Much of the feedback about the proposed Hy-Vee grocery store on the southeast corner of Woodland Drive expressed excitement about that store coming to Waunakee yet with the caveat that the developer be denied Tax Incremental Financing.
That tool has often sparked controversy, but it is perhaps the only one municipalities can use to encourage new development.
Within a TIF district, property values are frozen at the predevelopment rate. The municipality or the developer can borrow funds to aid with infrastructure costs such as grading, new roads and electrical, water and sewer extensions. Borrowing is then repaid by the added tax increment resulting from the increased property value.
TIF was created not so developers could stuff their pockets with this cash; instead, it is meant to bridge a financial gap for development costs and create a larger tax base for the community. At the end of the district’s life, the full value of the redeveloped property returns to the tax rolls.
Depending on the type of district, the district’s life must close within 20 to 27 years.
The development also creates construction jobs, and where manufacturing, office and retail facilities are built, long-term employment. In some cases, TIF can also help municipalities pay for the costs of road construction, such as the Hwy. Q project where a safer intersection at West Woodland Drive was included, along with stoplights and sidewalks among other improvements.
In this case, Forward Development Group – not Hy-Vee – is the developer. Forward Development Group has other plans for the site, as well, including a coffee shop, offices and other retail, senior housing, multifamily housing and a few single-family homes. That developer has proposed concept plans for the site in the past, as well. This time, Hy-Vee is proposed to be an anchor of the new neighborhood.
Some oppose the use of TIF because they would prefer development occur without that delay in the value being added to the tax rolls. During the life of the district, it’s been said that new development results in increased school enrollment, added traffic and additional roads, creating more demand on public services without the additional tax revenue to pay for it.
Yet TIF is to be used only when the development would not occur without the incentive, often referred as the “but for” clause in the state law.
As the Waunakee Plan Commission and Village Board consider the Forward Development Group’s proposal, these will be points to consider. No action has been taken on the plan, and likely several more meetings will occur to determine whether shovels will ever reach the ground.