Milwaukee streetcar plans are set, but how will we pay for it?

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MILWAUKEE (WITI) -- When construction begins on the Milwaukee streetcar, nearly half of that money will come from the city itself. The city plans to cover that portion with money generated by 'Tax Incremental Financing' -- or 'TIF'.

The starting point for the downtown streetcar is here, the inter-model station which itself was built with the help of TIF dollars. The ideas is to develop part of a city and once property values rise as a result, use the increased tax revenue to pay the cost of that development.

"I am betting on the future of this city," said Milwaukee Mayor Tom Barrett.

Milwaukee truly is making a bet in the way it plans to pay for the downtown streetcar route. Of the estimated $124 million cost, the city will provide $59 million through three separate TIF districts.

Tax Incremental Financing sets a base for property values within a specific area. The property taxes collected from that area are frozen while property values rise due to new development.

The new tax revenue generated by rising property values is used to pay for the project.

"You're taking new money again, that's why it's called 'Tax Incremental Financing' --- it's the increment that occurs from development," said Rob Henken, director of the public policy forum.

Before the streetcar vote, Milwaukee had 46 TIF districts -- two of them will help fund the streetcar: Cathedral Square and Erie Street which is being extended.

They city will also create a new district on East Michigan Street.

The risk is that property values in the TIF districts might not meet projections.

"Ultimately, if the TIF is not successful and it doesn't generate enough money to pay off the investment, taxpayers are on the hook," said Dale Knapp, with Wisconsin Taxpayers Alliance.

Dale Knapp says that risk is relatively low, based on a study conducted by the Wisconsin taxpayers alliance.

"We looked at 81 TIF districts that closed during 2003-2008 and of those 81, 67 actually generated enough tax revenue to pay the cost -- only 14 did not," said Knapp.

Opponents say the city can grow its tax base without the streetcar. Supporters say it will encourage downtown development.

Henken says each side makes a valid point.

"The use of these dollars for the streetcar for that period of time, those dollars would not be going to those other taxing bodies but an argument could be made those taxing dollars wouldn't be available or there wouldn't be as many dollars available if you did not build the streetcar," said Henken.

Henken says the inter model is an example of a TIF district that did not meet projections. But when that happens, the city can draw from successful TIF districts to fill the gap. He says one such district is Cathedral Square, which is now being used to help pay for the streetcar.

12 comments

  • G Man

    Wait, What? This was given the go ahead without knowing how to pay for it? How about just raise property taxes in the city of Milwaukee because I’m not paying enough for the 1 time my snow was plowed this year

  • JC

    Wow who is running this, don’t know how they are going to pay a lot of maybe’s and what if’s. What a joke, just like Barrett

  • Hell in a handbasket

    I’ve seen streets in Baghdad in better shape than Milwaukee (example 35th from Greenfield to Lincoln) and these “leaders” are building a trolley/train??? Liberalism is a mental disorder.

    • MKE Streetcar Supporter

      “Better streets in Baghdad…Liberalism is a mental disorder’

      Pretty hard to agree with this comment / attitude / opinion when one remembers that those better streets in Baghdad were built and paid for by “conservatives”. Imagine if they had actually “conserved” and applied those resources to America’s streets…

      • Hell in a handbasket

        Baghdad has streets and other amenities in life way before OIF. That is a fact but I guess when you spend your current life occupying this that and whatever else you do you would not know.

  • getupgetdownwiththesickness

    You do not understand the liberal mind, which is all about feeling good as opposed to doing good. The liberal mind is a emotional cesspool of nutty beliefs and illogical ideas, combined with a fervent belief that they can do no wrong. The scary part is that the nutty ideas and the risk of their implementation affects us all.

  • Duane

    Anyone ever ride the Market Street Railway in San Francisco? I did and after two blocks I got out and walked because that was much faster. I completely don’t understand the desire to build these these. They are busses that cannot change lanes, stull get stuck in traffic, create hazardous slots for pedestrians/bikes and require a awful looking network of overhead wires. I don’t see how the pros can justify the cons versus a simple bus. Also consider how quickly battery power is advancing and realize battery powered busses are close enough to reality that building something new with overhead wires is very short sighted. Glad I don’t live in the city as I’d be embarrassed such a thing even made it to the table for discussion.

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