Eau Claire TIFs Have People in a Tizzy

Tax Incremental Financing (“TIF”) Districts cost the government revenue and grant special treatment to a favored class of taxpayers, all in the hope of spurring development that might not otherwise happen. Because the line between crony capitalism and the public welfare is thin, TIF Districts can be lawfully created only based on certain facts and under limited circumstances. It is unclear that these facts and circumstances exist with respect to certain existing and proposed TIF districts in Eau Claire.

On behalf of Voters with Facts, an Eau Claire volunteer organization, the Wisconsin Institute for Law & Liberty (“WILL”) today sent the attached letter to the Eau Claire City Council, the City Plan Commission and the Eau Clare Joint Review Board.  The letter calls into question the propriety of their recent actions under the Wisconsin statutes that regulate the creation of TIFs.

The City has been expanding a TIF district it first created in 2002, supposedly to facilitate the redevelopment of a “blighted” area within the City.  It is also seeking to create a new TIF district covering the so-called Confluence Project in downtown Eau Claire, again using its power under Wisconsin law to address issues of urban blight.  These projects are controversial.  Voters with Facts has made the case that the areas covered by these new or expanded TIF districts do not qualify as blighted under the statutory definition.  If they do not, the City is exceeding its authority under Wisconsin law.  WILL’s letter calls these facts to the attention of the City Council, explains the applicable law, and requests further information from the City.  Legal action on behalf of Voters with Facts may be appropriate if the City cannot establish the proper basis for its actions under the Tax Increment Law.

Rick Esenberg, President and General Counsel of WILL, said: “We are representing Voters with Facts because we share their concerns.  Wisconsin allows cities to create TIF districts for limited purposes such as the financing of redevelopment projects to remediate slum-like conditions in blighted areas.  The law was not intended as a means for cities to use tax dollars to subsidize real estate developers for any project that catches their eye and seems to local government like a good idea. Eau Claire is not unique.  The use of TIF laws to finance projects that go far beyond the original legislative purpose appears to be a growing problem both in Wisconsin and in other states that permit tax incremental financing.”

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