Data center-driven TIF referendum tops ballot

Port Washington residents will be asked Tuesday to decide whether a referendum should be held on any large tax incremental financing district considered by the city in the future — a measure prompted by residents opposed to the Vantage Data Centers Lighthouse Campus and the TIF district created last year for the development.

Supporters of the ballot question said the measure, if approved, will give residents a voice in large developments that require TIF funding. 

But those opposed to it said the wording of the question is vague and is sure to bring additional legal challenges while creating an atmosphere that could make it difficult for the city to attract new development by adding uncertainty to the creation of any new TIF districts.

The question on Tuesday’s ballot will not affect the Vantage TIF district, which was approved last year and will fund $459 million in primarily infrastructure projects for the project.

The ballot question asks voters whether the city should be prohibited from creating a TIF district that requires a large capital expenditure, has project costs of $10 million or more or encompasses properties valued at $10 million or more without a successful referendum.

The city placed the question on the ballot after members of Great Lakes Neighbors United, a grassroots organization opposed to the date center, circulated a petition to force the vote.

Michael Beaster, a member of Great Lakes Neighbors, said the intent isn’t to stop development but to make sure it’s the kind of development residents want and are willing to invest in.

“If you’re doing these massive, multi-billion dollar projects like this, the community has to have a voice,” he said. “If they were doing it without public funding, that would be different.”

Beaster, who is running unopposed for alderman in Tuesday’s election, said that input is something officials should welcome.

“I would want to know my constituents approve of it,” he said.

Beaster said that people are frustrated by the data center issue, and a measure like this would have helped.

“I don’t know that it (the TIF district) wouldn’t have gotten approval,” he said. “What it would have facilitated is more open dialog between the community, the city and Vantage.”

Beaster said he doesn’t believe it would be difficult to garner support for and ultimately approval of many TIF districts.

“I don’t want to hamstring development. I think something like the downtown TIF district would have wide support,” he said. “If it’s a good project, fixing blighted areas or bringing in small businesses, I don’t see how the community isn’t going to support that.

“With something like the data center, your developer would have to come in and sell the project.”

But Erin Hickey, CEO of Lakeshore Realtors Association, which invested heavily in an advertising campaign opposing the referendum measure, said that however well intended, the ballot measure is likely to have unintended consequences.

“We don’t want Port Washington to be a place that is considered undesirable for future development,” she said, adding that if the measure is approved, Port would be the only community in the state requiring a referendum on TIF districts.

“I don’t know that everyone has a clear idea of what could happen.”

Placing the decision on whether to create a TIF district in the hands of voters adds uncertainty to the development process, Hickey said, which will likely give developers a reason to reconsider bringing a project to Port.

It would also add to the time needed to approve development and the cost of holding an election, she said.

“It would make so many developers question if it’s worth it,” Hickey said, adding that would ultimately slow growth of the city’s tax base and increase the burden on property owners.

The cost of infrastructure projects, such as building roads and installing water and sewer lines, is expensive and could easily drive the cost of virtually any TIF district beyond $10 million, she added.

“It seems like an exorbitant amount of money to a person on the street, but $10 million doesn’t get you a lot in terms of infrastructure,” Hickey said.

Hickey said that if approved, Tuesday’s referendum question will likely be challenged, noting a group of Milwaukee area business organizations as well as a Port business and resident have already gone to court to try and stop the ballot question.

Part of the problem, she said, is that the threshold for requiring a referendum on a TIF district isn’t clear.

Tuesday’s question requires a referendum for a TIF district that requires a “large capital expenditure” but doesn’t define that, for districts with a base value of at least $10 million and for those with project costs of $10 million or more. 

TIF districts are complex, and they are the only economic development tool available to communities. 

In a TIF district, the properties within the district continue to increase in value and are charged property taxes commensurate with that increase, but taxing entities such as cities, counties and school districts only receive the same amount of taxes they did when the district was created.

Any additional tax revenue generated by the development, called increment, is used to pay for infrastructure and similar improvements within the district. Once the costs are repaid, the TIF district is dissolved and the entire value of the property is put on the tax rolls.

Projects within a TIF district typically  include not just infrastructure that benefits the development but also items that benefit the public as a whole.

In a traditional TIF district, the community pays the infrastructure costs and is repaid through the district. But the Vantage TIF district is a so-called pay-as-you-go TIF, in which the company pays the upfront costs and is repaid through the increment.

Port Washington has four existing TIF districts, two of which would have required referendum approval had the measure on the April 7 ballot been approved in the past — the data center district and the downtown TIF district.

The downtown district had a base value of $13 million when it was created in 2010. The district was expanded in 2015, when the base value increased to $14.7 million.

That district was used to revitalize downtown with projects that included rebuilding and beautifying Franklin Street and providing development incentives. It is expected to close in 2031.

The city’s TIF District 3, which was to help finance the proposed Cedar Vineyard subdivision and improvements to the city’s industrial park, is expected to end in 2028. TIF District 4, a pay-as-you-go district used to finance Spring Harbor Senior Apartments on South Spring Street, is expected to close in 2035.