By Michael S. Hoey
Correspondent
The Town of Delavan board voted to abandon plans to form a tax incremental district in the town that would move the proposed Shodeen development known as Shores of Delavan Lake closer to reality on July 6. Supervisor Katherine Gaulke was the only supervisor to vote in favor of the process moving forward.
Dustin Wolff of Mead and Hunt Planners gave a presentation and answered some questions about tax incremental districts at the Plan Commission meeting that preceded the special Town Board meeting. Wolff said TIDs are powerful tools that can help municipalities have a say in how a development is completed. He said a TID is an economic tool that can help a project happen that would not otherwise. He also said that a municipality can establish a TID without obligating itself to borrow any money right away. That step would come later if the board agreed to do so.
Wolff noted that the Shodeen development was approved years ago and has been stalked for a very long time. He said municipalities across the state use TIDs to help projects like this one.
In explaining how a TID works, Wolff said a common misconception is that a community’s taxes will rise because of the TID but that’s not true. He said when a TID is created, the property’s assessed value is locked in and the developer will continue to pay taxes based on that value for the life of the TID, usually 15 to 20 years.
The increase in property value over that time is called the “increment” and not being taxed on that value is the incentive for the developer to move forward. When the TID expires, the property will be taxed at the rate it is then valued at, which would potentially be much higher than if the land is never developed.
Wolff said municipalities borrow money to cover necessary infrastructure costs and the increment is used to pay that back over time. Shodeen had asked for the town to borrow $9 million so far. After the meeting, Administrator John Olson said that figure was certain to rise as the development grew. The actual amount the town was to borrow, Olson said, would have been negotiated as part of the approval of the project plan, which will no longer happen now that the board voted not to move forward.
Concerns discussed
Some discussion was had about if creating a TID and including the Shodeen property in it would keep it safe from annexation by the City of Delavan. Wolff said there was nothing in TID procedures that would keep a developer from annexing into the city if they so desired. Olson said that a draft developer’s agreement with Shodeen, however, included language stating Shodeen would not request annexation. Olson said he was confident Shodeen would have signed that agreement if it was approved.
Frank Jones shared several concerns about how a TID would impact the school district and municipal services as the Shodeen development grew. He said he believed a community needs to create jobs first that will attract people to fill new homes, not the other way around. He also suggested taxpayers could be stuck with the bill for whatever amount the town borrows for infrastructure improvements if the development never takes off.
“The town should not be in the business of financing a development,” Jones said.
The Plan Commission voted 5-1 to recommend to the board to dissolve the TID proposal and not move forward with it.
During the special Town Board meeting, Gaulke said some things were said at the Plan Commission meeting that she did not think were accurate. She asked Derek D’Auria, Executive Director for the Walworth County Economic Development Alliance, to speak.
D’Auria said municipalities compete with their neighbors for development and those that do not have tools to attract developers will see them go elsewhere. He said there is a need for affordable housing in the county and TIDs have less of an impact on school districts than one might think.
Supervisor Lynnette Phillips said as a realtor she did not consider homes priced at $350,000 to be “affordable” and even though she makes a living selling homes she has been opposed to forming a TID in the town from the start. She said housing is not an economic driver, businesses are. She also said people with $350,000 to spend will want to buy an acre and build on that rather than build on the small lots proposed by Shodeen on what is currently a corn field located next to a pig farm.
Phillips said there is no guarantee the town will ever get its money back if the development fails and the large scale of the development was not conducive to what most people come to the town for. She said if a developer wants something they should pay for it themselves and plenty of other developers have come to the town without asking for anything.
Gaulke said the Shodeen development all by itself would pay for the town’s costs related to the TID, but this discussion was about establishing a TID, not the merits of the Shodeen development. Gaulke said if the TID is not established, Shodeen might ask to be annexed by the city. If that were to happen the town would lose all control over how the land is developed and the eventual lots could become even smaller if they are city lots.
Gaulke said many in the town asked years after the town lost the Lake Lawn property to annexation how that came to be and who was responsible. She said 10 years from now people will ask the same thing if the Shodeen property is annexed by the city.
TID project dissolved
Phillips made the motion to accept the recommendation of the Plan Commission and dissolve the TID project.
Gaulke said that would be a bad idea as there are other properties being considered for the TID that would benefit from it even if the town were to decide to exclude the Shodeen property. She cited the property near Dairy Queen along Highway 50 as an example of land that likely will not get developed without some incentive. At a minimum, she said, a TID should be considered for that area.
Phillips’ motion passed 4-1 with Gaulke opposed.
After the meeting, Dave Patzelt of Shodeen said Shodeen did support the creation of a TID, He said TIDs are economic incentive tools used by cities and villages to create jobs and increase tax bases and recent legislation has put towns on more equal footing in creating them.
Patzelt said the town has been stagnant in growth with a lack of commercial development and a lack of the creation of jobs. Self-storage, which Patzelt said creates no jobs or sales tax, seems to be the only new commercial development in the town lately.
Patzelt also said the town is under pressure of being reduced in physical size due to the recent annexation request made by the owners of the property along Highway 50 across from Lake Lawn Resort. He said that trend is likely to continue.
According to Patzelt, a TID would help the Shodeen development come to fruition by allowing the increased tax increment generated by new developments to be used for public improvements as an economic incentive for the development of the site. The improvements, he said, would not cost existing taxpayers anything.
When asked if the development can move forward without a TID, Patzelt said it could. It has been zoned and platted and the vote not to move forward with the TID does not kill the project, he said.
“The project has faced many challenges and hurdles over the years,” Patzelt said. “We continue to believe in the development and the creation of the development.”
Patzelt said it’s unknown at this time if the failure to establish a TID will delay the project as compared to if the TID was approved, which would have been a process that would have taken several months to create and finalize.
