Bonus round for potholes!

Eau Claire St. 4 2016 GailWisconsin’s long road back to a well-maintained transportation system has begun. Yesterday the Wisconsin Department of Transportation announced the details of a one-time grant competition to invest $75 million repairing, rebuilding and/or upgrading Wisconsin’s local roads, bridges, bike trails and transit systems. The grant program is one part of a state transportation budget that acknowledged the need to beef up our transportation system, especially (but not exclusively) the local part of our system.

The League has a simple message for Wisconsin’s cities and villages: APPLY! Come on, you know you have a road that’s long overdue for reconstruction, a bus stop that should have been bulldozed years ago, or a pedestrian trail nobody uses because it has more weeds, mud puddles and broken concrete than it has walkers. This is their chance; it’s the bonus round! As they say on the commercial: “Send it in!”

I give Transportation Secretary Craig Thompson, Governor Tony Evers and the Wisconsin Legislature a serious “tip of the hat” on this one. It’s flexible, it’s responsive and it lets YOU at the LOCAL level make the call. Projects can be everything from “shovel ready” (can we hate that term yet??) to a gleam in your Public Works Director’s eye. As long as the project can be completed within six years, it’s eligible. Minimum project size is $250,000, and the maximum size is $3.5 million. You must have something that fits in between those two numbers. Every city and village does.

We won’t regurgitate all of the rules and regulations here; you can read them at the WisDOT’s web site. Just remember the deadline: December 6.

We also have a request: Send us pictures. The League would love to see the critical projects that our members want to work on. Send us an ugly “before” picture.

Potholes, your days are numbered.

 

A life or death conversation

One of my mentors is Clarence Anthony, the Executive Director of the National League of Cities. A week ago, Clarence posted this item as he reflected on the most recent round of pointless and tragic mass shootings. Like many of us, Clarence is struggling to understand why these things happen. But like many of us in the arena of local government, he asks an even more important and immediate question: What’s our role? What’s our role in response to tragedies such as those that have occurred in El Paso, Dayton, and Oak Creek? What’s our role in averting and avoiding these acts of deadly outrage? What’s our role as citizens?

Democracy in America is not a spectator sport. It is nothing more and nothing less than  every one of us acting together for the common good. What’s the role of democracy in the face of domestic terrorism? This will be a difficult conversation. It may be a painful conversation. But it’s a conversation we need to have if we are ever going to find a solution to this violence.

To quote Clarence Anthony: No more, no more, no more.

Another week, another Dark Store defeat

While the Wisconsin Legislature can’t seem to grasp it, members of the State Bar are beginning to get the idea: the Dark Store Loophole is a loser. This week the City of West Bend declared victory over a Dark Store play by Menards. The home improvement chain withdrew three year’s worth of Dark Store-based claims that it was being taxed too much. In a news release, City Administrator Jay Shambeau said the decision proves that his assessors, like many others in Wisconsin who face Dark Store claims, were doing it right all along.

“Our City Assessors take great pride in their work and establish fair and equitable assessed values,” stated City of West Bend Administrator, Jay Shambeau. The cancellation of this lawsuit affirms the fact that the City of West Bend assessments were proper and fair all along.  Shambeau also states, “The residents and property owners in West Bend should find peace in knowing that our city staff work hard to establish uniform and law-based assessments on all property assessments.”

We don’t have the exact numbers involved in this case, but similar claims from big box stores have called for cuts as large as half their tax bill, shifting tens of thousands of dollars in taxes onto homeowners, small independent businesses and manufacturers every year. In addition to shifting the tax burden to others, the cost of defending an assessment decision can easily exceed $50,000, forcing many cities and villages to make the hard choice and agree to a settlement. The Mayor of West Bend, Kraig Sadownikow, is pleased the city stuck to its guns and didn’t negotiate a settlement.

“West Bend has been a leader in combating the dark store theory,” states City of West Bend Mayor Kraig Sadownikow.  “I am proud of our city council and staff for their resistance to buckle to the big box pressure to accept a settlement offer. Any type of settlement would have caused a tax shift to other city property taxpayers. This was unacceptable in my opinion.”

Governor Tony Evers included language in his state budget bill that would have closed the Dark Store and Walgreens loopholes once and for all. On a party-line vote, Republican leaders in the Legislature removed that language from the bill. While the future of Dark Store legislation may be uncertain, the future of dark store arguments winning in Wisconsin court rooms looks even shakier. The good news is that, despite the significant legal costs, cities and villages that have stood up to the tax-shifting strategy have been succeeding lately. If this discourages enterprising tax lawyers for big box stores from using dark store strategies, it’s good news for taxpayers.

Way to go, West Bend!

Another assessment win

If you tell a bank that your property is worth $450 million, chances are you won’t win an argument claiming your property tax assessment of $400 million is too high. That’s one of the morals of this most recent property assessment story. On May 9 the City of Wauwatosa won the largest, most complicated retail property assessment challenges to date. By order of a judge, super-regional Mayfair Mall is worth what the assessor said it’s worth (and probably more), not what 20 less attractive malls are worth.

The Mayfair Mall property tax saga began in 2013 when the city of Wauwatosa pegged the property’s value at $400 million. The city’s data suggested the property was worth about ten-percent more than that amount, but the assessor went with the more conservative figure in part because he didn’t have access to income information that had been repeatedly requested from the owner. The assessment was the same for 2014 and raised by roughly 5-percent for 2015. The real estate investment trust that owned Mayfair sued, claiming the city assessments were in error.

A four-year court battle ensued. A year ago, both sides met in Milwaukee County Circuit Court for a six-week trial. The trial became a dense and complicated contest of competing experts. Milwaukee County Circuit Judge Marshall B. Murray issued his written decision in favor of the city this month. His 34-page written decision carefully details how Wauwatosa Assessors Steve Miner and (later) Shannon Krause repeatedly used correct data, scrupulously-followed the Wisconsin Property Assessment Manual and assigned values that were conservatively-beneath the actual value of the property.

On the other side, the experts hired by Mayfair to justify its claim that the assessment was wrong were repeatedly found to be “inconsistent and not credible” by the judge. In some instances, the judge’s decision points out that the owner’s experts contradicted their own previous work. Mayfair had an appraisal done to finance the mall, putting its value at about $460 million. One of the experts who challenged the $400 million assessment worked for the firm that had done the appraisal. (Just one of the facts that Judge Murray pointed out in his “inconsistent and not credible” finding.)

Although Mayfair’s challenge did not turn on the “dark store” theory directly, the decision is an important element in the ongoing legislative debate. It is unquestionably the largest, most complicated retail assessment challenge in the recent string of property tax decisions. Two of Wisconsin’s best municipal assessors, Miner and Krause, were central figures in assigning the values to the property and the case was defended by expert municipal tax attorneys Amy Seibel and Ryan Braithwaite. The other side brought its legal A-team as well, and both sides relied on leading national experts in assessment and appraisal. The case was as expertly-argued as an assessment case can be…and the municipal side won on all points.

Despite the importance of this win, the fight continues. In Wauwatosa, there are related cases from more recent tax years still under appeal, and this decision may be appealed to a higher court. Wauwatosa Mayor Kathy Ehley has said her city budgets more for assessment-related legal fees annually than it receives in shared revenue payments; more than a quarter of a million per year.

Ironically, the same week Judge Murray rejected Mayfair’s appeal the Wisconsin Legislature’s budget-writing committee rejected a proposal to clarify the law. The Joint Committee on Finance voted 11-3 against League-supported Dark Store language in the state budget. Apparently, legislation that would help Wauwatosa and other Wisconsin municipalities not spend $250,000 per year on legal fees is not “fiscal policy” suitable for a state budget.

Stay tuned.

212 Roads to Somewhere

The Wisconsin Legislature is deciding this spring whether or not to delay main street in 212 Wisconsin Cities, Villages and Towns. There are 212 state highway rehabilitation projects included in a $320 million state highway rehabilitation program budget request. The request is being considered this month by the Legislature’s Joint Committee on Finance. Each of those projects is a vital piece of a community’s economic success. We hope the vote is “Green” for go.

We admit that the “State Highway Rehabilitation Program” is a name only a bureaucratic mother could love. And $320 million is a lot of money, even within a multi-billion dollar state budget. What’s the connection to downtown Wisconsin? It’s not local transportation aids. Why should we care?

We do care, because all roads in Wisconsin lead somewhere. For example, one of those 212 projects would resurface Highway 172 in the Green Bay Area; the highway that leads to the Brown County Airport. Another project would replace a critical bridge on Highways 59 and 18 in the City of Waukesha. One more resurfaces the road that runs through the Village of Athens in Marathon County. Project after project affects city after city, village after village and town after town. It’s all connected; connected to you and I.

State highways are the links between Wisconsin’s 602 cities and villages; they are also often the main thoroughfares through those communities. They carry farm products, manufacturing equipment, school buses, ambulances and the tens of thousands of family vehicles traveling back and forth every day. Without a quality network of these roads linking local roads and the highway system, it gets harder to get to work, to get to school, and to get emergency services to people who need them.

A few days ago, the Wisconsin DOT released the list of road rehabilitation projects that would be delayed or deferred (deferred is bureaucratic word that means something worse than delayed) if we cannot find consensus on how to pay for them. Take a look at the list; it’s long but organized by county. Chances are you’ll find a road that you drive on listed there. Think about that particular stretch of road. What happens to your village if that project doesn’t get done next year; or the year after; or maybe just doesn’t get done? Whose job is affected; whose school is affected; which ambulance has to be rerouted?

Think about that. Then call your area legislator. It’s all connected.

They were listening, but did they hear?

Over the last few weeks, the Legislature’s budget-writing Joint Committee on Finance held hearings in Oak Creek, Janesville, River Falls and Green Bay.  At each location local leaders welcomed the committee and offered comments about the challenges municipalities face in dealing with the triple-whammy of sub-inflationary levy limits, declining shared revenue and increasing costs for infrastructure and essential services. Or, as Oak Creek City Administrator Andrew Vickers put it, the parent state demanding that its local children do more chores with less allowance.

The hearings were recorded by WisconsinEye, a nonprofit public-service digital television channel. For a “Local Perspective” on the state budget, follow the link embedded in each local leader’s name below.

One week into his job as the new Mayor of Green Bay, former state legislator Eric Genrich (comments begin at 5:40) told his former colleagues, “I can’t tell you I have everything figured out, but I know this much: our community is incredibly strong, but our city’s fiscal foundation could be stronger. We have significant infrastructural needs, and the tools we have at our disposal are not adequate to meet the challenges we face.” Genrich urged the committee to support Governor Evers proposals to increase shared revenue and transportation aids and to restore an inflationary “floor” for levy limits. Genrich also told them it’s time to look at diversifying local government revenue sources.

“Wisconsin’s municipalities are overly reliant on property taxes and we’ve seen a dramatic reduction in state aids over the last twenty to thirty years. Adjusting for inflation, the city of Green Bay receives about $20 million on an annual basis less than we did in the year 2000. That’s nearly 1/5th of our city budget. We are doing less with less, and the most glaring example of that is the condition of our streets.”

At the Oak Creek hearing, City Administrator Andrew Vickers (comments begin at 6:18) spoke up for diversifying the resource base for cities, but also for keeping property taxes fair. Oak Creek has a robust retail economy, including a greater than average number of medium- and big-box retailers. Like many communities, Oak Creek is beginning to be challenged by “dark store” loophole arguments from some of those retailers and Vickers urged the committee to close those loopholes via the budget bill.  He said, ”If we are asked to rely on property taxes, loopholes allowing [certain] segments to avoid paying their fair share should not stand.  The burden should not be shifted to residential property owners.”

Also in Oak Creek, the President of the Milwaukee Common Council, Ashanti Hamilton, (comments begin at 19:55) reported that the decline of shared revenue and imposition of levy limits that do not keep up with inflation has put his city in a situation where the police department’s budget alone exceeds the total amount of property taxes the city will receive.

South Milwaukee lies between Oak Creek and Milwaukee. South Milwaukee Mayor Erik Brooks (no video link available) said his small city of 21,000 is long past the point of “cutting the fat. He walked through some sobering numbers for the committee. “For 11 straight years, our “net new construction” figure – used to calculate how much we can increase our base levy, our largest source of revenue – has measured less than 1%. For 2019, it was 0.3%, meaning we were only able to increase our levy by approximately $22,000, on a $19 million budget. And it was worse in previous years. This is not sustainable. Costs go up, and we’re not allowed to reflect that in our budgets because the state has hamstrung us on revenue. And what if we want to give our people a raise, or if we want to add services? What do we do then? I’ll tell you one thing we can’t do: Cut fat. We did that long ago. Cuts now are cuts to people, and services. The days of Cadillac benefits are long gone too. We certainly seek ways to do things better through efficiencies and partnerships, but those only go so far.”

South Milwaukee went to referendum in 2017, to ensure it could adequately fund paramedic services and add two new police officers. The referendum passed 2-to-1. Brook said, that was a success, but “One-off” solutions like this don’t solve the problem.

In River Falls, City Administrator Scot Simpson (comments begin at 12:27) said the current revenue system is simply “unsustainable.” Simpson pointed out that the state needs to partner with local emergency services providers to meet a growing need for emergency detention beds for persons experiencing mental health crises. Under current rules and funding, police and sheriff’s departments have no choice but to transport such a person all the way across the state to a facility in Oshkosh. The Administrator said a facility in the western part of the state is needed to reduce skyrocketing transportation costs; costs that cannot be paid under the existing levy limits.

Janesville City Administrator Mark Freitag (comments begin at 7:48) offered thanks to the committee. The last state budget created a five-year added Expenditure Restraint payment for Janesville, to partially address an anomaly that put Janesville on the low end of both levy capacity and shared revenue payments. With the payment, Janesville was able to hire badly-needed first responders, double its street repair budget and reduce bus fares, in addition to implementing a number of internal operating efficiency programs.

This month the Joint Finance Committee will start the long process of working through the state budget agency by agency and program by program. It will vote on everything from base funding for prisons to local shared revenue and levy limits. The state budget document is typically around 1,000 pages long and lays out how the state will raise and spend roughly $83 billion in state income, sales and corporate taxes and federal funds. The budget also dictates to local governments how much they may raise in local resources. The city and village leaders who spoke up asked the committee to remember; they serve the same public. In Andrew Vicker’s words:

“We have a shared constituency.  There is not a single state resident that is not also a resident of a local government entity.  What’s good for the state is good for local government, and what’s good for local government should be considered good for the state.”

That’s not your job

If you have the chance to see Michigan State professor Dave Ivan speak, take advantage of it. I’ve heard him give four different talks in the past year and have come away with pages of new ideas each time. He’s “that guy;” the one who inspires, challenges and engages people who work in local government. I crossed paths with Dr. Ivan in Rice Lake this week, at the annual Wisconsin Rural Summit.

The Rural Summit is a gathering hosted by Wisconsin Rural Partners. The League is one of several sponsors for this event. The summit attracts about one hundred or so city, village, town and county leaders, economic development directors and private citizens who are interested in sustaining small town living in this state. At this particular Rural Summit, Dr. Ivan challenged my notion of what is, and what is not, the job of local government.

Should local governments be in the job of negotiating commercial building leases? Most of us would say, “Of course not,” but that’s exactly what city leaders in Jonesville, Michigan are doing. Jonesville is a typical older small Midwestern city; established in the 1800’s with a current population in the neighborhood of 2,200. If you go to the Jonesville.org web site you’ll see the usual tabs for city meetings, schedules for brush pickup and photos of a downtown streetscape. You’ll also find commercial real estate listings. According to Dave Ivan, the city is an active participant in bringing small businesses together with downtown real estate opportunities.

Like many of our older cities and villages, Jonesville struggles to keep its downtown vibrant. But unlike many places, the city doesn’t sit back and wait for commerce to happen. City leaders take an active role. And the result? Jonesville has an old-fashioned-looking, but modern and vibrant downtown with a growing business base.

Dr. Ivan rattled off other communities that went off the usual track to get things done, including a small town in Kansas where the city built and owns the one and only grocery/convenience store, as well as builds and sells housing (at cost) to attract young people.

The role of local government isn’t limited to snow plowing and brush pickup. In a representative democracy, the role of local government is whatever your citizens need it to be. Does your community need housing, but can’t attract a developer? Consider the village being the developer. Are you a “food desert,” without a grocery, or even a convenience store? Build one. Don’t wait around for an entrepreneur in shining armor or a state politician waving a grant application; take the initiative and do it.

I’d like to propose a simple four-step process for you as a village leader when faced with a problem no one seems to be solving: 1) Does this thing need to be done; would it help your community remain viable? 2) Is someone already doing it? 3) Is there community consensus that it needs to be done (consensus does not mean unanimity)? 4) Can it be done from a legal and financial perspective? If the answer to questions 1, 3 and 4 is yes and the answer to question 2 is no, then do it!

Stop waiting for someone outside your community to come to your rescue; they’re either busy rescuing someone else, or they’re just not interested in your particular village. There are resources available to Wisconsin communities through state and federal agencies, regional economic development organizations and the powerful private marketplace. But those resources don’t come to you; you have to go after them. And don’t sell yourself short; you have resources too. The most important resources you have are your sense of your community and your concern for the people who live there today and tomorrow. Those people are expecting you to lead them. Lead!

I attend a lot of meetings and conferences where big problems are discussed and a variety of solutions are displayed. There’s a common element to the solutions. What I hear over and over again are not success stories that came to the community from without; they are success stories that started from within. They were started by a village president who kept asking questions until someone said yes. A city administrator who wouldn’t accept the “fact” that “we just don’t do that here.” Or a mayor who wouldn’t quit when told, “businesses aren’t interested in downtowns anymore.”

Successful municipal leadership isn’t magic, genius, luck or a gift from the State Legislature. It’s persistence. It’s hard work. It’s an unspoken vision of a community handed to your grandchildren in better shape than it was when you took office. That’s your job.