TIF and the Edgewater

by

I’ve seen a whole gang on interesting points made on the Edgewater in recent days, so I’d like to share a few of them with you.

First: Brenda Konkel brings up an interesting motive for supporting Tax Incremental Financing for the renovation: schools. According to Brenda, the proposed changes to the TIF district (which you need to be a part of to receive TIF funding) include James Madison Park (which Ald. Bridget Maniaci has lobbied for), as well as the Lincoln Elementary School.

For those of you unfamiliar with the jist of TIF, the city pays a subsidy which it expects will be paid back through increased property tax receipts that result from the increased property value in the area. It is in the interest of public schools, who are the largest beneficiaries of property taxes, to support plans to increase the property tax base.

Although Brenda seems to use this point to illustrate a sinister scheme by the schools, I see it as a valid point in favor of TIF. The public sector can benefit as well as the private sector. And please no comments about Kelo v. New Haven!

Forward Our Motto, another Edgewater renovation opponent, points out that Madison has been inconsistent with its allocation of TIF money. For instance, Epic, the Madison-based software firm, moved to Verona years ago in an apparent attempt to find a more business-friendly climate. Lukas points out that Verona gave them $14 million of TIF money, which is $2 million less than we’re giving the Edgewater people. Lukas correctly points out that Epic represents a helluva lot more jobs than the Edgewater.

In response I would make two points. First, it doesn’t look like Epic ever applied for TIF funding from Madison. Did they want to stay here anyways? They rejected sites in Madison and Fitchburg before settling on V-town. Take a visit to their headquarters sometime and you’ll understand that the vision their CEO had likely wouldn’t have been possible within the city limits. If Epic approached Madison with some kind of offer and the city told them to go to hell, well, that was very short-sighted. But I doubt that’s what happened. Secondly I would make the somewhat predictable point that the Edgewater is taking place during a recession and we’re desperate for any kind of investment we can get.

Tags: , , , , ,

8 Responses to “TIF and the Edgewater”

  1. lukas Says:

    Part of my reason for including Epic was because Dean Mosiman included it when talking about Madison’s develop policy. I, like you, wonder if Epic’s decision to leave was related to other factors and I think Mr. Mosiman might have been out of bound mentioning. Epic in an article about Madison’s development process.

    Re: The recession – I think that in a recession, the city should be extra careful with its money, especially since it will impact the schools as well. If this is about jobs, a much better TIF project was the Danisco project. Although Danisco didn’t get any TIF and still went forward. So maybe that was okay to skip.

    • Jack Says:

      Hmm…so you are more of the opinion that stimulus should come from the federal government, which can take on more debt, or are you simply against stimulus model all together?

      • lukas Says:

        Neither. 🙂 Regardless of where the money comes from, it comes from taxpayers. So I tend to favor projects that have a good cost to job ratio or support infrastructure. A new rail line or renewable energy plant benefits the community.

        Does 80-some new hotel rooms downtown benefit the city? I’m doubtful. It’s certainly not worth 16 million TIF dollars. And I’m really not seeing the huge job boost either. Since the economy is tight, we need to be certain we are getting good value for our money. I don’t think the Edgewater redevelopment is a good value.

  2. Scot Says:

    At today’s Madison Board of Estimates meeting, city comptroller Dean Brasser was asked how soon Tax Incremental Financing District #32 would close if the Edgewater (and a large area of properties around it) were not added to TID #32 (State Street + University Square).

    If the city follows the mayor and adds Edgewater to TID 32, about $1.5 million dollars annually of “excess increment” from University Square’s taxes will not be available for the city’s general fund or schools until TID 32 closes in 16-20 years. TID 32 expires in 2030.

    But, if Edgewater is not allowed to glom on to TID 32’s cash, TID 32 will close early and $1.5 million a year will be available for tax relief and schools.

    So, what did the city comptroller say about TID 32?
    “Because of successful development at University Square, after State Street redevelopment costs are included, the district has a surplus above scheduled costs of about $1.5 million a year. Based on how it is going so far, we will recover current costs in a few years from now. ”

    Mayor Dave gives $16 million in TIF to a wealthy developer to build a luxury hotel and 6000+ square foot condos on the lake.
    We lose $1.5 million a year for a generation.

    • Jack Says:

      So you are skeptical of what Brasser says? Do you think he’s fudging the numbers? Because your last statement doesn’t jive with the Brasser quote.

      • Scot Says:

        I believe Brasser. Right now “the district has a surplus … of about 1.5 million a year” and because of that, TID 32 can pay off its existing debt in a few years.

        But, if $16 million of new Edgewater debt is added to TID 32, it willl take many more years to pay off the total debt.

        Until all of TID 32’s debt is paid off, the schools, county and city general fund don’t get a dime.

        Leave TID 32 alone, get $1.5 million a year starting in a few years.

        Or, add Edgewater along with $16 million of new debt, and wait 16-20 years to help the schools and provide tax relief.

  3. Brenda Says:

    Actually, I talked to Brasser after the meeting, its about $3M per year that could be going to the taxing entities (City, County, MATC and Schools) when the district closes. They have an excess of $1.5M per year and $1.5M of expenses (retire debt, new projects). That means about $1.5M per year could be going to the schools to help pay the gap if the district were to close. Or, the city could keep it and use it for the Edgewater. I think the schools need it more right now. Open a new TID for the Edgewater, but don’t deprive the schools of the money they need by creating a ginormous TIF district with $213M of value that the schools and others are not getting their share of new taxes (the increment) on that property.

    • Scot Says:

      Brenda,

      I had just realized the $1.5 million excess didn’t count existing debt service ($900K) + ongoing State Street projects ($1.6+ million) which would cease when district closes. I came back to correct the error and POOF you’d beat me to it.

      Brenda’s right. Without Edgewater, TID 32 would provide $3 million in new revenues for the city, county and schools.

      The numbers are spelled in the 2010 capital operating budget, TIF section. Scroll down to TID 32. It’s in there.*

      If a new district were opened for the Edgewater, the mayor could no longer claim that Edgewater’s $16 million would be paid back in 6 years.

      But then, he shouldn’t have been claiming that in the first place without mentioning that most of it ($10+ million) would be paid back by University Square, not Edgewater.

      * http://www.cityofmadison.com/comptroller/documents/2010CapBud/Adopted/TIF_Adopted_2010.pdf

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s


%d bloggers like this: