Data center pushback; Sheboygan voters push TIF limits

SHEBOYGAN, Wis. - Voters in a second Wisconsin city are trying to change local law as they push back on data centers and the public financing tools sometimes used for major developments.

Data center opponents had already urged Sheboygan to put a moratorium on data center zoning changes and approvals. That effort has stalled, so they are now taking matters into their own hands.

What we know:

Some Sheboygan residents are launching a petition even though there are no official data center plans in the city right now. The effort targets tax incremental financing, known as TIF.

If petition organizers gather enough signatures, Sheboygan residents could vote on whether to change city ordinance and require voter approval for any TIF districts over $10 million.

The ordinance would also stop the splitting up of projects to bypass voter approval. It would also require publicly releasing financial documents before approval, and would stop the city from entering into non-disclosure agreements for large TIF projects. It would also require competitive bidding for the TIF's public infrastructure.

The League of Wisconsin Municipalities says TIF allows municipalities to pay for site improvements upfront using future tax revenue generated by the project.

FREE DOWNLOAD: Get breaking news alerts in the FOX LOCAL Mobile app for iOS or Android

One example of a TIF deal in Sheboygan is Badger State Lofts, an affordable apartment development. The deal calls for the developer to make more than $21 million in investments.

By meeting that investment, the developer of the lofts would qualify for 12 years of incentive payments from the city, equal to 50% of new extra property tax collected yearly on the property, with a maximum of $750,000 total over 12 years.

What they're saying:

The proposed ordinance change would require voters approve TIF projects totaling $10m or more, but would also apply if the developer incentives total $5 million or more. 

"I don’t feel that citizens should be forced to take on millions of dollars of debt for private companies and these companies are the richest, wealthiest companies in our country. And why are citizens having to pay for infrastructure for their private business?" asked Lisa Salgado, who is lauching the petition.

"If a project gets stopped in the middle of the project, it’s not going to be making revenue to pay back that TID debt. So, that’s a concern," she added.

Sheboygan Mayor Ryan Sorenson warned the proposal could hurt the city’s ability to attract development.

"This is ultimately an obstructionist approach that would exacerbate the ongoing housing shortage and increase costs for residents and businesses alike. This proposal would be detrimental to the long-term economic health of the city," he stated.

"Developers and lenders value predictability above almost anything else. Requiring additional referendums and political hurdles injects uncertainty into the development process, increases costs, and drags out timelines. The lasting impact will depend on whether the city can continue attracting investment under these new rules or whether businesses and developers decide the uncertainty simply is not worth the risk and choose to invest elsewhere," the mayor added.

Dig deeper:

The Sheboygan effort follows a similar push in Port Washington, where voters approved an ordinance change in April requiring voter approval for future TIF districts over $10 million. The Metropolitan Milwaukee Association of Commerce is suing over that ordinance.

Earlier, Port Washington’s Common Council had approved a TIF for a large Vantage data center campus, estimated to be a $15 billion project. The new ordinance won't stop that project, but it would apply to future developments.

SIGN UP TODAY: Get daily headlines, breaking news emails from FOX6 News

Wisconsin law allows city and village voters to bring forward ordinance changes through referendum. While some states allow voters to bring forward referendums to change state law, Wisconsin does not, though voters give final approval to constitutional amendments approved by the Legislature.

TechnologySheboyganNews