At last night's council meeting, two citizens spoke up about the Experimental Aircraft Association's request for Tax Incremental Financing (TIF) assistance to build an exhibition hall. Both opposed the request, as did former councilor and UW economics prof Kevin McGee in the June 8th Northwestern.
The request is fascinating in that it's the first time I've seen an applicant acknowledge that the development will take place even without the TIF. One of the foundation principles of the state's TIF law is that TIF should only be granted if development will not take place without it. The EAA proposal says: "The situation is atypical in that development will occur with or without TIF, it just will not occur at the cost outlined in this proposal without it . . . EAA has committed to this project. It will occur with or without TIF assistance . Without TIF assistance, however, EAA will be forced to cut costs from the Project because it was conceived based on certain assumptions, including securing TIF . . . Without TIF assistance, EAA would cut costs on the Exhibit building, which would result in it being less desirable for non-Air Venture events . . . The Exhibit building without amentities/TIF will not have bathrooms, meeting space, climate control, or aesthetic upgrades. The building with TIF will."
After McGee's piece appeared, a man approached me in the grocery store and asked, "Is the bottom line that if we want people to be able to take a crap at the Exhibit hall, we'd better approve the TIF?" We were near the aisle where they sell Immodium, so I told him to pick some up to bring to the Exhibit Hall in case the council votes down the proposal.
Please contact councilors if you have views on the EAA TIF plan.
During the Sammy Hagar era, Van Halen did have a good song with airplanes in the video. If nothing else, this post at least allows an opportunity to share that.
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14 comments:
Can you print the text of the TIF proposal? I would like to read through it and I give an informed opinion.
Thanks.
Found this article to be of great interest-
http://www.aero-news.net/index.cfm?ContentBlockID=9fc8721b-25ac-4a66-a7e3-4d458ff3d0f7
"The Oshkosh Northwestern reports the Experimental Aircraft Association recently asked city officials for close to $2 million in tax incremental funding, or TIF, financial assistance to construct two expanded, two-story exhibit buildings, which would link the four existing exhibit hangars in pairs.
The extensions -- part of a 10-year, $17.2 million upgrade project at Wittman -- would result in nearly 150,000 square-feet of additional, indoor exhibit space... complete with indoor plumbing, air conditioning, and meeting areas.
EAA spokesman Dick Knapinski told the paper the group plans to build one of the exhibit buildings with or without TIF aid. If the plan is approved, EAA would recoup $1.94 million in assistance after the improvements are made, with the money coming from property taxes generated over 20 years in the proposed TIF district."
The word "recoup" stands out. And the fact that they would proceed with or without (but leave air conditioning and bathrooms out).
I'm still on the fence. I'd like to read the request proposal. Many questions...
On the fence? You're sounding more like a politician every day ;-).
Seriously, the "but for" test is the most fundamental principle of TIF financing. "But for the TIF, would the development take place?" When an entity acknowledges up-front that the development will take place anyway, TIF on the surface would seem inappropriate. In awarding TIF in the absence of meeting the "but for" test, we could be setting a dangerous precedent.
The proposal is too long for me to scan in. Perhaps the Northwestern can place the proposal on their site. Also would be interesting to see if their editorial stance on the Chamber purchase was an anomaly or if they really are interested in dismantling the "business as usual" mindset, in past years, would have gotten the Chamber building purchased and something like an EAA TIF with little or no debate.
Sounding like a politician? *L*
Like you said, TIF law is pretty clearly spelled out. So are industrial revenue bonds.
What really piqued my interest were the "excemptions"- "Exempt" projects such as water, sewage and solid waste disposal facilities, do not have to comply with the $10 million limit.
(I posted some TIF info with links on the "EAA TIF thread" on the ONW forums)
I hope ALL of the councilors not only read the requirements for TIF qualification and industrial revenue bonds, but demand that the Joint Review Board satisfy the "but for" clause.
Even on the surface, it appears that there is going to be some "creative" financing in order to meet the bond limits.
I keep getting the "what's wrong with this picture" feeling. The numbers aren't adding up.
And that's why I said "I'm on the fence". --I want someone to come out and tell me why/how this is going to work. And how it qualifies for a TIF.
Here's more info for anyone who's interested:
http://www.revenue.wi.gov/pubs/slf/tif/5-1.pdf
Off topic-
But you're the anti-corporate media voice in town.
Check this out-
http://www.truthdig.com/report/item/20080611_this_way_to_better_media/
I have mixed thoughts about this. Just as you, I couldn't believe it when EAA acknowledged publicly last week they would build whether or not they received TIF money. That a project would not go forward without TIF financing is a key criterion for some decision-makers, though I don't believe it's statutory. On the other hand, EAA tells it like it is, without using PR folks to massage the message - and they get crucified. What message does this send?
Jo,
The "but for" criterion IS statutory. It's included in chapter 66 in the description of the responsibilities of the review board:
66.1105(4m)(b)2.
2. Except as provided in subd. 2m., no tax incremental district may be created and no project plan may be amended unless the board approves the resolution adopted under sub. (4) (gm) or (h) 1. by a majority vote within 30 days after receiving the resolution. The board may not approve the resolution under this subdivision unless the board's approval contains a positive assertion that, in its judgment, the development described in the documents the board has reviewed under subd. 1. would not occur without the creation of a tax incremental district.
The city can offer financial assistance with industrial revenue bonds.
I'm still waiting for "someone in the know" to publicly explain TIF qualification ((city attorney?, director of the dept. of community development?, anybody?).
There are great benefits to be had for all if the EAA can secure financial assistance.
Beside the statuary obligations of a TIF, my greatest concern is that if TIF is approved when the EAA has already stated that they would proceed with or without TIF, the city would be setting a precedent for any developer or business who is looking for a way to recoup construction costs on the taxpayers dime.
We (city/state/private investors) need to look for other ways to assist them with financing other than TIF.
CJ,
Are you sure that the city can issue industrial revenue bonds in situations like this? I thought only Winnebago County could issue those. No time to look it up at the moment.
Thanks for the input. --Tony
Tony,
From the Dept. of Commerce site:
http://commerce.wi.gov/BD/BD-IRB-overview.html
The Department of Commerce's Industrial Revenue Bond (IRB) Program allows all Wisconsin cities, villages and towns to support industrial development through the sale of tax-exempt bonds. The proceeds from the bond sale are loaned to businesses to finance capital investment projects at, primarily, manufacturing facilities. Even though IRBs are municipal bonds, they are not general obligations of the municipality. The company or business that will use the facilities provides the interest and principal payments on the loan. The local government is in partnership with the business, lending its name, but not its credit, to the bond issue.
What projects are eligible?
Federal law defines eligible projects. IRBs are a means of financing the construction, expansion and/or equipping of, primarily, manufacturing facilities. Manufacturing generally includes nearly every type of processing that results in a change in the condition of tangible property. The proceeds of the bond issue may be used to finance the cost of land, construction of new or expanded facilities, purchase of equipment, and the payment of certain costs incurred in the issuance of the bonds. Prospective IRB users should consult with bond counsel on project eligibility and the use of bond proceeds.
More info on the website.
You could contact Elizabeth Hartman, director of CHAMCO. CHAMCO assists in application and aquisition of IRB's,
On OCAt she mentioned that the areas in the development proposal are zoned industrial. (Unless I misunderstood)
CJ,
I did speak with Hartman almost 2 weeks ago, and I thought she said that Oshkosh does not participate in the IRB program, but I might have misunderstood or we might be talking about two different things.
http://www.chamco.org/default.asp?id=13
(paragraph 3)
"Assisting in the application and acquisition of Industrial Revenue Bonds (IRBs), Chamco offers businesses convenient, long-term, and fixed-rate financing for the acquisition of industrial facilities and equipment. The interest earned on IRBs is exempt from federal income taxes. Chamco will aide with negotiating the terms of the bond to meet the needs of the borrower."
??????
http://www.1490wosh.com/
Council Preview The Oshkosh Common Council will learn more tonight about the EAA's plans for expanding their display areas at Wittman Airport. The group is requesting about $12-million in industrial revenue bonds that would be secured through the city, and close to $2-million in TIF district funding for infrastructure improvements. The council will hold a public hearing on the EAA request tonight, then vote on it June 24.
CJ,
Thank you. I think what Hartman and I were talking about was/is the Winnebago County Industrial Development Board's Revolving Loan Fund. I'm not sure how that works, but I don't think the city of Oshkosh participates. Thanks again.
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