A tax incremental district was recommended for approval by the Chetek Common Council on Oct. 8, and the TID will be discussed and voted on by the Joint Review Board on Thursday, Oct. 24.
If approved, it will be the fourth TID Chetek has created. It covers the south industrial park and 40 acres of a proposed residential development on Knapp Street.
A TID allow cities to take advantage of tax incremental financing, where a city uses future tax revenue, in excess of a base level. This “extra” revenue can be used to help spur development, such as by improving streets or water and sewer utilities in the district.
For example, say an industrial park is relatively vacant and only generates $5,000 in annual property tax revenue. The city wants to attract more industry and jobs so it creates a TID for the industrial park. Using the TID and tax incremental financing, the city makes $100,000 worth of improvements to the park and new industries move in. Now, the park is generating $10,000 in annual revenue, of which $5,000 is regular tax revenue and the other $5,000 is used to pay off the $100,000 over the TID’s 20-year lifespan.
Council Member Terry Hight, Ward 3, voted for the TID. He wants to see the 40 acres on Knapp Street developed because there is a known need for housing in the area, but he questioned how much the city should be involved in the project.
He felt the city should not do too much before a private developer was found and was concerned that the city was taking on too many expenses or risk in the project.
Council Member Mark Edwards, Ward 4, said he expected the city will be hard-pressed to find a developer and may need to take on the project itself. He wanted an engineering study completed to show how many houses could be built and what return the development could bring. He was in favor of the TID.
“Use the TID to take some of the pain out of building the infrastructure like streets and sewer,” he said.
Edwards recognized the concern that the development could become upsidedown on its return if houses didn’t sell. When a TID cannot pay off its improvements within its lifetime, it is called “distressed.”
Scott Bachowski, council member for Ward 1, also voted in favor of the TID. “I think it is a great idea. It can get us funds to develop that [40-acre] housing development,” he said.
Council member Earl Grover, Ward 2, also voted for the TID.
“The whole point of the TID is to have an incentive for a developer,” explained Chetek City Clerk/Treasurer Carmen Newman. “It covers expenses of public utilities, usually.”
Even if the TID is created, it doesn’t mean the city is obligated to make any improvements if it does not want to. But it was a useful tool to have, she said.
“You still want the TID in place because a developer isn’t going to come if you don’t have that in place.”
The JRB meets at 5 p.m. at Chetek City Hall on Oct. 24. It is comprised of members from the local school district, tech college, county, city and a member from the public.