Source: Lake Geneva Regional News

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Another set back for TIF

by Rob Ireland

June 14, 2012

FONTANA — The already cash-strapped Community Development Authority just received an unexpected $110,000 bill from the state for the Highway 67 project.

When the CDA planned the improvements to Highway 67 in 2003, it entered into a cost-sharing agreement with the state.

The village has been paying the state back for its share for years, and was anticipating making its final $40,000 payment this year. The plan was to use tax increment funds to pay this debt.

However, the state has recalculated the bill and determined the village actually owes it $110,881.

The error occurred because the Wisconsin Department of Transportation entered a cap incorrectly in the cost-sharing formula. The cap was entered at $1.86 million, and it should have been $1.5 million.

The village's CDA is scheduled to meet Jan. 20 to discuss how to handle the unexpected bill.

"I'm not ready to say what I think should or will happen," Village President Arvid "Pete" Petersen said. "For the moment, it is going to go back to the CDA for further discussion. We will see what they recommend to the board. They are the ones that took on the responsibility in the first place. We will look toward the CDA to fix it."

CDA Chairman Robert Chanson didn't return a call by Regional News deadline.

The CDA has been operating at a deficit since in 2010 the Department of Revenue changed how its formula for calculating TIF district valuation.

In previous years, the DOR valued the TIF district using a formula. Now the state uses the assessor's value, which dropped the value of Fontana's district by about $26 million overnight.

This year the village's general fund has to cover some of the CDA's deficit.

"One of the options that I would consider is to pay the portion that we are prepared to pay and defer the balance until such time that the TIF District has revenue," Petersen said.

What happens if the village ignores its bill from the state or only pays part of it?

"I have no idea what the consequences might be," Petersen said. "I don't see any, but I'm sure the state has the opportunity to make us suffer in some form or another. There might be interest involved, but that would be minimal in today's market anyway."

Despite the latest concern, Petersen said the Highway 67 project was a good one.

"On the other hand we are very satisfied with the end product that we've got," Petersen said. "Everybody loves the highway the way it goes through now, the changes that we made, they benefit everyone in the long-term.

"For the moment, my suggestion would be to study what the consequences might be on a delayed payment and, if it is palatable, hang on for whatever it takes to get the TIF district in a positive tax flow basis and take care of it then," Petersen said. "For the moment, we can see if we can get it reduced any more than we have. The chances are relatively remote, but then again there is no harm in asking."