TIF Summary

Alderman Scott Frederick Home page

A Summary of West Bend TIF Districts (TIF Report)

During our spring election the concept of Tax Increment Financing was badly misrepresented through letters to the editor and advertisements printed in the Daily News. In an effort to correct this misleading information and to illustrate the value of TIF Financing as an economic development tool, I requested that a summary of TIF financing be presented to members of council and to our city taxpayers.

As part of the educational process, several of our business and community partners were invited to attend the presentation on Monday July 8, 2002 including members of the West Bend Area Builders Association. Unfortunately, it was the Builders Association who was responsible for the advertising campaign directed at misleading the West Bend voter and taxpayer. The Summary of West Bend TIF Districts report is intended to provide factual information and demonstrate the value of TIF Financing to our community.

The West Bend Department of Community Development in conjunction with the city's financial consultants, Ehlers and Associates, prepared the Summary of West Bend TIF Districts. I would like to give special recognition to our Community Development Planner, Julie Licht, for her time and effort in preparing this report. (TIF Report)

TIF Districts - Fact vs. Myth

The concept of Tax Increment Financing (T.I.F.) has been badly misrepresented in recent editorial letters published by the Daily News. T.I.F. is a valuable economic tool that should be understood for its value to our community and benefit to the property tax base. Following is an explanation of facts in response to the misinformation being presented.

Myth #1 - Developers benefit from T.I.F. Fact: Tax Increment Financing is used only for public infrastructure costs including roads, sewer, water and utilities. In addition, developments must meet very specific criteria to be eligible for the creation of a T.I.F. district. The main criteria is that a development would not be possible without T.I.F. The only benefit to the developer is that T.I.F. makes certain developments possible, which is also a benefit to the community.

Myth #2 - Property owners pay for T.I.F. Fact: The exact opposite is true. T.I.F. pays for infrastructure that allows for development. Without T.I.F. the entire cost burden would in fact be assessed to the property tax levy. The additional benefit to the property tax payer is that needed road improvements are included in T.I.F. districts that offset the cost regardless of new development.

Myth #3 - T.I.F. districts do not pay taxes Fact: Tax rates apply equally to all property and business owners regardless of T.I.F. There are no tax breaks and no special assessments of any kind.

Myth #4 - The city does not receive tax until the T.I.F. is paid off Fact: The city continues to receive tax from the value of the property prior to new development. Tax from the incremental value of the new development is used to repay the T.I.F. loan, incremental value made possible only through the creation of new development. Think of a T.I.F. district as an investment. The city maintains its original tax base during the loan period and will benefit substantially as the district matures based on the value of new development.

Myth #5 - The city debt is a result of T.I.F. Fact: The city has incurred debt directly related to T.I.F., the alternative was to immediately assess every property owner for public infrastructure costs necessary for new development. Tax Increment Financing is very similar to a home mortgage. The down payment for a new home would be assessed property tax, the mortgage is T.I.F. financing. The current city debt of $50 million dollars is 3.5% of our assessed property value. State statues allow a city to carry a maximum of 5% debt to assessed property value. West Bend also has an A1 bond rating earned from Moody's for three main reasons: 1. Fiscal conservativeness of city government. 2. Aggressive repayment of debt. 3. Use of T.I.F. districts to stimulate industrial and commercial development.

Myth #6 - Local builders do not benefit from T.I.F. Fact: Without the creation of T.I.F. districts to attract commercial and industrial growth, residential development would suffer dramatically. Retail business and residential development prosper or fail in direct relation to industry. The industrial parks created through T.I.F. have in fact allowed for continued residential development. Without Tax Increment Financing West Bend would not be able to attract or even retain many manufacturing and technology companies.

Myth #7 - Fleet Farm would not use T.I.F. Fact: While this statement is true it is misleading. Fleet Farm would not be eligible for T.I.F. because it is an established retail business building on 'clean' property. The criteria for the creation of a T.I.F. district are: 1. the development addresses a blighted area 2. the development will attract new industrial and commercial business into a community. The Common Council approved Fleet Farm's annexation request for the parcel on the south east corner of Hwy 33 and Cty Z last year. We are looking forward to a brand new Fleet Farm in the near future.

Tax Increment Financing is a valuable tool that has brought industrial and commercial development to our community. We have used T.I.F. to revitalize downtown, retain the Serigraph company, address blighted areas and rejuvenate our city without passing the direct cost to the residents. As our T.I.F. districts mature the incremental tax gained from new developments will be applied to the tax levy providing a benefit for every homeowner.

Revised Thursday, August 09, 2007