A life lesson in TIF
There is nothing like Tax Incremental Finance (TIF) to make a regular citizen’s eyes glaze over. It’s complicated and theoretical. It involves investments, payment schedules, tax rates and lots and lots of calculations.
Faced with a blitz of numbers, many citizens slink away from TIF, trusting governments to do the right thing.
But TIF and its attendant problems are as real as a whack to the head with a stiff piece of pine.
Just ask the Village of Curtiss board. On Oct. 6, village president Randy Busse proposed creation of a new Tax Incremental District (TID) to “capture” the taxable value of two apartment buildings proposed to be constructed starting this fall by Abbyland Foods owner Harland Schraufnagel on an unused soccer field. The housing project wouldn’t need any infrastructure, the president said, but the village could use the tax proceeds from a multi-million dollar investment to help pay for the village’s wastewater treatment plant upgrade. He theorized that the village could use the proceeds from the apartments for the utility project because “it supports the TIF.”
Busse’s problem is that his loose interpretation of TIF law and sales pitch ran into a buzz saw in the form of two other board members on Curtiss’ three-member board, Betty Rettig and John Unruh, who lived through the village’s last TIF with Abbyland Foods, and say never again.
Unruh reminded the board that, after the meat company spent millions on new buildings in the TIF, the village had plenty of net new construction authority under levy limits to increase local taxes and pay for village services incidental to the development, like extra snowplowing. In the end, Curtiss taxes were among the highest in Clark County. In 2016, when the village’s TIF loan was paid off, village taxes dramatically dropped from about $2,500 to $1,600 on an $81,500 home. Unruh said the tax relief was welcome but failed to remedy the sting of two decades where village residents paid an extra $885 annually in taxes to support “economic development” in Curtiss.
Unruh argued that a $5 million apartment complex in the village would wind up costing village residents an extra $50 a year in property taxes, possibly for a police department. That might not seem like a lot, he said, but “that’s taking groceries out of the mom’s car.”
Unruh said there is no need to support the Abbyland apartments with TIF. Schraufnagel owns the land, he noted, and the needed streets and utilities are already in place.
Busse couldn’t argue the point, but said that the village would be able to receive a greater percentage of Abbyland taxes with TIF than without TIF.
Unruh and Rettig, however, said they were unwilling to play the TIF game any longer. Rettig demanded a village referendum (that is she sure would fail).
Thus we come to the sad TIF reality in Wisconsin. TIF is not used for economic development as much as it is used by municipal officials to fatten their bottom line. Municipalities set up TIDs even when no infrastructure is needed. They set up TIDs when a development will happen even without TIF. The state Department of Revenue looks the other way. The Joint Review Board looks the other way. TIF allows a village or city to “capture” taxes that otherwise go to school districts, counties and tech schools. This happens without the consent of the taxpayers who have to make up the difference in higher K-12 school, county and tech school taxes. That’s why it is legalized stealing.
TIF is a difficult, complex subject to master. Criticism of TIF is doubly complicated.
But just ask Betty Rettig and John Unruh about TIF. They don’t like it. And that’s because they have lived it.