The Economic Development Commission recommended a bunch of changes last spring, the council created an ad hoc committee which has been meeting since July to review the recommendations and it seems they are contemplating some changes, but maybe not all those recommended by the Economic Development Commission . . . lets catch up with that conversation. Is the candy store wide open with no one there to guard it? Or are the EDC recommendations falling a little flat.
Here’s the most relevant documents:
Economic Development Commission Recommendation
Comparison Matrix of EDC and current policy
Agendas and Minutes
July 9 presentation to ad hoc committee
8/1 Olver presentation
Olver Joint Review Board presentation
TIF Policy IV But for Rewrite – 9-12-13.pdf
Alternatives to 50 Percent Rule Slide.pdf
Memo on Business Incentive Programs.pdf
TIF Policy IV But for Rewrite – matrix.pdf
DRAFT TIF Goals and Objectives – 2013 10-28.pdf
DRAFT TIF Underwriting Policy – 2013 10-28.pdf
And, in case you are wondering what these policies are about, here’s a clue from the minutes of the August 1 meeting:
Olver noted that the Judge Doyle Square project, which would exceed 100% of the TIF generated, was an example of a civic project that could meet the EDC’s proposed definition of an “extraordinary… civic project”.
And in case you want to know what the risks to the city with TIF are, also from the August 1 meeting:
Olver said that the longer a TID stays open, the longer the overlying taxing jurisdictions have to wait to regain the new development value to their tax roles. He said the City also has risk if it makes a development loan to a project that fails, and there is also risk in how the project is financed (regular financing versus pay-as-you-go). Alder Ahrens asked how City TIF Policy affected the overlying taxing jurisdictions. Olver said that State policy made up some of the differences to school districts due to TIF in differing levels of State aid.
Here’s a summary of the minutes to catch up on what they have discussed according to the minutes:
- Consensus was to move the TDA discussion to the section of the Policy discussing the creation and amendment of a TID. A TDA or Targeted Development Area is a “pre-TID” area where the city signals it is interested in development.
- Consensus was to go with the EDC’s proposed goals and move the Goals to a TID Creation Manual.
- Discussion took place on the Ineligible Development items. Staff was asked to further refine what was meant by “luxury housing”.
- Consensus was to eliminate the simultaneous land use and TIF approval in the Adopted Policy.
- Consensus was to put the Application Fee, using the Adopted Policy language, into an ordinance.
- Consensus was to better the define the EDC phrase “but may bear additional risk to the developer”.
- Consensus was to continue to use a Term Sheet per existing policy, adding that Staff “may present its findings to BOE, if needed.
- Consensus was to eliminate the requirement in existing policy that a TIF have a 12 year expenditure period.
- Consensus was to leave Section 4.1(1-5) as they were presented in both policy drafts.
- Olver said the overall architecture of the EDC proposal divided projects into three categories; real estate projects (excluding affordable housing), affordable housing, and employer oriented projects. He said that for real estate projects the City would continue to apply existing “but-for” standards, and modified standards for the affordable housing and employer projects. He said the “competitive factors” analysis would only be applied for employer oriented projects. Olver also pointed out the issues with affordable housing tax credit projects, relative to the “but-for” test and WHEDA applications. . . . Gromacki was asked to draft some sample standards for dealing with a “WHEDA gap”. And there were no further conclusions reached. Sounds like the council wants to stick with the science of data, instead of using “art” to make these decisions.
- Consensus was for the Committee to review the concepts presented by Olver for how to address the 50% rule and discuss at the next meeting.
- Gromacki provided an overview of the memo that he drafted at the request of the Committee at the previous meeting. He noted that the dilemma with WHEDA projects was that these types of projects under current WHEDA formulas did not have a gap. He said that one idea was to “create a gap”, by requiring projects to have a higher percentage of units that were deemed “affordable” at a lower AMI. He noted that it was a simple fix by essentially “creating a gap”, it allowed the project to still comply with the “but-for” test. I didn’t really see a conclusion to this discussion.
- Gromacki reviewed the Staff proposal on competitive TIF incentives. He provided background on previous TIF loans to industrial users. He noted that many of the numbers there, including the proposed number of jobs, were starting points for discussion at the Committee level. There didn’t seems to be many conclusions drawn here.
- Discussion took place around whether or not to include the current state of a TID in the analysis of a TIF loan. No conclusions drawn
- Staff was asked to generate an example of a WHEDA project that demonstrated the affect of the proposed changes and a matrix of the proposed exceptions to the “50% rule”.
- Staff was also asked to begin work on two separate documents that would split the TIF policy into a TIF Goals and Objectives Manual and an Underwriting Policies Manual.
- Schmidt asked the Committee what they would like to see in a process to review applications for funding when they do come in. Council members had strong statements about being involved earlier in the process instead of after a deal had been struck and exceptions made.
- Schmidt said he was very frustrated with and tired of hearing unfounded stories of TIF projects that didn’t go through or even come to Madison, without hearing numbers, names or examples. He said the WHEDA gap and the greenfield TID issues still needed to be addressed. He said that without hearing specific numbers or examples, why would the Council throw out the current policy? Bidar-Sielaff said that the EDC Proposal seemed to be going towards “guidelines” as opposed to “policy”. “Guidelines” in her view were softer and murkier than “policy”. She said if switching from “policy” to guidelines” was the direction of the Council, then the Council needed to have a much more involved role with the review of a project. . . . Ellingson said she felt that the process was okay the way
it currently worked, given the level of detail that was involved with a TIF
- And once again . . .
Olver noted that there are projects that are coming forward, specifically Judge Doyle Square, that will challenge the existing TIF policy.
- Questions about who is the staff team and what are their roles.
- Discussions of more inclusive reports for the council.
And the beat goes on . . .
That would be the drum beat of the developers and their lobbyists trying to squeeze as much money out of the taxpayers as possible, shifting the risk to the city and minimizing their up front investment and financial responsibility if it fails.
Meeting tonight at 4:30. It looks like the Economic Development Committee’s recommendations are not picking up much transaction – but we’ll see.
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