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Municipalities trip over development district law

By Sean Ryan

A public notice snafu sabotaged the village of Kimberly’s request for a development district.

A math dispute between Union Grove and the state Department of Revenue undid the village’s attempt to create a similar district.

Milwaukee simply missed the application deadline by five months.

Despite the errors and disagreements, Kimberly and Union Grove still got their tax-incremental financing districts.

History suggests Milwaukee will do the same, said Jim Scherer, vice president of the Milwaukee Economic Development Corp.

“This was an oversight by our department,” he said, “and we will have to go back to get it remedied at the legislative level. The state has many, many examples of legislative exceptions and exemptions when deadlines were missed.”

Seven pages of amendments are tacked onto the state law governing TIF districts. Many of those amendments offer exemptions to cities and villages that failed to meet the letter of what municipal officials call an overly rigid law.

TIF districts are municipalities’ main tool for raising money for private projects. The districts let municipalities borrow money for projects and pay off the debt with the increased property taxes generated by the new development.

A state bill that was introduced this year, but which failed to pass, would have amended the TIF law to give municipalities more time and more flexibility to meet deadlines and satisfy paperwork and public notice requirements.

State Rep. Kristen Dexter, D-Eau Claire, said she expects the legislation to come back next session. As Milwaukee’s missed deadline shows, the issue will not die because more municipalities will go back to the Legislature in 2011 seeking amendments for individual exemptions, she said.

“It’s really a way to streamline the governmental process,” she said.

Dexter said the problem is municipalities do not have enough time or people to satisfy the many requirements of TIF law without making unintentional and innocuous mistakes. She said the state must preserve the public meeting and notice requirements in the TIF law, but must stop the cycle of municipalities requesting amendments for individual errors.

“Municipal budgets have been cut to the point where there’s only one person wearing many hats,” she said, “and we all know how easy it is to miss one thing.”

Union Grove lobbied for a legislative exemption in 2006 after disagreeing with the Department of Revenue over a new TIF district, said Janice Winget, village clerk and treasurer. State law does not let municipalities create new TIF districts if more than 12 percent of the municipal property value is from properties in existing TIF districts.

The Department of Revenue rejected Union Grove’s application based on the 12 percent rule. The proposed TIF bill would have offered a way around such disputes by letting the department approve new districts, regardless of the 12 percent rule, if the board of the county in which the district is in approves the district.

Winget and Rick Hermus, Kimberly village administrator, said the whole process must be simplified to save municipal officials the time and hassle of lobbying the Legislature to deal with such problems.

“It is a real cumbersome process,” Hermus said, “to create the TIFs. I understand what the state is trying to do to get people involved.

“I just wish it wasn’t so rigid.”

Scherer at the city of Milwaukee said he already asked city lobbyists to draft an amendment the city can present to the Legislature when it goes back into session. He said if the Legislature approves the amendment for Milwaukee, the city will not lose anything financially from missing the deadline.

“It’s something,” he said, “that fell through the cracks.”

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