Supervisors offer opposing views on the issue
By Michael S. Hoey
Correspondent
The Town of Delavan is considering establishing a tax incremental district, an idea not unanimously supported by the Town Board.
The board discussed the option on April 20. The proposed TID would include the land near the intersection of County Highway F and Mound Road where Shodeen, Inc. plans to build a large residential subdivision called the Shores of Delavan Lake.
Administrator John Olson said the actual boundaries of the TID have not been determined yet, but he also said the idea for a TID came from Shodeen. He said Shodeen has said the development needs the incentive to move forward.
A motion to pay for a study to look into the possibility of establishing a TID at a cost of $12,500 was approved 3-2 with supervisors Kim Jedlicka and Lynnette Phillips opposed. Phillips later reached out to the Delavan Enterprise to express her concerns about the proposal. She said she thought town residents needed to be aware about what was being considered.
“As a supervisor, I feel it is imperative that I reach out to the community to let them be aware of what is being proposed and how it will affect them in the pocketbook,” she said. “I am only one vote out of five and I feel my hands are tied on this matter.”
Phillips said she feels strongly that a TID would not be a good investment for the town and it is not the direction the town should be going in. She said a TID would put the town in the position of lender for a business entity in the hopes that the arrangement will one day lead to additional tax revenue for the town.
Phillips said a TID is an incentive to businesses and they can work if provided to the right business or industry. She did not see a residential development like Shodeen as that type of business. According to Phillips, the town would, in essence, become the bank to the tune of $9 million for the infrastructure needed to get the development started.
One question Phillips has about establishing a TID for Shodeen is the need for the development. She said the area it’s slated to occupy does not need, or show a need for, the row houses that are planned in the development.
She said she also has seen many developments within the city and town of Delavan that remain empty and undeveloped. One subdivision that was established in 2008 in the town remains one-third empty. Phillips said if lots in an established subdivision are not selling, why would lots sell on what is now an empty corn field next to a farm?
Phillips also wonders what would happen if the Shodeen development never materializes. She said the town would be left holding the note for $9 million and there is no contract that could be written that would guarantee repayment to the town from Shodeen if the development fails.
“I am not saying that Shodeen does not have a good product or is not a good builder, I’m just saying it is not a good investment for the town to make,” Phillips said.
Phillips said adding municipal water to the development rather than individual wells has been suggested and would add another $5 million to the infrastructure costs to start the development.
“I for one am not willing to gamble away the hard working money of the townspeople on that investment,” Phillips said. “If we borrow that amount of money, we are also reducing the town’s credit rating.”
Phillips said the fear of losing land to the city through annexation has been a driving force of the desire to establish a TID. She said the town should go ahead and let the city take on that debt if it wants it.
“It’s better to let something go than to try to hold onto a piece of land with a bad investment to the town that ultimately lands on the shoulders of every taxpayer,” she said.
Phillips said she knows the Shodeen development would help address flooding issues on the inlet but taking care of that problem without the development would not cost the town $14 million or jeopardize the town financially. She also said that the storm water system that services any development in the area would be under the control of the county, so the town would be investing a lot of money in something it won’t even own.
Phillips urged residents to attend meetings and get involved as she represents just one vote.
A different viewpoint
The only other supervisor to reply to a request for comment was Katherine Gaulke, who took the opposite view. Gaulke said there are some areas of the town that will never be developed “but for” a funding mechanism such as a TID.
One example Gaulke provided of such an area is the southeast corner of the intersection of highways 50 and F near Dairy Queen. She said several developers have looked at the site but a hurdle to development has been the planned rerouting of Highway F to make the intersection safer.
The necessary roadway improvements that a developer would have to pay for have, according to Gaulke, deterred development and if the area was included in a TID, a developer could get help that could lead to the land getting developed.
The town, according to Gaulke, had two consultants weigh in and both of them concluded the area Shodeen has proposed developing will not be developed by Shodeen, or anyone else, without a financial incentive.
Gaulke said a TID would help the town retain land by protecting it from annexation and allow for the town to have funds to invest in infrastructure and other needs without raising property taxes.
She said TIDs are the primary development tool for municipal governments to encourage private development because they make certain projects viable by using public funds to pay for infrastructure improvements and other project costs. The investment is paid back to the municipality with an increased tax base from the development that otherwise would not have happened.
Gaulke said a TID in a rural area is not uncommon. She said it’s an option that allows a municipality to fund infrastructure improvements through property tax revenue on the newly developed property and TIDs have become popular in townships.
“The Town of Delavan is a large town and it makes sense to utilize the TID option,” Gaulke said.
Annexation by the city has led to the town absorbing the burdens of the city development without receiving the increases in assessed valuation or the corresponding property tax revenue that pays for those burdens, Gaulke said.
Those burdens include additional costs of traffic, police, fire, public works, storm water flows and water quality issues in the lake.
Gaulke said the key for a successful TID for the town would be to find a willing partner that has the financial strength to stand behind the financial incentive and has the experience and track record to complete a development.
Gaulke disputed the idea that the current consideration of a TID is solely due to the Shodeen development. She said there have been several developments that have stalled over the years due to infrastructure costs and the idea of forming a TID has been around for a while.
As for the Shodeen development, getting it done would ensure the retention ponds that are a required part of the development would be built to reduce flooding and improve lake water health. Gaulke said if the development could have happened without a financial incentive it would have by now. She also said creating a TID would keep the Shodeen development from being annexed into the city.
