A state law change that lets counties issue bonds for construction is letting developers sidestep rules tied to city of Milwaukee project support.
Milwaukee requires developers that receive more than $1 million from the city hire Milwaukee residents, give contracts to emerging business enterprises and pay prevailing wages. The city enforces the requirements on, among others, projects using industrial revenue development bonds, which let developers borrow money tax-free. The developers are responsible for paying off the debt.
But the change to state law approved last week lets counties issue those bonds, prompting fear developers would do business with the county to avoid the city law. The law change, in addition to giving counties ongoing bonding authority through state programs, lets counties approve portions of $238.2 million in American Recovery and Reinvestment Act recovery zone facility bonds.
“It is possible that a developer could say that, ‘We prefer to go through the county, so we won’t be subject to those limitations,’” said Jennifer Gonda, Milwaukee senior legislative fiscal manager.
The development community opposed the city’s development requirements before they were approved in early 2009, and it has become more difficult since then to make the rules work on private projects, said Mike Ruzicka, president of the Greater Milwaukee Association of Realtors.
“I think it would be a rational decision for any developer to make — to go to the county,” he said. “People are going to take the path of least resistance.”
Milwaukee County supported the change to state law because it lets the county support more projects proposed for its Park East land, said Theo Lipscomb, Milwaukee County Board supervisor.
“It’s not intended to circumvent the city’s ordinances,” he said. In fact, he said, the county’s development law — for its Park East property only — sets hiring rules and requires prevailing wages.
The city considered crafting an amendment that would require developers adopt the strictest law between the city and county, regardless of which approves the bonds. But the bill cleared the Legislature in a little more than a month, Gonda said, so there was no time.
Instead of passing laws that set up rivalries, the state should encourage more collaborative programs, said Ed Huck, executive director of the Wisconsin Alliance of Cities Inc. Minnesota, for example, has programs that let counties and cities in a region share in the new taxes generated by developments, he said.
“It’s us versus them,” Huck said of the law change. “The problem behind that is people need jobs, damn it. They need them now. So you want to have policies that encourage the cities and towns and counties to work together.”
Time will tell, Lipscomb said, if the city and county work together or if their differences create a loophole for developers.
“It’ll be something for us to confirm,” he said, “and perhaps it will be reason for us to adopt something stronger.”