Here’s an interesting public policy debate happening in Kewaskum.
KEWASKUM — Charlie Serwe owns 3.7 undeveloped acres of land in the village’s tax incremental financing district on which he pays $6,000 in property tax. But after action taken by the Kewaskum Village Board during a special meeting Thursday afternoon, he may have to pay an additional tax of $28,000.
“The village borrowed $8 million to pay for the significant public improvements that were needed in the TIF, such as roads, water, sewer and storm water management,” Fenner said.
The economy then went into a slump and developmentcame to a standstill, but the village still had to pay back on the borrowing. Since the TIF was not generating the expected funds through development, a budget shortfall was created, Fenner said.
“The money had to come out of the village’s general fund, which means everyone in the community ends up paying it,” Fenner said.
Establishing the utility district, Fenner said, is the mechanism that will allow the village to place the tax only on those properties in the TIF that are not developed.
Joel Fleischmann, who owns a home in the TIF that is now a part of the utility district, said while he would not be impacted by any special tax assessment, he is concerned that the developers may either sell their parcels cheap to get out of having the burden of the tax, or they may begin to build inexpensive housing simply to get the land developed.
TIF districts can be a valuable tool for development. But if it doesn’t work out, who should pay? The Village created the TIF and knew that there was a risk that the development wouldn’t work out. Shouldn’t the taxpayers for the Village be responsible for the risks that their representatives take? On the other hand, the developers got a lot of free improvements made to their properties. Even if they just sold them now, the property is worth more than it was before the Village installed the infrastructure. Shouldn’t the developers hold the bag for failing to deliver on their end of the TIF bargain?
This just shows that folks need to put a lot more thought into the risks before using tools like TIF districts to encourage development.