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Jim Bork, owner, manager, chief dreamer and funmaker for The Big Picture is closing his doors October 15, then going into receivership. Jim is to be commended and celebrated for going after and sharing those dreams with the City of Appleton.

But, a piece of those dreams was built with the city’s dime.

According to the Post-Crescent, the theatre is $4 million in debt, including a $1.6 million TIF ‘loan.” Tax Incremental Financing (TIF) is essentially a tax forgiveness tool used by cities to spur costly redevelopment.

TIF is a creative financing tool that permits cities and villages to make public improvements to attract private development. The improvements (and, in some cases, actual construction costs) are repaid from increased taxes collected (in the Tax Increment District – or TID) as a result of the development.

So The Big Picture borrowed a portion of the cost of the building and the land. Some of that borrowing was a TIF loan from the city. That loan was to be paid back with money that would otherwise be paid as property taxes. So one way or the other, the borrower gets a free ride; he’s paying property taxes instead of paying back the loan – or you could look at it as paying back the loan and not paying property taxes.

As stated here 10 days ago, TIF’s can bring big problems. If a loan is based more on what good the project will do for the city and not on the absolute risk of the investment, that’s trouble. A political board, the Common Council, cannot – and sometimes does not - do a good job of analyzing risk.

Appleton case in point – The Big Picture. Second case in point – Richmond Terrace, (In the interest of full disclosure – this author voted yes to support a multi-million loan for the now struggling condo project).

Some cities do it right. Fox example, Oshkosh recently hired investment bankers to carefully analyze a potential TIF project – a project the Common Council ultimately rejected as a poor risk.

Appleton has been successful with several TIF projects – that can’t be forgotten. And hindsight is always 20/20. But rose-colored glasses, dreams, optimism, hopes and prayers do not pay back loans.

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