{image1}In the wake of the Common Council's thumbs down on the Pabst City project, a fair amount of Milwaukeeans are likely scratching their heads and asking, "what the heck is a TIF"?
In the words of a Public Policy Forum Regional Report from February, "In simple terms, TIF diverts property tax proceeds from the general tax rolls to specific geographic districts as a way to fund public infrastructure and developer incentives to spur economic development."
So, how do taxpayers get that money back? The new developments, hopefully, result in increased tax revenues and that growth is used to pay back the debt created by the TIF (which means Tax Incremental Financing, by the by). Once paid off, the TIF is ended and the tax money used to fund it goes back into the general tax pool.
Authorized by a Wisconsin statute 30 years ago, TIFs are now the main engine for sparking economic development in the state, according to the report.
According to Andrea Rowe Richards, Communications Manager for the City of Milwaukee's Department of City Development and Housing Authority, the City has created 50 TIFs in major redevelopment projects since 1977, boosting the tax base by some $1.8 billion.
Among those projects were the original Grand Avenue Mall in the early 1980s ($34.6 million) and its redevelopment in recent years ($19.5 million, including the conversion of the Field's building on Wisconsin Avenue into the ASQ Center); the Beerline neighborhood along the river, north of Downtown ($19.9 million); the tear-down of the Park East Freeway and preparation of the area for redevelopment ($19 million); renovation of the Boston Store building the addition of lofts (also included in Grand Avenue renovation); and Cathedral Place condo and retail tower ($20 million).
"Grand Avenue was recently sold by Northwestern Mutual Life, which demonstrates the strength of the Grand Avenue turnaround, as NML is not in the business of losing money," Rowe points out. "Granted, we'd like to see additional retail choices in downtown Milwaukee but you cannot sneeze at the turnaround of the Grand."
And the projects continue, according to Rowe.
"Currently, the City of Milwaukee has 43 tax incremental financing districts. The estimated average payback period for all TIFs is 18 years," says Rowe. "The TIFs funded everything from redeveloping the old Capitol Court Shopping Center into Midtown Center (to) Lindsay Heights residential subdivision in the central city (to the) Menomonee Valley site acquisition and clean up."
But according to the Public Policy Forum Report, Milwaukee lags far behind Minneapolis and Chicago in utilizing TIFs to spur economic development.
While Chicago has 22.7 percent of its state's population, it collects 30 percent of state TIF tax proceeds. In Minneapolis, those numbers are even more disparate: 7.5 percent and 25.3 percent. Milwaukee, which has nearly 11 percent of the state's population, collects just 7.7 percent.
In comparing these numbers, the report posits, "Does the slow economic growth in the city and county of Milwaukee at least partially result from a low rate of TIF utilization?
"TIF 'under-usage' in Milwaukee could be good for Milwaukee if the neighbor's use of TIF proves to be financially reckless compared to Milwaukee's. However, Milwaukee also assumes the significant risk that its TIF 'under-usage' is a symptom, or worse yet, a contributing factor to Milwaukee's declining economic fortunes in comparison to Chicago and Minneapolis."
But Rowe points out that the Public Policy Forum report ignores the fact that unlike Milwaukee's TIFs, TIFs in Chicago and Minneapolis are "developer-financed."
As with most things, TIFs have positives and negatives.
On the plus side, according to the Public Policy Report:
TIFs help create development and a tax base that wouldn't otherwise exist.
After the TIF is paid off, the development has paid for itself.
Otherwise unfeasible developments are possible.
TIF-funded projects can spark further development both inside and outside its immediate area.
The city doesn't lose any tax revenue.
On the down side, the report says:
If the project isn't successful, taxpayers suffer by having to pay the development costs.
TIFs help developers elude risk and have been called "welfare for developers."
TIF money has encouraged sprawl.
And, in the words of the report, "Although appearing to be self-financing, TIF is actually a burden to taxpayers outside of redevelopment areas because it increases taxes as the new development spurs the need for more services (schools, police, fire)."
Born in Brooklyn, N.Y., where he lived until he was 17, Bobby received his BA-Mass Communications from UWM in 1989 and has lived in Walker's Point, Bay View, Enderis Park, South Milwaukee and on the East Side.
He has published three non-fiction books in Italy – including one about an event in Milwaukee history, which was published in the U.S. in autumn 2010. Four more books, all about Milwaukee, have been published by The History Press.
With his most recent band, The Yell Leaders, Bobby released four LPs and had a songs featured in episodes of TV's "Party of Five" and "Dawson's Creek," and films in Japan, South America and the U.S. The Yell Leaders were named the best unsigned band in their region by VH-1 as part of its Rock Across America 1998 Tour. Most recently, the band contributed tracks to a UK vinyl/CD tribute to the Redskins and collaborated on a track with Italian novelist Enrico Remmert.
He's produced three installments of the "OMCD" series of local music compilations for OnMilwaukee.com and in 2007 produced a CD of Italian music and poetry.
In 2005, he was awarded the City of Asti's (Italy) Journalism Prize for his work focusing on that area. He has also won awards from the Milwaukee Press Club.
He has be heard on 88Nine Radio Milwaukee talking about his "Urban Spelunking" series of stories, in that station's most popular podcast.
