Lisbon BOE: Village tax breaks still a concern

LISBON — The school board would like to have more of a say in the village’s plan to grant tax breaks for new residential and commercial development because of the potential loss of future revenue

Village Council has approved legislation seeking state approval to designate the town a Community Reinvestment Area, which allows property owners to seek a tax break of up to 100 percent for 10 to 15 years on property taxes generated by new construction and improvements made to existing structures.

Councilman Ryan Berg, who took the lead in getting the CRA legislation passed, attended this week’s school board meeting to review the program with them and answer any questions, which is one of the requirements before the state gives its approval. Berg explained that while the school board has no say under state law regarding any tax breaks granted for residential development, any commercial/industrial developer seeking a tax break in excess of 50 percent would need board approval. The abatement is on new taxes generated by new construction or improvements.

School officials pointed out they have only two major sources of income: state funding and local property taxes. Officials pointed out Lisbon is currently a “cap” school district, which means it cannot receive additional state funding should enrollment increase. School Board President Gene Gallo said this means property taxes are currently their only revenue source that has the potential to grow, and the CRA designation would impact that.

Berg believes the impact on the district would be minimal because there are no housing developments in town where new homes can be constructed. The village envisions the tax breaks being used by homeowners and business owners as an incentive to make improvements, which is the reason for creating a CRA.

School districts on average receive about 70 percent of all property taxes paid on a levy. School Superintendent Joseph Siefke said if five new homes were built on vacant lots in town over the next several years, the district could lose $200,000 in potential property tax revenue over the life of the abatement.

“I would hate to roll the dice and lose out on that kind of money,” he said, especially since voters have twice rejected board efforts to pass a 1 percent income tax.

The school district also takes in portions of Center and Elkrun townships, but the CRA only applies to Lisbon.

Berg said he understands the board’s concerns, but again reiterated he did not think the impact would be that significant since new residential construction is where significant property taxes are generated and that is unlikely to occur in Lisbon.

He said the CRA is being used primarily as part of the village’s overall effort to revitalize the downtown business district by encouraging property owners to fix up their buildings. “The village is stagnant right now and we’re trying to do what we can” to offer incentives to downtown property owners, Berg said.

He pointed a school board representative will serve on the five-member CRA Tax Incentive Review Council, and its job is to review all tax breaks to determine if the recipient is living up to the terms. He said tax break agreements can be canceled for just cause if there are any problems.

Gallo wondered if they could work out an agreement setting a cap on the size and length of any tax breaks granted for commercial/industrial development under the CRA program, but Berg indicated afterwards he did not know if that was possible. “If we could limit that it would kind of defeat the purpose,” he said.

Board member Jim Smith thanked Berg for coming but said it would have been more helpful had the village entered into discussion with the board beforehand.

“I, at least, would have appreciated it if the village had talked to us before the ordinance passed because we’re the ones that stand to lose the most,” he said.

Gallo said the board will take up the issue at its next meeting on Feb. 28.