By Shereen Siewert
Without input from most Wausau City Council members, city officials persuaded several lawmakers to put forward legislation that would allow for a new tax increment district at the former mall property, now owned by Wausau Opportunity Zone.
Wisconsin Reps. Patrick Snyder (R-Schofield) and John Spiros (R-Marshfield) co-sponsored the bill, which passed the state Assembly this week. Wisconsin Sen. Jerry Petrowski (R-Marathon) is also a co-sponsor of the bill, which will next head to the state Senate. The bill seeks to add a new TID that encompasses the former mall property, land that is now privately owned, and asks for an exception to state rules that require the equalized value of taxable property of a new or amended TID not to exceed 12 percent of the total equalized value of taxable property in the city.
City Council President Becky McElhaney said she had no knowledge a TID was being created in Wausau or that an Assembly bill was being circulated.
“There is not a TID 13, nor have we discussed or voted on a new TID creation in council,” McElhaney said. I’m sorry, but I do not have any knowledge of the Assembly bill you reference.
State documents show City Finance Director Maryanne Groat approached lawmakers as early as December.
“We are requesting a legislative exemption to allow the City of Wausau the opportunity to incorporate the Mall Property into a TaxIncrement District,” Groat wrote, in a letter to lawmakers. “In reviewing Wisconsin statutes, it appears that a handful of similar exemptions exist.”
Dist. 3 Alderman Tom Kilian said he was dismayed to discover the bill passed the Assembly without input from council members or constituents.
“I called Senator Petrowski’s office today and conveyed that I and my constituents here were kept in the dark about this bill,” Kilian told Wausau Pilot & Review. “I requested that I be notified and put on the list to provide testimony at any related Senate meetings for this bill in the future, in which I will provide comments in opposition to it. I also requested that I be notified well in advance of these Senate meetings by his office so that I can notify Wausau citizens about them, so that they are able to participate in the process by providing their written and verbal input on the bill. I expressed my concerns about the lack of transparency here in the process to date.”
Groat explained the rationale in her December letter by saying that part of the mall redevelopment plan “has been to bring the mall property into TID 13 once the demolition of the property was complete.”
“The city was well positioned to do this, but a combination of circumstances have resulted in the valuation of their existing TIDs exceeding the twelve percent limit on their equalized value,” she said.
In her letter, Groat said Wausau has two tax increment districts that will be ready to close in 2024 and 2025. These districts represent 46% of the overall tax increment value.
“When these districts close we will see our percentage drop dramatically,” she wrote. “Unfortunately, we cannot wait until these districts close. The blocks of vacant space in the heart of our downtown need redevelopment now.”
In his Feb. 21 testimony supporting the bill, Snyder said he authored the legislation in part because the “fallout of COVID closures accelerated the demise of the Wausau Center Mall and led to city officials and stakeholders developing new plans for the site.”
Snyder’s narrative echoes that of Wausau Economic Development Director Liz Brodek, who in November claimed the pandemic “caused the mall to close at a pace no one expected.”
But Brodek’s statement that the pace of the mall’s closing was impacted by COVID and, therefore, unknown or unanticipated, appears to be directly contradicted by emails between Wausau Opportunity Zone, the entity that now owns the mall property, and city officials obtained through an open records request.
According to internal WOZ board records, the group was already planning on demolishing the mall in June 2020, just a few months into the COVID-19 pandemic. Those emails indicate demolition was planned for 2021. Interactions from April 2020 also include a discussion on “diagrams that have been started,” plans that appeared to also center on mall demolition.
Tax increment financing is a hotly debated topic by lawmakers and economists. Proponents say that TIF promotes public-private partnership as real estate developers, neighborhood groups, and local government officials work together to deal with fiscal and structural problems in the community and restructure otherwise deteriorating neighborhoods.
However, TIF is prone to several pitfalls. In practice, TIF often captures some revenues that would have been generated through normal appreciation in property values, even without the TIF-funded investment. This over-capture of revenue diverts resources away from public services citywide, according to Will Jason, of the Lincoln Institute for Land Policy. Cities also sometimes exploit TIF to obtain revenues that would otherwise go to overlying government entities such as school districts, he said.
In addition, Jason said, TIF can make cities’ financial decisions less transparent by separating them from the normal budget process. In Chicago, for example, $660 million — nearly a third of the city’s property taxes — go to TIF districts, making public scrutiny of these funds more difficult and preventing elected officials from re-prioritizing the spending. And according to Good Jobs can divert huge sums of property taxes from schools for long periods of time.
During the time that TIF projects are active, overlapping jurisdictions receive property tax revenues on base property values only. They do not receive tax increment dollars, yet they must spend more to cover local service costs because of redevelopment projects in the TIF jurisdiction, and while they might benefit from TIF ultimately, these benefits tend to be many years into the future, a Brookings Institute study reports.
Dist. 7 Alder Lisa Rasmussen said if passed, the bill would allow Wausau to “move projects forward in partnership with the private sector to generate some new growth, which has been lacking since the onset of the pandemic when a lot of things were stagnant.”
The Wausau City Council in October 2019 approved a proposal by WOZ to purchase the Wausau Center with $1.6 million in taxpayer-funded incentives that included a $1 million forgivable loan and transfer of city-owned assets to the LLC for $1. Those assets include the former Sears building, which the city purchased in 2017 for roughly $650,000.
Then in November 2020, the Wausau City Council approved a proposal to spend an additional $4.7 million to help fund demolition and redevelopment of the mall space.
A decision by city officials to apply for a $10.5 million grant to fund a pedestrian bridge envisioned by WOZ as part of the mall redevelopment project was met by no shortage of criticism in the community. The Neighborhood Investment Fund grant program, announced by Gov. Tony Evers in August, aims to help communities deliver innovative public services, including new or improved facilities. The fund is largely intended for housing, child care, transit solutions and increased access to healthcare in response to the COVID-19 pandemic, though “improved outdoor spaces” also fits the criteria.
Groat did not respond to a request for comment by press time.