RACINE — Typically, a tax increment district or TID is created in an area needing new development, whether residential, industrial or commercial, as an avenue for raising funds to incentivize new construction.
But Mayor Cory Mason stated that in doing research for the two new TIDs the City of Racine is proposing creating, he found that TIDs were initially created to fund rehabilitation and stabilization of residential neighborhoods.
Instead of spurring new development, funds from the two new proposed TIDs would be made available for voluntary residential home improvement loans, investing in infrastructure and growing the tax base in those neighborhoods.
How does this work?
TID No. 22 is located on the city’s north side, bordered by the lake to the east, roughly the corner or Rapids Drive and Northwestern Avenue to the west, Melvin Avenue to the north and Rapids Drive and Goold Street to the south.
The other, TID No. 23, is on the city’s south side and is bordered by 12th Street to the north, DeKoven Avenue to the south, the lake to the east and Center Street to the west.
When a TID is established, the city sets the base value of the area. As property values go up, that money could be set aside and used for specific projects in the area.
In this case, the base value would be set with what values were at the beginning of 2019 and the increment that could be invested would include property assessment increase in the TID area that occurred this year. Throughout the city the increase was roughly 8%.
According to draft project plans for the TIDs, $14.7 million in TID No. 22 and $4.48 million in TID No. 23 would be available to the residents of those TIDs as loans or grants to fund home repairs, similar to the Rebuild Racine program which was launched last spring.
Rebuild Racine is funded by the $680,000 the city received once TID 8 closed in 2018. Mason classified the program as an “enormous success” but is only funded for one year.
In designing TIDs 22 and 23, Mason said the city was looking for neighborhoods that are, “in distress, but with healthy enough increments to sustain a project like this.”
Over 50% percent of the properties within those districts were classified as average condition or less. In TID 22, approximately 69% of the properties were average or less condition; In TID 23, it was approximately 64%.
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Similar to Rebuild Racine, city spokesperson Shannon Powell said the loans or grants will be available to owner occupied homes, not rental properties.
Another $4.9 million in TID 22 and $1.49 million in TID 23 would be available for infrastructure projects, such as roadway resurfacing, curb and gutter repair, stormwater and sanitary sewer upgrades and more.
An additional $1 million in TID 22 and $650,000 in TID 23 will go toward administration of the TID.
Alderman Sandy Weidner of the 6th District, said she wasn’t consulted in drawing the boundaries for the TID and is concerned that the area of her district that is included in the district does not require the services the TID would provide.
“My concern for my portion of the 6th district is that they’re going to paying but they’re not going to be receiving,” said Weidner. “This is a real re-distribution of wealth.”
Weidner said there are neighborhoods in her district that could benefit from a home repair grant or loan but she’s unsure if a TID is even the best approach for funding such a program.
On Monday, the city formed a Joint Review Board for the formation of the new TIDs. A public hearing was also held at a special Plan Commission Meeting held on Monday.
According to the timeline given on the proposal, the city hopes to bring the proposed TIDs before the City Council at its meeting scheduled for 7 p.m. on Sept. 30, City Hall, Room 205.
After the City Council, the Joint Board of Review’s second meeting regarding the proposed TIDs is scheduled for 4 p.m. on Oct. 7.
Some have expressed concern that the TID would divert money away from city operations that could otherwise be used for health care. But Powell said that is not how a TID works.
“Under the levy limits imposed at the state level, the state does not allow the City to capture increases in assessed value for purposes of increasing the levy. The only way to increase the levy is through net new construction (meaning new development, outside of a TID) and we do not have significant net new construction happening at this point to make a significant impact to the levy,” Powell explained.
“The TID allows us capture the increment within the border of TID to use for very specific things as outlined in the TID plan ... We are banned from using the increment generated in a TID for general government operating expenses, unrelated to the planning or development of tax increment district.”
He said: “In short, there is not a way to use the increase in home values for operating expenses, such as health care.”