In recent weeks, as debate about the Confluence has heated up, opponents of the project have espoused potential risks of TIF funding to taxpayers.
"With private ventures, only the individuals involved are at risk. Their participation is voluntary," stated a flier entitled "Myths of TIFs" distributed by
The flier labels TIFs as "crony capitalism," adding that "corruption is fostered because private parties, in particular developers, stand to gain from a transaction that is being subsidized by the taxpayer."
A couple of days after the flier's distribution during a
"This assertion is just plain offensive," she wrote of the "Myths of TIFs" flier. "It implies that there is something fishy or illegal about the transactions that have resulted in incremental property valuation increases of
TIFs were used in projects that resulted in the city's largest property taxpayers, some of the biggest employers and redevelopment of blighted land into popular city parks. About 70 percent of
But Cohen and others rallying around two
In a TIF, a municipality attempts to attract new development by installing roads, utilities and other infrastructure. The local government issues bonds to pay the costs, and the debt is repaid through property taxes on the increased value of the property. This arrangement can last for up to 30 years before the development goes on the general tax roll.
While taxes in TIF districts go toward projects there, Cohen's flier notes they aren't paying for municipal services, public schools, county government and the local technical college, as the rest of property taxpayers do.
"Roads to the new buildings need to be maintained and plowed," Cohen wrote. "Fire and police services are required. Schooling for children of families that come into the city as a result of the new activity must be financed."
Noland said city officials often write agreements with developers requiring them to make payments in lieu of taxes, which are intended to help pay for those services. And businesses locating in TIF districts also can bring new workers who buy homes in
"As a result of the TIFs, we have companies that provide jobs and pay property taxes for the benefit of all
Eau Claire TIFs
Built in a TIF district that lasted for 13 years,
In addition to economic reasons for TIFs, Noland said residents have seen other benefits. TIF financing helped create
As CEO of
"The rates of return of past city TIFs would not pass such a test at even the lowest of thresholds," she wrote in an email to the
The biggest return on the city's investment in TIFs has been in the
Your tax bill
A privately owned, mixed-use student housing and commercial building in the project would be taxable new construction, which the city is allowed to use in its calculation for its property tax increase. The city is requiring that this part of the project be worth at least
Based on the
But Cohen points to the potential that city taxpayers could be stuck paying for TIFs that underperform. Should private development in a TIF district fail to meet its goals before its expiration date, any remaining debt for completed public improvements ultimately falls to taxpayers.
"Due to the nature of the funding and risk entailed, I believe enterprise decisions should be made by the private, not the public, sector," Cohen said in the email. "Private entities do not have the taxpayers behind them as either a backstop or source of funds."
Frequently, taxes on the new development falls short of paying back the bonds used on utilities, roads and site preparation, she wrote.
While that happens in early years of TIFs -- as the city makes improvements but private development has not yet begun -- the city has never had a TIF close without repaying its debts.
State law allows TIFs to be open for up to 30 years, Noland said. However, an overlay -- a new TIF created nearby and including parts of the old neighboring TIF -- can go for another 30 years.
"It can be extended infinitely through creation of overlapping TIF districts ..." Cohen wrote.
The city created an overlay for
Cohen stated that an overlay for the Confluence would extend the North Barstow TIF, which began in 2002, out to 2039 before it would go on the tax rolls.
As a project plan for the Confluence has not yet been proposed, Noland said, it is premature to project how long a TIF for it would last.
"The proposal to fund a performing arts center through a TIF strikes me as inappropriate, given the fact that TIF debt is supposed to be serviced from incremental property taxes," Cohen wrote. "As a public building, the performing art center is tax exempt and will generate no incremental taxes to pay off the debt."
Taxes on the mixed-use building are not enough to justify the investment sought from the city, Cohen said. Confluence backers have asked for
So far the city has pledged only
"For a TIF project plan to be successful, there must be an increase in taxable property valuations," he wrote.
In most cases, before it begins building new infrastructure, the city requires a guarantee from developers of a certain amount of taxable valuation, which was the case for
Though half the city's TIFs have not yet closed and begun contributing to general property taxes, those that were completed have added
However, a couple of researchers state that just looking at property growth within a TIF district doesn't show the overall impact on a community's value.
Two economics professors,
"We find evidence that the nonTIF areas of municipalities that use TIF grow nor more rapidly, and perhaps more slowly, than similar municipalities that do not use TIF," the researchers wrote in a 2006 article published by the
Cohen cites their research as support for her stance that TIF districts are not necessary for private development.
"Put quite simply, I and many others contend that development has and will continue to occur without the use of a TIF," Cohen said.
But outside of city TIF districts -- there are no large, open parcels for new companies to locate in
There has been redevelopment of old properties in
The city did not provide help to redevelop
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