Damakant Jayshi
Two Wausau committees this week approved keeping a tax increment district slated for closure open for another year to help fund affordable housing projects in the city.
Both the Economic Development and Finance Committees approved the measure for TID 6, allocating about $4 million in estimated tax for 2024 for such projects. The Wausau City Council will consider the recommendation later this month.
The TID was set to close a year earlier than its projected timeline of 2025 because it has paid for all of its expenses, said Finance Director Maryanne Groat. “By law, once you have funded all of your expenses, it’s time to close the district,” she said.
The measure calls for Wausau to extend tax collection for a year and use the entire amount toward funding four housing projects: Riverview Lofts, a 56-unit housing project at the former West Side Battery site; a Thomas Street affordable infill housing project that seeks to create nine units; the 700 Grand Ave. project for 50 units; and a project on Sherman Street with between six and eight units planned. Of these, the projects on Thomas and Sherman have been allocated ARPA funding.
Alder and Economic Development Committee Chair Sarah Watson said that since some of the projects were to be funded through ARPA and its allocation needs to be committed by 2024, it made sense to extend TID 6.
Under Wisconsin Dept. of Revenue rules if the TID is extended at least 75% of the resulting revenue must be used for affordable housing and the remainder on housing in general.
State statutes also require that affordable housing costs cannot be more than 30% of household income, Groat said. When Alder Chad Henke asked if the city has to use the district’s funds in a year, Groat said that there is no spend down date. The only requirement, she said, was to allocate the money to specific projects.
The city’s community development staff said that after consultation with experts, they concluded that the lead service line replacement project qualified to receive the 25% in remaining funds. But several committee members disagreed, saying that the lead line replacement initiative has other sources of funding.
Alder Tom Kilian suggested using the entire amount collected from any TID 6 extension to fund affordable housing projects and formalize it. The lead replacement program is expected to cost about $80 million, with each of the 8,000 lines reflecting a $10,000 cost. The 25% of funding from TID 6 would have a small impact on that program, but could be substantial for affordable housing projects, he said.
Alder and Finance Committee Chair Lisa Rasmussen agreed, saying the difference in the impact for affordable housing and LSL replacement was significant. She said that if the city opted to keep the district open for another year, it could do it all by itself. But if city officials chose a different option – reducing the district’s size and then extending it – the Joint Review Board would have to be involved.
The housing projects slated for funding are not within a half-mile of TID 6, which would automatically qualify them to receive the district’s levy. But Community Development Director Liz Brodek said the increment can be used for any project in the city, with about $5.3 million in outstanding funding required for those developments.
Tax increment financing, or TIF, was created to spur development in blighted areas by declaring them TIF districts, or TID. The program subsidizes companies by refunding or diverting some of their taxes, or consumer-paid taxes, to pay for re/development in a “TIF district.” In some states, TIF is frequently used – and is also very controversial, according to Good Jobs First.
For the life of the district, which can extend for 20 to 30 years or even longer, any increase in property tax revenue in the area goes into a fund that’s set aside for development projects. The logic is that new development will increase property values, generating revenue that the city can use to subsidize development.
