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Sunset Homes too big to fail

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Waukesha Freeman September 3, 2015 Page 6A Opinion

Sunset Homes too big to fail

Close vote a chance to do over

The residents of the Sunset Homes Condominiums were not disappointed Tuesday. City staff recommended an amendment to an existing tax incremental district (TID) to loan the condo board $1.6 million to fix up the property and the Common Council voted 7-6 to approve it.

Mayor Shawn Reilly was not present for the vote but, since he voted for the loan at the plan committee level, it is unlikely he will veto it. The city is going into the subsidized housing business.Capture

The TID was amended despite the revelation Tuesday night that one private lender was willing to loan the condo association $500,000 for home improvements.

This is not the final word on the subject. One of the council members who voted in favor of amending the TID to allow the loan could move to reconsider the vote.

The following aldermen voted for the amendment: Kathleen Cummings, Steve Johnson, Chris Hernandez, Adam Jankowski, Joan Francoeur, Daniel Manion and Vance Skinner.

But more likely aldermen will have a full debate again when the loan itself is brought before the Common Council. Given the closeness of Tuesday’s vote, all it would take is for one or two of the wavering aldermen to switch. All it will take is for the aldermen to hear from their constituents on the issue.

Manion voted in favor of allowing the loan because his neighbors know what condo associations are like. Apparently they are not the benign but befuddled busybodies of Del Boca Vista of “Seinfeld” fame.

But Manion should be wondering what message the vote sent to the other condo boards in the city. Having a little trouble financing repairs? Don’t want to pay for repairs right now?

Don’t worry. The city will figure out a way to bail you out. Welcome to bailout Waukesha. If your condo development is too big to fail, the city is there to fix your problems.

But beyond this condo story becoming the latest example of bailout nation, it also sends a terrible message about needing to keep up with the maintenance of the condos.

The problems at Sunset Homes did not suddenly happen overnight. The recent E0 tornado did not wreak havoc on the buildings. There wasn’t an earthquake. Rampaging mobs did not destroy the roofs and sidewalks of the development. This is years and years of neglect.

Someone said at the meeting that the current owners should not be punished for what happened in the past. Really? If they weren’t one of the owners who allowed the neglect to continue unabated, then they must be relatively recent purchasers. Why should the city bail out their bad investment?

State Rep. Scott Allen spoke at Tuesday’s meeting in support of the bailout. He pointed out that TIF financing was created to combat blight. But we’re not getting new development to replace blight, we’re giving the money to the same people who made the bad investment in the first place.

Allen’s a Realtor and should know better. Sometimes real estate investments, including condominiums, go bad. Allen needs to rediscover his free-market principles.

Allen and others point out that the condo association voted to raise their monthly fees from $168 per month to $268, or about as much as a mortgage on a condo if someone were to purchase one at Sunset Homes. It’s entirely possible the city will be repaid. And if the residents don’t pay the dues, they’ll be out of their homes.

I’m also sympathetic to the discussion that if the city doesn’t do something, the city will take a tax hit from the lost value.

However, there are other costs. As long as the TID is in place, the properties in that district are not contributing to the city or the schools. TIDs are not free money.

But more importantly, the newly created moral hazard of this bailout sends the wrong message to homeowners across the city. Owning a home carries great responsibilities as well as risk. By giving out this loan, the city just took the risk and responsibilities away.

(James Wigderson is a blogger publishing at http://www.wigderson.com and a Waukesha resident. His column runs Thursdays in The Freeman.)

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