Municipal officials facing backlogs of roadwork are waiting on a Wisconsin attorney general’s opinion that could give them a new source of construction money.
The idea of using tax-incremental financing to rebuild deteriorating roads started in the city of Milwaukee but is catching the attention of other municipalities. When Milwaukee requested to dedicate $395,000 in TIF money to two road projects, other local governments asked Attorney General J.B. Van Hollen to decide if state law would allow it.
The request is taking on greater significance, as other cities, such as West Allis, consider the potential to pay for roads with TIF money.
“Generally, our colleagues are all looking at it,” said John Stibal, West Allis director of development. “It’s too valuable a resource, particularly in these tough economic times, to overlook.”
The tax districts let municipalities borrow money for projects and pay off the debt with the increased property taxes generated by the new development. But the longer the districts are open, the longer other local governments must wait for their property tax receipts to increase.
Municipalities commonly use TIF money to pay for infrastructure related to new developments, but the new proposal would apply TIF money to aging roads scheduled for resurfacing or reconstruction.
Any amendment to a Milwaukee TIF district requires approval from a TIF Joint Review Board that includes representatives from the city, Milwaukee County, Milwaukee Public Schools and the Milwaukee Area Technical College. When the city in March sought permission to use TIF money on roads, the Joint Review Board delayed a decision until the attorney general weighs in.
“It was sort of a slow-go test case, if you will, of really providing a pilot in terms of taking a slow approach that wasn’t going to upset the apple cart,” said Jim Bohl, the Milwaukee aldermen who sponsored the TIF plan.
Tim Schoewe, Milwaukee County acting corporation counsel, said he is not aware of county officials disputing the idea, but the new use of TIF for city road projects poses legal and money questions.
“Given our financial situation,” he said, “any dollar amount is a significant amount.”
Mike Sargent, MATC vice president of finance and representative on the area TIF board, said he is considering the TIF question purely in legal, not financial, terms. But, he said, an attorney general’s endorsement of the practice will have statewide repercussions because more municipalities likely will follow suit.
“We all believe in using TIF districts to stimulate the economy and stimulate growth,” Sargent said. “What we want to do is make sure we are complying with the state statutes.”
The greater use of TIF money for infrastructure goes beyond roads, Bohl said, since Milwaukee is considering extending the lives of downtown districts to pay for its proposed streetcar system. The fully built-out system would require $9.7 million from TIF districts.
Stibal said he is interested in pursuing the plan to use West Allis TIF districts to pay for more roadwork but will wait for Van Hollen’s opinion.
“We’re very interested in the outcome,” he said, “obviously.”