Sussex officials are still interested creating in a special taxing district in the downtown area, but it may be a lot smaller than originally planned.
Village Administrator Jeremy Smith told the Community Development Authority last week the village should start with a smaller tax increment financing district because property values have fallen in the past several years, and there could be problems if that trend continues.
Smith said if a TIF district loses property value, the money raised would go toward paying back the lost value. However, if the district is centered over an area the village knows will increase in value, it would be a more secure venture.
“With property values falling, you don’t want to have a huge loss,” he said.
Communities use TIF districts as a way to spur development in a targeted area. Typically, a community will borrow money to help finance infrastructure improvements within the district. That debt is then repaid by the additional property taxes generated by those improvements. After that debt is paid, the additional property taxes from the development go to the municipality, school district and other taxing bodies.
Sussex is exploring a TIF for the downtown area to pay for infrastructure improvements as part of the Main Street redevelopment plan. Leaders had originally discussed expanding it from the Main Street and Waukesha Avenue area to possibly as far west as the Maple Avenue area.
Smith said the scaled-back TIF proposal will go to the CDA at its August meeting.
If the TIF is approved, Smith said the village could expand it up to four times in the future to encompass a larger area if leaders wished.
Because the Main Street area could be considered the nexus of the redevelopment project, there is no limit in physical size to an expanded TIF, but it can’t contain more than 12 percent of the village’s property values.
“It could be a mixed blessing going with a smaller TIF,” Smith said.
One area likely to be part of the initial TIF is the proposed Cannery Crossings development, which Smith said is moving along and the Waukesha County Board should approve the transfer of land to the developer of the site.
He said the developer should begin presenting plans in the fall and the Village Board will most likely approve the TIF by the end of the year.
While leaders had initially wanted to approve the TIF by the end of September, Smith said they will not want to fast track its creation, otherwise it would absorb the property value losses in the district for this year.
However, committee members said they’re fine with a smaller TIF because it’s “more palatable.”
“I like the smaller area,” CDA member Ralph Banka said.