tag:blogger.com,1999:blog-5785254727522230181.post4028295722773157371..comments2011-01-12T11:01:19.253-06:00Comments on School Daze: The Edgewater TIF. Or, Can I Use My MasterCard to Pay My Visa Bill???<br><br><br><br><br><br>Lucy Mathiakhttp://www.blogger.com/profile/02585215561497641539noreply@blogger.comBlogger5125tag:blogger.com,1999:blog-5785254727522230181.post-23886836322309874152010-02-22T21:48:59.385-06:002010-02-22T21:48:59.385-06:00stevesc said:
"And why does the City prefer t...stevesc said:<br />"And why does the City prefer to extend rather than create new districts?"<br /><br />The city likes to have and keep TIF districts open so it can fund improvements -like Lucy mentioned for the Square- without sharing the resulting increased taxes with the county and schools. It's like paying for dental work with pre-tax income - new tax revenue pays off the the city's projects before income is shared with other taxing entities. <br /><br />In the case of Edgewater, it goes beyond that because it's such a bad deal in terms of return on our investment. A whopping $16 million of TIF will only result in $45 million of added property value and a $900K tax increment. <br /><br />Compare that to the bigger University Square project which got a more modest $3 million in TIF and is already returning over $1 million/year in taxes even though it's not fully rented. <br /><br />If $3 million for Univ Square square filled a "gap", $16 million for Edgewater fills a Grand Canyon. <br /><br />If Edgewater wasn't scabbed onto a successful district and was by itself, it would take 18 years just to pay off the principal of the loan. Adding origination costs, interest and just a few private or public works projects would take the Edgewater district to the 27 year statutory limit or beyond (while not sharing the increased taxes with the county and schools the whole time).<br /><br />The "but for" argument for Edgewater is turned on its head by the city's Hunden Hotel study which labeled new downtown hotels that are not near Monona Terrace as "threats" to improving the viability of the convention center. See pages 20-21 of Hunden at: http://tinyurl.com/yc9adlj<br />Subsidizing Edgewater now increases the difficulty of reducing our $3 million annual subsidy of Monona Terrace. <br /><br />In addition, Edgewater's TIF subsidized rooms and condos may actually drive down assessments and taxes of existing downtown hotels and high end condos (condo market already overbuilt) while TIF withholds new taxes from a big chunk of downtown from schools.rickettshttps://www.blogger.com/profile/02710121979080252791noreply@blogger.comtag:blogger.com,1999:blog-5785254727522230181.post-73463487512962875492010-02-22T19:36:47.183-06:002010-02-22T19:36:47.183-06:00Mark, thank you for sharing your perspective. Cert...Mark, thank you for sharing your perspective. Certainly, there are many ways to look at TIF, and I respect your right and interest in advocating for what you believe to be the proper way to proceed.<br /><br />We can agree that successful TIFs generate additional revenue over the long term. And yes, I understand that there is an investment in the future when TIFs are created.<br /><br />I realize that it is inconvenient for me to question the impact of the decisions that you and other city leaders are promoting. However, it would be completely irresponsible if I failed to ask very legitimate questions about the purposes for which TID #23 was expanded. I'm sure that the aesthetic improvements will be lovely for the downtown, but am struggling to balance that against the impact of struggling neighborhood schools on property values throughout the city.<br /><br />It would be equally irresponsible of me to fail to point out the down side of decisions to extend the life of successful TID's involving prime real estate. Especially when the down side has a significant impact on public school finance and, very likely, homeowners who may well see their taxes raised to make up for the funds that are not coming to the district when TIDs are artificially extended rather than closed out.<br /><br />As you say, these are complicated decisions. And I am very much working to understand not just the impact of the proposals that are coming forward, but also how these proposals conform to TIF guidelines.<br /><br />I do know that we are looking at this from very different perspectives. You, from your agenda as a city mover and shaker, and me as a member of a board that must live with decisions over which we have little control outside of the mostly symbolic no vote when we believe that the proposal hurts the interest of our public schools.<br /><br />For me, the recent city proposals are a starting point rather than an end point. I am looking forward to working with people who can provide a good economic analysis of whether the financial gains that the district will reap when the extended TIDs are closed out are, as touted, significantly larger than the benefits that would accrue if the TIDs were closed out rather than extended (and the full value of property taxes made available to schools.)<br><br><br><br><br><br>Lucy Mathiakhttps://www.blogger.com/profile/02585215561497641539noreply@blogger.comtag:blogger.com,1999:blog-5785254727522230181.post-40880928473329345742010-02-22T19:28:53.376-06:002010-02-22T19:28:53.376-06:00This comment has been removed by the author.<br><br><br><br><br><br>Lucy Mathiakhttps://www.blogger.com/profile/02585215561497641539noreply@blogger.comtag:blogger.com,1999:blog-5785254727522230181.post-86339689540514184262010-02-22T17:23:01.417-06:002010-02-22T17:23:01.417-06:00Lucy, MMSD has been (and continues to be) the happ...Lucy, MMSD has been (and continues to be) the happy beneficiary of millions of dollars of tax increment that would not have existed if not for TIF. It's an investment in the future, a concept that should be familiar. The decision to close a TID is not nearly so straightforward as you describe, as there are often other projects that could be captured (or lost). You may remember that Ald. Compton fought against the closing of TID 24 in 2008 for that very reason.Mark Clearhttps://www.blogger.com/profile/04142442555921255251noreply@blogger.comtag:blogger.com,1999:blog-5785254727522230181.post-66661109297153559892010-02-22T10:18:21.986-06:002010-02-22T10:18:21.986-06:00Thank you for the informative post. The issue abou...Thank you for the informative post. The issue about expanding TIDs that meet criteria for closing, rather than creating new TIDs, is one I was not aware of. It would be helpful to know what the actual tax loss to MMSD as a result of these actions. And why does the City prefer to extend rather than create new districts?<br /><br />The issue of lost revenue during TID life is more complicated than portrayed however. The idea behind TIF is that the new tax revenue would not exist "but for" the public loan (TIF) that made the development possible. This is better in theory than in practice however.Anonymoushttps://www.blogger.com/profile/16152826280849910897noreply@blogger.com