Milwaukee alderman revives TIF extensions

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By Kirsten Klahn

A green light from the state attorney general’s office has emboldened a Milwaukee alderman to renew his request to extend TIF districts to pay for roadwork in the city.

Alderman Jim Bohl in 2009 proposed extending tax incremental finance districts that are ready to close out so they can pay for roadwork within a half-mile of their borders.

TIF districts let cities borrow money to pay for public projects that support private development in a designated area. The increase in property taxes generated by development in the district pays off the project debt. When that debt is paid off, the district is closed and the property taxes return to local governments.

But Bohl’s resolution stalled while the city waited for Attorney General J.B. Van Hollen to determine whether amending TIFs for nearby roadwork is legal. According to a December letter from Van Hollen’s office, the amendments are legal, but cities should be selective in the projects they choose.

“The attorney general’s opinion basically said, ‘You can do it,’” Bohl said.

But there is a difference between legal and correct, said Rob Henken, president of the Public Policy Forum, a nonpartisan government watchdog. The city, he said, would be misusing TIF districts, or tax incremental districts, by extending those that should be dissolved.

“The purpose of a TID is to close it out,” Henken said, “and allow local governments that property tax boost. They’re not using the TID the way it’s intended.”

The other problem is precedent, Henken said. Amending districts for roadwork could prompt other aldermen to propose resolutions to extend TIF districts for other purposes, he said.

“It raises the questions: What else can the city find to use TID money for? And will they continue to amend them?” Henken said.

One of the proposed projects would use $400,000 from TIF District 47 to repave North Jefferson Street between East Clybourn Street and East Kilbourn Avenue. TIF district 40 also would be extended for $480,000 to improve roads around West North Avenue between North 30th Street and North Sherman Boulevard.

Bohl’s original proposal focused specifically on TIF districts that would close in 2011 and 2012. But, he said, his new proposal, which has not been introduced in committee, would allow amendments for roadwork to any TIF districts that are closing at any time.

When cities are considering extensions to TIF districts for roadwork, according to Van Hollen’s letter, a Joint Review Board must give its OK.

It was the Joint Review Board for Milwaukee TIF districts that raised the warning flag over the legality of Bohl’s first proposal. The board is comprised of members from Milwaukee, Milwaukee County, Milwaukee Area Technical College, Milwaukee Public Schools and the Redevelopment Authority of the City of Milwaukee. By law, all TIFs must be approved by the board.

Van Hollen’s letter has swayed MATC to support the proposal, said Kathleen Hohl, spokeswoman for MATC.

“Our main concern was supporting something before we knew if we could even do it,” Hohl said. “Once that was addressed, it helped with a lot of our questions and concerns.”

Bohl said his new resolution specifically targeted road projects and would not extend TIFs beyond a year. The fact is, he said, local roads need work, and the city’s budget is limited.

“I’d argue if we don’t do anything about these roads, we’ll lose even more money,” Bohl said. “So you find ways to be creative.”

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