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Monday, June 22, 2020

Public hearing - Tax Incremental Districts

Several new or amended Tax Incremental Districts (TIDs) will be the subject of a public hearing before the City Plan Commission in the 3rd Floor Conference Room at City Hall at 4:00 p.m. on June 29.

A proposed amendment to the boundaries of existing TID 13 will be discussed along with amendments to TID 11, 14, 15, 16, and 17. "Proposed additional and updated projects costs of approximately $10 million may include but are not limited to: various public improvements and cash grants to owners, lessees or developers of land located within the District (development incentives), and professional and organizational services, administrative costs, and finance costs."  In addition, three new proposed TIDs will be on the agenda.

Tax Incremental Districts allow a municipality to identify "blighted land" that, they certify, would have little chance of attracting investment without government intervention. The municipality then funds, often by selling bonds, improvements such as infrastructure updates which encourage new businesses to develop in the district and raise the property values and taxes collected. The difference between the taxes assessed before the upgrades and the new taxable amount is the increment. 

For the life of the TID, that increment is not included in the pool of taxes divvied up among libraries, schools, parks, etc but is used only for TID improvements. That means the taxpayers are subsidizing private development and the taxpayers are paying more of the burden for city, county, school district, and technical college because the increments are held out through the life of the TID. The promise is that once the TID ends, the new higher property taxes generated will all go to benefit the municipality and all taxing authorities.

But that reward is often a long way off - decades. And while the costs of things we want and need,  like libraries, parks, social services, schools, salaries, maintenance costs, and general infrastructure, go up, the share of these increased costs that the TID pays is frozen at pre-improvement levels for a long time.

This article touches on a few of the ways TIDs can be twisted to, for example, pay off private companies' development costs with tax dollars. This explainer from Curious City, goes into more detail about the problems with TIDs (in Chicago). The Institute for Local Self-Reliance calls for a reform in the way TID (also known as TIF = Tax Incremental Financing) is used. "However, all too often, cities are using TIF to underwrite projects in affluent areas, to subsidize construction on undeveloped land, and to finance big-box retail."

In this book FREE LUNCH: How the Wealthiest Americans Enrich Themselves at Government Expense (and stick you with the bill), Pulitzer Prize winner, David Day Johnston goes into more details on the many ways TIDs can be used to enrich the wealthy using tax dollars. Even conservative/libertarians have problems with the way TID/TIF  Districts are currently arranged. "Rick Esenberg, president of the Wisconsin Institute for Law and Liberty, a conservative law-and-policy think tank based in Milwaukee, asserts that too often TIF becomes a form of corporate welfare for wealthy developers, with municipalities picking winners and losers."

The notice from the June 22 La Crosse Tribune is shown below. The notice published on June 15 about proposed amendments to existing TIDs is at this link.

Particularly interesting is proposed new TID #19 = the old K-Mart property at State Road and Losey Boulevard. But is it blighted? It seems it might only be considered blighted because K-Mart closed and the new owners have done nothing with the building in the many months they've just let it sit there.The area is not blighted - JavaVino is across the street, there are small shops and services just across State Road, there's a new "pocket community" development across from Central. And is the only way any development would go there is if the city provides millions of dollars in subsidies?  At one time it was reported that the Village Shopping Center owners had bought the K-Mart property. So, why do they need a TID?

If we are concerned about how our tax resources are divided up and how our vital services are paid for, we should be interested in how our city is using Tax Incremental Districts and ensure they are being used to benefit the entire community.

Are there any experts out there who could shine more light on this? It just smells a little like "the giant sucking sound," to me.





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