A local group that has sought a state Supreme Court ruling on the legality of a downtown tax increment financing district is now setting its sights on Water Street.
Voters With Facts, one of the plaintiffs in a case being handled by Milwaukee-based legal interest group Wisconsin Institute for Law & Liberty, claims in a notice the city unlawfully created a TIF district where development already was underway.
TIF districts are funding mechanisms that use public funds to attract businesses to areas that otherwise wouldn’t be developed.
The notice says the review board couldn’t have made the claim that development wouldn’t have happened without a TIF because the development was already completed and housing UW-Eau Claire students by the time the TIF was approved.
“It is unlawful to consider and approve a TID project plan that involves ‘incremental’ tax revenue from property that was fully developed before the TID was enacted,” the notice states. “Putting such property into a TID removes the property from the allocable tax base, and burdens the other taxpayers ... with the taxes that would otherwise be allocated to the new property.”
WILL’s notice — a procedural step that has to be done before filing a lawsuit — was sent to the city on Jan. 12. WILL also represented Voters With Facts in a lawsuit filed in July contesting the city’s contribution to the Confluence Project.
That case will make its way to the state Supreme Court for oral arguments in February.
City attorney Stephen Nick said the claim on TIF District No. 12 isn’t legally well-founded because the law allows cities to develop TIFs in areas where development has already begun.
“There’s a belief that somehow you can’t form a TIF district while something’s in progress,” he said. “That’s impossible. Things are always in progress.”
He said the tax base from which the TIF is created is based on property values on Jan. 1 of the year prior as long as the TIF is created before Sept. 30.
Aspenson Mogensen Hall, completed in August, isn’t a detriment to the TIF, Nick said. The Water Street TIF was approved by the City Council on Sept. 12 and by the Joint Review Board on Sept. 15.
“The (state) Legislature addressed the issue,” Nick said of the state setting a Sept. 30 date. “It’s expressly foreseen as an issue and answered by the written law, and the city is on the correct side of that law, very clearly.”
Cities create TIF districts in underdeveloped or blighted areas. The city makes an investment in the TIF by funding improvements such as infrastructure, developer incentives, parks, property acquisitions and demolitions.
Over the life of a TIF, tax dollars from the new development that would be collected by schools, the city and the county go to paying off the city’s investments. Once the TIF has ended, those taxes are then paid to the public entities.
In TIF District No. 12, the city’s planned projects are to expand and improve a parking lot, reconstruct part of the Chippewa River State Trail and possibly extend it and to fund a housing revitalization program. Including interest on borrowing, the city is planning to invest $12.5 million into the TIF.
The city’s TIF plan estimates $32 million in private development in addition to Aspenson Mogensen Hall.
Although projects relating to TIF District No. 12 aren’t expected to begin until 2019, the area’s property values are projected to increase by about $14 million with the addition of Aspenson Mogensen Hall.
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