Letter to the editor:

I have served on CDA/Industrial Development Committees for 26 years. I served 14 years in Saukville, Wis., and 12 years in Whitewater. I am very familiar with Tax Incremental Financing (TIF) and the rules of what can be included. TIF started years ago as a financing tool for communities to attract and expand industrial and commercial developments which were tied to job creation. Eventually, it expanded to include mixed-use, including residential and multifamily developments.  All TIFs must initially be approved by a Joint Review Committee made up of all the taxing jurisdictions that will be affected by the TIF. Historically, I have opposed using TIF for any housing development. However, I recently softened my position against single-family development as the need for affordable single-family housing in Whitewater became clearer. The support in the community over the last four years has been loud and clear of the need to support affordable single-family housing initiatives. 

Therefore, my problem with multifamily development receiving TIF subsidies is based on four issues that impact the community.

First, we have a disparity of too many multifamily rentals compared to single-family properties.  The slide below is taken from a presentation by the SEWPPC Deputy Director, Ben McKay, at the recent city housing round table.

Second, there have been many new apartments built in Whitewater and surrounding communities in the last few years that did not need subsidies.  As a result, they do not meet what economists call the but-for test. Beyond the but-for, the same SEWRPC presentation suggested that our vacancy rate was within the Housing and Urban Development (HUD) guidelines of 4-6% vacancy rate in our rental market and 1% in single family. I am suggesting the new development does not meet the but-for test.

Third, and most important is the claim that this project will not increase your taxes. A large densely populated project will require significant amounts of service support from police, fire, emergency support, social services, and education needs. All the taxes collected in the district stay in the TIF until closed out (approximately 17-20 years). Other potential projects provide greater opportunities to address community needs in the same TIF (Single-family housing) that will need TIF support. Adding the multifamily component to the TIF pushes back the timeline when you could close out your TIF and start sending revenues to the city and school district’s general fund. The city and school district are already under pressure and are rumored to be looking to pass referendums. If the apartment project is built without TIF support the close out of TIF 11 will be sooner and with reduced risk.

Fourth, you establish a new precedent for all apartment developers to come in and ask to be subsidized in the future.

The proposal that I voted against at the CDA has a $5.1 million subsidy and if you compare it to a TIF-approved project in Madison we are far more generous with our TIF money. The Whitewater project computes to $40,000 per unit while the comparable Madison project is $11,000 per unit. I have not checked other communities, but the vast difference in offering tells me something is wrong with our generosity when other’s recent developments have not needed any help.

So, I have two followup areas needing additional information that would be helpful for me, the city council, and CDA members to know.

I requested a copy of the but-for analysis from (Economic Development consultant) Kristen (Fish-Peterson) and (Economic Development Director Taylor (Zeinert). I have not seen a copy yet. It would be helpful for me to understand why we are giving such a large amount to this project compared to a similar development in Madison.

Two, from reviewing documents from the developer’s web page indicated they currently own and operate section 42 housing, low-income housing, in other communities. Does the developer plan to include section 42 housing here? If so, I believe we would be making a huge mistake. Over the last six years, the city has told the community we need affordable single-family housing, not low-income housing, If low-income housing is included in their plan, including the citizens of the community in the discussion of housing strategy changes would be important. 

I ask (the city council) to reconsider (its) position and continue pursuing single-family housing proposals, not additional high-density rental projects.

Thank you,

Jeff Knight,

Whitewater