TIF projects create ‘domino’ effect of development

TIF projects create ‘domino’ effect of development

By Steve Jagler, of SBT

To detractors, tax incremental financing (TIF) districts have been abused by real estate developers and should be blamed for urban sprawl, corporate welfare and environmental damage.
To supporters, TIF districts are powerful tools of economic development that create jobs, generate wealth and add to a community’s property tax base.
Though the debate continues, one thing is for certain: TIF districts and other partnerships between the public and private sectors are flourishing. Such partnerships were the focus of "Real Estate Development – A Public/Private Joint Venture" symposium conducted by the Marquette University Bell Chair in Real Estate May 15 at Strong Financial Corp.’s headquarters in Menomonee Falls.
Real estate developers and various public officials, including the mayors and economic development officials from municipalities throughout southeastern Wisconsin, were invited to the symposium. Small Business Times interviewed participants for this report prior to the event.
Mark Eppli, Marquette professor and the school’s Robert B. Bell Sr. chair in real estate, said TIF districts and other such partnerships can be used to benefit both the public and private sectors.
"If cities and developers don’t get along, not a whole lot gets done," said Eppli, who organized the symposium. "I expect that what we hope to achieve is to educate both sides, to get both sides looking at each other and say, ‘This works.’ We want to show that this can be done in a good way."
Featured speakers at the symposium, including Bruce Behling, senior vice president of Strong Capital Management, Barry Mandel, chief executive officer of The Mandel Group, and Peter Bell, president of the Pabst Farms Development LLC, planned to extol the virtues of TIF districts and other public/private partnerships at the symposium.
Behling, Mandel and Bell say TIF districts have been crucial to their development projects (see accompanying articles).
The City of Glendale is a prime example of the value TIF districts can bring to a community, according to city administrator Richard Maslowski. Maslowski points to the first four TIF districts completed by the city:
1) A former asbestos-laden elementary school and public works facility site along Port Washington Road near Green Tree Road, which Maslowkski said had "no value" in 1989, was transformed into a Manchester Suites Hotel and an office complex and now has a value of $28 million.
2) A former contaminated industrial site along Port Washington Road, valued at $4 million in 1990, was transformed into the Coventry office and apartment complex, now valued at $47 million.
3) The former Jos. Schlitz Brewing Co. offices and silos, with an original value of $2.3 million, was transformed into the Estabrook Corporate Park and is now valued at $51.4 million.
4) A former contaminated service station and abandoned hotel site, once valued at $600,000, was transformed into a Woodfield Suites Hotel and is now valued at $8 million.
Glendale’s three newest TIF districts are accommodating the new Glendale Technology Center and the Heart Hospital of Milwaukee ($9.2 million), a new mixed use development along Silver Spring Drive ($43 million) and a revamped Bayshore Mall (projected $150 million).
Bayshore, which will be renamed the Bayshore Town Center, will be renovated into a multi-story complex that will feature a variety of first-floor retail, second-floor offices, a series of public streets, outdoor restaurants and cafes, a town square and various entertainment venues.
"Bayshore will not be a mall. It will be more of a lifestyle center," Maslowski said.
The Bayshore project qualifies under the "brownfield" stipulation of the state’s TIF law because it actually is located on a former sanitary landfill and continues to "settle," creating uneven surfaces in the parking lots, Maslowski said.
"Without TIFs, none of these projects would have gotten off the ground. In some cases, these were blighted, vacant, industrial sites," Maslowski said. "They also were having a negative impact on surrounding properties. There were concerns that Glendale was not going to survive. Without it (TIF development), we would not be where we are today, and it’s really questionable what Glendale’s future would have been."
The TIF districts have expanded the city’s property tax base, its employment base and its residential values, he said.
"It’s a domino effect," Maslowski said.
Both critics and supporters of TIF districts will be closely watching the fate of a State Assembly bill that will reintroduced by Rep. Michael "Mickey" Lehman (R-Hartford) this fall.
Lehman’s new proposal will have some slight modifications from the bill that was approved by the Wisconsin Assembly, but died in the Senate in 2001.
The bill would stipulate that the Wisconsin Department of Revenue prohibit a city or village from creating a new TIF district if it has already exceeded state TIF limits, which are based upon percentages of the total value of the property in the municipality.
Lehman’s bill also will include provisions that would: restrict cash grants to developers and landowners; restrict the terms in which annexed land from towns can be included in TIF districts; require a joint review board to determine whether a proposed development could not occur without the creation of a TIF district; impose a $1,000 filing fee for a new TIF district; and reduce the maximum life of a TIF district for industrial development to 20 years, from the current 23.
Lehman denies that his bill would impose further restrictions on the use of TIF districts.
Instead, Lehman said, his proposed changes would clarify the state’s existing TIF laws. Lehman said his bill would ensure that the statutes "are appropriate and updated, and our processes are known."

May 16, 2003 Small Business Times, Milwaukee

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