We had the first COW meeting of the new council this past Monday night and I’d like to share some of my thoughts about this meeting. Many of you were there, and I hope you had an opportunity to speak if you wished to do so. In my campaign, I promised to support transparency and to spend the city’s money wisely. Both of these promises were put to the test Monday night.
Let’s start with the Marquette School property. Even before the meeting the Mayor disseminated a press release to Facebook and the media without notifying the council. The press release was both misleading and in parts, simply wrong. I have received comments from people in my district wishing to mow the lawn for the city, given the price the Mayor says he pays. The city came up with those numbers based on a $50/hour wage. But even with the most generous time estimates for lawn mowing and snow removal, $7,000 is grossly exaggerated. But the local news reported the numbers from the press release without critique or scrutiny.
To understand the issues for the Marquette School site, you really need to understand that the land has been put into a TID (Tax Increment District). This is important because this means that any taxes generated by this land, if developed, will only go to pay off a loan called a TIF (Tax Increment Fund) for the next 20 years at least. This is a loan that the city has to pay back. The TIF loan is not for razing the old school or mowing the lawn or paying off existing loans. It’s a new loan to pay a developer to build homes at the city’s expense. The developer gets the home sale profits and has up to $1.5 million of seed money from the TIF to develop these homes.
I have had people pose the following statements/questions to me:
The city needs tax revenue on this property to pay for Marquette School demolition.
No. Taxes from development on the Marquette property are earmarked first for the developer. Up to $1.5 million would go to any developer. The city used grants and loans to pay for the demolition. New taxes on Marquette property will not pay for the demolition costs. The TIF loan which finances the developer has to be paid back, but funds from improved property will not go into the city’s coffers. They will go towards paying off the developer’s costs.
Homes on the school site will lower taxes for everyone else.
No. Your taxes will go up. The money collected for this site is explicitly not going to schools, nor is it going to a hundred other city expenses. The bulk of these taxes are going to two developers. One developer wants to build the duplexes on the school site, and another developer would like to build a hotel and spa downtown. The TIF loan will be in place for the next 20 years at least. So the tax money for this property will not help our property taxes for at least 20 years.
But the city will get money by selling the land to the developer.
Mostly no. The city in incented to sell the land for as little as possible. If the city sells the land for as little as $10,000, the TIF can get most of the money, since the improved incremental value goes to pay off the TIF. And that money goes to pay off the developer’s costs. If the city had to take the highest bid in an open auction, that money could offset the cost of the demolition loan, or lower property taxes, whichever the city would choose. Judging from vacant lot property values in the area, the land is worth at least $80,000, and maybe more. The city has already paid around $77,000 for a house on a much smaller lot that they plan to tear down.
The city plans to build affordable housing.
The mayor’s press release said that he is expecting “at a minimum $61,176 annually in tax payments”. If you divide this by the eight proposed properties, that comes to an annual property tax of $7,647 per home. Given the $225,000 proposed price for these homes and the large annual taxes, these cannot be considered affordable housing.
My information may not be what you are hearing from other sources. I refer you to the public document made available to the council for the May/June 2020 city meetings entitled:
Project Plan & District Boundary
Tax Incremental District No. 3
In the City of Kewaunee, Wisconsin
In this document the residents of Kewaunee were promised a chance to participate in deciding the use for that land. I have heard many ideas for Marquette land use. The Council voted for this document, which states that the site be used for “Mixed use, Independent Senior Living and/or Assisted Living Center, New Library, or Condominium Row Houses”. I will send you a copy if you request it, as it’s difficult to find on the city’s website.
Finally, if the TIF is used to develop this land, the city will take out a new loan for $9 million dollars, which, by the way, will not have to be counted against the city’s debt cap. All incremental tax increases for the next 20 years at least, will go to pay off this new loan, which will be used in large part to pay developers. All other city property taxes are likely to increase to make up for tax dollars NOT being allocated to schools, county etc.
I know this is a complicated issue, so please let me know if you have any questions.