend Common Council) itself, without raising the taxes of residents outside the target area. This is often called “redevelopment from within”. It is viewed as a way to raise sufficient capital for redevelopment and to stimulate industrial growth without using general revenue funds.
In a TIF district, public investments are made to encourage growth and redevelopment or as part of planned private sector development. TIF finances the public investments by capturing, for a limited time, the increased tax revenue that result when private investment is stimulated. Tax revenues resulting from the growth are called the “tax increment”. As private investment adds to the tax base within the district, the increment is directed back to pay for the public investment projects. When the projects are paid off, the increment goes back into the general tax revenues.
TIFs may also be used as an incentive or financial benefit directly to developers. Development agreements are negotiated between the developer and the city’s department of economic and community development. Each agreement is subject to approval by the common council.
Since 1979, the City of West Bend has created 13 TIF districts to stimulate industrial growth and eliminate blight. The TIDs in West Bend are geographically varied and contain all types of property.
TIF is a mechanism for funding development and redevelopment projects. TIF allows an eligible municipality to fund improvements in a limited area of its jurisdiction by earmarking a defined portion of future tax revenues from that limited area as an income stream to pay off the costs of making the improvement.
The City of West Bend has been successful at using TIFs to create employment opportunities, stimulate commercial, industrial and residential development, expand the tax base and improve street, water and sewer systems. Specifically, West Bend has used TIF to revitalize downtown, reconstruct major streets and intersections, retain the Gehl Company and Serigraph, address blighted areas and provide opportunities for industrial and commercial growth by creating industrial parks – without passing the costs directly to residents.
The city has made significant strides in encouraging industrial development. Through effective planning, the city has supported the initiation of five industrial parks, four of which were created with the help of TIF districts. The public industrial parks (West Bend Industrial Parks East and South) are full, while the private industrial parks (West Bend Corporate Center, Wingate Creek Business Center and River Road Industrial Park) have installed public improvements, attracted development and continue to market their locations.
The usage of TIFs in the City of West Bend are likely to continue in the future as development projects continue to materialize.