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Madison to Tighten TIF Requirements

Wonderful.

The City Council on Tuesday will consider a new policy that would use the city’s most potent development tool — tax increment financing — to promote “living wage” jobs by attracting, keeping and expanding business and targeting improvements in high-need areas.

“It’s jobs,” said attorney Tripp Widder, who led a special committee that has spent years revising the city’s TIF policy. “It’s eliminating blight.”

TIF helped ignite a Downtown renaissance, but under the new policy upscale condos, market rate apartments, speculative office buildings with no secured anchor tenant and student housing would be ineligible for public support.

[...]

Developers generally support the policy’s new goals but have concerns about some specifics, especially possible penalties for projects that don’t make good on job promises and a provision that makes very successful projects share two-thirds of unanticipated profits.

“We’re glad job creation is a priority,” said Carole Schaeffer, executive director of Smart Growth Greater Madison, an industry advocate. “But it’s difficult to do TIF projects in the city of Madison.”

[...]

The city has no TIF applications pending.

Here’s the thing… any private development project that is ever done is done to make money.  At the end of the day, the developer wants to turn a profit.  If Madison passes this, it adds cost to any project and reduces the potential profit.  No, this won’t kill any project in the future, but makes projects less likely to be profitable.  This will lead to some projects never happening because the risk and cost of the project doesn’t justify the potential profit.

Posted by Owen at 1235 hrs
Politics + Politics - Wisconsin

1. Yes, failure to hand out tax dollars to real estate developers does tend to impact the profitability of their projects.  Poor babies.

   Madison is a little kid trying to wear dad’s boots, whether we’re talking about the inane TIF policy for condos (which was premised on the idea that old people and families would want to live in booze and vomit soaked downtown), or the absoutely unecessary and inevitably doomed trolley.  It’s about time they started acting a little more grown up and stopped letting developers treat them like rubes and hicks.

   Posted by .(JavaScript must be enabled to view this email address) on February 20, 2009 at 1609 hrs
   
   
   

2. Unanticipated profit?

   Who gets to decide this?

   Isn’t this just Madisons way of telling businesses exactly how much money they can make? Sounds to me like a profit tax. Or worse yet price controls.

   Any dollar you make over your costs on a yearly basis the City automatically gets 66 percent of? Really?

   Posted by Michael J. Cheaney on February 20, 2009 at 1912 hrs
   
   
   

3. A very similar proposal is moving forward in Milwaukee right now - a proposal that several national retail chains have said will kill any plans to come or expand here.  The Milwaukee plan even talks about profit sharing - essentially saying if there are lower than anticipated costs or higher than anticipated profits that the City would get a taste of the action.  Ironically, they don’t have a clause to put the City on the hook if a development doesn’t make it. 

   Jason doesn’t get it - projects sometimes aren’t feasible when you dump a ton of mandates on them, or at all but a “stimulus” such as a TIF actually puts a shovel in the ground and raises the tax base.  In many cases, the projects that require a TIF are the ones that are generally agreed as catalytical for the area.  Why should developers lose money to kick start things in a community when people like Jason are there to knock them down the minute they make a dime

   Posted by .(JavaScript must be enabled to view this email address) on February 21, 2009 at 1710 hrs
   
   
   

4. The part about unanticipated profits is ridiculous.  But that said, it does sound on the whole like a more worthwhile use of TIF money.

   Everyone talks about downtown Madison being revitalized, but frankly a lot of that revitalization would have and could have occurred without a subsidy.  Virtually all of the housing that’s been constructed downtown is upscale development that appeals only to empty nesters who are downsizing or downtown professionals who don’t have kids.  This deluded dream of families moving back downtown was a load of crap from the very beginning.  Downtown Madison is a terrible place to raise a kid.  Start with the reasons Jason mentioned and add an abhorrent lack of green space away from the lakes.

   That Madison handed TIF money over for the U-Square project is further proof that the inmates are running the asylum.  U-Square is nothing more than a glorified dorm for rich kids with some retail space below it.  When one looks at the housing development that has occurred on campus in the last ten years, it’s plainly evident that the construction of 12-story student dwellings didn’t need any help from government to get going.

   Some of it makes sense - Monona Terrace, the Hilton, Block 89 - but the residential stuff has been nothing short of welfare for local developers.  And the city was known for being so whorish with TIF that developers started holding out for it even on projects that made sense without the subsidy.

   Posted by Recess Supervisor on February 21, 2009 at 1840 hrs
   
   
   

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