Tax Incremental Financing is an extraordinary funding mechanism that gives municipalities tools to encourage development in specific areas where it otherwise wouldn’t occur.  Following specific steps set forth in state law, cities can designate a TIF district and specify public improvement projects that should lead to new development and increased property values.  The city can then capture all the increased tax revenue from the growth within the district and dedicate it to paying for those improvement projects.

State law requires, however, that a TIF district meet what’s called the “but for” test.  A city must show that development would not occur in the district “but for” the creation of the district.  In other words, if development would occur even without a TIF district, the TIF district is not allowed.

Eau Claire is taking this concept to the extreme.  The city claims that a building that was already built before TIF district #12  was created can somehow satisfy the “but for” test.  We filed a lawsuit challenging that abuse.  The court dismissed the case, concluding that we had failed to file suit within 6 months of the creation of the district, despite the fact that such a deadline is impossible to comply with and also comply with notice of claim procedures, which can take as long as 8 months.  We are considering whether to appeal.

The city also has resorted to the extreme tactic of seeking sanctions in an attempt to scare us into backing down.  But we won’t stop fighting just because the government thinks we shouldn’t get to question the legality of what they do in court.