All I want to know is, how many units? Who will they be affordable to? And, when??
TUESDAY AGENDA ITEM
Item #63 on the City Council’s agenda on Tuesday was
Authorizing the Mayor and City Clerk to execute a development agreement with Starkweather, LLC to create a 20-year, mixed-use, Tax Incremental District #55 (Voit Farm), to assist in the development of the former Voit Farm property into 13 lots that may be sold to developers of both market-rate and affordable housing. (District 15)
One of my latest pet peeves is how people say the words “affordable housing” to get things passed because everyone knows we need more affordable housing. It feels much like the greenwashing that corporations do where they claim to be environmentally friendly to get consumers to buy their products when they have very little action towards improvements for the environment.
So, I wanted details, how much, affordable at what income levels, etc.
THE DETAILS
The agenda item has the resolution, the TID Creation Summary and the Exhibit A term sheet for more details.
Resolution
The resolution essentially outlines that they are having Starkweather LLC develop the property into 13 “shovel ready” lots at Voit Farm. The resolution is a bit confusing to me because the fiscal note says this:
The purchase of the property and the costs of installing infrastructure on the property will be the responsibility of the Starkweather, LLC (approximately $18.8 million).
And then they whereas clause in the resolutions says this:
WHEREAS Starkweather Group LLC, (“Developer”) has proposed to develop 25 acres of the former Voit Farm property, located at the northeast quadrant of the intersection of Milwaukee Street and North Fair Oaks Avenue in the City of Madison (the “Property”) and within the boundary of a proposed TID# 55 (Voit Farm), for housing and mixed-use development, including implementing required public improvements to 13 platted lots with infrastructure at a total estimated development cost of approximately $21,000,000 (“Project”); and
Later again they say the project costs to get the lots ready is $21M so the fiscal note is just confusing/wrong?
Apparently they still haven’t created the TID or set the boundary. When they do the project plan will outline the eligible TIF project costs including the $3,887,000 in this resolution for the developers and the $4,165,000 the City is using for landbanking 4 of the 13 lots.
This is apparently just a commitment to create the TID district because the cost of constructing infrastructure “may” cause a gap for future affordable housing development projects. So they are setting aside $3,887,000 for that. The other $4,165,000 is for low density lots 6, 9, 10 and 13.
This is all contingent on creating the TID (project plan and boundary) and approval by the TIF Joint Review Board.
So, this isn’t a done deal.
And, how much affordable housing and affordable to whom? It doesn’t say. Surely, the other documents do, right?
TID Creation Summary
Here’s how they got to the numbers of how much assistance may be available
TIF Staff has estimated that the incremental value of initial housing development projects, comprising an initial forecast of approximately 534 units constructed on Lots 1 through 5 and starting construction between 2026 and 2027, would be approximately $90,800,000. Developer’s land development cost must be recovered through land sales to other housing developers. Housing developers may have a financing gap and may require TIF loan assistance in addition to other City and local sources of development assistance.
The new TID is projected to be able to support approximately $3,887,000 for TIF loan assistance to housing development projects at the maximum 55% amount allowed under TIF Policy (“55% Gateway”),and approximately $4,165,000 for City land banking of Lots 6, 9, 10 and 13. It is estimated that the remaining lots held by the Developer could yield approximately 984 units (including the 534 units estimated in Lots 1 through 5).
Summary Estimated Incremental Value
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- Initial Development Forecast $90,800,000
- Approximate Project Cost $21,000,000
- TIF Loan Assistance for Housing $ 3,887,000
- TIF Funding for City Land Banking $ 4,165,000
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Just an aside – the memo says this about the costs, so a third explanation of the costs.
Developer has raised approximately $21 million of capital sources to purchase the land, design and plat the land into parcels, secure zoning entitlements and install public infrastructure.
This is a further explanationof how they got to these amounts of money to set aside that doesn’t paint such a rosy picture.
There is limited anticipated value growth within in the proposed TID but outside of the Project area. In addition, the typically lengthy period required for land development absorption (usually about 15 years) means that incremental value growth will be gradual, which translates to lesser amounts of tax increment available each year, and less supportable TIF borrowing.
In addition, as the nation is entering an unpredictable economic phase, including cost increases due to tariffs and potentially higher interest rates, providing some amount of financial cushion is a prudent financial measure.
In response, the Project Plan includes approximately $3.887M of TIF assistance for housing development projects, representing $37% of TIF. In addition, the Project Plan sets aside approximately $4.165M for City land banking, representing 40% of TIF, to purchase less viable, low-density Lots 6,9,10 and 13.
The “less viable” lots are the ones they saved for the affordable housing. Gee, thanks.
But still, how many affordable units? And affordable to whom? I mean, if the city is committing $8,052,000 shouldn’t we know? Maybe the term sheet will tell us?
Exhibit A Term Sheet
This purpose they outline here seems more wishy-washy than I would like and seems liek there isn’t reallly a commitment to affordable housing. The purpose is to
assist in the development of approximately 25 acres of land to be subdivided into thirteen lots, with Lots 1 through 5, 7 and 8, and Lots 11 and 12 to be sold to buyers for the purpose of constructing either market-rate and/or affordable housing and Lots 6, 9, 10 and 13 to be sold to the City for the purposes of encouraging the development of either market-rate or affordable housing
This outlines the costs differently throughout
- $8,260,000 for purchase, but the city “acknowledges” $8M.
- $10,550,000 to install infrastructure (roads, water, stormwater, sanitary sewer etc)
The other $2,190,000 to get us to $21,000,000 in costs seems to be the costs of the city development process?
And then the city funds would be spent this way
- $1,652,000 to purchase lots 9 and 10
- $2,302,000 for the purchase of lots 6 and 13.
The $3,887,000 is for lots 1 – 8 and 11 – 13. Lots 9 and 10 are excluded. Buyers of the lots will have to fill out a TIF applicaiton and prove a financial gap caused by the lot sale price.
The “less viable” lots will be sold to “non-profit buyers”. Lots 9 and 10 are clearly expected to be affordable housing and there are no guarantees who it will be sold to. (It doesn’t say it but Community Land Trust and Habitat for Humanity are the expected buyers)
Here’s the number of units – 1042 with maybe 58 affordable units, but there’s no guarantee all 100% of the units will be affordable. If they are, that means the current plan is that 5.5% of the units anticipated may be affordable.
Are you starting to see why I compared the use of affordable housing by the city to greenwashing.
Other items of note here
- The council still has to budget the funds for this
- The TID is anticipated to be created by August 30, 2025
- If the TID isn’t certified by the state by about April 2026, the city can extend the agreement to get certification by the state in 2027.
- The developer has 30 months to complete their portion once closing date or the agreement is nullified.
- The agreement will be nullified if they permits to being street work, infrastructure and rough grading are not obtained by May 1, 2026
THE COUNCIL DISCUSSION
Will Ochowicz asked a question of the developer and a question of staff.
There was no discussion.
CONCLUSION
How much affordable housing?
And affordable to whom?
If we are spending $8,052,000 for affordable housing, shouldn’t we know what we are getting?
Some of these alders won’t even be on the council by then, the mayor may be gone and who will remember what was promised by a prior council and why will they feel they have to follow through?
And, how much more could they have deprioritized the affordable housing in this project. They put it on the least viable lots, said they lots could be affordable or market-rate.