RACINE — The City of Racine is getting creative in its efforts to prevent potential federal budget cuts from sinking its affordable housing initiatives.
Taking advantage of a provision in Wisconsin statutes, the city plans to extend Tax Increment District (TID) No. 8 to improve affordable housing stock in 2019. City Development Director Amy Connolly, at Monday’s meeting of the city Finance and Personnel Committee, proposed the one-year extension of the TID, which expires on July 17. The committee unanimously recommended approval of the plan.
The TID was created in 1990 to revitalize the State Street corridor and has generated more than $12 million over 27 years, according to a City Development Department memo. It spans much of the length and surrounding area of State Street, from its intersection with Forest Street (just south of Spring Street and just west of North Memorial Drive) to the Root River.
“Wisconsin statutes have a provision that if you have a tax-increment district that is ready to expire, you can extend it for one year, only if the purpose is to improve affordable housing,” Connolly told the committee. “Those monies can be used anywhere in the city, not just within the tax increment district.”
The city projects the TID will generate $625,000 in the additional year, which will go toward housing funds the following year. Connolly said that beyond this being an available option for the city to take advantage of, the TID extension will help safeguard against potential federal low-income housing cuts expected from the Trump administration.
“Those funds are always debated at Congress and every year they come to us later and later and later,” Connolly said. “Right now, we don’t expect to get this year’s (federal funds) until August.”
The money from the extension could also replace Neighborhood Stabilization Program (NSP) funds, which have expired and will not be renewed, according to Connolly.
“NSP, which funded our programs for many, many years, has now expired and there’s no more money coming to us,” she said. “This would be a way for us to use the existing regulations and processes that we have for NSP to do more housing for our community.”
The extension would benefit 2019’s budget because “you’re always in arrears” with TIDs, according to Connolly.
“You have to create the district and then a year has to pass and the tax increment has to be created and then you can spend the money,” she said.
Where the money is targeted
According to a memo, Connolly and her staff seek to use the additional money in two ways: for homeowner housing development and homeowner code compliance grants. The department further recommends that 75 percent of the funds, a projected $468,750, be used for the former purpose and the remaining 25 percent, or an estimated $181,250, for the latter.
“They are two programs that we currently do within our organization, but we would use more funding to do more projects in each of those areas,” Connolly said.
Sixth District Alderman Sandy Weidner, who attended Monday’s meeting but is not a member of the committee, asked Connolly to inform “other taxing bodies” through the Joint Review Board of the plan before the City Council considers the extension next week. Connolly replied that she could send a letter to the taxing bodies, including the Racine Unified School District, Racine County and the Gateway Technical College District, even though she’s not required to do so by state law.
“As a measure of good faith, I’d like to see that happen before the council takes an action on this,” Weidner said.
According to the state Department of Revenue, under the provision of a TID, the other taxing bodies have their tax revenue rates for the targeted area frozen at the level before the TID was enacted, while the city collects incremental increases in property revenue to fund civic improvements. The end idea is once the TID expires, all taxing bodies will reap the benefits of increased property value.