Football Weekend
I am so unbelievably glad it is Friday, with a great football weekend forthcoming. Tomorrow’s Texas-Michigan game is the highlight of college football and might be the best football game of the weekend.
I mentioned yesterday that my puppy, Scooby, ate a jar of mayonnaise. Today he got to a small bottle of vinegar.
The Thing About TIFs
Playing in the government sandbox requires an investment of time to understand the processes and nomenclature.
If I were giving a twenty second definition of TIF, I would describe it as a shell game. The money gets shuffled around a bit, but the money still ultimately comes from taxpayers and still ends up in the pockets of businesses.
Why do TIFs exist? One of the reasons is that taxes are too high. Local communities need to incentivize businesses since their standard tax rate (the one you and I likely have) is too high to promote new business. Not my idea of capitalism or free market.
So businesses get a tax break while they start up. At the end of the day, I can tepidly support businesses getting TIFs much more than rental property builders. There is an ROI (Return on Investment) in the form of jobs, taxes, and lifestyle in the community. The timeline for this ROI is years.
For builders, such as the 128-unit rental property about to be built (over the next several years), the ROI pretty much cannot be accurately calculated since the ROI never really takes place. There are negligible local jobs created and decades go by before the taxes catch up.
TIFs can also be very risky and many TIFs fail. This is almost implicit. If it was a great investment, the additional funding would likely not be needed. The builder of the 128-unit complex to be behind Pete’s said, flat out, that the building could not take place without this massive subsidy.That risk is absorbed by us (the Whitewater city taxpayers).
TIFs also result in higher taxes. Again, this is almost implicit. If someone is getting a tax break, someone else has to pay for it. With mill rate, it is kind of a zero sum game. From Maciver:
“The non-partisan Wisconsin Legislative Council confirmed something about tax increment financing (TIF) that the MacIver Institute has been warning taxpayers about for years: TIF directly results in higher property tax bills, contrary to what government officials and lobbyists claim. Find out what it’s doing to your bill.”
More on the complex coming behind Pete’s
I am very disappointed in Whitewater’s City Manager, John Weidl. The CDA met on a Thursday and passed, in secret, the $5.1M TIF (subsidy) for the 128-unit complex.
On the following Tuesday, the amount had not yet been disclosed to the public. I asked John Weidl the amount of the TIF that day. His response,
“Regarding the subsidy (TIF) amount, the city is committed to transparency, and the details will be made available in due course, after the elected officials review the structure of the proposal as a body. The PAYGO structure ensures no upfront costs to the city, with the developer reimbursed through incremental taxes generated by the project.”
Later that day, and without any opportunity for public comment, the common council passed the $5.1M payout to the builder.
The next day, I received this from Common Council Chair Patrick Singer,
- The provided Developer’s Agreement was recommended by the CDA at its 5/24/2024 meeting in open session. At this point the document was a public record and should have been available to anyone who wished to view it. While it was included in the packet provided to Councilmembers, it was omitted by city staff from the meeting material that was posted online since the matter was agendized for closed session.
- As John stated, we had the details of the agreement verbally reviewed prior to any vote on the agreement in open session. This is available on the recorded video of the meeting.
- The reason I asked for a delay in the press release was because the framing of such a release that was proposed by the City Manager at the end of the meeting is that this development is a done deal. As a member of the Plan Commission, you know that there is still a final site plan review and Conditional Use Permit that the PARC will be considering for approval at its next meeting. I felt that it would be premature to have a press release sent out with that framing prior to the PARC decision.
- There will be some press release hopefully crafted that can detail the development agreement portion but not box the PARC in on a decision.
- While a press release is one mechanism, there are other channels the City should be taking to communicate out with those entities and interested parties, such as the surrounding neighbors, on details of developments, once information is publicly available. More proactive communication helps to reduce the perception that things are rushed or done with suspect intent.
I appreciate Patrick’s candor here.
Five million dollars of taxpayer money was given to a builder without adequate accountability or transparency (my opinion and I hope your opinion). This is simply not acceptable. Our city manager has a huge opportunity for improvement here.
But that’s not all
Five million dollars for 128 units is over $40k per unit. If the units cost around $120k each to build, then the taxpayers are paying for a third of the cost.
Wouldn’t you like someone to finance a third of your home or your business, to the tune of five million dollars?
By way of comparison, Madison TIFs recently paid just over ten grand per unit.
TIFs require a BUT-FOR analysis, which measures tradeoffs for the TIF. My understanding is that the BUT-FOR timing and content was not adequate. I need to get that analysis and evaluate on my own.
So here we are
Does this surprise you? Take this as an opportunity to get involved. It is much, much needed.
And I encourage you to share this information and this blog post.
And get involved. You are welcome to ping me any time.
I am just getting started here.
Peace and love to you all. I love Whitewater.
-mike
Discerning Whitewater 