Are We Investing in Two Rivers in the Right Way?
Topics for this post:
- Room Tax Refund
- Façade Grant Extension
Tonight’s City Council Meeting
Tonight’s meeting will be short, but there are a couple of items worth mentioning. I’m skipping last week’s recap because very little happened, and no one came to complain about property taxes during the public comment period.
Room Tax Refund
One resolution tonight will approve refunding an overpayment. Baeten Lakeshore Properties, which owns at least eight properties in town, paid room tax directly, not realizing that listing websites like Airbnb.com automatically collect room tax.
Fun Math: If the Baetens are being refunded over $31,000, that means they made about $510,000 in revenue from their properties. For the loss of eight available homes for year-round residents, the city gets $22,700 to attract more tourists and just $9,300 for the general fund – the money we actually use to run the city. That’s all… $9,300.
Why there is a refund:
- Booking Sites: When you book a short-term rental (e.g., Airbnb, VRBO), the listing site collects room tax and eventually sends it to the city. However, it’s lumped together with taxes from hotel booking sites (e.g., Booking.com, Expedia). This means we don’t know how many Airbnbs are being booked or how much of the room tax comes from Airbnb stays versus hotel stays at Cobblestone, Lighthouse, or Village Inn.
- Direct Payment: Airbnb owners often try to avoid listing site fees and book directly with prior guests. In these cases, the owners must collect room tax themselves and pay it to the city. Realistically, this isn’t very likely… Think about how often you’ve reported all your internet purchases on your Wisconsin income tax since the state required it in 2018.
Since the Baetens accidentally double-paid, they’ll be receiving a refund. Nothing nefarious here, but keep this in mind the next time the city talks about all the wonderful room tax money we’re collecting. This refund is a significant amount we never truly had.
Façade Grant Extension
I’ve written before about façade grant extensions and Baeten’s ownership of at least eight mixed-use and residential properties in town. Now, let’s add a ninth property to the mix. Just to be clear, I’m not picking on the Baeten family, but when you own a ton of Airbnbs, sit on the Main Street board, and ask for façade grants for your tourism-focused golf cart rental building (which isn’t even near downtown), you’re going to hit my radar.
Tonight’s request is just for a grant extension. But what irks me is that the contract refers to an application that isn’t in public record, so I can’t tell if we’re missing critical pieces or not. The façade program rules say that a $10,000 grant would be overpaying by $350-1600, depending on how you interpret the rules. And the contract is missing repayment language if they sell the building within four years.
Does it Impact Property Taxes?
But here’s the part that confuses me about the façade grant program. First, take a look at the map. Anywhere you see a red line is where a business can apply for a $10,000 grant.
- Wide Area: While I support making our city attractive, does it make sense for taxpayers to fund business improvements on streets like 14th Street or Lincoln Ave? Business owners already are incentivized to update their properties to attract customers or increase value if they sell the building.
- Business Type: The property in question looks like a service garage (2015 Jackson St). Is this the kind of property that residents should be paying to replace their windows and paint murals on?
“But Andre,” they’ll say, “these aren’t funded by property taxes.” Yeah, sort of. They’re funded by TIFs.
A Quick Overview of TIFs
When a TIF district is created, property taxes are frozen at a baseline. Any increases in property taxes from improvements are reinvested into the TIF district instead of going into the general fund that is used to run the city (that’s where our property taxes go).
- We have 12 open TIF districts.
- This façade grant comes from TIF #8, created in 2000 to demolish Washington High School and build Washington Highlands condos.
- Instead of closing TIF #8 and redirecting Washington Highlands taxes into the general fund, it was amended 19 years later to fund other city projects.
So, instead of closing the TIF and using Washington Highlands property taxes to help residents, the money stays locked in the TIF for further improvements.
Why This Matters
Façade grants and TIFs can be great tools, but when they’re stretched too far or applied too broadly, especially after residents just got hit with a massive tax bill, it’s a problem. These programs need tighter focus and better oversight to ensure they’re helping the community in a targeted way, not adding to the burden on families.
Meeting Agenda Packet
You can read the full packet that council members get here:
MEET-Packet-238acda4816e4464ade70c10466cdf0b.pdf
