EDITORIAL: Council avoids one TIF mistake, can fix another

The Port Washington Common Council earlier this month did as the writer of a recent letter to the editor urged and just said no — a resounding no to a developer’s request for $5.25 million in tax incremental financing assistance for what would be the city’s largest subdivision built on valuable south bluff property.

Even in a TIF-friendly city like Port, this was an easy decision for council members to make. When officials solicited proposals for the 44 acres of city land, they made it clear they would not create a TIF district to support it. Black Cap Halcyon, whose Prairie’s Edge development was selected, knew this going in and didn’t breathe a word about TIF until last month after its project had stalled.

The council’s rejection of the request was encouraging, as was the TIF philosophy articulated by some aldermen who signaled they understand that while TIF is appropriately used to encourage the redevelopment of blighted sites, it is not intended to mitigate the risk and enhance the profits of the developers of prime property like the south bluff land.

Referring to that property, Ald. Dan Benning noted it is “not a redevelopment, brownfield site ... which is what TIF funds should be for. We should not be a funding source for risk mitigation.”

Wisconsin’s TIF law dates to 1975 and has undergone several significant revisions. But from its inception, the legislation has included guidance in the form of a “but for” clause that states the financing mechanism should be reserved for projects that “but for” TIF would not otherwise occur.

When used properly, TIF is an effective redevelopment tool that benefits municipalities and taxpayers. But when it is used to fund development of land that would otherwise be improved, it provides unnecessary subsidies for developers and, because the value of land in a TIF district is frozen for the duration of the district, it delays additional tax revenue for municipalities, counties and schools. Consider a school district that must manage the increased cost of educating the children who move into a TIF-supported subdivision without the additional tax revenue generated by the development for perhaps decades.

Port Washington has a mixed record when it come to using TIF. On the positive side, the Common Council recently expanded the parameters of a TIF district created for a senior apartment development on the site of a former trailer park on South Spring Street. It’s a good bet that this subpar lot, which has high-tension power lines running overhead and railroad tracks flanking it, not to mention poor soil conditions, would not be developed without TIF assistance.

The same might be true of the St. Mary’s School building on top of St. Mary’s Hill. Ansay Development proposed converting the former school into condos, and the city was willing to support it with TIF assistance rather than have an old building with limited use sit empty or be razed. It turned out that even a TIF deal wasn’t enough to make the project financially viable for Ansay, which announced recently it was dropping its plans.

City officials have differentiated those projects from the likes of Prairie’s Edge and said that using TIF to subsidize the development of prime land would set a dangerous precedent. Unfortunately, the precedent has already been set.

A previous council compounded one mistake — the decision made despite significant protest from residents to sell a city-owned lot off Washington Street abutting the end of the north slip section of the marina — with another by agreeing to give a developer who plans to build the Blues Factory entertainment complex designed to resemble the factory that once blighted the lakefront $1 million in TIF incentives.

Not only did the city agree to subsidize development on a valuable lakefront parcel, it used TIF to encourage a development that should never happen there.

The lot in its undeveloped state provides visual and physical public access to the lake, which is more valuable than ever given the robust development elsewhere in the marina area. It also happens to provide needed public parking.

The current council could work to undo both Blues Factory mistakes by negotiating with developer Gertjan van den Broek a deal to buy back the property. The good news is the city wouldn’t have to make a single improvement to the lot. It’s perfect as is.