tif 101 municipalities’ main economic development tool › ... › 04 ›...

TIF 101 Municipalities’ Main Economic Development Tool April 26, 2019 – WGFOA Spring Conference

Justin Fischer Senior Vice President

Baird 414.765.3635

[email protected]

Brian Ruechel Director

Baird 920.469.0332

[email protected]

Adam Ruechel Village Administrator

Village of Marshall 608.655.4017

[email protected]

Kristin Filipiak Wisconsin Department of Revenue

Community Services Specialist Technical & Assessment Services

608-266-5708 [email protected]

[email protected]

Stacy Leitner Wisconsin Department of Revenue

Community Services Specialist Technical & Assessment Services

608-261-5335 [email protected]

[email protected]

Robert W. Baird & Co. Incorporated is providing this information to you for discussion purposes only. The information does not contemplate or relate to a future issuance of municipal securities. Baird is not recommending that you take any action, and this information is not intended to be regarded as “advice” within the meaning of Section 15B of the Securities Exchange Act of 1934 or the rules thereunder.

U:\NON_IB_FOLDERS\Fixed Income_Public Finance\[MAIN] FICM Pitchbook - 2018_110918.pptx 11/9/18 12:21 pm

Agenda

• TID vs. TIF

• Why Create a TID?

• Types of TIDs

• Financing Options

• Real World TID Case Studies

2


TID vs. TIF


TID vs. TIF

TIF (Tax Incremental Financing):

An economic development program which helps promote local tax base expansion by using property tax revenues to fund site improvements to attract new industrial or mixed-use development, rehabilitate/conserve property, eliminate blight or remediate the environment.

TID (Tax Incremental District):

The actual physical area (whole parcels) designated for improvements using tax incremental financing.

4


What is a TID?

• Contiguous geographic area within a municipality intended to foster economic development or redevelopment

• Administered by the municipality while benefiting all overlapping taxing entities, a municipality may also have a lake district, sanitary district or metro sewer district

5


Wisconsin Department of Revenue (DOR)’s Role

TIF program is intended to be locally initiated and managed, with minimal state oversight.

DOR cannot certify a tax incremental base until they determine procedures were followed, documents were

completed correctly, and notices were provided timely.

Facts supporting any document adopted or action taken by the local governing body are not

subject to review by DOR.

Responsibility for specific TIF expenditures belongs to the

municipality with consultation from its attorney or auditor.

6


TID Fees and How to Pay

Municipality must pay fees through My Tax Account

• Creation - $1,000 • Territory Amendment (addition or subtraction) - $1,000 • Territory Amendment (addition and subtraction) - $2,000 • Base Value Redetermination - $1,000

Fees: Payable by October 31 – once per request

• Certification administrative fee - $150 per active TID

Fees: Payable by April 15 – yearly

7


Report and Document Due Dates

Annual Report – Due July 1 (late fee of $100 per TID per day applicable after the 60 day grace period) e-file Form PE-300 located on the DOR online filing page

Creations, Territory Amendments, and Base Value Redeterminations – Due October 31 – email required documents to [email protected]

Project Plan and/or Allocation Amendments – Due December 31 – e-mail required documents to [email protected]

8

mailto:[email protected]

mailto:[email protected]


What Statutes Regulate the TIF Program

Village and City – sec. 66.1105, Wis. Stats.

Town – sec. 60.85 and sec. 60.23(32), Wis. Stats.

Environmental remediation (municipal resolution adopted before November 29, 2017) - sec. 66.1106, Wis. Stats.

9


TID Overview

In 2017, 70 new TIDs were created: – 18 Blight Elimination – 15 Rehabilitation – 12 Industrial – 25 Mixed Use

In 2017, there were 74 TID Amendments: – 23 Territory – 30 Project Plan – 16 Allocation – 5 Base Value

Wisconsin currently has 1,261 active TIDs*: – 130 created before October 1,

1995 (not required to declare a type)

– 305 Blight Elimination – 161 Rehabilitation/Conservation – 305 Industrial – 329 Mixed Use – 4 Towns – 15 Environmental Remediation – 12 Legislative Exceptions

There were 47 TID terminations effective in 2018

Source: Wisconsin Department of Revenue *As of April 23, 2018

10


How a TIF is Funded

When a TID is created, the municipality and other taxing entities agree to support their normal operations from the existing tax base within the district.

Assuming that the TID was not created, there would be no additional growth to the existing tax base.

Property taxes for the school, county, technical college, and municipality are based on the taxable value of the TID at the time it is created.

The tax rates are applied to the TID value increment, which results in additional revenues collected for the district’s fund.

Eligible TID costs are paid from these revenues before the additional tax base is shared.

State of Wisconsin does not collect or pay increments to municipal governments.

11


Important TID Terms

Base Value • The total full market value of all property within the TID when the TID was created

Current Value

• The total full market value of all property within the TID for the current year

Increment Value

• The difference between the base value and the current value

Tax Increment

• Taxes levied by overlapping taxing jurisdictions on the value between the base value and the current value of the TID which is used to pay eligible project costs

12


Tax Increment Calculation

Step A: Municipality determines the tax rate per $1,000 of property value for each overlapping taxing entity

• Apportioned Levy / Equalized Value (less TID value increment) = Interim tax rate

Step B: The tax rate is multiplied by the value increment DOR certifies to determine the actual dollars available to pay the eligible project costs

• Interim tax rate X Equalized Value(with TID value increment) = Levy amount • Levy Amount – Apportioned Levy = Tax Increment

Changes to the increment value or tax rate result in a different tax increment

Every municipality with a TID must complete the Tax Increment Worksheet (Form PC-202) each December to calculate the actual tax increment based on the municipality’s levy amount

13


Tax Increment Worksheet (Form PC-202)

14


Increment Value and Tax Increment

Current Marshall and Combined Mill Rates

• 2017 (2018 purposes) Village Mill Rate: • $8.14 / $1,000 of equalized value

• Combined mill rate of all overlapping taxing entities: • $23.98 / $1,000 of equalized value • (School - $11.76 / County - $3.14 / MATC - $0.94)

Assume $1,000,000 of Increment

• Village mill rate generates $8,140 of tax revenue annually • Combined mill rate generates $23,980 of tax revenue annually

15


Tax Allocation

$0

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

TID Debt Service

Village Portion Tax Revenue @ $8.14 Tax Rate

Total Village & Underlying Entities Tax

Revenue @ $23.98 Excess Revenues over Expenditures

Shortfall

Estimated TID Closure

2018 EQUALIZED TAX RATE Village of Marshall $8.14 Dane County $3.14 School District of Marshall $11.76 Madison Area Technical College $0.94

TOTAL VILLAGE AND UNDERLYING ENTITIES TAX RATE $23.98

16 The hypothetical example is for illustrative purposes only.


Example TID Lifecycle

Calendar Years $0

$5,000

$10,000

$15,000

$20,000

$25,000

Equa

lized

Val

uatio

n ($

in th

ousa

nds)

Rapid Growth Period – As the value increases,

the municipality experiences

growth in tax revenues which are used to service

TIF related debt.

Mature Growth Period-

Valuation growth begins to level off.

TIF District Closure – Once project costs are

recovered, the TIF closes. The tax base and

increment is applied to the underlying taxing

entities.

Base Valuation

Increment Over Base New Tax

Base

Initial Construction Period–

Develop infrastructure and attract buyers.

The hypothetical example is for illustrative purposes only.

17


Why Create a TID?


Why Create a TID?

Attract new private development that would otherwise not occur “but for” the creation of the TID

• Expand tax base/development becomes cost effective and proceeds

Share costs among:

• Municipality • School district • Technical college district • County

Tax increment revenues based on full tax rate to offset TID project costs

Once TID is closed, all overlapping taxing entities benefit from expanded tax base

19


Financial Feasibility

Village of Marshall Tax Increment District No. 2

Cash Flow Proforma Analysis

20


TID Creation Timeline

Planning Commission

Meeting

Notice of public

hearing mailed

Notice of public

hearing published as

Class 2 Notice1

Joint Review Board*

appointed

Public Hearing

Planning Commission

adopts Project Plan and

submits it to Council

Council adopts

resolutions

Joint Review Board*

approves or denies

proposal

DOR certifies tax

increment base

Allow a minimum of 60 days. *JRB Meetings require a Class I published notice. After Council adopts resolution JRB has 45 days to then approve or deny.

At least 14 days At least 14 days

1TID amendments require class 1 notice (2016 Act 256)

21


Village of Marshall TID #2 Creation Timeline

22


Village of Marshall TID #2 Creation Timeline

23


Types of TIDs


Types of TIDs

*Towns with a minimum population of 3,500, minimum valuation of $500 million and wastewater treatment plant access to the TID are eligible. Sec. 60.23, Wis. Stats.

Villages, Cities, Certain Towns*

Sec 66.1105, Wi. Stats.

• Blight • Rehabilitation/

conservation • Industrial • Mixed use • Environmental

remediation (on or after 11/29/2017)

Towns Sec. 60.85, Wi. Stats.

• Tourism, agriculture, and forestry

• Cooperative

Environmental Remediation Sec. 66.1106, Wi. Stats.

• Adopted before 11/29/2017

25


Blight or Rehabilitation/Conservation TIDs

• At least 50% of the TID area is considered to be a:

• “Blighted area” • In need of

“rehabilitation or conservation” work

• Must pick either blight or rehabilitation as the TID type

• Maximum life: 27 years • Maximum life standard

extension: • 4 years with JRB

Approval (10/1/1995 – 9/30/2004)

• 3 years with JRB approval (after 9/30/2004)

• Expenditure period: 22 years

26


Blighted Property

• By reason of dilapidation, deterioration, age or obsolescence, inadequate provisions for ventilation, light, air or sanitation, high density of population and overcrowding, or the existence of conditions, which endanger life or property by fire and other causes

• Is predominantly open and which because of obsolete platting, diversity of ownership, deterioration of structures or of site improvements or otherwise, substantially impairs or arrests the sound growth of the community

Property which:

27 Sec 66.1105, Wi. Stats.


Industrial TID

• At least 50% of the TID area must be suitable for industrial development

• Property currently zoned for industrial use must remain zoned industrial throughout the life of the TID

• Maximum life: • 20 years (after 9/30/2004) • 23 years (10/1/1995 –

9/30/2004) • Maximum life standard

extension: • 3 years with JRB approval

(after 9/30/2004, unless it is a donor)/no extension (10/1/1995 – 9/30/2004)

• Expenditure period: • 15 years (after 9/30/2004) • 18 years (10/1/1995 –

9/30/2004)

28

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwi0xfPnwprVAhWK8YMKHbPpAncQjRwIBw&url=http://archiv.ethlife.ethz.ch/articles/tages/scmchinaexcurs.html&psig=AFQjCNFYQcd_1foIJ9Ov2THu9JYoePgfBQ&ust=1500731482737402


Mixed-Use TID

Mixed-use type TIDs were created in 2004

50% of the land within must be suitable for at least 2 of the following uses:

• Industrial • Commercial • Residential

Newly platted residential portion is limited to no more than 35% of the area

• Housing density of 3+ units per acre

Maximum life: 20 years

Maximum life standard extension: 3 years with JRB approval

Expenditure period: 15 years

29


Mixed Use TIDs

30


Environmental Remediation (E.R.) TID

*Source: Wisconsin Department of Revenue; Active Tax Incremental Financing Districts (as of May 9, 2017)

• Have to obtain DNR site certification report before creation • 50% of property has to be in need of environmental remediation • Remediation, property acquisition, demolition costs, asbestos removal, capital costs,

financing, and underground storage tank removal and disposal • Maximum life:

• 23 years (10/15/1997 – 11/29/2017) • 27 years (after 11/29/2017)

• Maximum life standard extension: • 3 years with JRB approval (after 11/29/2017) • No extension (10/15/1997 – 11/29/2017)

• Expenditure period: • 15 years (10/15/1997 – 11/29/2017) • 22 years (after 11/29/2017)

• Currently 16 active E.R. TIDs*: • 13 city • 2 town • 1 village

31

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwik1aWK1ZrVAhUP24MKHY-kB5sQjRwIBw&url=http://www.inlineco.com/environmental-remediation/sustainable-remediation/&psig=AFQjCNF-JLVxmjojJkuFJiVgv0QPYqoyGw&ust=1500733420929759


Town TIDs

• Towns may create a TID under s.66.1105 (the statutes governing city and village TID) if the following apply:

• Population of at least 3,500

• Valuation of at least $500 million

• Access to wastewater treatment plant

• Selection of one of the three following options:

Option A (sec.60.23 (32)(f)2.a.)

At least 51% of public infrastructure improvements value must be financed by a private developer or entity

Development agreement is required to receive cash grants which will solely repay the developer or entity for public infrastructure costs

Option B (sec. 60.23 (32)(f)2.b.)

All project costs are expected to be paid within 90% of the TID’s maximum life

Option C (sec. 60.23 (32)(f)2.c.)

Expenditures may be made only within the first half of the TID’s maximum life

JRB can unanimously approve additional expenditure(s) but not beyond the original expenditure period

32


Town TIDs (Sec. 60.85)

After 9/30/2004

Statute allows towns to use TIF for specific agricultural, forest, manufacturing and tourism activities.

Maximum life: 16 years

Maximum life standard extension: No

Expenditure period: 5 years

Limitation restrictions: 5% and 7%

33


TID Criteria Matrix

34 Source: Wisconsin Department of Revenue (DOR)


TID Creation Requirements

(66.1105 and 60.23 and 60.85)

• The “but for” test • Would the expected

development occur without the use of tax increment financing?

• Without development, could remain vacant

• Equalized value limitation • Whole parcels • Contiguous geographic area

• Public notices • Project plan • Public hearing • Resolutions • Plan commission approval • Council/Board approval • Joint review Board approval • DOR certification • Forms/workbook/checklist • Timeframes/timelines

35


TID Creation Requirements

36


Base Year

Date Resolution Adopted Base Year

Oct. 1, 2018 – Sept. 30, 2019 Jan. 1, 2019

Oct. 1, 2019 – Sept. 30, 2020 Jan. 1, 2020

• The table below illustrates the district’s base year depending on the date the resolution is adopted:

37


Equalized Value Test

Blighted Area, Industrial and Mixed Use TIDs

12% Statutory Test Limit

Total Equalized Valuation (TID-In) $100,000,000 100.00%

12% of Total Equalized Valuation (TID-In) $12,000,000 12.00%

Total TID Increment $4,000,000 4.00%

Remaining Capacity $8,000,000 8.00%

• Equalized value of the proposed TID plus the value increment of all existing TIDs may not exceed 12% of the municipality’s total equalized valuation (TID-In)

• For multiple TID creations completed at the same time, each new TID is tested on a stand-alone basis

• DOR releases equalized values for the current year annually on August 15 (e.g., the 2019 equalized value will be available on August 15, 2019)

• The equalized value test is based on figures available at the time the TID creation resolution is adopted by the governing body

38


Options if TID Increment Exceeds E.V. Test

• Close existing TID and create new TID in the same year

TID Closure

• Amend existing TID to subtract territory and create new TID in the next year

• Amend existing TID to subtract territory and create new TID at the same time within the E.V. test • Requires certified appraisals • Limited to one simultaneous subtraction and creation until newly

created TID is closed

Territory subtraction

39


TID Publish Notices Requirement

• Publish one notice at least five days before any JRB meeting • Excluded: towns (created under sec. 60.85) and environment

remediation (created under sec. 66.1106)

Joint Review Board (JRB) meetings

• Publish two consecutive notices, one per week, with the second notice at least seven days before the public hearing

TID creation

• Publish one notice at least seven days before the public hearing • The minimum number of days does not include the day the notice is

published but does include the ay of the meeting

TID amendments

40


Combined Public Hearing/First JRB Meeting

41


Notice of JRB Meeting

42


Annual Report JRB Meeting

43


Guidelines for Project Plans

Project Plans include the following:

• State number, location, and type of proposed public works or improvements • Economic feasibility study • Detailed list of project costs • Financing methods & timeframe the costs/obligations are to be incurred • Maps: district boundaries, existing uses and conditions of real property &

proposed improvements and uses • Proposed changes in zoning ordinances, master plan, map, building codes

and municipal ordinances • List and estimated non-project costs • Plan for relocating any displaced persons or businesses • Describe how district’s creation promotes orderly development • Signed attorney’s opinion & legal description of TID

44


Project Plan Guidelines

Towns/Environment Remediation/Base Value Redetermination

Towns – Sec. 60.23(32) (specify the expenditure option selected) • Option A: At least 51 percent of the public infrastructure improvement value must be financed by a private developer

or entity. Development agreement is required to receive cash grants which will solely repay the developer or entity for public infrastructure costs.

• Option B: The town expects all project costs to be paid within 90 percent of the TID’s remaining life. • Option C: Expenditures may be made only within the first half of the TID’s maximum life. Joint Review Board can

unanimously approve additional expenditures but not beyond the original expenditure period.

Environmental Remediation (specify the expenditure option selected) • Option A: All project costs are expected to be paid within 90 percent of TID’s remaining life • Option B: Expenditures may be made only within the first half of the TID’s remaining life. Limitation on the expenditure

period does not apply to any expenditure made to address significant environmental pollution not identified in the original certified site investigation report. No expenditures may be made beyond the original expenditure period.

Base Value Redetermination amendments (specify the expenditure option selected) • Option 3: At least 51 percent of the public infrastructure improvement value must be financed by a private developer

or entity. Development agreement is required to receive cash grants which solely repay the developer or entity for public infrastructure costs.

• Option 4: All project costs are expected to be paid within 90 percent of the TID’s remaining life. • Option 5: Expenditures may be made only within the first half of the TID’s maximum life. Joint Review Board can

unanimously approve additional expenditures but not beyond the original expenditure period.

45


Eligible Project Costs

Project costs related directly to establishing and improving the TID

• Public works & improvements directly associated with the TID • Pro-rated cost of utility infrastructure • Capital development • Demolition or building repairs • Financing – Capitalized interest, debt issuance costs, temporary debt refinancing) • Real property assembly (land write-down) • Professional services (ex: consulting, accounting, legal services) • Organizational and administrative activities • TID maps or architectural drawings • Relocation • Annual fees • Developer incentives (requires signed developer agreement) • Removal or containment of lead contamination • Projects within ½ mile of district (improvements must serve property in the TID)

46


Non-Project Costs

Public works projects which only partly benefit the TID.

Municipality may not pay these costs with tax increments.

Public improvement non-project costs examples:

• Improvement made within the TID – that also benefits property outside the TID. The portion of the total project costs allocated to the properties outside the TID is a non-project cost.

• Improvement made outside the TID- that partially benefits property within the TID. The portion of the total project costs allocated to the properties outside the District is a non-project cost.

• Projects started within the TID as part of the project plan implementation that are paid fully or in part by impact fees, grants, special assessments or revenues other than TIF increments.

47


Financing Options


Financing Options

Up-Front

• Projects the incremental property values of the project and extend an up-front payment to assist in development costs

• Lump sum • City assumes risk

Pay-As-You-Go Note

• Relies on the developer to pay for the up-front project costs with the promise of being reimbursed

• Series of installments • Developer assumes risk

49


Joint Review Board (JRB)

• JRB’s chairperson and public member chosen by majority vote. • Chairperson remains the same for TIDs life or no longer on JRB. • At least one-half of JRB members must attend a meeting.

Initial JRB organizational meeting must be held within 14 days after public hearing notice publication.

JRB meeting notice published at least 5 days before the meeting.

• Municipal – JRB may approve/deny resolution anytime within 45 days of receiving the resolution.

• Towns/Environmental Remediation – JRB may not approve/deny resolution until 10 days after receiving the resolution.

Local legislative body adopts a resolution.

• JRB members can attend annual review by phone as no vote needed.

JRB must meet annually to review TID’s annual report, performance, status.

50


Joint Review Board Approval

The JRB must base its decision to approve (by a majority vote) a TID on the following criteria:

• Positively assert whether the development expected in the TID would occur without the use of tax incremental financing (“but for test”);

• Whether the economic benefits of the tax incremental district (as measured by increased employment, business and personal income, and property value) are sufficient to compensate for the cost of the improvements; and

• Whether the benefits of the proposal outweigh the anticipated tax increments to be paid by the owners of property in the overlying taxing districts.

JRB must respond to municipal officials within seven days of its decision.

51


TID Checklist

Legal Documents • Scan all documents together and use name: LegalDocs.pdf • Proof sent notices / publications • Resolutions : Planning Commission; Municipal; JRB • Retail percentage

Boundary and Map • Scan parcel map and legal description; name: Bounds-Map.pdf • County real property lister notification

Project Plan – Save and name: ProjectPLan.pdf.

Base Value Workbook: Save and name: Forms.pdf

TIF Fees

TIF Timeframes

52


TID Resolution Checklist

• Indicate TID name/number • Recommend TID boundaries • Approve proposed project plan

Planning Commission Resolution Requirements

• Indicate TID name/number • Designate final TID boundaries • Adopt project plan • Confirm 12% EV test • Declare TID type

Municipal Resolution Requirements

• Indicate TID name/number • Confirm proposal meets three criteria

Joint Review Board Requirements

53


Amendments

City/Village

• Territory amendments • Addition • Subtraction • Simultaneous creation and subtraction

• Project plan and or allocation (donor) amendments • Distressed/severely distressed

Town

Base Value Redetermination

54


Territory Amendment

• Applies to existing as well as new TIDs • Anytime during the existence of the TID • May add or subtract territory • Additions and subtractions cannot make TID non-contiguous • Expenditure period for amended area is the same for TID

Districts allowed four boundary amendments

55


Project Plan Amendment Procedure

Amendment of project plan prepared by

Plan Commission

Requires Plan Commission

approval

Public notice stating

purpose and cost

Public hearing

Governing body approval

Joint Review Board

approval

56


Project or Project Cost Amendment

Allows for the amendment of any element of the original

project plan

Most common amendments are changes to the project cost

No limitations on the number of project plan amendments Not subject to the 12% test

57


Allocation Amendment

Transfer funds from a revenue generating TID (“donor TID”) to a poorly performing TID (“recipient TID”)

Can delay time when donor TID recovers its costs

Donor and recipient district must have same overlying taxing jurisdictions.

Only certain TID types can be a recipient TID

• Industrial and mixed use TIDs cannot be a recipient TID

Any TID type can be a donor TID

Allocation Amendment Resolution must be adopted before the expenditure period ends

58


Allocation Facts Sheet

59 Source: Wisconsin Department of Revenue (DOR)


Distressed or Severely Distressed

No longer an option to declare a TID distressed or severely distressed

• Provision sunset on September 30, 2015

No option for an existing distressed TID to become undistressed

Project plan cannot be amended to:

• Add new costs • Any new territory • Become a donor TID

May not become part of a TID with overlapping boundaries

May not spend any funds outside its boundaries

No reason TID cannot close earlier than distressed extension life

60


Base Value Remediation

Eligibility (requires DOR to re-determine the TID’s base value)

TID value must be at least 10% below the TID’s base value for the most recent two consecutive years

The amended project plan must specify at least one of the following:

• At least 51% of public infrastructure improvements must be financed by a private developer (which costs may be reimbursed via a “developer financed grant”)

• All project costs are expected to be paid within 90% of the TID’s remaining life

• Expenditures may be made only within the first half of the TID’s remaining life (unless unanimous approval for the expenditures is granted by the JRB)

TIDs are eligible for decrement amendments only once during the TID’s life.

61


TID Termination

• A municipality must terminate a TID when the earlier of the following occurs:

• When the municipality has received aggregate tax increments that equal all project costs delineated under the project plan (and its associated amendments)

• The maximum life of the TID

• The local legislative body dissolves the District via resolution

62


Real World TID Case Studies


Real World Scenario #1

• A former mill site was in need of redevelopment. The blighted property, with a highly desirable riverfront location, failed to attract development. The Village took matters into their own hands.

• The closure of the mill meant the loss of approximately $40 million of assessed valuation – roughly 8% of the Village’s total assessed value. The new owners didn’t develop the site and after several years of waiting for the development, the Village acquired the property and is considering using TID to foster the redevelopment

• Village population: 6,700 • S&P Rated “AA” • Cash Flow Proforma attached

Scenario:

• The risks associated with projected revenues • The risks associated with the projected expenditures • How the plan, as presented, mitigate certain risks identified above

Consider:

64


Real World Scenario #1 Background

• Tax Increment District No. 6 was created on September 12, 2016 as a “Blighted” TID

2016

• Village borrowed $13 Million to purchase property and fund infrastructure projects • On September 21, 2017 special State of Wisconsin legislation under 2017 Wisconsin Act 59 was passed

allowing the Village of Kimberly to redetermine TID No. 6 base value not withstanding two consecutive year decrement situation requirement

• Base Value was reduced from $18,468,200 to $13,918,500 providing an additional $2.6 Million in tax revenue to TID expenditures over its life

2017

• Creation of Community Development Authority (CDA) for the Village of Kimberly which has the authority to issue debt

• The CDA is created for the purpose of carrying out all such blight elimination, clearance of undesirable conditions, urban renewal programs and projects, and housing projects within the Village

• CDA borrowed $3.7 Million for developer incentive • Village borrowed the remaining $6 Million for infrastructure projects • 2018 Equalized Valuation = $524 Million

2018

• Approximately $90 Million in new construction increment is currently tied to developer agreements

2019

65


Real World Scenario #1 Proforma

AssumptionsAnnual Inflation During Life of TID…………………………………………………………… 0.50%2018 Gross Tax Rate (per $1000 Equalized Value)………………………………… $20.38Annual Adjustment to tax rate…………………………………………………………………… 0.00%Investment rate…………………………………………………………………………………………… 1.00%

RECIPIENT

Background Data Revenues(a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (k)

TransfersTIF District Inflation Construction TIF Increment Tax Tax Investment Land from DSRF Total

Year Valuation Increment Increment Over Base Rate Revenue Proceeds Sales Donor TID #4 Revenue Revenues Year(January 1) (1) (2)

Base Value$13,918,500

2016 $18,468,200 ($4,549,700) 20162017 $13,918,500 ($159,400) ($159,400) $21.07 20172018 $13,759,100 $68,796 $3,500,000 $3,409,396 $20.38 $0 $11,027 $1,000,000 $1,011,027 20182019 $17,327,896 $86,639 $22,000,000 $25,496,035 $20.38 $0 $12,454 $3,380,000 $134,804 $2,807 $3,530,065 20192020 $39,414,535 $197,073 $15,000,000 $40,693,108 $20.38 $69,471 $40,989 $1,020,000 $126,804 $2,807 $1,260,070 20202021 $54,611,608 $273,058 $15,000,000 $55,966,166 $20.38 $519,514 $45,868 $870,000 $134,029 $2,807 $1,572,218 20212022 $69,884,666 $349,423 $25,500,000 $81,815,589 $20.38 $829,174 $43,873 $170,000 $136,229 $2,807 $1,182,084 20222023 $95,734,089 $478,670 $20,000,000 $102,294,259 $20.38 $1,140,382 $36,141 $170,000 $133,529 $2,807 $1,482,860 20232024 $116,212,759 $581,064 $9,000,000 $111,875,323 $20.38 $1,667,098 $27,193 $500,000 $135,929 $2,807 $2,333,027 20242025 $125,793,823 $628,969 $112,504,292 $20.38 $2,084,377 $24,482 $500,000 $133,429 $2,807 $2,745,094 20252026 $126,422,792 $632,114 $113,136,406 $20.38 $2,279,603 $24,680 $199,729 $2,807 $2,506,819 20262027 $127,054,906 $635,275 $113,771,681 $20.38 $2,292,419 $22,474 $199,729 $2,807 $2,517,429 20272028 $127,690,181 $638,451 $114,410,132 $20.38 $2,305,299 $20,418 $199,729 $2,807 $2,528,253 20282029 $128,328,632 $641,643 $115,051,775 $20.38 $2,318,244 $7,419 $199,729 $2,807 $2,528,198 20292030 $128,970,275 $644,851 $115,696,626 $20.38 $2,331,253 $4,135 $199,729 $2,807 $2,537,924 20302031 $129,615,126 $648,076 $116,344,702 $20.38 $2,344,328 $873 $199,729 $2,807 $2,547,737 20312032 $130,263,202 $651,316 $116,996,018 $20.38 $2,357,467 $0 $199,729 $2,807 $2,560,003 20322033 $130,914,518 $654,573 $117,650,591 $20.38 $2,370,673 $0 $2,807 $2,373,479 20332034 $131,569,091 $657,845 $118,308,436 $20.38 $2,383,944 $0 $2,807 $2,386,751 20342035 $132,226,936 $661,135 $118,969,571 $20.38 $2,397,282 $0 $2,807 $2,400,088 20352036 $132,888,071 $664,440 $119,634,011 $20.38 $2,410,686 $0 $2,807 $2,413,493 20362037 $133,552,511 $667,763 $120,301,774 $20.38 $2,424,158 $0 $2,807 $2,426,964 20372038 $134,220,274 $671,101 $120,972,875 $20.38 $2,437,696 $0 $2,807 $2,440,503 20382039 $134,891,375 $674,457 $121,647,332 $20.38 $2,451,303 $0 $2,807 $2,454,110 20392040 $135,565,832 $677,829 $122,325,161 $20.38 $2,464,978 $8,908 $2,807 $2,476,692 20402041 $136,243,661 $681,218 $123,006,379 $20.38 $2,478,720 $23,617 $2,807 $2,505,144 20412042 $136,924,879 $684,624 $123,691,004 $20.38 $2,492,532 $43,483 $2,807 $2,538,822 20422043 $20.38 $2,506,413 $63,649 $283,467 $2,853,529 20432044 $2,520,363 $86,982 $2,607,345 2044

$13,850,404 $110,000,000 $51,877,378 $548,664 $7,610,000 $2,332,861 $350,826 $62,719,728

66



Expenditures TID Status(l) (m) (n) (o) (p) (q) (r)

Year EndExisting CDA Existing GO TIF Village Combined Annual Cumulative

Year Debt Service Debt Service Incentives Payments Expenditures Balance Balance Year(December 31)

2016 20162017 $1,102,725 20172018 $668,376 $200,000 $868,376 $142,652 $1,245,377 20182019 $0 $476,580 $0 $200,000 $676,580 $2,853,485 $4,098,862 20192020 $0 $572,173 $0 $200,000 $772,173 $487,898 $4,586,760 20202021 $219,211 $1,230,179 $122,258 $200,000 $1,771,647 ($199,429) $4,387,331 20212022 $217,461 $1,232,194 $305,644 $200,000 $1,955,298 ($773,215) $3,614,116 20222023 $280,661 $1,407,984 $489,031 $200,000 $2,377,675 ($894,815) $2,719,300 20232024 $276,383 $1,412,584 $715,208 $200,000 $2,604,174 ($271,147) $2,448,153 20242025 $276,990 $1,410,784 $837,465 $200,000 $2,725,238 $19,856 $2,468,009 20252026 $277,190 $1,412,784 $837,465 $200,000 $2,727,438 ($220,619) $2,247,390 20262027 $277,190 $1,408,384 $837,465 $200,000 $2,723,038 ($205,609) $2,041,780 20272028 $276,691 $2,514,024 $837,465 $200,000 $3,828,179 ($1,299,926) $741,854 20282029 $275,980 $1,543,140 $837,465 $200,000 $2,856,585 ($328,387) $413,467 20292030 $279,708 $1,546,916 $837,465 $200,000 $2,864,089 ($326,166) $87,302 20302031 $277,988 $1,546,724 $837,465 $200,000 $2,862,177 ($314,440) ($227,139) 20312032 $276,044 $1,547,031 $837,465 $200,000 $2,860,540 ($300,537) ($527,676) 20322033 $278,876 $1,544,781 $837,465 $200,000 $2,861,122 ($487,643) ($1,015,319) 20332034 $276,260 $1,545,297 $837,465 $200,000 $2,859,022 ($472,272) ($1,487,591) 20342035 $278,210 $1,542,588 $614,090 $200,000 $2,634,888 ($234,799) ($1,722,390) 20352036 $279,700 $1,542,363 $531,821 $200,000 $2,553,883 ($140,391) ($1,862,781) 20362037 $275,730 $1,543,406 $531,821 $200,000 $2,550,957 ($123,993) ($1,986,774) 20372038 $276,530 $531,821 $200,000 $1,008,351 $1,432,152 ($554,622) 20382039 $276,870 $531,821 $200,000 $1,008,691 $1,445,419 $890,797 20392040 $276,530 $529,267 $200,000 $1,005,797 $1,470,895 $2,361,692 20402041 $275,720 $42,790 $200,000 $518,510 $1,986,634 $4,348,326 20412042 $279,440 $42,790 $200,000 $522,230 $2,016,592 $6,364,918 20422043 $277,455 $42,790 $200,000 $520,245 $2,333,284 $8,698,202 20432044 $0 $0 $2,607,345 $11,305,547 2044

$6,262,814 $27,648,288 $13,405,804 $5,200,000 $52,516,906

67


Real World Scenario #1 Graph

68


Real World Scenario #2

• In 2017 the Village of Marshall had surpassed the expenditure period on their first successful Tax Increment Financing District created in 1994. Because of the overall successfulness of this district the Village Board and staff started to review the potential of closing TID #1 and in turn create TID #2.

• Village population: 4,000 • S&P Rated “AA-” • Cash Flow Proforma attached

Scenario:

• The key risks surrounding each developer’s request • The risks associated with projected revenues • The risks associated with the projected expenditures • The steps the Village could take to mitigate these risks

Consider:

69


Real World Scenario #2 Background

TID #1 was closed March of 2018 and TID #2 was created directly after

TID #2 was created as a “mixed use district” development where 50% of the land within the TID is suitable for a combination of industrial, commercial, or residential uses. Housing density within the TID must be at least 3 units per acre

The maximum lie of the TID is 20 years from the date of adoption, which was January 1, 2018. TID #2 can be extended an additional 3 years with JRB approval

The expenditure period is 15 years, and the Village anticipates various public improvement project cost expenditures identified in the project plan of approximately $14,840,000 during the expenditure period

The projects included in the Village of Marshall TIF plan are:

•Campground development •Firemen’s Park redevelopment •Water tower addition •Business park •Land acquisitions •Single/multi family residential development •Hotel development •Wedding center/rental facility • Library enhancements Currently the Village is in discussion stages with developers in regards to future projects. The campground and park

developments have been completed. Further projects are in the building stage with a tow truck company and single family development

70



Annual Inflation During Life of TID………………………………………………………………… 1.00%2017 Gross Tax Rate (per $1000 Equalized Value)………………………………………… $23.98Annual Adjustment to tax rate………………………………………………………………………… 0.00%Investment rate………………………………………………………………………………………………… 0.50%

Data above dashed line are actual

Background Data Revenues Expenditures TID Status(a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (k) (l) (m) (n)

Year EndTIF District Inflation Construction TIF Increment Tax Tax Investment Total Combined Annual Cumulative

Year Valuation Increment Increment Over Base Rate Revenue Proceeds Revenues Year Principal Interest Expenditures Balance Balance Cost Recovery Year(January 1) (1) (December 31)

Base Value$14,377,100

2018 $14,377,100 $1,500,000 $1,500,000 $23.98 $0 $0 $0 2018 $0 $0 $0 20182019 $15,877,100 $158,771 $1,000,000 $2,658,771 $23.98 $0 $0 $0 2019 $0 $0 $0 20192020 $17,035,871 $170,359 $3,000,000 $5,829,130 $23.98 $35,970 $0 $35,970 2020 $82,155 $82,155 ($46,185) ($46,185) 20202021 $20,206,230 $202,062 $3,000,000 $9,031,192 $23.98 $63,757 $0 $63,757 2021 $56,550 $56,550 $7,207 ($38,977) 20212022 $23,408,292 $234,083 $1,500,000 $10,765,275 $23.98 $139,783 $0 $139,783 2022 $65,000 $55,575 $120,575 $19,208 ($19,770) 20222023 $25,142,375 $251,424 $11,016,699 $23.98 $216,568 $0 $216,568 2023 $65,000 $53,625 $118,625 $97,943 $78,173 20232024 $25,393,799 $253,938 $11,270,637 $23.98 $258,151 $391 $258,542 2024 $70,000 $51,600 $121,600 $136,942 $215,115 20242025 $25,647,737 $256,477 $11,527,114 $23.98 $264,180 $1,076 $265,256 2025 $70,000 $49,500 $119,500 $145,756 $360,871 20252026 $25,904,214 $259,042 $11,786,156 $23.98 $270,270 $1,804 $272,074 2026 $75,000 $47,325 $122,325 $149,749 $510,621 20262027 $26,163,256 $261,633 $12,047,789 $23.98 $276,420 $2,553 $278,973 2027 $75,000 $44,700 $119,700 $159,273 $669,894 20272028 $26,424,889 $264,249 $12,312,038 $23.98 $282,632 $3,349 $285,981 2028 $80,000 $41,600 $121,600 $164,381 $834,275 20282029 $26,689,138 $266,891 $12,578,929 $23.98 $288,906 $4,171 $293,077 2029 $85,000 $38,300 $123,300 $169,777 $1,004,053 Expenditures Recovered 20292030 $26,956,029 $269,560 $12,848,489 $23.98 $295,243 $5,020 $300,263 2030 $85,000 $34,900 $119,900 $180,363 $1,184,416 Expenditures Recovered 20302031 $27,225,589 $272,256 $13,120,745 $23.98 $301,643 $5,922 $307,565 2031 $90,000 $31,400 $121,400 $186,165 $1,370,581 Expenditures Recovered 20312032 $27,497,845 $274,978 $13,395,724 $23.98 $308,107 $6,853 $314,960 2032 $95,000 $27,700 $122,700 $192,260 $1,562,840 Expenditures Recovered 20322033 $27,772,824 $277,728 $13,673,452 $23.98 $314,635 $7,814 $322,450 2033 $95,000 $23,900 $118,900 $203,550 $1,766,390 Expenditures Recovered 20332034 $28,050,552 $280,506 $13,953,957 $23.98 $321,229 $8,832 $330,061 2034 $100,000 $20,000 $120,000 $210,061 $1,976,451 Expenditures Recovered 20342035 $28,331,057 $283,311 $14,237,268 $23.98 $327,889 $9,882 $337,772 2035 $105,000 $15,900 $120,900 $216,872 $2,193,323 Expenditures Recovered 20352036 $28,614,368 $286,144 $14,523,412 $23.98 $334,616 $10,967 $345,583 2036 $110,000 $11,600 $121,600 $223,983 $2,417,305 Expenditures Recovered 20362037 $28,900,512 $289,005 $14,812,417 $23.98 $341,410 $12,087 $353,496 2037 $115,000 $7,100 $122,100 $231,396 $2,648,702 Expenditures Recovered 20372038 $29,189,517 $291,895 $15,104,312 $23.98 $348,271 $13,244 $361,515 2038 $120,000 $2,400 $122,400 $239,115 $2,887,817 Expenditures Recovered 20382039 $355,202 $14,439 $369,641 2039 $369,641 $3,257,457 Expenditures Recovered 2039

$5,104,312 $10,000,000 $5,344,883 $108,404 $5,453,287 $1,500,000 $695,830 $2,195,830

Type of TID: Mixed-Use2018 TID Inception (3/27/2018) (1) Increment per Village Estimates.2033 Final Year to Incur TIF Related Costs2038 Maximum Legal Life of TID (20 Years)2039 Final Tax Collection Year

Assumptions

71


Disclosures

Robert W. Baird & Co. Incorporated is providing this information to you for discussion purposes only. The information does not contemplate or relate to a future issuance of municipal securities. Baird is not recommending that you take any action, and this information is not intended to be regarded as “advice” within the meaning of Section 15B of the Securities Exchange Act of 1934 or the rules thereunder. In providing this information, Baird is not acting as an advisor to you and does not owe you a fiduciary duty pursuant to Section 15B of the Securities Exchange Act of 1934. On April 1, 2019, Baird Financial Corporation, the parent company of Robert W. Baird & Co. Incorporated (“Baird”), acquired HL Financial Services, LLC, its subsidiaries, affiliates and assigns (collectively “Hilliard Lyons”). As a result of such common control, Baird and Hilliard Lyons are now affiliated. It is expected that Hilliard Lyons will merge with and into Baird later in 2019. You should discuss the information contained herein with any and all internal or external advisors and experts you deem appropriate before acting on the information.

72