ELKHORN — Walworth County officials are critical of Tax Increment Financing (TIF) plans that are short on details, and supervisors approved an ordinance earlier this month requiring municipalities to present a better blueprint during a TIF’s inception.
“It recognizes that TIF districts are suppose to be a partnership between all of the taxing bodies that participate,” Supervisor Daniel Kilkenny said of the ordinance. “As partners, we are making sure that the initial plan that gets approved has sufficient details so that all the partners understand what to expect.”
The ordinance provides direction for the county’s representative on the Joint Review Board (JRB) before he or she votes creating or amending a TIF plan.
“It is asking municipalities to be more specific in their project details and cost estimates,” said Jessica Conley, the county’s appointed member to the JRB. “It is requesting more detailed reporting, it is requiring me to provide municipalities with more feedback on the county’s perspective.”
Before a TIF is created, it needs the blessing of the majority of the members on the JRB. Although the new guidelines require more details be provided — and could force the county’s representative to vote against the district if those details aren’t available — the county representative is only one of five votes on the JRB. The remaining 80 percent of the JRB wouldn’t be required to follow the county’s guidelines. County officials believe these meetings should provide a chance for the JRB to dive into the details of proposed TIFs and amendments.
Kilkenny said some of these organizational meetings have lasted only 10 minutes.
“Let’s not have 10-minute meetings that authorize expenditures of $20 million dollars that give total flexibility,” he said. “I would think we are being reasonable. Accountability always affects flexibility.”
There are currently 15 TIF districts in Walworth County, including Genoa City’s TIF district, which is slated to close at the end of the year.
“I think the county is just looking for more information on some of the TIF districts that are currently out there,” Conley said. “And because there is only meetings of the time of the project plan, and at the time of a project amendment, we are trying to open up that communication.”
Conley and Deputy County Administrator Nicki Andersen, who is in charge of the county’s finance department, both are critical of the amount of information provided by local municipalities when TIFs are created.
“I think if we get the project plans more specific in their initial implementation going forward there is probably more likelihood that there will be more formal amendments to those plans during the 20 year life of that district,” Andersen said. “Right now, I think the plans are being written fairly general.”
Conley said, in some cases, that communication doesn’t improve as the TIF district moves forward.
“In the city of Lake Geneva, we have received their audit reports. However, they are not very detailed,” Conley said. “They told us they were going to get us more detailed reports. They are still working with our auditor.”
Lake Geneva City Administrator Dennis Jordan said that the city is working on getting this information to the county.
Lake Geneva’s TIF District
County officials pointed to Lake Geneva’s TIF district as one that should close.
“We think, from our perspective, in looking at the information that they have provided us, that it is time to close,” Conley said. “Without further information we can’t really see why they are looking to keep that open. We are at that point where we expect that it should be closed.”
Lake Geneva’s TIF district was created in the 1990s, it had a base value of about $19.6 million. Since then, the district has grown in value by $73.8 million.
The county’s criticism is that Lake Geneva’s TIF district has reached its target increment. However, the city’s initial project plan includes building a parking garage, and the city hasn’t made a decision on that project.
“It was amended. There was a group (of aldermen) that was trying to, I think, make sure we never got one, so they lowered the figure,” Jordan said of the parking structure line item on the TIF district budget.
Jordan agreed that the parking garage was the main reason the TIF district is still open.
“If it comes in at $7 million or $8 million it is the only place we are going to get the money,” Jordan said.
Andersen expressed concerns that Lake Geneva believes it can make changes to its TIF plan without approval from the JRB.
“The question comes down to the interpretation of the plan,” Andersen said. “It is a little general in some areas, and I think the city of Lake Geneva believes that it can approve an additional project out of there without making a formal amendment.”
Jordan said when the TIF was created, some of the plan placed funds in undesignated reserves.
“When that was done in 1996, (the Lake Geneva City Council) didn’t have a clear idea on what might be coming down the pike,” Jordan said. “They had certain projects, but they knew there were a lot of things that could be done to improve blight and to improve transportation.”
Lake Geneva, Jordan said, placed funds in undesignated reserves to fund future projects that would alleviate blight or help relieve downtown congestion.
“I think people can appreciate back then, there was a lot to do, some things came up earlier like (the Edwards Boulevard extension),” Jordan said. “I think nobody can argue that has helped alleviate downtown traffic to a degree. I think they just have to look at it from a different perspective.”
County officials said that loose project plans have allowed municipalities to change TIF plans years after they are created without having formal amendments.
“We would like to have the initial plan more specific. If we are talking road construction which roads or which segments of roads,” Andersen said.
Conley added that “lots of times there is enough flexibility in these project plans that they can add things without it coming back for an amendment.”
Other times, the lack of details and time provided to review the plans has pushed the county to say no, when it may have supported an amendment.
“The village of Fontana, when we did vote no against that most recent amendment, I think we wanted to vote yes, but (voted no) because we didn’t have enough time in order to make suggestions or minor changes,” Conley said.
The ‘but for’ test
Kilkenny said he isn’t opposed to TIF districts.
“I am no more against TIF districts than I am against sanitary districts, school districts, drainage districts, business districts,” he said. “It is how they are set up and run and whether they are accountable.”
However, he is concerned that the municipalities aren’t using the “but for test” fairly.
The “but for test” states that TIF funds can only be used if the project wouldn’t have occurred “but for” the TIF.
Kilkenny pointed to Delavan’s TIF district, which includes a portion of the strip mall along Highway 50, as an example of a district that was approved with a questionable use of the “but for” test.
“The Chili’s (restaurant) is in the TIF district, and it was already owned by Chili’s before it was in the TIF district,” Kilkenny said. “I have an article that states Lowe’s is chomping at the bit and can’t wait to come to Delavan.”
He said he doesn’t believe the TIF district enticed the developers of Lowe’s or Chili’s to come to the community.
“I think that is all stretches,” he said.
“If you look at what Lowe’s and other people paid, they paid market value, so that didn’t induce them to come. Did it induce the developer to offer it for sale? I think the market did.”