Thiensville's Village Board is considering a proposal to take three to four additional years to pay off a debt tied to the community's only tax incremental financing district.
A Sept. 20 public hearing has been scheduled to consider the proposal. It would declare the tax district as "distressed."
Under a new state law, a distressed tax district may take up to 40 years to pay off its debt. State law typically limits the payback period to 27 years.
With a TIF district, a community usually borrows money for public improvements - such as roads and sewer lines - that are tied to new development. The property taxes from the new development pays off that debt. Once the debt is gone, the property taxes go to the community, its school district and other local governments, such as the county and area technical college district.
However, some Wisconsin tax districts have run into trouble because the recession has reduced property values, so it's taking longer to pay their debts. Some of the deepest holes are in smaller communities, such as Warrens and Necedah.
In response, the new law was passed unanimously by the Senate and Assembly and signed by Gov. Jim Doyle. Along with allowing more time to pay off the debt, the new law lets a community take revenue generated by a successful district to help pay off a distressed district's debt. The law's supporters say it gives communities a way to avoid defaulting on their tax district bond debt.
Thiensville appears to be the first Milwaukee-area community to seek "distressed" status for a TIF district. But its situation is different from the communities whose troubles led to the law.
The village's only tax district is due to expire in 2013. The downtown district fell short on generating the expected level of development, and property tax revenue, said Karl Hertz, village president.
But there is no default threat looming, he said. The village used revenue from its general fund to pay off the district's debt, Hertz said.
Hertz said keeping the district operating for three to four years beyond the original 2013 expiraton date will result in paying back all the general fund money used to pay off the district debt.
Ironically, while development acitivity within the tax district was lower than expected during its first several years, there was activity in recent years that helped generate more revenue, Hertz said.
Those later projects include Willowbrook Place, a 64-unit senior apartment building at 205 Green Bay Road, which opened in 2003, and Thiensville Village Homes, a 14-unit condo project at 228 Elm St., which opened in 2005.