From Express News published on January 23, 2020
By Katie Kress
Menomonee Falls has nine Tax Incremental Finance (TIF) districts ; TIFs 1-5 have closed while TIFs 6-14 are open, some have been incredibly successful while others have languished. A TIF is supposed to be a designed area that is given enhancements like water, sewer, and road development. TIF funds are typically given through a bond, which, as the new development begins generating money, is repaid through tax revenues.
Until the bond is paid back, no new property tax is added to the tax rolls, which can take up to 20 years. TIFs can be rolled into other TIFs in order to prolong the period before new property tax is added. For instance, it is fairly common for successful TIFs to direct revenues into failing TIFs. Unfortunately, taxpayers are forced to cover the burden of increasing property value for TIF developments until the bonds have been repaid. Taxpayers, however, can only cover so much, meaning that municipalities, counties, K-12 education, technical colleges, increasing police and fire department needs across Wisconsin lack the funds that would be raised by these developments.
We must remember that every TIF is different, along with the differing financing proposals for each specific project. For this reason, I am not opposed to all TIFs. In the beginning, TIFs were to be used for blighted areas or locations with environmental issues where development may not be beneficial. TIFs were also to be used to take formerly abandoned properties and return them to the tax rolls. When TIFs are used correctly, the system can have a great benefit to Wisconsin and its taxpayers.
Unfortunately, misuse of the TIF system has prompted almost all development to use this tool in real estate. TIFs were supposed to pass the “but for…” test before being used, as in, “but for this TIF, development would not happen in this area…” Currently, developers seek the additional funds offered with TIFs, meaning we, the taxpayers fund winners and losers. Is Menomonee Falls subsidizing private development that may have happened in the free market?
Katie Kress is a trustee on the Menomonee Falls Village Board