#1

TIF Districts

Welcome to the inaugural newsletter of the Citizens for a Better Mequon. We hope to provide all of the residents of Mequon with an objective source of information about our city and its government. This issue will focus on the recent developments such as the “Town Center District” that the city government is subsidizing through the use of Tax Incremental Financing (TIF). We will explain what this method is, what is being done with it here in Mequon, who is benefiting, and how it may be creating long-term, negative consequences for the city and its residents. What is Tax Incremental Financing (TIF)? Tax Incremental Financing is a method local governments can use to subsidize developers. TIF was originally intended as a last resort to foster the redevelopment of blighted properties or contaminated industrial parks where no private investment could ever be justified. However, some city governments have expanded the definition of “blighted” to include almost any area, even including farmland. This development is incentivized by the promise of the developers not having to pay property taxes for years or even decades as well as city sponsored cash payments or loans. Municipalities effectively borrow against the increased property values and economic development adjacent properties will supposedly provide. What are the potential dangers of using TIFs? Unfortunately, many TIF districts never create any sustainable economic benefit and result in huge public debts and defaults. Many municipalities overuse TIFs or direct them toward pet projects in areas that could otherwise be developed through private investment. Instead of using the traditional “but for...” test where the argument is that development would not occur but for the TIF, city officials can use this mechanism to force taxpayers to support projects with city-favored developers for risky projects which will never produce additional tax revenue and can lead to default and increased urban blight. Even though the State of California first made TIFs legal in 1952, they ended up banning them by statute in 2011 because of the debt and litigation they inflicted on their residents. How has the City of Mequon Government used TIF Districts? Town Center Spur 16 has 3 apartment buildings and 1 townhome building: Townhomes = 10 units Apt building A = 45 units Apt building B = 57 units Apt building C = 44 units Residential portion of project is required to be completed by Dec 31, 2019.

#2

Questions and Answers

The first issue of the Citizens for a Better Mequon newsletter generated an enormous response! People across the city have been extremely supportive of our effort and we have been overwhelmed by the number of residents who have contacted us with their encouragement and suggestions. They have expressed a sincere interest in learning more about what is happening at city hall as well in having their own voices heard by fellow residents and local government officials. It is our intent that the Citizens for a Better Mequon newsletter will provide a voice for residents across our city. In this issue we hope to address some of the questions we have received from readers of our newsletter and provide more information about our plans.