Villages’ TIFs take a hit
Plummeting property values in the past year have left Wisconsin villages with dull and, at times, ineffective development tools.
The tax-incremental financing district created around the village of Muscoda’s downtown, for example, lost 3 percent of its value, or $93,600, between 2008 and 2009. The shops in the downtown area are folding, said Cinda Johnson, village clerk and administrator.
She said customers are gravitating toward big-box stores in larger communities, and there is no new construction to create new property value, she said.
“We don’t have any of the little shops,” Johnson said. “When I grew up, we had a shoe store and we had a clothing store, and we don’t have any of those anymore.”
The same thing is happening along Cambridge’s main drag, which is in a TIF district, said Village Treasurer Vicky Schamens. The local floral shop, a printing business and some restaurants folded because there were not enough customers, she said.
“We have a lot of small businesses, entrepreneurships, that just started up and they ran for six or four years,” Schamens said. “But they just couldn’t make a living here.”
The Wisconsin Department of Revenue on Friday released reports on changes in TIF district values between 2008 and 2009. The report showed 175 out of 365 village TIF districts lost money.
“Cities tend to be larger, more urban, and they probably weren’t quite as affected by the slowdown in construction as villages,” said Dale Knapp, research director for the Wisconsin Taxpayers Alliance, which monitors TIF use in Wisconsin. “But there tend to be a lot of fairly smaller villages.”
To create a TIF district, municipalities borrow money to promote development by subsidizing projects or building new infrastructure. Municipalities then use property taxes generated by the new developments to pay off the debt.
Michael Carignan, North Freedom village president, in 1997 championed a TIF district to renovate and replace old houses and build new streets and wells. But housing value in the district dropped 5 percent in the past year, resulting in a loss of $86,100.
The district still has about $225,000 in debt that must be paid off by 2020, he said.
“We were able to do all of the projects that we had outlined in the TIF, and payout has been very good so far,” Carignan said. “I’m not sure how much this (decrease) is going to affect our payback or how much we’re going to lose through revenue.”
While 2008 and 2009 have been rough on the North Freedom TIF, Carignan said, he does not regret supporting the development because, in the long term, the debt will be paid off, and the TIF already improved the village.
“I have no doubt that it was the right thing to do,” he said. “We’ve been discussing the possibility of creating another one.”