DOWNTOWN RACINE REAL ESTATE COLLAPSES!!!
The City of Racine has BIG problems with TID 17 – which will likely be a failure. First – the project has been delayed – for unknown reasons – and as we all know – costs go up! Well, the City has planned for this. From the TID 17 Document – Page 19:
“All costs are based on 2012 prices and are preliminary estimates. The City reserves the right to increase these costs to reflect inflationary increases and other uncontrollable circumstances between 2012 and the time of construction. The City also reserves the right to increase certain project costs to the extent others are reduced or not implemented, without amending the plan.
The tax increment allocation is preliminary and is subject to adjustment based upon the implementation of the Plan. This Plan is not meant to be a budget nor an appropriation of funds for specific projects, but a framework within which to manage projects. All costs included in the Plan are estimates based on best information available.The City retains the right to delete projects or change the scope and/or timing of projects implemented as they are individually authorized by the Common Council, without amending the Plan.”
Aren’t the above clauses scary? It’s open-ended – the cost is the cost and we will determine the cost as we go. It’s already a guaranteed loser.
Here is an even scarier clause, from the TID 17 Document – Page 23 :
“If financing as outlined in this Plan proves unworkable, the City reserves the right to use alternate financing solutions for the projects as they are implemented.”
What types of financing can The City of Racine of Racine use? From the TID 17 Document - Pages 20-22:
1.General Obligation (G.O.) Bonds or Notes
The City may issue G.O. Bonds or Notes to finance the cost of Projects included within this Plan.
2.Bonds Issued to Developers (“Pay as You Go” Financing)
The City may issue a bond or other obligation to one or more developers who provide financing for projects included in this Plan.
3.Tax Increment Revenue Bonds
The City has the authority to issue revenue bonds secured by the tax increments to be
collected.
4.Utility Revenue Bonds
The City can issue revenue bonds to be repaid from revenues of the sewer and/or water systems, including revenues paid by the City that represent service of the system to the City.
5.Special Assessment “B” Bonds
The City has the ability to levy special assessments against benefited properties to pay part of the costs for street, curb, gutter, sewer, water, storm sewers and other infrastructure.
And for the FINAL KICKER – The City of Racine based the projects upon certain assumptions. One of those assumptions is that the value of the City and Downtown Racine will continue to increase. WELL – it hasn’t – in fact – The City of Racine is rapidly losing value, Downtown Racine real estate prices have collapsed, and the Property Assessments in Racine are grossly overvalued and bear no resemblance to the actual prices received for real estate.
From the TID 17 Document – Page 21:
Assumed 2013 City of Racine Equalized Value: $3,809,017,600
From the 2014 Racine County Budget – Page 46-1:
Actual 2103 City of Racine Equalized Value: $3,139,701,950
These numbers are significant in that the equalized value determines the debt limit of The City of Racine and the $$ amount of TIF districts the City may have.
The Porters project WILL be a loser for taxpayers – and a winner for Team Porters because they have turned a worthless property, that should have been bulldozed into a parking lot, into a gold mine – Team Porters gets the gold – the taxpayers get the shaft.
TID 17 document available here:http://www.cityofracine.org/search.aspx?searchtext=tid%2017&searchfor=all&orderby=id&orderdirection=ascending
Racine County 2014 budget here:http://www.goracine.org/crepository/FinBudgets/B2014/is01.pdf
