Board votes unanimously to abstain from key vote amid concerns about city’s efforts to expand financing district
The Port Washington-Saukville School Board on Monday decided it will not support a proposed expansion of the City of Port Washington’s downtown tax incremental financing district because of concerns about the city’s use of developer incentives and questions about the tax district’s value to the school district.
The board voted unanimously to direct its representative on the Joint Review Board, Director of Business Services Jim Froemming, to abstain from a key vote this week on the city’s amendment its downtown TIF plan by adding five lakefront-area properties to the district.
The creation of TIF districts or changes to those districts must be approved by Joint Review Boards consisting of representatives of all the taxing entities affected by the district, in this case the City of Port Washington, Port Washington-Saukville School District, Ozaukee County and Milwaukee Area Technically College. There is also one citizen member on the board, which was scheduled to meet Wednesday, April 19.
School board members noted they have supported TIF districts in Port Washington and Saukville in the past, but said those districts were created primarily to finance public infrastructure improvements such as street and sewer work needed for projects.
TIF incentives, which developers use to subsidize the cost of their projects, were described by one board member as being akin to handouts for firms that reap significant profits from their projects.
“The plan (for TIF districts) was usually to help pay for infrastructure,” board member Brian McCutcheon said. “I understood the need for that, but I personally have an issue with developer incentives.
“I’m definitely for development, but as a taxpayer it bothers me that the city just gives away money as incentives.”
Board member Brian Stevens said, “I, too, have some personal misgivings about incentives.”
The city’s plan for the amended TIF district calls for as much as $8.4 million worth of incentives for developers, as well as $2.6 million for public infrastructure improvements.
Whether TIF districts are used to finance infrastructure or incentives, or a combination of both as is the case in Port Washington’s downtown district, they function the same.
When a TIF district is created, the taxable values of the properties within it are frozen for the duration of the district, which in the case of the downtown district would be a maximum of 20 years.
During this time, the increase in property taxes due to the increase in property value, or the tax increment, is used to finance infrastructure improvements and incentives for property owners within the district rather than being paid to taxing entities like the school district.
When the TIF district is retired, however, the full value of the improved properties is returned to the general tax rolls.
Froemming told the board that TIF districts are effective mechanisms for encouraging redevelopment of blighted areas that would not be improved without TIF assistance.
But board member Michelle Shinners questioned why developers need incentives to develop property within the amended section of the TIF district, which is on or near Lake Michigan.
“We’re on the water. It’s one of the best positions to be in,” she said. “Who wouldn’t want to be here?”
School officials also said that aside from its beneficial impact on property values, the downtown TIF district is not as attractive to the school system as other TIF districts have been because it does not call for the type of development that brings school-age children into the city.
The proposed amended TIF district area calls for the development of retail shops and housing such as high-end apartments, townhouses and possibly condos on properties that include the NewPort Shores restaurant site, the city-owned car-trailer lot that is to be developed into townhouses and the adjacent former Victor’s Restaurant property, both on Washington Street east of Franklin Street.
The city has already used development incentives for the Port Harbour Lights luxury condominium complex at the corner of Franklin and Main streets and has promised them to the developer of the proposed Blues Factory entertainment complex on the north slip marina parking lot.
School Board member Brenda Fritsch said that while the proposed projects may not be everything the school district is looking for, TIF districts can have ancillary benefits.
“The residential development planned may not bring in a lot of kids, but it will help the downtown and perhaps spur the next development,” said Fritsch, who as a member of the city’s Design Review Board has reviewed plans for some of the projects within the TIF district. “It’s a fine line, but they (TIF districts) are useful in many areas.”
Froemming noted that because school property taxes constitute roughly half the overall tax bill, TIF districts can have significant impacts on the school district.
“The (school) district is the largest player,” he said. “Between 45 and 50% of property tax bills is the school tax.”
Board members said one of the challenges they face is not having enough information about the proposed TIF projects and their potential impacts on the city.
“I think the board would have liked a little more information (from the city),” Supt. Michael Weber said.
McCutcheon said that regardless of whether the decision to abstain from the Joint Review Board vote has an impact on the outcome, at least it signals to the city that the School Board has concerns with its plans.
“We have the ability to send a little bit of a message, and that makes me feel better,” he said.
As for the city, its message is clear —because most of the funds included in the original downtown TIF district created in 2010 have been spent, the expansion of the district is key to facilitating the development of the marina district.
And although controversial, city officials have said, incentives for developers are an important part of redevelopment efforts, not just in Port Washington but in communities around the state.