TIF tiff – Give the companies as much as they want?

Posted October 10th, 2012 @ 5:21 PM by

Dualing TIF committees and other issues. Yeah, live blogged again. This is the EDC subcommittee on TIF. For the geeks, and those who are concerned about how the 1% runs this town.

People who are in the room: Lobbyist for Downtown Madison Inc, Lobbyist for Chamber of Commerce, Lobbyist for Smart Growth Madison (who is in the middle of switching jobs and will be working for another lobbying group soon), A developer, a candidate for alder, staff, a county board supervisor, the guy who used to do some of the city blight studies and two mere mortal citizens.

OK, I was late but . . . .

I missed most of the discussion about have two committees to deal with TIF. Ann Monks was at the table speaking and they were discussing why there were two meetings. Alders in the room smoothed it over saying that the second committee had not been approved yet and that they would work in parallel and any recommendations from the other group would come to the Economic Development Committee.

Rhodes-Conway talks about the goals that should be addressed. Says that she would ask about geography, projects and public works. Through that they should look at the overall question of goals. She says the question and geography is where do you put districts and why, usually it was around a project and an arcane process of determining blight. She says that should be driven by the goals. The second part of what kind of projects do we want to fund in the private sector. What are the criteria, she doesn’t want to assume every project meets the criteria – she is interested in the higher goals in the city in the comprehensive plan or neighborhood plans or a housing plan or sustainability plan. When using tools, we should be using them in the service of the planning we have done. On the public side we need to screen the projects as well, is the infrastructure meet the goals we have laid out. She says we need to meet multiple goals when spending a million dollars. We need to get multiple benefits. She would like to see additional goals beyond economic development and she would like to see a housing plan first and then there should be affordable housing in some of the projects. San Fransisco has an affordable housing set aside, which she doesn’t think we can do in WI, they set it aside and don’t just spend it in the district. Portland Oregon has a 20% housing set aside and they put out rfps. She says that we should get jobs for people who live in the city, especially in targeted neighborhoods, NRT neighborhoods or CDBG targeted neighborhoods. Those who need it most, we could have a first source hiring situation. They would screen people, the employer would start there and interview them and see if they fit the job. She also thinks that there should be wage and benefit standards to the she says there are other goals to lessen the impact of the building on public health of the users and occupants, surrounding people and the environment. She listed a bunch of things, but I missed them. She says we have to leverage our money better, there is too much need and we have to try to meet multiple needs with every dollar they spend. (I really didn’t catch everything she was saying, as I was catching up from being late.

Joe Boucher, the chair asks if San Franscico and Portland succeeded. She says San Fran has been very successful and she will look at Portland.

Vicky Selkowe asks about public benefits, we have heard that TIF is a real estate tool and the public benefit is the project and the surrounding economic development and that if we have those other standards it will make us less competitive.

Rhodes-Conway says that quality of life is why people come here and live here. That is what we should be looking at when we spend public dollars. Reducing impacts on public health and environment are important investments. She says affordable housing also has all kinds of benefits and there are city employees who can’t afford to live in the city and less time driving makes it healthier. She says that also being in stable housing will save the city money in the long run in detox and police services and other services.

Gary Peterson has a handout that summarizes his comments, so I didn’t type a whole lot, will link it after I scan it – essentially he thinks we should give people as much TIF as they want! Selkowe wonders where he gets his numbers from – he says the cap is 12% and we should run it up to 11.9%. Ed Clarke says one of the concerns is who is responsible for doing this – he is concerned that they will make the people doing the development do these things. Peterson says that he is not in favor of making people do things, but we should give them the opportunities. He says that TIF can pay for the additional things that people are trying to get. Boucher asks about best practices that Peterson is aware of. Peterson goes back to teh 1.8% utilization. Boucher interrupts and asks again. Peterson says communities just negotiate a good deal and follow the state law, which is the best practice. He says that we will get high paying jobs but those who are waiting tables shouldn’t be paid $20 or $30.

Susan Schmitz is from DMI, thoughts from their group is that the schools and city need to increase the assessed values, we shouldn’t put lots of restrictions on TIF because this is one of our tools to that. We need to allow as many TIFs as allowed by statute. We should get to our 12% capacity. She talks about lots of plans that we have and how they will need public/private support. She says that we hear this is the city’s money, yes, but it should be a partnership. We should clean up the lakes with the money and they should start over on the policy. Boucher asks when their committee will have a formal statement. She says after they have something to react to. She says that best practices are the most communities don’t have policies and just follow the state law. She notes she sen them the policies from Fitchburg which are pretty good.

Heidi Weglietner explains she is on the board and her work in poverty. Agrees with much of Rhodes-Conway’s statements about the important role TIF can play to do things we otherwise can’t get done. She says affordable housing is an important goal of TIF because there sin’t money for affordable housing development. It will almost always be a “but for” situation. She says she grew up in affordable housing and at that time the federal government was giving 3 times the amount of money at that point. Its not surprise we have so many homeless people and people who need affordable housing. That is why TIF is so important. Having a stable home creates economic mobility. It allowed her parents to complete college, give the kids a stable home and allowed us to go to schools. This is a contributor to our achievement gap. Affordable housing is listed in so many of our reports that housing impacts and we need to see that quality of life is impacted by that. People keep their jobs if they are not evicted. We need to think about truly affordable housing, 100% or 08% is not affordable. We need to think about not just the city employee or the fast food joint. They aren’t asking for $20 or $30 an hour but a living wage. They should make enough to afford their rent. She opposes scraping the entire policy. Clear says you don’t need to sell me on affordable housing, but what is the role of TIF. Should there be different standards for an affordable housing project. Should they use TIF proceeds for affordable housing project or would they have other standards. She says it should all be on the table, she is not the expert, was interested in what Rhodes-Conway talked about. Boucher says that he was at a lunch sponsored by bankers and there were two builders there, he said they don’t build in Madison and TIF is a pain – he says we have a perception issue. Do you understand that is part of the problem? Wegleitner says that she doesn’t deny they said that. He says everyone knows we have an affordable housing problem, but how do we do that.cover the agenda.

Olver says that affordable housing is important in the policy, but it makes it hard to create it. He says that if a WHEDA project comes in and wants TIF then we have a problem because the tax credits wipe out the gap, but they need TIF to get the match for the tax credits. He says one thing we could do is have a policy on how staff should deal with affordable housing to help create it.

Carole Schaeffer (no client, in between clients), she worked for real estate industry for 7 years. She was there for the ad hoc committee and other plans. She says that the policy was not improved last time but we didn’t make it worse. She says the 50% increment, the equity participation formula that requires you to pay it back twice and things that don’t happen in other communities. We did look at best practices, there are no other communities that have policies that we have. Scrap our policy, go back to the law. For affordable housing, job creation etc she has sat in meetings where we were compared to other communities. She wants to meet those other goals but we shouldn’t muddy the waters in this venue. We should use the increase in the tax base to achieve those goals. We need to level the playing field to offer something competitive to continue to grow. Boucher asks if she knows of other best practices? She says the last time there was nothing we found. When we compare to other states, this is one of the few tools we have for real estate development. Selkowe says that you worked with developers who this worked for, what would we lose if we just scrapped the policy. ARe there things in the policy that developers find useful. She should go back and ask that. She says last time we got bogged down in 50% and equity participation and at the end of the day those still exist.

Boucher says their goal was to talk about goals and objectives.

Mark Clear has something written. Here it is. This is a straw man to start poking at. He says these should be guidelines not policy. He says it creates a closed restricted point of view, they don’t have to be strict and have the force of law. Every project is unique and has to evaluate on an individual basis. He says they should be guidelines.

Boucher asks if you create more growth and increase the tax base then you can accomplish other goals. The other way it to get them through the policy. Clear says that there is a different issue with developer requirements and what you do with the proceeds. The guidelines for development is just for development projects and then we determine what is done with the increment. Clear says that some of the social goals happen with the development. That happens from good real estate development. He says there could be a scoring system. There wouldn’t be a threshold projects have to meet. We would get more than one thing out of TIF.

Selkowe says in a guideline framework its hard to do that.

Clear says that we can have them look at these issues through those lenses when looking at projects.

Boucher says that there could be guidelines for the development and also for the increment and they would be different.

Clear says yes that they still have to be TIF eligible. He says that we have arbitrary guidelines at the moment. TIF is free money and we just spend it and he thinks that we should look at that.

Selkowe says that we have two contrasting points of view, are we trying to make it less of a pain in the butt for developers or is it our goal like the Mayor is how to use it as a tool to create value for the whole community.

Boucher says the goal is to increase the tax revenue.

Selkowe says she is looking for value beyond property tax.

Boucher says he doesn’t disagree.

Selkowe says we have limited tools.

Boucher has we are only using 1.8% of TIF. She argues, he says in terms of the valuation we are only using 10%. They also correct her that this is not tax dollars.

Clear says that our capacity is unlimited with TIF.

Selkow says we should be looking at broader values. She also wants to think more about guidelines and policies. She wants to think about just going back to the state statutes. She would like to see what we lose. Statutory frameworks are supposed to be minimal and then we fill it in. What have we added on top of state law.

Olver says that most of what you think of as TIF policy is above an beyond the law. He says TIF law is silent on how much is public and private, silent on how much money a developer can receive, requirements of the developer, when you create a TID. We create one when we have a project, some communities create an area and hope development comes and then we will use it to implement a plan. Most TIF policy is above and beyond the statutes.

Clear says that you lose predictability for the development community.

Selkowe says how is a guideline different than a policy – don’t you have the same problem.

Argument ensues. Too much talking on top of each other.

Boucher asks about the goal. Selkowe says it is to create value for the community.

Ed Clarke is worried about this committee setting social policy for the community, is it affordable housing or sustainability. He thinks the common council should decide that – how do we promote the public good. He says it has to be flexible, competitive and attract development. We are not thinking enough about the tax base. WE are losing ground on our ability to pay for service adn we can use private development to pay for public services. If we are not competitive its a problem.

Boucher says much of the creation of jobs and economic development is government and University – they don’t pay taxes, we have to incent tax paying growth in value, not just university – not that this isn’t important.

Olver says it might be useful to think about regulation vs. vision. There might be a huge difference if you require LEED certification or if you say we will support that with TIF. You might underwrite projects based on gap but storm water retention we’ll pay for above and beyond the gap.

Clear says that would give us lenses to evaluate the projects.

Olver says that the state statute only approach by his friends out there, but they need to have clear guidance for staff, otherwise staff will decide what to say yes or no to. We have said no to affordable housing even tho the council would like to see it, because of the policies. WE need a strong statement of the things we want to invest in. We can be pro-development and pro-social policy.

Boucher pushes on what the goals and objectives are.

Selkowe says they should talk about areas where there are goals that we would proactively give more to meet certain goals. WE have TIF funds for this area if it does xyz. She would like to see that pro-activeness and see how they can incentivise it.

Boucher asks again if they can come to a sense of their objectives.

Clarke says it should be something like Selkowe and Ann Monks was saying. He says that we should be flexible and creative and effective in promoting development and through that development of tax base we can create a better quality of life.

Clear says that is what he was saying. That we would place a higher value on projects that do this. He says none are required.

Selkowe says we want more than commercial value, we want homes and jobs.

Boucher asks if they can tweak Mark’s sentence.

Clear asks about the jobs issue. Is that the goal or is it to create tax base.

Clarke says they should incent projects to increase tax base, provides for infrastructure and improves the quality of life.

Selkowe reads the current policy. Sounds a lot like what Clarke says. Clarke says that the only thing that the current policy says is that they can only use increment for infrastructure. They haggle over the details of the details of the sentence.

Olver says the only “but for” language is considered when a TIF District is created, not project by project.

They pretty much keep the first sentence of the current policy. Clarke rewords things.

They set up the next meeting for Halloween at 4:00 because they have heard they should have public input. They discuss what they will discuss.

Olver says that they should create buckets of projects like affordable housing, greenfield fringe development, infill development and then they would create policies for each of the buckets. They could then do proactive outreach because most people can’t participate in this discussion. He says it is easier to ask how to think about working with developers. What is important, stormwater management, higher wage jobs, sustainable features, what are the extraordinary public projects. How do we know when we have an extra-ordinary project.

Clarke says if we start with affordable housing, we are not talking about the projects we missed or got. Those that have the biggest impact create the biggest impact and we need to look at those projects, instead of working on the smaller issues. When the big issue walks in, what do we do then. Will this help us with the developer who wants to build a hotel on Doyle Square.

Olver says that they need to look at how they deal with employers. Our policy presupposes we are dealing with a landlord, what do we do if you are dealing with an employer. If they are profitable, we say no. Affordable housing is the same, it doesn’t work the way we underwrite TIF. Companies in dealing with employment is a huge area. He suggests that there might be categories where we want policy to vary. The council could say one size doesn’t fit all. We should have a conversation with the public about what we want to accomplish – they can give feedback on that, we can reward developers who do these things like sustainability. Then you can decide if there is a requirement or bonus. You cold then trnaslate those values into policy.

Boucher asks what they should talk about next time.

Selkowe says that we shouldn’t just talk about high quality jobs and affordable housing on the increment side, she would like to see what other cities do, is it an incentive or requirement. They could look at sustainability, housing and jobs and see what others do.

Clarke asks about data on jobs or affordable housing. Olver says no. They usually deal with the landlord/developer, not the renter that creates the jobs and we are not dealing with the employers at the same time. There may be a lead anchor tenants, but the other 50% doesn’t come til later. They might want to distinguish between employers who own and rent.

Selkowe says they need to look at metrics, Chicago has a good summary. She talks about predictability. Clarke agrees that they need to determine the TIF budget – if it is limited it is hard to take money and set it aside.

Boucher says they will talk about whether affrodable housing, sustainable development and jobs should be direct goals or after the TIF is developed and there are proceeds should that be when we look at it. It might not be either or. Selkowe asks for other examples.

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