A Presentation to: Wisconsin Government Finance Officers Association

Accounting and Financial Reporting for Tax Increment Districts We will discuss: Various ways to account for Tax Increment District transactions in the general ledger. Periodic financial and compliance reports required under the Wisconsin Statutes.

Accounting for Tax Increment Districts Due to the professional judgment allowed under governmental accounting principles, TIF transactions can be appropriately accounted for in nearly every governmental fund type.

Accounting for Tax Increment Districts Capital Projects Fund Capital projects funds are used to account for expenditures for capital outlay, including the acquisition or construction of capital facilities and other capital assets. Since most TIF project plans involve some type of capital activity, this is the most common fund type used.

Accounting for Tax Increment Districts Special Revenue Funds Special revenue funds are used to account for the proceeds of specific revenue sources that are restricted or committed to specified purposes, other than debt service or capital projects. Could be used for districts where the main expenditure is a developer subsidy or contribution.

Accounting for Tax Increment Districts Debt Service Funds Debt service funds are used to account for financial resources to be used for the payment of principal and interest. Could be used for districts where the expenditure period has expired and the district remains open to make debt service payments. Or could be used for current debt payments.

Accounting for Tax Increment Districts General Fund The general fund is used to account for and report all financial resources not accounted for and reported in another fund. Utilizing the general fund to account for district activity will require some subsidiary records to be maintained.

Accounting for Tax Increment Districts Other Options Project accounting software Spreadsheets

Accounting for Tax Increment Districts The actual accounting entries for district transactions are fairly straightforward.

Accounting for Tax Increment Districts Exception: Capital assets constructed for proprietary funds Fund Statements – TIF expenditure is recorded in the appropriate governmental fund and capital asset and contribution revenue recorded in the appropriate proprietary fund. Government-wide Statements – Governmental fund expenditure is reclassified to a transfer and the proprietary fund contribution revenue is also reclassified to a transfer.

Accounting for Tax Increment Districts Exception: Debt refinancing

Accounting for Tax Increment Districts Questions?

Financial Reporting for Tax Increment Districts Annual Reporting Requirements Increment request from the Wisconsin Department of Revenue (DOR) Report of district status Periodic Reporting Requirements Audits as required by Wisconsin Statutes

Financial Reporting for Tax Increment Districts Increment Request from Wisconsin Department of Revenue Clerk is required to submit a Tax Increment Certification report (PE-209) to the DOR for each district for which you would like to receive an increment. Reporting period is between April 15 and May 15. To be completed on line at the DOR website.

Financial Reporting of Tax Increment Districts Annual Report of District Status Wisconsin statutes require the following: An annual report of the status of each existing tax increment district be made available to the public. A copy of that report should be sent to each overlying taxing district by May 1.

Financial Reporting of Tax Increment Districts Annual Report of District Status The required contents of the report are not specifically addressed in the statutes. But the sample report from the DOR indicates the following should be disclosed: Revenues, current year and to date Expenditures, current year and to date Project costs to be recovered Outstanding debt

Financial Reporting of Tax Increment Districts Annual Report of District Status Revenues Tax increments Special assessments Computer aid and other grants Sale of property Developer guarantees Subsidy from other districts

Financial Reporting of Tax Increment Districts Annual Report of District Status Expenditures Administration Capital expenditures Developer incentives Interest and fiscal charges Subsidy to other districts

Financial Reporting of Tax Increment Districts Annual Report of District Status Project costs to be recovered In most cases, this would be calculated as: Project costs in excess of revenues Outstanding principal on debt

Financial Reporting of Tax Increment Districts Annual Report of District Status Outstanding debt and maturity dates

Financial Reporting of Tax Increment Districts Annual Report of District Status A sample report is available on the DOR website at: www.revenue.wi.gov/forms/govtif/pe-218.pdf

Financial Reporting of Tax Increment Districts Audits as Required Under Wisconsin Statutes Essentially a financial and compliance audit Determine if district transactions are made in a legal and proper manner Determine if the district is complying with the project plan and provisions of the Statutes

Financial Reporting of Tax Increment Districts Audits as Required Under Wisconsin Statutes Three audits are required under Wisconsin Statutes based upon the following: No later than 12 months after 30% of the project expenditures are made No later than 12 months after the end of the expenditure period No later than 12 months after termination of the district

Financial Reporting of Tax Increment Districts Audits as Required Under Wisconsin Statutes Separate audited financial reports are not required under the Statutes, but are often prepared for a variety of reasons including: Compiles all financial information for a district into one document Easily demonstrates compliance with the Statutes The financial and compliance audits may be conducted as part of the annual audit process.

Financial Reporting of Tax Increment Districts Audits as Required Under Wisconsin Statutes A sample of an annual audit report format can be found on the DOR website at: www.revenue.wi.gov/forms/govtif/pe-219.pdf

Financial Reporting of Tax Increment Districts Reporting Required at District Termination When a district is terminated, the municipality must: Notify the DOR Submit and Excel file of the Final Accounting Report Prepare the online Final Accounting Report to the DOR

Financial Reporting of Tax Increment Districts Reporting Required at District Termination The DOR notification of district termination should be made within 60 days of the termination resolution. It is contained on the “Final Accounting for Terminated Tax Incremental District” form established by the DOR Sets the time frame for the completion of the final accounting for the district usually 6 months from the termination resolution date, unless extended by DOR

Financial Reporting of Tax Increment Districts Reporting Required at District Termination A fill in form of the Final Accounting for Terminated Tax Incremental District can be found at: www.revenue.wi.gov/forms/govtif/pe-223f.pdf

Financial Reporting of Tax Increment Districts Reporting Required at District Termination The Excel file of the Final Accounting Report consists of the following sections: Cover page Detail of capital expenditures Balance sheet Detailed allocation report

Financial Reporting of Tax Increment Districts Reporting Required at District Termination Final Accounting Report Cover page Identifies district Identifies who prepared the report Detail of capital expenditures Actual compared to project plan budget Should only include project costs and not administrative or financing costs

Financial Reporting of Tax Incremental Districts Reporting Required at District Termination Final Accounting Report Balance sheet Not really a balance sheet Details project costs and project revenues by year since district creation with a final total to date Includes a comparison to the project plan budget (if applicable, as amended)

Financial Reporting of Tax Increment Districts Reporting Required at District Termination Final Accounting Report Detailed Allocation Report If the district was a donor to another district, the year, recipient district, and amount of the allocation should be reported If the district was a recipient of funds from another district, the year, donor district, and amount of the allocation should be reported

Financial Reporting of Tax Increment Districts Reporting Required at District Termination A copy of the Excel file can be obtained from the DOR website at www.revenue.wi.gov/forms/govtif/tidterm.html

Financial Reporting of Tax Increment Districts Reporting Required at District Termination The Excel form is located under the Termination section under the form name box for “TID Final Accounting Report” The Excel file should be saved as “Termination (City/Village) TID No. ___.xls” and emailed to: tif@revenue.wi.gov

Financial Reporting of Tax Increment Districts Reporting Required at District Termination After the Final Accounting Report has been completed, the on-line submission can be completed. Located at the same website as the Excel form, click on form PE-110

Financial Reporting of Tax Increment Districts Questions?