OZAUKEE PRESS EDITORIAL: A needed attempt to rein in TIF largesse

Even though it is still only a concept and not a single brick of its forbidding, industrial-themed facade has been laid, Port Washington’s Blues Factory serves as supporting evidence for Gov. Tony Evers’ proposal to limit the amount of money raised through tax incremental financing (TIF) that municipalities can give developers.

The governor’s budget seeks to rein in the profligate use of TIF funding as a developer incentive.

The much-criticized Blues Factory entertainment complex would not exist as a threat to the public’s visual and physical access to the Port Washington lakefront without the generous gift  of a TIF subsidy from the city to the would-be developer.

The state budget proposal seeks to modify TIF rules to bring the funding mechanism closer to its original purpose, which was to support economic growth by paying for public improvements of less desirable or even blighted land to encourage private development.

Under the budget unveiled last week by the governor, cash grants to developers would be restricted to no more than 20% of the TIF district’s project costs.

Created by state law in 1975, TIF requirements were liberalized in the last decade to allow sizable cash subsidies for developers, even those investing in high-value properties that were ripe for development.

Municipalities and their taxpayers get no benefit from the property taxes paid on new development in TIF districts until the subsidies are repaid, a process that can take 20 years or more.

The “or more” is a big problem for a large number of Wisconsin communities whose TIF districts are considered distressed because their costs have not been recovered after at least 27 years. Even TIF programs that pay back costs on schedule can put a burden on cities, villages and school districts by deferring tax payments to fund community service needs, including those resulting from the new development.

When TIF rules were changed, supporters of allowing direct cash payments to developers said the the grants would be given only in situations in which the development would not happen without the TIF incentives. That turned out to be a joke, and again Port Washington is a good example.

All of the projects now under way or planned on prime lakefront land in the marina district are supported by TIF grants. The idea that precious parcels of land overlooking Lake Michigan would not be developed without taxpayer incentives is ludicrous. The fabulous potential of the Port lakefront properties would have been all the incentive needed, and the condos would surely have risen without a penny of taxpayer subsidy.

Yet you can’t blame developers for seeking the TIF support. Failing to ask for money the city government was freely handing out would have been a poor business practice.

In the case of the Blues Factory, city officials (most of whom are no longer in office) used TIF money in an attempt to force development of  taxpayer-owned land at the edge of the harbor that should remain open space for public appreciation of the water views. The project, widely opposed by city residents and featuring a building designed to look like a manufacturing plant, is delayed, but thanks to TIF it remains an unfortunate possibility. Too bad that, if approved, the TIF changes would not be retroactive.

In any case, Evers’ TIF limits will face heavy opposition in the Legislature, and may well not survive. That would be the taxpayers’ loss.

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Ozaukee Press

Wisconsin’s largest paid circulation community weekly newspaper. Serving Port Washington, Saukville, Grafton, Fredonia, Belgium, as well as Ozaukee County government. Locally owned and printed in Port Washington, Wisconsin.

125 E. Main St.
Port Washington, WI 53074
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