1. A Presentation to: Wisconsin Government Finance Officers Association

2. 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.

3. 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.

4. 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.

5. 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.

6. 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.

7. 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.

8. Accounting for Tax Increment Districts
Other Options
Project accounting software
Spreadsheets

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

10. 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.

11. Accounting for Tax Increment Districts
Exception:
Debt refinancing

12. Accounting for Tax Increment Districts
Questions?

13. 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

14. 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.

15. 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.

16. 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

17. 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

18. 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

19. 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

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

21. Financial Reporting of Tax Increment Districts
Annual Report of District Status
A sample report is available on the DOR website at:

22. 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

23. 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

24. 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.

25. 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:

26. 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

27. 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

28. 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:

29. 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

30. 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

31. 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)

32. 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

33. 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

34. 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 ed to:

35. 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

36. Financial Reporting of Tax Increment Districts
Questions?