About the 400 Block and that $300,000…

There was an interesting story in the Wausau Daily Herald this week entitled:

“Overlooked $300,000 from TIF district to help pay for part of 400 Block project.”

“Wausau will use $300,000 in economic development funds to cover its portion of 400 Block construction costs — money that was set aside in 2006 and then all but forgotten by city officials.

“Minutes from April 2009 and August 2009 City Council meetings make no mention that the city three years earlier had set aside $300,000 in funding from its tax increment district No. 3 for the project — money that is separate from the general fund and used to spur economic development.

“The money had not been spent by the end of 2010, when the city approved this year’s budget, and Wausau Finance Director Maryanne Groat said Monday that the money carries over from year to year.

You can read the entire story here:

http://www.wausaudailyherald.com/article/20111004/WDH0101/110040403/Overlooked-300-000-from-TIF-district-help-pay-part-400-Block-project?odyssey=mod|mostcom

And it’s quite a story. It makes it sound like there was a pot of gold that had been quietly and carefully stashed when Tax Increment District 3 was amended in 2006, just ready and waiting to be hauled out.

Well, that’s not exactly the case.

First, let me say that I unequivocally supported the improvements to the 400 Block. That includes the city’s share of the cost, which was a minority of the funding in comparison to the money raised by people and organizations who donated to make it possible.

I also knew about the provision for up to $300,000 in the 2006 amendment to Tax Increment District 3 that created the possibility of funding “Perimeter Landscaping, Sidewalk and Amenities (seating, shade accommodations)”.

But there is a lot of stuff in TIF plans. The 2006 amendment to TID 3 in Wausau includes, for example, “Construction of a multi-purpose structure that will serve as a civic center/conference center/convention center,” although there is no dollar amount mentioned. Does anyone think we’re ready to roll on that?

So I’ve never been of the opinion that the existence of an item in such a document translated into a done deal, putting funding authority in place to proceed with no further action by the city council. In fact, I’ve said the opposite – that we want to include everything including the kitchen sink in the TID plan to mitigate the need for amendments later, but that the council would always have the right and obligation to pull the trigger – (or not) — on actual projects, as they came up.

If elected officials didn’t exercise that authority and affirmatively vote in favor of projects as they came up, they could end up as little more than spectators while tens of millions of dollars in projects “approved” by their predecessors in tax increment district plans with lives stretching over decades ran on autopilot.

It doesn’t work that way and it is for this reason that you will find, under Item 7 on Page 14 under “Detailed List of Project Costs” in the 2006 amendment to TID 3, the following statement:

“The Plan is neither meant to be a budget nor an appropriation of funds for specific projects, but a framework from which to manage projects.”

The 400 Block project isn’t a really huge matter in a fiscal sense, but it has been controversial enough for years to become a monument to acrimony. We might have hoped all that would have ended with its completion in a project mostly funded with private gifts, but it is apparently a gift that keeps on giving.

As for in-kind services by the city, they were estimated at around $175,000 and I don’t have a problem with that. Unless people believe that all of the workers would have been laid off for free and the equipment would have sat idle as an alternative to the 400 Block work, it’s really a case of “no blood, no foul,” in my opinion. Sucking it up and providing support for an important city improvement on a piece of city-owned property within existing resources is something that I regard as falling within the purview of good management by the mayor and he is an elected official. It’s also fair to recover some of that cost from the TID.

But the “Watchdog Report” from the Wausau Daily Herald also cites around $185,000 in materials and those are hard costs:

http://www.wausaudailyherald.com/article/20111003/WDH0101/110030445/Watchdog-Report-400-Block-bills-pile-up-Wausau

Now, if I was cynical, I might suggest that between the recent story on city cell phone costs and this 400 Block piece, it looks like the newspaper may be bored with the upcoming mayor’s race and they’re doing what they can to manufacture some issues for next April’s election. (Hey, any travel costs out there?)

Having said that, there is a right way and a wrong way to take care of the city’s hard costs for the 400 Block (which I have little doubt are probably already paid, notwithstanding the “bills pile up” headline in the Wausau Daily Herald.) It’s the same way the city takes care of other business and here is how that works: Somebody draws up a resolution for funding. It gets placed on an agenda of the responsible committee, say, Finance. It is moved and seconded in a public meeting. The committee votes and then it moves on to a full council agenda. There is another motion and a second.  The council discusses and votes on it. It’s all very simple, fairly routine, completely legal and totally ethical. It also looks like maybe it didn’t happen on this one.

Let me be clear that I’m all for that money coming from TID 3 revenues – (which isn’t free money sitting in a bank bag somewhere in city hall, but is still a pretty good way to handle it.) It’s also clear that this possibility was anticipated and provided for in the TID 3 plan amendment.

I’m happy that the 400 Block was finally completed. I fought against setting a lower cap on city participation when former council member Matt Kaiser tried to advance that idea in 2009. As Finance chair at that time, I was more than happy to hold up that hard cap proposal in committee until such time as a full funding resolution came with it to provide context, which it didn’t. But it doesn’t mean that nobody in Kaiser’s camp ever had a point.

But what happened with the passage of the plan amendment five years ago is simply not enough for current council members to either hang their hats on or be left out of the process in 2011. Moreover, I’m not interested in looking like I tried to pull a fast one in 2006 as chair of the Joint Review Board that passed the TID 3 amendment, nor in 2009, when the 400 Block plan that was finally implemented this year was being passed by the council. At that time, I didn’t regard the funding element from the city’s side as being resolved and I talked about it here:

https://jimrosenberg.wordpress.com/2009/08/14/400-block-long-nights-journey-into-day/

Bottom line? It is my firm belief that everyone involved in this matter has plenty of integrity and they have acted in what they have seen as the best interests of the community. They also produced an excellent result at a cost to the taxpayer that was more than fair. The funding source is legitimate.

But in addition to getting things done, local government needs to be mindful always of best practices, precedents being set and the need for due process at every stage. It is the responsibility of elected officials to make that ideal the reality.

JR

UPDATE: Herald editorial –

http://www.wausaudailyherald.com/article/20111006/WDH06/110060428/Our-View-Leadership-lacking-400-Block-costs?odyssey=mod|newswell|text|FRONTPAGE|p

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6 Responses to “About the 400 Block and that $300,000…”

  1. I just personally think that the entire 400 Block improvements was a textbook example of how NOT to handle a controversial public project.

    When the City is going to proceed with a project that has a large vocal element in opposition, they need to go out of their way to make sure the i’s are dotted, the t’s are crossed, and demonstrate to the public that the critic’s fears are unfounded…

    However, $200K in “in-kind” services turns into nearly double that, and nearly $200K in “real money” expendatures. And, none of this was really addressed by the council or committee until the project was nearing its end… giving the critics one more bullet in their “I told you so” gun.

    Then, the $300K lying around in the TIF comes into play, and you and I both know that TIF’s can get complicated. I understand that what is probably going is that this TIF has a positive balance, and the 400 Block was one (of a number of items) that funds could be applied to, so… match made in heaven.

    But… using TIF funds was never discussed during the meeting where the final approval was given… and since in government, perception is reality and the general public will never let truth get in the way of the perception… this again gives the cinics more ammo in the “I told you so gun”

    And then the naming fiasco. Private donors came up with a million bucks and they liked City Square… and even though I like 400 Block, if the city said it will be City Square.. that is fine.

    But the city didn’t do that. The involved the public in a naming process. The public voted and chose 400 Block as the name by a HUGE majority… and in the next city council meeting, the city decided on City Square. Talk about fostering a level of government distrust. Yes, they did revisit the issue and go with the publics choice, but the damage was done.

    Every possible way the city could mis-step on this issue, the city did.

    It is a very attractive piece of looking land… it does enhance the downtown… the fact that over a $1 million of the cost was from private donations is simply incredible… but I think those city mis-steps will tarnish the project for many for a very very long time.

  2. Paul Henning Says:

    James,
    Very interesting posts on TIF. You are certainly correct that most people do not fully understand the concept, including those that implement it. I feel that because of that lack of specifics knowledge, the rules often get bent or manipulated and the general public has difficulty in refuting a specific proposal. They know when something does not pass the smell test, but they are unable to say exactly why.

    In the spirit of the topic and further education, could you do another post or a continuation of these two, regarding the $400k+ given to Wausau Window and Wall? Are the convenient, varying definitions of “blighted” another tactic used to bend the rules? There are many owners of properties located within existing TIF districts that would love the extensive help in marketing their vacant property, that WW&W has enjoyed. It seems that only a chosen few are afforded that luxury. I hope to see further discussion on this complex topic.

    Thanks, PH

  3. Paul, you won’t be surprised to know that I have some opinions on the Wausau Window & Wall project at 17th & West and that I made a few phone calls while that was on the docket. I’m not sure if I’ll be doing a blog post about it or not — (because I’m thinking if this turns into a blog primarily about TIF districts, I’m going to see readership drop off a cliff) — but you’ve correctly identified a specific project for which there is more than ample room for debate.

    • Paul Henning Says:

      I’ll have to accept your response here, but I can’t help but to feel that you are more that willing to have expansive discussion on the virtue, but unwilling to expound on the negative aspect. I think you are being “politically correct” and unwilling to step too hard on the sensitive toes at City Hall, which your true response would do. I can see your logic. Don’t like it…but I can see it.
      Thanks, for the discussion anyway. PH

  4. Well, let’s not write it off just yet. Perhaps something on what I’ll call “negative revenue” projects would be a good place to include what you’re talking about.

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