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Incomplete TIF tempts Madison planners

Paul Snyder
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A $6.1 million investment from a cash-strapped budget and a missing anchor project cannot scare away Madison planners from creating the 40th city-supported development district.

“I still think it’s worth making it happen,” said Alderwoman Satya Rhodes-Conway. “It’s going to be an important part of the economic development that we’re trying to get going on the north side.”

Madison’s expected investment in the tax-incremental financing district will cover such items as road and storm-sewer upgrades. Even though no major project is lined up for the district, smaller proposals could generate enough money to justify the city’s commitment, said Joe Gromacki, the city’s TIF coordinator.

TIF districts let municipalities borrow money to subsidize developments and pay for infrastructure to serve new construction. Municipalities then need the new projects to generate taxes that the municipalities use to pay off the debt.

The UW Credit Union is expected to build an estimated $4 million branch in the new district, Gromacki said, and Oscar Mayer, a division of Kraft Foods Inc., might build a $3 million addition to its plant for boiler system improvements.

Those projects could expand the tax base enough for the city to start paying off the debt while awaiting more development, he said.

But Michael Schumacher, another north side alderman, said the Oscar Mayer development is not guaranteed, and the Credit Union would have opened the branch without a TIF district.

“I don’t argue that this part of the city needs attention, and I’m happy to be a team player,” he said. “But it does raise the question of what we use TIF for if it’s a weak district, and there is no generator to help pay this back.

“People assume these districts come for free, but they come out of our projected costs.”

Madison government leaders are putting together the city’s 2010 budget in the midst of reduced state aid and the prospect of cutting or suspending programs and projects to maintain basic services.

Gromacki said of the past 18 TIF districts in the city, only two or three gained approval without a major project as an anchor.

The last time the city got shortchanged, he said, was over a TIF district for Madison-based McGrath Associates Inc.’s Union Corners development, which originally was planned as a $100 million mixed-use development. So far, the city has committed only $1.6 million in TIF assistance, but there still is no development.

But the relatively minor commitment, combined with general growth in the district, should be enough to pay off the district in eight or nine years, Gromacki said.

“It sure doesn’t hurt to wait until something is about as imminent as it can possibly be,” he said. “But even if it is created, there are checks and balances.”

With some growth projected for the north side, Rhodes-Conway said, the new TIF district is justified.

“If nothing else, it’s an opportunity to bring some really necessary infrastructure improvements to the area without breaking the bank,” she said. “It’s a relatively small-scale district.”

The city’s Plan Commission on Monday approved the north side TIF district.

Schumacher said he worries the approval signals a wrong turn for Madison’s TIF policy.

“I believe we’re rushing into this,” he said. “Quite frankly, I wish we would’ve taken a breath and seen what we could have accomplished with a business generator as part of the equation.

“We should not be TIF crazy.”

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