It was, last night, a quiet and somnolent setting in which our Common Council recommended to the Joint Review Board five new TIDs. I’ll give the atmosphere of the meeting some attention.

Often, a public meeting takes place in early evening, so that citizen-representatives can attend without missing work. They’ve worked all day, under conditions that have been hectic and demanding, and afterward they find themselves in a new arena, that requires as much energy and vigor as their working conditions. It’s no easy task to be as ready and energized at seven in the evening as seven in the morning.

Those who work for the city have an advantage over those who work elsewhere, and then merely visit, so to speak, the municipal arena. Ordinary citizens are not as fresh and ready to go. It showed last night, and I have sympathy for those who have to gear up for another round of intense work after a day of intense work.

The City Manager, and the Police Chief who sat at his right rand, had no such dual roles with which to contend. Their days might have been hectic, but they were not, certainly, as different from their evenings as those who came to the meeting after a full day of private work.

That’s one reason it’s easy for a public official to meet citizen objections at a legislative meeting – the official is fresher for the meeting, and has likely spent more time preparing for it.

Sometimes replies to objections are silly. Consider, for example, Kevin Brunner’s contention, in reply to a concern about notice of the TIF plan, that the city manager’s weekly report had provided ample notice about TIF, for weekly issue after weekly issue. That’s hardly notice, in a popular way. A message in a bottle floating in the Indian Ocean would be more widely read than the city’s manager’s report. (No one at last night’s meeting would say so, however, because the reply would be that both council members, and citizens, were notified. That’s truer with council members than the citizens they represent. There’s notice, and then there’s popular notice, literally and figuratively)

Initiatives or proposals from citizen commissions or bodies like the CDA often have a momentum that’s difficult for a citizen-legislator to stop. The commission claims exhaustive research, careful consideration, and thorough analysis, and so the presumption is that the citizen-legislator should approve it all. Even simple questions are easily portrayed as unwelcome objections, or ignorant and ill-informed second-guessing.

(That’s the none-too-subtle implication of Kevin Brunner’s remark to a council member that the member was new to council, and so not up-to-speed on all the many deliberations over the months preceding. Too funny: if it’s really a well-discussed issue, then it should be a community issue where awareness does not depend on legislative office.)

It’s hard, though, for a citizen, or citizen-legislator, to challenge a polished, full-time professional in that situation. Hard, mostly, because it’s so easy for the full-time manager to make someone else look and feel like an obstructionist, and to do it delicately. Our city manager has surely played this role – in one arena or another – for much of his life.

The answer, of course, is to match delicacy with delicacy, subtlety with subtlety. That’s hard to do after a day working somewhere else. The citizen-volunteer tends, from weariness and lack of rehearsal, to be blunt; the polished manager tends typically between being overly-solicitous and condescending by way of reply. (That professional technique works well, after all; some of those who spoke scarcely ventured their own opinions, but instead deferred to City Manager Brunner and how much thought he – rather than they — had put into the matter.)

What are the challenges of a TID, or sometimes of planning generally?

Retail cannibalization. It’s a big problem in many communities, with or without a TID. There’s no retail gain, under this scenario, just businesses – the same or new – locating in newer areas while others fold or move. Oshkosh, for example, is a city with this sort of retail problem, wholly apart from a TID.

Market-Like Deals with Only Half a Market. TIF is a municipal development mechanism that takes the form – superficially – of the market. In a private market, buyers and sellers freely engage in transactions for profit. A buyer might have dozens of prospective sellers, each different on any given day. After he buys, be becomes a prospective seller himself. Look back a few months later, and the people who are buyer and seller may be wholly different from those you knew before.

That’s not true at all in the TIF scenario. The city, the CDA, or some entity representing the municipality is one half of the exchange. There are huge risks in this situation. First, it places municipal officials or their delegates into the role of buyers, sellers, or dealmakers. No matter how experienced they imagine themselves to be, they will typically lack the skill of a successful private broker of goods and services. The private broker will engage in more deals, under greater pressure, and often for greater amounts, than even a small municipality. (I am not, buy the way, such a broker, so I am not describing my own work.)

It’s not a private market transaction, both by definition and by experience and skill. I will have far less confidence in development deals negotiated under a TID than those between two private parties. The private parties bear the risk more keenly, than any number of municipal negotiators who distribute the city’s risk – debt — to the general population rather than themselves.

When a Common Council member, at least night’s meeting, tried to be reassuring by declaring that the city could dictate which businesses might go in a given TID, one has to steady oneself. There’s nothing at all reassuring about the idea of the city or CDA members trying to ‘dictate’ market development. It’s a case of not knowing what they don’t know. A little more humility would be in order – it’s easy to push this matter forward, but the skill and insight to pick wisely will tax even the best our city has to offer. The brusque declaration that it will all be determined or dictated is hardly reassuring. (It’s difficult to tell if this attitude stems from a lack of self-awareness or an excess of self-importance.)

A TID is a matter of last resort, and should be used when ordinary private transactions are too few to sustain a healthy economy. There should be no rush to use public debt as a last ditch effort to preserve an economy. Whitewater stakes these projects upfront, a poor practice. We are here as a consequence of challenges unmet, unresolved.

All of this is potential only; no TID will make new factories sprout from the ground like clover.

This is quite a ‘Hail Mary,’ pass, however. More TIDs than previously, with two decades of life, and when we have one TID now that does not pay for itself. It’s a long-range idea, with no clear certainties, that has one public-relations advantage: officials can claim that they did all they could. Many involved in this effort, including our current city manager, will be long-gone and retired before those remaining in the city will know if this five-TID plan was sound.

We should know, however — now and forever — that public solutions with the look of private ones are less advantageous than wholly private arrangements.

Last night, Whitewater’s Common Council recommended to a Joint Review Board five new Tax Incremental Districts for the city. There is common agreement that Whitewater faces significant economic challenges, and that an increase in private economic activity, and development, would be welcome. (There are, in our town, few if any ‘no growth’ advocates of the kind one would encounter in a prosperous suburb.)

One way to encourage additional private development is through the now-ubiquitous municipal financing arrangement known as Tax Incremental Financing. Virtually all states have statutes that allow municipalities to finance public works in this way. Tax Incremental Financing is a mechanism by which a municipality designates tax revenues from growth in property values within a specified area to finance public works development in that same area. The municipality may undertake any number of public expenditures for roads, sewers, etc., within the designated area, and repayment of financing for those public expenditures comes from the increased (incremental) tax receipts that the city receives from additional private investments within the district.

The mechanism is Tax Incremental Financing (TIF) and the area is a Tax Incremental District (TID).

It’s not, of course, the only way to raise money for new public works in a designated area. The other options, however, are often more painful, uncertain, or undesirable. A city could, after all, increase taxes wherever possible, to finance new roads and street lights in a blighted area. The cost, however, might be borne disproportionately by areas of the city that don’t need or want additional public works, and both affluent residents and prospering businesses might rethink staying in town.

A second alternative might be to issue bonds to raise the money for new streets, etc., in the designated area, even if new business prospects were not yet available. There are limits both legal and practical on this approach, the practical being – ultimately – the more decisive. Will you spend publicly with no clear private prospect in mind? Some might do so, in the hope that new roads, etc., in a blighted area would attract businesses looking for a new market. This sort of “if you build it, they will come approach” is, however, better left to novels about baseball than the public finances of our small town. There is only so much that we could bear, and risk, in any event. Without a clear private gain, spending merely to spend would be the riskiest of ideas for us.

That brings us to TIF – an authorization to commit up to a specific amount of municipal obligation, from which we would build public works in a specific area, and an obligation that we would satisfy through the additional tax revenues that increased private activity made possible.

(In the Common Council discussion, City Manager Brunner remarked that Wisconsin statutes afford only one development tool, while other states have several. It’s a narrow way of seeing the world; no one thinks that cities did not undertake development projects long before the first tax incremental scheme was instituted. TIF is a post-war development, yet cities undertook both urban planning and development without it. Spend too much time inside, and you no longer imagine the scenery outside, as it were.)

Some have written as though Tax Incremental Financing (TIF) and the designated Tax Incremental Districts (TIDs) where it takes place are identical. Our city has five proposed TIF districts, designated 5 through 9. Tax Incremental Financing is a municipal redevelopment mechanism that may be more or less reasonable as applied to a specific TID. The selection of the right area – the right TID – will render the entire TIF mechanism either sensible or foolish. It’s not wholly different from the distinction between the concept of a thirty-year fixed-rate mortgage and the suitability of a given property and borrower for that arrangement. For Tax Incremental Financing, all the real action is in the districts, so to speak. One may be a good idea, others foolish.

So, what’s a community to look for in a TID?

1. Limits on new retail space, to avoid cannibalization from existing locations. (It’s not that there should be no new retail, but merely that one needs to be mindful of merely cannibalizing existing retail locations. This is a problem apart from a TID, too.)

2. Limits on use for completely open agricultural land. Why? Because valuation for open ag land is different from valuation for other land, and the base value of the TID derives not on the potential for the farm land for development, but on the value as existing crop land.

3. Areas for a TID should ideally be blighted or struggling. Creating a TID in a place that doesn’t need one restricts otherwise useful tax gains only to a TID that doesn’t need it, away from general tax coffers where they would be more useful. Saying that statutes determine selection is unpersuasive, as there is flexibility in selection of TID boundaries.

4. Minimum amount of public works possible. A TID will have a legally defined amount of public spending possible, but less is more in public works expenditures.

5. A transparent, responsible community body to carry out TID administration. (A critical study of TIDs in Chicago found that many TIDs are poorly administered, of limited accountability, and that administrators voted ‘yes’ on proposals before them over 99% of the time.)