The current Shorewood Village Board is spending some big dollars and planning to spend more, and gambling that increasing property values will pay the bill.
Shorewood is using what is called a TIF (tax incremental financing) as a Financing Tool to pay for various projects, such as Streetscaping, the River Project, Condo Development, etc.
According to the information published by the Wisconsin Dept of Revenue, a TIF works like this:
"Tax Incremental Finance, or TIF, is a financing tool that allows municipalities to invest in infrastructure and other improvements, and pay for these investments by capturing
property tax revenue from the newly developed property. An area is identified (the tax
incremental district, or TID) as appropriate for a certain type of development, and
projects are identified to encourage and facilitate the desired development. Then as
property values rise, the property tax paid on that private development is used by the
municipality to pay for the projects."
There is a risk though, that IF property values Decline, rather than Increase --- All the Property Tax Payers will pay for the expenditures through Increased Property Taxes, as explained here by the Dept of Rev:
" Municipalities can invest significant amounts of money into these infrastructure
improvements in hopes that growth will follow (sometimes called the "build it, and
they will come" strategy). However, if little or no private development occurs after the
improvements are made, there may be no tax increment revenue with which to pay for
the investment. If there is no increment revenue, the bonds used to pay for the
improvements will have to be paid for with general tax revenue. Paying for these bonds without a larger tax base means a higher tax burden. Another risk of over-investing can be that the site is improved, but the improvements actually prevent some types of development from being able to use the site."
The Big Question now becomes --- are Shorewood Property Values Increasing or Decreasing ?
There are many different ways to calculate the values, and with the current volatile real estate market --- it is anybody's guess of what the values will be by the end of the current year. The basic method of calculating property values, involves what is termed "Market Value", and changes in what the sales prices are in comparison between two comparable time periods. (Other methods of valuation, "replacement" and "income" are not commonly used for residential property appraisals or assessments).
Taking a snapshot of Single Family Home sales in Shorewood for the time period of January 1st of this year (2008) to date, compared with the same time period for last year (2007), there is a notable trend:
JANUARY 1 TO MARCH 26, 2007 --- SINGLE FAMILY HOMES SOLD IN SHOREWOOD (17 sales)
ORIGINAL ASKING PRICE DAYS ON MARKET SALES PRICE
189,900 24 192,100
214,900 169 180,000
224,900 114 215,000
230,000 16 221,500
259,900 126 235,000
289,900 183 237,000
289,000 13 289,000
298,000 46 298,100
329,900 99 295,000
309,000 20 310,000
320,000 45 320,000
339,000 42 335,000
364,900 43 356,000
387,900 68 350,000
449,000 10 460,000
749,000 18 750,000
1,495,000 62 1,425,000
Tot 6,740,200 1098 6,468,700
Avg 396,482 65 380,511
THERE WAS APPROX A 4% DECREASE BETWEEN ORIG PRICE AND SALES PRICE
JANUARY 1 TO MARCH 26, 2008 --- SINGLE FAMILY HOMES SOLD IN SHOREWOOD (9 sales)
ORIGINAL ASKING PRICE DAYS ON MARKET SALES PRICE
279,000 112 237,000
314,900 146 290,000
399,900 141 300,000
415,000 181 376,500
424,900 172 417,000
479,900 91 449,000
589,900 88 555,000
599,900 31 560,000
1,349,000 204 1,000,000
Tot 4,852,400 1166 4,184,500
Avg 539,155 130 464,944
THERE WAS APPROX A 13% DECREASE BETWEEN ORIG PRICE AND SALES PRICE, AND DAYS ON MARKET DOUBLED OVER THE PREVIOUS YEAR.
WHAT DO YOU THINK ? YOUR COMMENTS ARE APPRECIATED !
