Property Tax Reform Continues To Be Top Priority for Governor Walker
By Tom Larson
Despite cutting property taxes by approximately $500 million during the 2013-14 legislative session, Governor Walker is committed to reducing property taxes even further. As part of his 2015 State of the State address, Governor Walker pronounced that property taxes over the next four years would be lower than they were in 2014. While details about a specific property tax cut plan were not released, we anticipate a property tax cut initiative to be included in the Governor’s 2015-17 biennial state budget, which should be introduced in early February.
The Governor’s commitment to further property tax reform is noteworthy given that many interest groups have been advocating for other forms of tax cuts, like income and personal property. While NAIOP-WI has supported reducing income and personal property taxes, property tax reform continues to be a top legislative priority.
In addition to property tax reform, Governor Walker vowed to further reduce the size of state government by consolidating various state agencies like (a) the Wisconsin Housing and Economic Development Authority and the Wisconsin Economic Development Corporation, which are both quasi-public agencies, and (b) the Department of Financial Institutions and the Department of Safety and Professional Services. The exact cost savings related to these consolidations is not yet known, but apparently some savings would occur due to the elimination of several upper-level staff positions.
In the months ahead, NAIOP-WI will continue to work closely with Governor Walker’s administration and legislators to further reduce property taxes and improve the regulatory environment for commercial real estate development.
DNR Introduces New In-Lieu Fee Wetland Mitigation Program
The Wisconsin Department of Natural Resources (DNR) recently announced a new wetland mitigation program designed to help promote real estate development. The new program, called the Wisconsin Wetland Restoration Trust program, will provide an alternative to other forms of wetland mitigation so that developers will now have three different wetland mitigation options to assist them when with economic development opportunities that result in unavoidable wetland disturbances.
New In-Lieu Fee Program
In the past, property owners had only two options for mitigation. They could (a) create or restore an existing wetland on the same or nearby property (i.e., within a half mile of the wetland disturbance), or (b) buy credits from a DNR-approved wetland bank, which is a wetland created, restored or enhanced for the purpose of selling credits to compensation for wetland fills in other areas. Both of these options have significant challenges due to the complexity and expense of creating a wetland that functions properly, the limited availability of other nearby land to create or restore a wetland, or the limited availability of wetland banking credits located within the same watershed as the adversely impacted wetland, which is generally required.
The new wetland mitigation option allows property owners to purchase credits directly from the DNR. The amount of credits needed for a wetland fill project will depend upon the size of the fill, the location of the wetland fill, and the location of the wetland credits. Under the program, the property owner will have to purchase a minimum of 1.2 credits for every 1 acre of wetlands filled. This ratio could increase to 1.95 credits necessary for every 1 acre of wetlands filled, depending upon a variety of factors including the wetland type, the location of the wetland fill, and where the credits are purchased from.
The new wetland mitigation program divides the state into 12 service areas, based upon the water basin in which they are located. The property owner will generally be required to purchase credits from the same service area in which the wetland fill is located but, under certain circumstances, will be allowed to purchase credits outside the service areas at a higher cost.
To get the program started, each service area will be initially allocated a specific number of credits and each credit will have a different price. The number of credits ranges from 30 to 100, depending upon the service area. More credits will be available over time upon release by the DNR and Army Corps from eligible wetland mitigation sites. The cost of the credits range from in price from $58,000 per credit near Lake Superior to $61,000 in the Southeastern Wisconsin.
While the in-lieu fee program is an attractive option, property owners are not guaranteed to receive credits under the program. First, as indicated above, the number of credits available is limited. Second, the DNR has the discretion to approve or deny the permit application if the agency does not feel the credits from the in-lieu fee program will adequately offset the impact to the damaged wetland.
With the new in-lieu fee program, Wisconsin joins 21 other states to offer this form of wetland mitigation. Hopefully, this program will prove to be a useful tool to help development projects move forward while also preserving and enhancing the important role that wetlands play in protecting our watersheds.
For more information on the DNR’s new wetland mitigation program, please visit the DNR’s website at http://dnr.wi.gov/topic/Wetlands/mitigation/WWCT.html.