Response to Rodney A. Hedeen's September 27, 2023 letter to the Peninsula Pulse
Dear Rodney,
I saw your letter, “Sister Bay Pays More than Its Fair Share” at https://doorcountypulse.com/letters-to-the-editor-sister-bay-pays-more-than-its-fair-share/.
That Sister Bay could for now hold off on new property-tax funded projects in order to support the local taxpayer would be good, but there is more that could be done, towards similar ends. I’ll go over some things in hopes of interesting you. This is restating things from before, but it could still be interesting if you haven’t already read the other blog posts.
Sometimes tourist areas can become dominated by seasonal residents and residential development. When this happens, the economy suffers as property values rise.
That gentrification is harmful to Sister Bay and Door County can be measured with figures such as the percentage of young adults who leave and also by figures which reflects the pressures on young adults who might otherwise start families, but don’t. There are also figures which reflect the pressures on existing families. Figures such as the percent who never marry, the divorce rate, and the fertility rate can be used.
Part of what happens during gentrification is that the wealthy people moving in have a higher level of education and more capital than those who were there before them. This enables them to influence what happens in government, and they get the government to do things so their real estate investments will prosper.
Not everything desired by immigrating wealthy homeowners is bad, because sometimes they have the energy to take care of problems. An example comes from shoreline property owners complaining about oil slicks washing up near their homes; they prodded the Coast Guard to step up enforcement so the slicks would stop.
You described how Sister Bay’s tax money has gone to projects which drove up property values. To some extent, these projects have helped the economy by attracting tourists. But the gains can be offset as the benefits drive up real estate prices, and high housing costs hurt the economy, or at least the more useful parts of it.
To restrain the growth of mill rates, one way would be to lobby for a Vacant Home Tax. It would be a second property tax, but only paid by people and businesses who own vacant homes, including seasonal residences. Such a tax could repay Sister Bay’s existing municipal debt early, so the mill rate for the ordinary property tax could be lowered. It could also allow the village to take on new projects without increasing the mill rate for local taxpayers. The tax would also discourage speculation, and, if high enough, could lower residential real estate prices so more homes become affordable.
Because the Vacant Home Tax is not currently legal in Wisconsin, it would take a concerted effort, much like with the PRAT. It would be necessary to convince the village board. If some members won’t support a Vacant Home Tax, maybe there are people willing to run for office who would support it. Eventually the village board could petition the state legislature for a law allowing a Vacant Home Tax.
A flaw with the PRAT tax is that it taxes tourists more effectively than seasonal residents. Yet revenue from the PRAT can be used for things which drive up real estate prices, hurting the tourist economy while helping seasonal residents’ real estate investments. Tourism of the ordinary sort has more potential for growth and allows for a stronger economy with more jobs, but as a trade off, it is more seasonal and is vulnerable to being undermined by gentrification. A Vacant Home Tax would help correct for this by taxing seasonal residents more.
Door County's total fertility rate in 2020 was 1.533 lifetime births per woman, down from 1.905 births in 1990. With 2.1 being what the replacement rate would be to preserve Door County’s existing population without the emigration of young adults, it would be prudent for government officials to experiment with tax and economic measures in order to remove obstacles to young people getting married and starting families, and also to help existing families. Policies pursuing a better economy and lower real estate prices should help. It will be possible to see how well measures work by watching what happens to the total fertility rate in the future.
Other posts discussing Vacant Home Tax
https://doorcounty.substack.com/t/vacant-home-tax