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CONSORTIUM FOR ECONOMIC DEVELOPMENT

Consortium Fellows Continue Work on Economic Development Research
Two Critical ED Areas Examined: Brownfield Redevelopment, and the Impact of Tax Incremental Financing

Brownfield Redevelopment in Milwaukee:
How are we doing? An Examination of Brownfield Redevelopment Policies and Programs in the Greater Milwaukee
by Professor Christopher DeSousa


In cities throughout the United States, the legacy of our industrial past has left its scars on the urban landscape in the form of countless under-used or abandoned industrial and commercial properties, commonly referred to as brownfield sites. Indeed, it has been estimated that in the city of Milwaukee alone there are 1,194 of these sites, covering almost 2,000 acres (Simons 1998). Traditionally, interest on the part of developers, landowners, and other private sector stakeholders in putting these sites back into productive use has tended to be minimal because of the fear that they may be contaminated, thus making them too expensive, time-consuming, and risky to redevelop profitably. This is typically compounded by the developers' fear of future liability for any adverse effects that could arise subsequent to redevelopment. As a consequence, developers have been unwilling to invest in such sites, especially since they can still find numerous greenfield areas to develop in the urban periphery.

Understandably, policy-makers at all levels of government are interested in getting brownfield sites back into productive use, which could clearly go a long way towards revitalizing urban areas. However, governments cannot face the prospect of remediating the plethora of brownfield sites without the assurance of private investment. To attract such investment, the different levels of government in the State of Wisconsin have, over the last few years, implemented a variety of innovative economic development and environmental policies and programs designed to lessen the costs and risks associated with brownfield redevelopment and, thus, to stimulate private investment in them (State of Wisconsin, Brownfields Study Group 2000). But while many of these tools have met with support from both public and private stakeholders, there has been little effort to critically assess their effectiveness from an economic and community development perspective.

The purpose of my research is, therefore, to examine the nature of brownfield redevelopment in the Greater Milwaukee Area since the mid-1990s and to assess the effectiveness of different types of policies and programs designed to encourage such redevelopment. Through interviews and an examination of case studies, the particular questions that I seek to answer are:
  • How has brownfield redevelopment evolved in the Greater Milwaukee Area since the mid-1990s;
  • Which public policies, programs and funding strategies have been employed to mitigate the costs and risks associated with brownfield redevelopment?
  • How effective have public sector policies and funding strategies been at attracting investment and fostering the economic benefits associated with such redevelopment?
  • How can public sector brownfield efforts be engaged more effectively in Greater Milwaukee and in the State of Wisconsin.
The growing awareness of the critical importance of brownfield redevelopment to establishing more economically sustainable communities, the relative lack of research in the area, and the current aims of the Consortium for Economic Opportunity and UWM's "Milwaukee Idea," constitute both an incentive and a framework for conducting this research. However, the primary motivated for this research is to seek answers to research questions that can help Milwaukee area decision-makers in targeting the most promising strategies for community economic revitalization and make the region prosper.

Christopher De Sousa is an Assistant Professor of Geography and a 2002 CEO Faculty Fellow

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Economic Development and Tax Incremental Financing in Wisconsin
by Professor Robert Eger

Government's attitude toward business, as reflected by regulation, legislation, incentives for business, and state and local services are important components of the quality of business life in Wisconsin. To promote a business economic advantage, one of the primary economic development tools employed by cities and villages in Wisconsin is tax incremental financing (TIF). The current tools of economic and financial performance that assess the benefits provided by TIF through economic development are property values in Wisconsin. Property values are indexed with the number of years the tax incremental district has remained active; the index is then considered an indicator of the economic and financial impact of TIF. This measurement may underestimate the business impact on economic development through TIF in at least two respects. The estimate is understated by excluding the rise in income levels because of employment growth and greater profitability from business operations. In addition, a higher level and better quality of infrastructure also raises the marginal value of private capital, which, in turn, induces higher investment in physical capital and leads to higher per capita incomes and output. Most importantly, the measurement understates the work formulated by the final authority that approves the tax incremental district, the 5-member joint review board. The board is charged with approving or denying the project based on criteria that include economic benefits, such as increased employment, increased personal income, increased property values, and the impact that the project has on anticipated loss in property tax revenue for the other tax jurisdictions. This is the goal alluded to by the intergovernmental-private partnership.

The underestimate of the effects of TIF breaches the connection between knowledge and practice with respect to the economic changes provided by business in the realm of economic development. Thus, instead of fostering business expansion, job creation, and enhancing workforce quality through economic development, TIF is viewed as a development tool that is limited to property value changes. This view can be construed as misleading and a minimization of the true economic impact of TIF. The primary purpose of this research is to provide measurements of the employment effects (number of jobs created or retained within the TIF districts and wage rates of the new hires), the estimated effect on the other tax jurisdictions, and the business physical capital investment response to TIF. This supports a complete look at the business effect on economic development through the use of tax incremental financing in the Greater Milwaukee area.

Professor Robert Eger is an Assistant Professor of Political Science

To find more information on the Consortium's community-based research activities, visit the publications link of the CEO website at www.ceo.uwm.edu

  rule / divider JUNE 2002

Inside this issue
1 Consortium Fellows Continue Work on Economic Development Research:
  Brownfield Redevelopment
  Tax Incremental Financing
2Passing the Buck
3New Fellowship Program
3Forging Partnerships for Prosperity
3Small Business Development Center Highlights
3Staff Directory

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Online Resources
APA Rates the States on Planning Laws

Smart growth measures are most successful in states where planning statutes have been modernized. Read the details of each state's level of success in a new APA report, Planning for Smart Growth: 2002 State of the States. The report finds that in many cases outdated planning laws are preventing states from effectively implementing smart growth measures to address urban sprawl, scattered rural development, farmland protection and other issues. Read the report online at the American Planning Association website, www.planning.org.

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