The city can cover the Common Market financing gap with TIF revenue

District financing Incremental tax robust on the East Side has enough money to help pay for the $20 million Madison Pubic Market while still contributing to the arrival of the project on the South Side – if the City Council and other taxing jurisdictions agree to spend that way.

Alds. Syed Abbas, Regina Vidaver and Nasra Wehelie on Friday offered an amendment to the capital budget proposed by Mayor Satya Rhodes-Conway to deliver up to $6 million more in city support from the TIF district in the East Washington Avenue corridor for the public market, which has $5.2 million financing gap.

With a TIF, the city and other local taxing bodies agree to freeze property values ​​in an area. Tax revenues from growth are then invested in private development or public infrastructure. When the investment is repaid, the district is closed and the high-value property is fully returned to the tax rolls.

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To finance the market, the city intends to use $7 million in TIF, $849,000 in city funds, $3 million in private donations, a $3.4 million federal Economic Development Agency grant, and $4 million from a state program that uses COVID-19 relief funds. 19 federal. . But at the end of August, revealed city rising construction costs had added $1.8 million to the cost, pushing it to $20 million. So the city withdrew its application for a $3.4 million federal grant because the city couldn’t meet a deadline to guarantee how it would cover the new costs.

Then, our city’s Finance Committee offered a mixed signal about if or how the city can close the financing gap. Some members questioned whether such spending is a good use of public money and others said that the city should not further tap the developing TIF district that includes the market, called TID 36, because the money from the district is also envisioned to help with important needs in it. South.

The Finance Committee offers mixed signals on closing the funding gap for the Madison Public Market

In September, Rhodes-Conway proposed capital budget for 2023 which continues now, approved the level of funding for the project but including no additional money to help close the financing gap. The lack of it will, at the very least, delay construction in the market until the beginning of spring and could threaten the project as a whole.

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But TID 36 has now built up enough money to provide more money to the public market and contribute to the new South Side TIF district anticipated in 2023, said city economic development director Matt Mikolajewski.

TID 36 is expected to have a cash balance of about $21 million at the end of this year. The district still has about $7 million in debt, the city has committed $7 million in TIF for the Public Market, and about $6.5 million more is needed for other expenses. At this time, the district can cover all existing commitments.

But TID 36 also now generates about $10 million annually in eligible TIF fees, which can’t be spent until September 2027, meaning the district will have another $50 million by then. That money could be made available for new expenditures including a public market and contributing to the South Side TIF district.

The city and the tax entity’s TIF Joint Review Board, Mikolajewski said, have four basic options for TID 36:

  • Close the district first after current obligations are met, and return full tax revenue to the taxing jurisdiction.
  • Approving spending additional money within the limits of TID 36, such as for the general market.
  • Approving TID 36 cash donations to other districts, such as has been discussed for South Madiun.
  • Do some combination of the above.

The city is currently preparing boundaries and project plans for another TIF district on the South Side, TID 51, which will be implemented in the second quarter of 2023. Preliminary analysis shows that there are more than $100 million of TIF eligible projects in the South Side District, but they have not all started before the 2027 deadline to use or donate funds from TID 36, said Mikolajewski.

“There is a way forward where the money can be used to finance the common market and the initial TID 51 project,” he said.

The new TID 51 will likely be in place until 2042, and is expected to have the capacity to pay for projects within its own borders, Mikolajewski said. “They never thought that TID 51 would only rely on donations from other TIDs to pay for expenses,” he said.

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