Yesterday, I noted that Grafton’s plan to give $150,000 to Kapco for a development that has already been approved and is under construction is nothing but crony capitalism. At best, economic development money should be used to incentivize development that would not otherwise occur.
Mequon has now announced that it is selling 19 acres of distressed land for $1. This property contains an unusable, old industrial building, a city works building, some green space and some excess brownfield land. The property is on Mequon Road between a new retail and residential development (depicted above) and the Mequon Police Station. The property is part of what Mequon calls its “Town Center.” Mequon will require the purchaser to guaranty a minimum assessed value so that Mequon receives, through taxes in the coming years, more than the value it is conveying. Mequon anticipates that, by selling the land for $1, the buyer will maximize the value of the development, thereby increasing the taxes paid for many years after Mequon has received a return on its initial investment.
The two incentive packages could not be more different. The first is nothing more than a low-cost loan to a well-heeled prominent business for a project that would have occurred regardless of the loan (crony capitalism). The other is structured to rid a community of an eyesore and to create a positive return for the community. One is a giveaway of sorts. The other is an incentive.
The good Republicans in Grafton should be questioning whether their local officials understand the limited role of government. (By the way, Mequon did the same thing a few years ago.)
Thoughtful people can debate whether government should undertake either transaction. Mequon, however, can at least assert that it is incentivizing a higher and better use than what would occur without the incentive. As a result, it can argue that its plan is a true investment, designed to achieve higher future tax collections, the redevelopment of a blighted area and the rehabilitation of environmentally contaminated property.
Before we risk congratulating Mequon, however, we should wait and see if the sale they ultimately negotiate realistically and prudently achieves those goals.
W.F. Burkley 