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Taxpayers Get What Was Previously Promised, Meijer TID Rejected

By a vote of 5 -3, at its September 17 meeting, the Manitowoc Common Council rejected the inclusion of the Meijer parcel in a contentious Tax Increment Financing District that the City was proposing.  This article will provide some background, some resources, and some opinion-driven analysis of this issue and this decision.

First, some background. You probably recall back in 2016 when the County made the controversial (to some) decision to sell part of the Expo grounds to the Meijer Inc. for the purpose of building a grocery store. This parcel is somewhat unusual in that it is located in the City of Manitowoc, but was owned by Manitowoc County. So, it was the County’s decision to sell the parcel, because they owned it, but the City has certain oversight rights over the parcel, because it is within the Manitowoc City limits.

One of the many arguments made in favor of selling this parcel to Meijer was the Meijer was not asking for any public money—Meijer was willing to pay for all of the site improvements and the costs associated with building their store.  This was different from some other businesses that come into a city and expect the city to help finance their development, but is not unusual for many developments.

Fast forward to 2018 when the City decided to propose a new Tax Increment District (TID).  This TID, to be called TID 22, was to encompass several parcels on the southwest side of Manitowoc, including the Investors Community Bank headquarters, the movie theater parcel, some parcels along Calumet Avenue—and the Meijer parcel.  It is shown below, and the parcels labeled 1, 2, and 3 (north part of district) are owned by Meijer:

Here’s an example of how TIDs work.  If you live in the City of Manitowoc (for example), when you pay your property taxes, a portion goes to the City, but portions also go to Manitowoc County, the Manitowoc Public School District, and the Technical College District (LTC) in prescribed percentages.  In a TID, the municipality spends money to make public improvements—roads, sewers, etc.—to spur development.  If development does happen, the additional tax monies that are generated by the increased value of the parcel (the value “increment”) go solely to the City until the costs of the public improvements are paid off—which is often in excess of 15 years.  The terms “TIF” and “TID” tend to be used interchangeably.  TIF (Tax Increment Financing) is the financial mechanism, while a TID (Tax Increment District) is the geographic area involved.  If a municipality approves a TID, it must subsequently receive approval from the Joint Review Board (JRB), a group of five with a representative from each of the four taxing authorities plus a citizen member.

The reason that the County was so upset about the City’s proposed inclusion of the Meijer parcel into TID 22 was that all of the new tax money generated by the Meijer parcel once the store is built would go directly to the City—rather than having a portion also go to the County, the School District, and the Technical College District. The County feels that this was not consistent with what voters were first told by City officials upon sale of the parcel, and the County feels that they should be receiving their portion of the additional tax revenue.

At the Council meeting, Ald. Mike Williams proposed an amendment to take the Meijer parcel out of TID 22, and after a spirited discussion among all 8 aldermen present, the amendment passed 5-3.  Aldermen Novak (District 3), Lotz (7), Williams (8), Czekala (9) and Gabriel (10—she was actually allowed to vote!) voted in favor, while McMeans (2), Brey (4), and Sitkiewitz (6) voted against.  Howe (1) and Kummer (5) were absent.  Once the amendment passed, several Aldermen argued that it was no longer worth establishing the TID without the Meijer parcel, and the vote to establish the amended District failed unanimously.  (A video recording of the meeting can be found at the footer of this article, and is very much worth watching.)

There is something very revealing about the fact that all three of the aldermen who wanted Meijer to be in TID 22 voted against the TID once the Meijer parcel was taken out. These aldermen were clearly wanting to use the successful Meijer development to fund improvements in underdeveloped or undeveloped parts of the TID.  These politicians were furious that the County Executive pulled the curtain on their scheme.  They were especially miffed by the County Executive’s use of a comical childhood lollipop analogy to describe the plan in simpler terms.

Whether you think that this is the proper use of TID or a simple cash grab and example of “Robbing Peter to Pay Paul” probably depends on how you view the role of government in economic development, but I think that pure common sense also plays a role.

Meijer has said from the beginning that they would not seek any public funding in order to build in Manitowoc.  Several aldermen, Manitowoc’s mayor, and a particularly outspoken county board member have suggested that Meijer isn’t going to come to town unless we provide a financial incentive—where are they getting this information?  It seems weirdly impractical to me to offer an incentive to a business to come to town when they have already committed to come to town without an incentive.  To be sure—there’s concern because Meijer hasn’t built yet, and there’s a chance that they may not build at all—but is there any indication that the reason that they haven’t built yet is because they haven’t been offered public funding?

The argument from the pro-TIF crowd (not just on this project, but in general) seems to be that it’s impossible for growth to occur in Manitowoc unless we keep creating TIDs. This strikes me as absurd.  TIDs haven’t been around forever—How on earth did anything get built without them?  I’m certainly OK using TIF and other incentives if there is a likely partnership between parties and a high likelihood of a project being built.  But to simply establish TIDs with the hopes that they will be successful but doing so in the absence of a plan—as the City has been doing for years—smacks of real estate speculation rather than deliberate, realistic economic development.

When is it appropriate to use TIF?
Was a promise made to voters to keep the Meijer parcel out of a TIF?  If so, was there a time limit to this promise?
What are the best ways to promote growth in our area?

References:  –video of September 17, 2018 Council meeting where this item was discussed.  Public comments regarding the Meijer TID begin at approximately 13:30, while the Council discussion and vote on the topic (Agenda item 18-0973) begins at approximately 46:23— 2016 editorial by Manitowoc Mayor Justin Nickels encouraging the County to sell the Expo property to Meijer, and seeming to intimate that the City would not place the parcel in a Tax Increment District  –HTR editorial from County Executive Bob Ziegelbauer indicating that City officials were breaking a promise made to the public by proposing the Meijer TIF  –another HTR article summarizing the “he said/she said” aspect of whether a promise was being broken by City officials  –HTR article that summarizes arguments and alludes to the “lollipop” argument made by the County Executive that so incensed Manitowoc officials  –article summarizing vote on Meijer TID during Manitowoc Common Council meeting  –HTR editorial from County Board member John Brunner criticizing Council decision to take Meijer parcel out of the proposed TIF

If you have Facebook, there is also an excellent post by former D3 alderman Chris Able that gives some good historical background—Search on “Elect Able” and you should be able to find it.

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