TIF: An insider’s perspective

Before being elected to the Oshkosh Common Council in 2007, I was well known among ‘Kosh policy wonks and the local establishment press as a critic of Tax Incremental Financing (TIF). Created by state statute in the 1970s, TIF’s original purpose was to provide Wisconsin’s cities and villages with tools for recruiting and retaining a high wage industrial base, and for assisting private redevelopment of blighted, urban areas likely to continue on a downward spiral absent government help.

By the 1990s TIF had (d)evolved into a corporate welfare program far removed from its original purpose. TIF became a “sweetener” for developers who could have moved forward even without taxpayer assistance. Local governments failed to demand solid proof of TIF need, and many even used the tool to support retail developments in rural, non-blighted areas. Instead of halting TIF abuses, the state legislature in 2004 expanded the program to include support for mixed-use developments that need not even be in blighted areas. Across the state more than 1,400 TIFs have been created since the 1970s, with about 100 new ones added annually.

As an outside critic, I was shocked at how little interest the establishment media showed in telling the truth about TIF. As a Council member, I now see TIF from the inside. From an insider’s perspective, the establishment press coverage of TIF is appalling, embarrassing, and against the public interest.

In Oshkosh we have before us a proposal for TIF to support development of a big-box Shopko retail store and apartment complexes in a non-blighted, north side of town. TIF in this case amounts to a tax deferral benefit enjoyed by few individuals or businesses.

The developers took out a full page ad in Gannett’s Oshkosh Northwestern urging people to “tell your council members to vote YES for progress.” The Northwestern contributed a cheerleading editorial in support of the plan, along with a front page story on “pay-go” TIF that relied on pro-TIF advocates as sources and presented the views of not one critic. Councilors then received a wave of pro big-box email, with almost all the writers not even aware of what TIF financing means in this case. I ended up replying to each person with this:
Thank you for your email. Here is where I am on this issue at the moment:

The major issue for me on the Shopko plan is whether or not it should be financed via Tax Incremental Financing, a topic which has unfortunately received incomplete and misleading coverage in the local paper. TIF assistance for Shopko means that they would be benefiting from governmental assistance that no other big box retailer in town has received. My understanding is that a hardware store would also benefit from the TIF, a fact that would be of legitimate concern to Kitz and Pfeil and other hardware stores in town that have never asked for nor received government assistance. An optometrist and restaurant might also benefit.

Equally as important is the fact that the moment we say “yes” to Shopko for a TIF, it becomes very difficult (probably impossible) to say no to any other retailer who wants such assistance. Indeed, the Walgreens down the street should ask for TIF also since we would be financing their pharmacy competition at Shopko.

TIF, as you probably know, means that tax dollars that would normally go to the city’s general fund (to pay for police, fire, roads, etc.), the school district, the technical colleges, and the county, would instead go toward the costs of the Shopko development. That would go on for as long as 20 years, at which time the tax dollars would finally go back to the entities I mentioned. I suppose we could TIF the entire north side of Oshkosh in the name of economic development and increased shopping opportunities, but the impact on our city budget would be enormous.

We also will need to get some assurances from Shopko (more than verbal) that they will NOT close the west side store – or at least will pay for the cost of razing the building should it close. I’m not sure they will be willing to offer such assurances.

I live on the north side, and would personally benefit by being only 1.5 miles from the proposed site. But I will have to weigh that against the long term consequences to our city of going down this TIF road. TIF was never intended to be used this way, at least when the incentive was created in the 1970s (its purpose was to support redevelopment of blighted, inner city areas).

I do hope that if a majority of the council does approve the TIF, we can at least reach some kind of compromise in which the TIF will mature in 10 years instead of 20. Very few big boxes remain in one location for 20 years, and I think we should be cognizant of that when we make these kinds of deals.

Most people e-mailed back a reply thanking me for exposing them to a perspective on the issue they hadn’t thought about. How sad that, on TIF at least, citizens can’t count on the establishment press to provide a range of perspectives. We deserve and should demand better.

Tony Palmeri (tonypalmeri.com) is an associate professor of communication at UW Oshkosh and holds a seat on the Oshkosh Common Council.