Some aldermen question costs of TIF District review
By Angie Landsverk
Seven of the city of Waupaca’s active Tax Increment Financing Districts will be analyzed.
When the common council met on July 7, it approved a service agreement with Ehlers & Asociates for this work at a cost not to exceed $8,750.
The cost of the analysis will be charged proportionally to each of the districts the firm analyzes.
TID is an economic development tool to help promote local tax base expansion.
It involves using property tax revenue to fund site improvements to attract new development or eliminate blight.
The city has a total of eight active TIF Districts.
However, one of those districts, TIF District 9 on Royalton Street, is being excluded from the analysis.
That district has just a couple of parcels in it and no outstanding debt associated with it, according to Kathryn Kasza, the city’s finance director and treasurer.
City Administrator Henry Veleker said the city created the district to facilitate an ADD Inc. project, which never happened.
The city has not borrowed any funds for that TIF District, and he said it has a negative increment, which means the equalized value in the TID is actually less than when the city started.
As a result, the city is looking at the possibility of dissolving that district, Veleker said.
During last week’s council meeting, Kasza explained why city staff recommended analyzing the other seven active TIF Districts.
“The TIDs in Waupaca represent a major portion of the city’s assets and liabilities,” she said.
She said staff recommended having “another set of eyes look at them” as it considers closing, refinancing or using any of them as donor TIDs.
The in-depth analysis done by Ehlers & Associates will include a detailed cash flow, available opportunities and recommended options for each district.
Dawn Gunderson-Schiel, vice president-financial adviser from Ehlers & Associates, told the council that in addition to doing such an analysis for the city of Manitowoc, the firm has also assisted the city of La Crosse and other communities in this type of work.
“This is something Baird can’t do?” Ald. Paul Mayou asked Kasza.
Robert W. Baird & Co. is the city’s financial adviser.
Kasza said this is nothing against Baird.
“I’ve worked with them the last 15 years,” she said. “We’re using Ehlers more as an analysis service than a financial adviser.”
Noting Ehlers & Associates has extensive knowledge about TIF District law, Kasza said the firm will bring a different perspective.
“This is a one-time analysis. We will still have Baird do the forecasting,” she said.
Ald. Paul Hagen said $8,750 is a “lot of money to just have the TIFs looked at.”
Kasza said either an independent needs to do such an analysis or she and Brennan Kane, the city’s community and economic development director, need to do so.
With work on the city’s 2016 budget approaching, Kasza said she does not have time to do this type of in-depth analysis.
She wants the analysis presented to the council in late September, prior to budget discussions.
In response to Hagen’s comment, Kasza said there is debt the city could restructure, which could easily save the city more than $75,000 in interest.
In her July 1 staff report, she noted that the city negotiated with Ehlers & Associates to reduce the original cost of the analysis from $15,000 to $8,750.
The city did so by using the city’s Community Development intern to provide documentation and background information about each of the TIF Districts.
Kane told the council that he currently cannot provide any incentives to downtown businesses, because the city lacks the funds to create another TID.
He approached Kasza about the issue and said he has also worked with Ehlers & Associates in the past.
Looking at the TID documents and seeing if the city needs to close any of the districts could then open up other development opportunities in the future, Kane said.