A proposed bill floating through the Legislature would let cities team up on tax incentives for development projects.
The bill, co-authored by a pair of Green Bay Republicans, Rep. Chad Weininger and Sen. Robert Cowles, would let neighboring municipalities create tax incremental finance districts that cross city borders.
TIF districts let municipalities borrow money to subsidize developments and pay for utility and street work related to the projects. Cities then use new taxes generated by the projects to pay off the debt.
Under current TIF law, though, such districts are limited to a single city. The problem with that, Weininger said, is it discourages cities from working together or redeveloping blighted land adjacent to borders.
“Sometimes a corridor doesn’t always get a lot of development because you don’t always know what your next-door neighbor is doing,” he said. “(The bill) allows for corridor development so you get a good growth area. Otherwise, it’s hard for one municipality to do one project right next to a really bad hotel that’s rundown (in a neighboring city).”
In the past, municipalities that wanted to work together on tax incentives had several hoops to jump through.
Shorewood and Whitefish Bay, for example, spent almost a year negotiating a plan to create a TIF district for a development called the Cornerstone.
Completed last year, the Cornerstone is a multiuse building with apartments and shops. The development, though, straddled the border between Shorewood and Whitefish Bay, making it difficult for the cities to bring to fruition a project they both wanted.
“In order to capture the value needed to support the project, we needed to create a single tax increment district that would incorporate the entire site,” said Michael Harrigan, a senior financial advisor for Ehlers & Associates Inc.
Harrigan represented Shorewood in the negotiations, which resulted in Whitefish Bay selling a quarter of an acre to Shorewood for about $100,000, or about 150 years of anticipated taxable value.
The negotiations would have been unnecessary, Harrigan said, if the two municipalities could have extended a TIF across the border.
“A lot of legal work had to be performed,” he said. “This (bill) would simplify this process a lot and create an opportunity to produce a TIF without having to go quite to that length.”
Critics of TIF, though, have been wary of making it an ever-expanding economic development tool. Steve Hiniker, executive director of 1000 Friends of Wisconsin, a Madison-based environmental group, said the Legislature had been making it easier to build on undeveloped land while ignoring blighted urban areas, which were behind the original intent for TIF.
“What are we doing with our urban areas?” Hiniker said. “Do we see a vital urban future, or do we see Detroit in the future? The direction this Legislature is going is fine if Detroit is what we want Milwaukee to become.”
Green Bay Mayor Jim Schmitt, whose city stands to be one of the greatest beneficiaries of the proposed TIF bill, agrees with Hiniker that state policy favors suburbs over cities. Yet, Schmitt said, expansion of TIF rules can regenerate urban land. The bill, Schmitt said, actually would reduce urban blight by letting Green Bay redevelop land that borders Ashwaubenon, Bellevue and De Pere.
“Ashland Avenue, which runs through De Pere and Green Bay, that needs to be upgraded,” Schmitt said. “Bellevue, which is adjacent to the city, there’s some property there that could be developed. When you’re talking about half of a building being in Bellevue and half being in the city, that’s crazy. Let’s get together and create one district.”
TIF, Schmitt said, is one of the few tools available to cities with declining neighborhoods. “Whether it’s refining TIF or a new tool, we just need the focus to be on cities,” he said.
Schmitt and Ashwaubenon Village President Mike Aubinger want to use the bill to redevelop land near Lambeau Field, which is at the edge of both municipalities.
“We have several economic drivers, such as the Packers,” Aubinger said, “that straddle both communities.”
Weininger, who acknowledged the state budget would delay debate over his TIF bill until September or October, said it had attracted bipartisan support.
“Realistically, I don’t think this is too controversial,” he said. “As long as it’s not abused, it can be a great tool.”