The village of Poynette has the opportunity to grow in the coming years.
One thing that is driving that notion is the planned West Ridge subdivision development on the village’s northwest side, which the Poynette Village Board recently said it was in favor of continuing the initial process with developer Randy Alexander and Torque Companies. Alexander presented a concept plan of the development at a May 23 meeting.
Village Administrator Craig Malin noted that Alexander was in the process of purchasing the land, listed at $1.7 million, as of the June 13 board meeting.
To help pay for that development, as well as creating even more opportunities for the village to grow, the discussion of creating a Tax Incremental District (TID) has started among the Village Board. The subject is also known as a Tax Incremental Financing (TIF) district.
All that was needed from the Board at the June 13 meeting, however, was approval for Ehlers Financial Advisors to begin Phase I of a study, to determine the feasibility of whether or not the village is capable of financially creating such district. The cost to Ehlers for the first phase is $6,000. Other phases won’t take place until the feasibility study has been completed, which will be reported to the Board at its July 25 meeting.
If the village is able, and wants to move forward, the other two phases would have the village paying Ehlers an additional $10,500, for a total of $16,500. The village has $15,000 budgeted in 2022 for such services.
Lisa Trebatoski, a Financial Specialist from Ehlers, was at the meeting to make a brief presentation and answer questions from the Board.
Phase I of the study will answer the simple question of whether or not the village can sustain a TIF district in the first place.
Malin did point out to the Board that every other incorporated municipality between the village and the economic core of the region — Madison — had at least one TIF district. The city of Sun Prairie has eight.
Malin then addressed the concern of whether the village was “dropping the ball” in this situation.
“We aren’t dropping the ball, because we aren’t even playing the game,” Malin said. “We have this opportunity because of the West Ridge development, but this can’t all be because of the subdivision.”
In many cases, developments within various municipalities would not be possible without the use of TIF money.
In Poynette’s case, the only way that residential can be included in a TID is if it comprises no more than 35% of the total acreage of the TIF district.
Poynette has the potential to receive $2.2 million in TIF money each year for the 20-year life of the TID.
The state adopted a TIF law in 1975, and was originally formed to have TIDs as redeveloped blighted urban areas, and to promote industrial development. The law was also created for municipalities to determine their future economical growth.
More in-depth discussions will happen at the Village Board level once the results of the study have been reported.
What is a TID/TIF district?
A TID (Tax Incremental District) is land related to development and redevelopment projects. Tax Incremental Financing (TIF) is the tool used to fund the TID. A TID is more commonly called a TIF district. The money can only be used for projects or improvements within the established boundaries of the TIF district.
Before the creation of a TID, the total value of the land is considered the tax base. When the property is improved, the new land worth — above the base value — is deemed the incremental value. Municipalities can conduct studies to determine if it is capable of supporting one or multiple TIF districts.
Once it is determined to be feasible, the creation of a TID has several steps, first of which is a resolution from the governing body — public hearings for citizens to discuss the plans are also necessary. The municipality’s attorney must also review the plan. Then, a Joint Review Board — made up of people including individuals from the school board, elected officials and members of the public — are to determine if the development in a potential TID would be possible without TIF money.
All taxes being paid to the school district, county, and the likes before the TID creation will continue to be paid at the current rates. The TID can then use the extra tax money from the new assessed value to afford those improvements.
For example, if a $200,000 property is the center for the TID, and later becomes worth $2 million through the incremental value, the taxing entities would still be paid as if the property was valued at $200,000. The leftover tax is then used to pay off any potential improvements. Property owners within the new TID pay the same tax rate as the rest of the municipality.
The only risk to residents is if the payments on the project are not paid off by the time the 20-year TIF district expires.