Local Real Estate Market Remains A Concern For Caledonia

The lack of new housing and commercial real estate continues to have a substantial impact on the Village’s financial situation.

Some subdivisions were started before the economy “went south,” said Tom Lebak, village administrator. And because there are many available properties, it’s not appealing for a developer because there are already so many empty houses on the market. Building permits and other related fees for new construction are significant revenue streams, and the village is dealing with less funds.

In 2007, the Village had 81 single-family houses built and four new commercial developments. That translated into $21 million in revenue for houses and $5.7 million for new commercial/industrial developments. Through May 4 this year, the Village had one single-family home and seven commercial/industrial developments. That meant the Village received $180,000 for one home and $14,900 for seven commercial/industrial developments.

Bottom line, in 2007, the Village received $34 million from 754 permits, and in through May this year, they’ve receive $687,690 from 77 permits.

“Budgetarily what has hurt us over the past three to four years is the amount of money from water and sewer, and building permits, and the zoning permits, have really had a substantial negative impact on our budget,” Lebak said.

Now is not the time to be picky about which businesses to welcome to the Village of Caledonia, according to Ron Coutts, Village President. With foreclosures impacting the community’s economy, any tax revenue is valuable, he explained.

“At one time we could be very picky at choosing who we want to have in our community, and right now, tax dollars are tax dollars, so it’s not the time to be picky,” he said. “I think all the municipalities in Wisconsin are probably looking around trying to get extra dollars.”

Money matters, especially when budget constraints have already led to labor reductions. But personnel cuts aside, the village is still responsible for making sure state requirements are met, he noted.

“You can’t just shut the door and walk away from it and say we’re done with it,” Coutts said.

For instance, grass needs to be mowed and weeds need to be pulled. While the village doesn’t have a park and recreation program any more, it still needs to take care of the parks, said Tom Lebak, Village of Caledonia Administrator.

“We have a park commission that tries to maintain the parks, but…we’ve seen cutbacks in services because of the decrease in revenues,” he said.

Lebak also said that due to the new state budget, with its “severe levy limits,” the outlook is dismal, and an upswing isn’t on the horizon yet.

Due to job loss or other financial obstacles, many new homeowners have become unable to pay their mortgages, Coutts said. “…they end up walking away from their future,” he said.

In talks he’s had with developers, Coutts said they’ve discussed a 3-5 year estimate for when the residential growth might recover. And commercially, companies are hesitating to make moves in the uncertain economy. That poses challenges for the budget, he said, because new state laws prevent increased taxes.

“We can’t raise taxes, so if services have to be cut, and what direction do I have to go in, without commercial growth?” Coutts said.

Lebak said vacant properties pose a concern for the community because having a healthy tax base is an important element for the village.

“A healthy business climate is healthy to us as well…empty buildings are not, and that doesn’t show health of a community,” he said.