Connecting TIF's To BID's

Last Saturday, the Janesville Gazette ran an article titled Tax Increase largest In Southeastern Wisconsin, which attempted to explain the driving forces behind the huge levy increase in Walworth County. According to a new study by the Public Policy Forum(?), most of the blame not surprisingly, is placed on the schools. But more interesting here was the subject of TIF Districts and how they might play a major role in local tax increases. Remember, most pro-TIF sponsors swear the districts have zero-to-little influence on property taxes.

JG Excerpt:
Property taxes are collected from entities within the TIF district to pay for expenses within the district, he said, and taxpayers outside the TIF district do not pay for those expenses.

That’s true, but it's only one-half of the story behind TIF's. At least the statement laid out the reasoning to deduce that property taxes collected from TIF entities pay ONLY for expenses within the district – also meant that the taxes collected inside the TIF DO NOT pay for expenses OUTSIDE of the district. That may seem like a simple deduction, but the article seemed to go to great lengths to avoid it.

Adding more to this half of the story not mentioned is this: Since property taxes (above the baseline value established at onset of the TIF) collected from entities within TIF districts DO NOT PAY for expenses outside the district, it means businesses, institutions and property in a TIF District share all the same amenities (schools, roads, police and fire) and rising costs as everyone else, but their assessed values don’t participate in the levy paying the bills. This shifts a greater burden of the taxes onto those outside the district until the TIF agreement matures. And even then, city administrators including those in Janesville, are starting to shift successful early TIF funds to other TIF districts instead of returning this money in the form of a tax surplus. This is an area I believe that should be revisited by state regulators of TIF agreements and connected with BID's.

JG excerpt:
JANESVILLE — One speaker likened a proposed Business Improvement District to a train that will carry downtown Janesville and its supporters to a revitalized city center that’s been missing from the community’s landscape for decades.

But why has it been missing for decades? What was the city administration doing in the meantime? I'll tell you what they were doing. They were annexing farmland and other vacant land around the the outer edges of the city and drawing TIF districts around them. This has been a slow and meticulous process over a span of twenty-five years that not only drew attention away from the business core of the city, it rewarded the participants. In many cases, these developments would have been built anyways without using the TIF District tool.

Is a BID just what downtown property owners, business managers and entrepreneurs want to hear? – that their properties will be assessed at a special higher rate to attract and encourage more business. After 20 years of chasing re-investment away from downtown, the city administration and planning commission find it okay to levy a higher tax?

How many other cities and small towns in Wisconsin or the U.S. for that matter, have done the same two-step - TIFing sprawl and then BIDding the shortchanged inner core of the community. So the question is not only one of responsibility, it is one of fairness. Why do we reward the merchants of carbon consuming, environmentally damaging, fuel wasting sprawl with a TIF - yet punish the merchants of the revitalization of a walkable, efficient downtown with a BID? It makes no sense.

So.....this is my idea. Rewrite the state laws governing TIF Districts so that surplus funds from successful TIF's cannot be redistributed or shifted to younger or failing TIF's. This will have a two-fold effect. One, city planners and councils might not be so quick to rubber stamp a new TIF if they can't use surplus funds from another. And two, that this rewrite includes a provision that surplus TIF revenue can only be ported/funneled back to the existing areas neglected and shortchanged in the form of BID's OR returned to the general tax fund to lower the tax levy.

FUN FACT

Excerpt:
Illinois, which had one TIF district in 1970, now has 874 (including one in the town of Wilmington, population 129). A moderate-sized city like Janesville, Wisconsin—a town of 60,000 about an hour from Madison—has accumulated 26 TIFs.

Janesville might have as many as 32 TIF districts. There are 130 TIF districts in Chicago, comprising nearly 30% of the land area of the City. More and more, Chicago (pop. 2,800,000) residents have been questioning the wisdom of expanding tax increment financing districts, calling for substantive reforms, and putting accountability into the governance of such districts. Chicago of course has a notorious city council but consider this: Based on population, if Chicago had an at-large city council with Janesville’s wayward growth personality, Chicago would have over 1,100 TIF Districts.

Read More: TIF Districts a bad deal.