November’s Village Corner


Sam Kaufmann, Opinion Editor

There has been a lot of development in Waunakee over the past 10 years. The Lone Girl building on Main Street, Octopi Brewing, and the Kilkenny Farms neighborhood are several examples. All of these developments have one thing in common: all asked for and received Tax Incremental Finance (TIF) funding. TIF is a financing option that allows municipalities to fund infrastructure or other improvements through property tax revenue of newly developed/redeveloped property within a designated Tax Incremental District (TID). TIDs can last a maximum of 27 years and must include a residential/commercial mix or industrial uses. The three projects above were either located in or asked for a TID. The additional property taxes are split into two “streams”. The first stream is the base rate, or the original tax value of the property before development, which works like regular taxes. The second stream is the tax increment, or added tax funds generated by the higher property value. The additional funding is kept away from the school district, village, county, and MATC, reducing their funding streams. All of the second stream is used to pay for the redevelopment. Due to the lack of funding increases (i.e. the school district), taxes for residents living outside of the TID increase. I spoke with school board member and attorney Mike Brandt on how the issue is affecting funding for our school district. All of the taxing jurisdictions serving the area send one representative to a Joint Review Board (JRB) when a new TID comes up. There are eight active TIDs in Waunakee and according to Brandt, “the school district (including the liaison to the JRB) objects to TIFs often.” Brandt is concerned that by continuing to create TIDs, the district is “forced to overtax residents and businesses (both in and out of the village).”  TIDs increase the property tax base, but according to Brandt, “by deliberately excluding [the increased base] from property tax via TIF forces other taxpayers to cover the TID’s portion of the tax levy.” Thus, the rest of the community “funds what is effectively a transfer of revenue to developers” and tax base growth is repeatedly stagnated for decades. The lost funding results in a “negative short-term impact on tax revenue for schools.” When asked about how the village has responded to these concerns, Brandt said that the village is continuing to approve TIDs, despite the fact that associated development would likely occur anyway. “There is little evidence that a TID is necessary to spur investment in Waunakee at this point”, noted Brandt. Hy-Vee is an example of a project that paid for public improvements on its own without TIF. Waunakee has low crime, an excellent location, an affluent and educated population, as well as high quality schools and public works. All of these factors are more than enough to spur development. Brandt believes that TIF should only be used to incentivize a developers for projects we need such as “entry-level housing, more affordable senior living, and important businesses”. When asked where these additional funds could go if fewer TIDs were approved, Brandt noted that only one outcome is certain: residents will be taxed less for the same quality of schools. Brandt is under the impression that either the village “doesn’t understand the consequences for the school district [of TIF], or they don’t care.” Brandt directed me to the school board’s 2018 TID position statement. The TIF policy clearly states that the district loses revenue and must make it up by taxing other residents. In addition, it recommends for the JRB liaison to only vote for TIDs which support development that would not occur otherwise. For many of Waunakee’s recent TIDs, the school board liaison voted no for this reason. Our village has created a total of nine TIDs ever (eight of them are still active). Of these eight, four were approved within the last four years. One of them in the Kilkenny neighborhood includes 58 residential homes. Another includes numerous homes on and near Main Street. Many residents of the village have raised opposition to these TIDs because they do not want their taxes to increase. Nobody wants to pay more taxes than necessary. It is important for the village to understand the school district’s perspective and concerns when they are approving TIDs. Unless the funding is provided for important businesses and services we need in the village, we should not be deliberately increasing taxes of residents.