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Declining Property Values in Shorewood Could Mean Current Property Owners Face Tax Increases to Pay Off TIF's

CDA, Housing, Residential, Streetscape, Taxes, TIF, Village Administration

The current Shorewood Village Board is spending some big dollars and planning to spend more, and gambling that increasing property values will pay the bill.

Shorewood is using what is called a TIF (tax incremental financing) as a Financing Tool to pay for various projects, such as Streetscaping, the River Project, Condo Development, etc. 

According to the information published by the Wisconsin Dept of Revenue, a TIF works like this:

"Tax Incremental Finance, or TIF, is a financing tool that allows municipalities to invest in infrastructure and other improvements, and pay for these investments by capturing

property tax revenue from the newly developed property. An area is identified (the tax

incremental district, or TID) as appropriate for a certain type of development, and

projects are identified to encourage and facilitate the desired development. Then as

property values rise, the property tax paid on that private development is used by the

municipality to pay for the projects."

There is a risk though, that IF property values Decline, rather than Increase --- All the Property Tax Payers will pay for the expenditures through Increased Property Taxes, as explained here by the Dept of Rev:

" Municipalities can invest significant amounts of money  into  these infrastructure

improvements in hopes that growth will follow (sometimes called the "build it, and

they will come" strategy). However, if little or no private development occurs after the

improvements are made, there may be no tax increment revenue with which to pay for

the investment. If there is no increment revenue, the bonds used to pay for the

improvements will have to be paid for with general tax revenue. Paying for these bonds without a larger tax base means a higher tax burden. Another risk of over-investing can be that the site is improved, but the improvements actually prevent some types of development from being able to use the site."  

The Big Question now becomes --- are Shorewood Property Values Increasing or Decreasing ?

There are many different ways to calculate the values, and with the current volatile real estate market --- it is anybody's guess of what the values will be by the end of the current year. The basic method of calculating property values, involves what is termed "Market Value", and changes in what the sales prices are in comparison between two comparable time periods.  (Other methods of valuation, "replacement" and "income" are not commonly used for residential property appraisals or assessments).

Taking a snapshot of Single Family Home sales in Shorewood for the time period of January 1st of this year (2008) to date, compared with the same time period for last year (2007), there is a notable trend:

JANUARY 1 TO MARCH  26, 2007 --- SINGLE FAMILY HOMES SOLD IN SHOREWOOD (17 sales)

ORIGINAL ASKING PRICE             DAYS ON MARKET             SALES PRICE

189,900                                               24                                            192,100

214,900                                               169                                          180,000

224,900                                               114                                          215,000

230,000                                               16                                            221,500

259,900                                               126                                          235,000

289,900                                               183                                          237,000

289,000                                               13                                            289,000

298,000                                               46                                            298,100

329,900                                               99                                            295,000

309,000                                               20                                            310,000

320,000                                               45                                            320,000

339,000                                               42                                            335,000

364,900                                               43                                            356,000

387,900                                               68                                            350,000

449,000                                               10                                            460,000

749,000                                               18                                            750,000

1,495,000                                            62                                            1,425,000

Tot  6,740,200                                     1098                                        6,468,700

Avg 396,482                                        65                                            380,511

THERE WAS APPROX A 4% DECREASE BETWEEN ORIG PRICE AND SALES PRICE

JANUARY 1 TO MARCH  26, 2008 --- SINGLE FAMILY HOMES SOLD IN SHOREWOOD (9 sales)

ORIGINAL ASKING PRICE             DAYS ON MARKET             SALES PRICE

279,000                                               112                                          237,000

314,900                                               146                                          290,000

399,900                                               141                                          300,000

415,000                                               181                                          376,500

424,900                                               172                                          417,000

479,900                                               91                                            449,000

589,900                                               88                                            555,000

599,900                                               31                                            560,000

1,349,000                                            204                                          1,000,000

Tot  4,852,400                                     1166                                        4,184,500

Avg   539,155                                      130                                          464,944

THERE WAS APPROX A 13% DECREASE BETWEEN ORIG PRICE AND SALES PRICE, AND DAYS ON MARKET DOUBLED OVER THE PREVIOUS YEAR.

 

WHAT DO YOU THINK ?  YOUR COMMENTS ARE APPRECIATED !

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