By Shereen Siewert
WAUSAU — Fewer than half of Wausau’s current developer agreements have conditions that require the project to grow the city’s tax base, according to documents released last week by Economic Development Director Chris Schock.
A review of the city’s tracking database shows 34 current agreements, 19 of which do not specify a required assessed or fair market value of the property once the project is completed. Half of the 34 projects do not include a job creation requirement.
That’s unusual, aid Wisconsin Taxpayers Alliance Research Director Dale Knapp, because the whole reason for developer agreements is to stimulate economic growth.
The Government Finance Officers Association (GFOA) recommends that any jurisdiction’s economic development incentives have specific goals and criteria that define the economic benefit that both the government and the entities receiving the incentives expect to gain from the agreement, the conditions under which the incentives are to be granted, and the actions to be taken should the actual benefits or outcomes differ from plan.
But Schock said each development agreement is unique, with parameters set by the city council. Some metrics might include minimum assessed value, while others might have job creation numbers or certain construction timelines that must be met, he aid.
After an agreement is made, the metrics are tracked through a master database by city staff, Schock said.
Economic development agreements are used to promote or grow the local economy, according to the GFOA, though each municipality has unique needs and objectives that are sometimes at odds with the developers themselves. Municipalities are responsible for providing services to residents while businesses, which in many cases have come to rely on incentives and subsidies, are focused on maximizing profits. That means agreements are carefully crafted to satisfy the needs of everyone involved.
In Appleton, for example, agreements with developers for major projects are not only tied to value creation, there are often person guarantees given by the developers themselves that ensure the city’s investment is secure. Karen Harkness, Appleton’s director of community and economic development, said some developers are required to make up the difference if a project fails to reach its goal.
“Each development agreement is different, and the needs are different,” Harkness said. “But there is always some value creation tied to the needs of the community, some justification for the agreement.”
Harkness said that it is not unusual for job creation to be excluded from the agreement, because many projects, such as housing developments, are not intended to create jobs.
Many, but not all, of Wausau’s agreements that lack so-called “clawback provisions” for not meeting benchmarks were entered into before 2012, noted Lisa Rasmussen, Wausau’s city council president.
Rasmussen said that’s when things began to change in the city.
“Some did not contain benchmarks at all, which was not good,” Rasmussen said. “When our Finance Committee and ED Committees at the time learned of that, things began to change in terms of the way the development agreements were set up, including benchmarks and clawbacks to secure the taxpayers’ investment in the projects and tie it to results.”
The city’s economic development committee will meet on Tuesday, June 6 to review current development agreements. Public comment is allowed.
