Shorelines

I have heard the argument before that TIF Districts "steal" tax dollars from the other taxing jurisdictions like school districts.  The truth is TIF was created partly to level the playing field for municipalities, who carry the burden of most infrastructure and redevelopment projects.  Consider this excerpt from the Department of Revenue's history of TIF financing:

"In 1975, the Wisconsin legislature determined that all taxing jurisdictions benefiting from urban redevelopment should share in its cost. Public improvements, such as sewers, streets and light systems, usually result in an expanded local tax base. Although the cost of these improvements is normally financed entirely out of municipal revenue, it was argued that county, school, and technical college districts also benefit from the expanded tax base. The legislature recognized that this was an inequitable situation that sometimes discouraged development and redevelopment efforts. TIF was initiated to ensure that overlying local taxing jurisdictions shared project costs so those who benefit directly or indirectly would help pay development costs. All taxing entities were viewed as partners in promoting the expansion of their tax base."

If a TIF District is carried out the way it is meant to be, the other taxing jurisdictions get the same amount of tax revenue that they would have if the municipality would not have completed the improvements, whatever they be.  The project activities are paid for by the municipality alone, so it is logical that any increased tax revenue resulting from the project activities should go back to them.  When the TIF district closes in twenty-some years, the pie is bigger for everyone and all taxing jurisdictions reap the rewards from the municipality’s hard work.  

Final approval of a TIF District is given by a Joint Review Board consisting of one member each of the school district, county and technical college, as well as one member from the municipality and one public member.  This means that a majority of the board members approving a TIF district are from the other taxing jurisdictions.  A municipality cannot just create a TIF on its own.  In my job experience, I have never seen a school district, technical college or county representative say NO to a TIF.  They see it as a long-term benefit to their organization and the community in general.

Ann -

I think what Dave is saying, in this case, is that the base value would be understated, and the increment would be overstated.  If the lot were listed as being vacant, it would decrease the base value significantly compared to the value if the apartment building were listed.  In the formula you outlined, the school district draws its share from the base value, and what would have been the expected increase of that value.  In the case Dave is outlining, the base value appears to be understated.  This would cause the value of the increment to be overstated once improvements are made, which all goes to the Village to pay off the TIF rather than the schools or any other taxing jurisdiction.

Dave, can you post documents or other evidence of this assessment change?

Steve

I think you explained my basic premise pretty well.  Anticipating the result that you and I both surmise would happen --- one has to wonder why the flawed assessment was done in this way, which benefits the TIF tremendously --- not to mention both the Seller and Buyer.

I am adding a copy of the tax records to the posting above, as it will not fit into the comments section.  Please note when reading the tax records, you have to divide the total by the percentage number at the far right to get the equalized assessment, which is the actual number used for taxing purposes.  This is the valuation adjustment made by the state to keep municipalities honest in their assessments in realtionship to other municipalities, and to give the other taxing bodies (school district, MATC, county, etc., a fair basis to tax upon.

Dave

Steve and Dave,

I was my understanding that the base value is determined for the entire TIFF at its start.  In other words, the TIFF base would have been set much earlier than the assessment posted above.   Hence, a lower assessment beneficial to the landowner would hurt the finances of the TIFF (base steady, increment down) and not be an immediate burden on the taxpayers.  Am I wrong?

Good question.  I am not certain when the base value would have been determined in this case.  Was it before or after the revised assessment?

Mr. Knox is correct.  The base value is set when the TIF is created.  If the assessed value is now less for that parcel, it is actually a "decrement" in the TIF and not beneficial to the municipality because they will have to cover the loss with more increment.  This has happened in TIF districts I have worked on.  As we demolish buildings, the value of the parcels goes down; thereby creating decrement that temporarily hurts the TIF cash flow.

Another thought after I posted that message.  From the map on Shorewood's village website that I posted earlier, it looks like the TIF that Sunrise is in was "proposed".  In that case, the village would be cooking the books to benefit the TIF.  Does anybody know if we have one or two TIFs right now?

I thought TFF 1 was expanded to include not only North Oakland but also East/West Capitol/River and South Oakland. Could anyone confirm this?  Am I right that TIFF 2 is the Edgewood Condominiums?

Ann23, was there a date for that map?  Also, I checked the "Village Manager's Memo."  Get this.

"The Village Board and the Community Development Authority will be taking up several important policies during the months of April of May, including:

...

Establishment of TIFF 3

Dissolution of TIFF 2

Sunrise Developer's Agreement"

TIFF #3 ???   This is ugly.  

Although, I would recognize that the option, the contract of sale, and the developer's agreement might have an impact on the fair market value of the property in question.  We drag things out in Shorewood.  How long has this "negotiation" taken place?  

Interesting to me, residential properties in Shorewood have proportionally high improvement values, low land values.  Until I saw that shift above, I thought commercial property in Shorewood was assessed the same way.  Is everyone else's land over there assessed so high?  :)

TIF#2 is the Edgewood Condos.

My understanding is that TIF#3 will be only the Riverfront site, which is currently part of TIF#1.  This action would be splitting off this piece into its own district.