Politics & Government

COMMENTARY: Caledonia Needs To Know Who Is Coming To Their TIF District

At a time when every dollar counts, transparency is key.

Tax incremental financing (TIF) districts are funny things. They have a have a simple purpose and a complicated premise.

The voted 4 to 1 to move forward with a that could create a tax incremental finance (TIF) district to expand the Franksville Industrial Park by 390 acres on Tuesday.

Basically the tax revenue generated from a development pays for the infrastructure projects. One caveat is that the tax increment (the difference between the base tax and the created tax after the project is completed) is diverted away from paying for schools, the village and the county until the project is paid in full. So, while those entities won’t lose money, they won’t receive additional money.

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Now the repayment of a TIF can happen in only a few years or it could mean 20 years. And these financing tools are to be used if they meet the test of the “but for” rule, which means that if the business didn’t have the incentives the development wouldn’t happen.

There are different ways communities have used this tool. I’ve seen some go really well and I’ve seen some projects go badly. For this reason, it’s really important that the Village Board examine the details on this TIF in a careful, thorough and transparent manner.

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With that said, the businesses have requested that their identities not be made public until October. So the glaring problem I see is that the public won’t know all of the details about the businesses we’re expected to help finance until after the Village Board votes on the creation of the TIF.

Given this, I can’t help but remember what an acquaintance of mine said about the purpose of business – that businesses and governments do not to create jobs, demand for products or services create jobs. And given our economic position, it’s important to remember that while there are a number of good companies out there, we need to be realistic in our expectations. We also need to have a stronger understanding about our community’s demand for those goods and services if we plan to use a TIF district to finance infrastructure projects.

The reason being, I covered Pleasant Prairie when they created a TIF district to woo Abbott Labs across the border in 2008. The plan was approved, and “the table was set,” said officials with the Village. The state promised tax credits, the Village promised new roads and infrastructure improvements, nothing got built, and no one came to dinner. And I covered West Allis when their dinner plans got ruined when Pressed Steel Tank stiffed them with the check, and they ended up having to follow Pressed Steel into bankruptcy court to get their money back.

I’m not saying this is a good or bad dinner, or that this TIF isn’t worthwhile; I’m just saying we should know who is coming to dinner before the main course is served. And if we are diverting funds away from schools, the Village and the County, we should have more information to go with these promises because we can’t afford not to know.


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