Madison leaders Monday withheld a decision on how to recoup money from a developer that already owes more than $180,000 to the city.
The city’s Board of Estimates requested reports and recommendations from the city assessor, attorney and tax incremental financing coordinator on how best to recover delinquent TIF payments from Madison-based Monroe Neighbors LLC. Alderman Tim Bruer said the Board of Estimates will make a decision at its May 10 meeting.
“I’m sure there are small business owners out there that would love to have the city and taxpayer cover their debts,” he said. “But it’s totally unacceptable.”
Monroe Neighbors in 2005 received city approval to build the Monroe Commons mixed-use development with $2.3 million in TIF assistance to be paid off by 2012. Joe Gromacki, the city’s TIF coordinator, said during Monday’s meeting that city staff cautioned developers that $2.3 million was too much, but were encouraged “to think outside the box.”
“Now I have to say I told you so,” he told board members. “And now they’re asking us to think outside the box again.”
David Keller, a Monroe Neighbors principal, told the board that construction delays hampered the agreed-upon timeline. He said he wanted a two-year extension and higher tax assessments on the condominiums and Trader Joe’s grocery store to help pay off the debt.
“We’re not trying to avoid obligation,” he said. “We want to continue to negotiate and work out an acceptable resolution.”
TIF districts let municipalities borrow money to subsidize developments and pay for utility and street work that serves projects. Communities then use new taxes generated by the projects to pay off the debt.
According to city documents, Monroe Neighbors is nine months late on a payment of $182,727.99. It will owe an additional $139,798.45 in August.
The developer already told the city it cannot afford to make those payments, Gromacki said, so he said the idea to be assessed more is not fully formed.
“I think they want to try to somehow negate or reduce the amount owed,” he said. “But it doesn’t affect the monies already due.”
Furthermore, Gromacki said, if the city allows Monroe Neighbors to renegotiate its TIF agreement and the guarantee it made in 2005, it allows others to try the same thing.
“We have several outstanding loans right now,” he said. “We’ve seen this behavior in the marketplace before. Once someone gets a deal, other people come in and see if they can get the same deal. We need to go into the field with policies that are enforceable.”
In a memo to board members, Assistant City Attorney Anne Zellhoefer said Madison could sue Monroe Neighbors or foreclose on unsold units to recoup the money.
Bruer said he will wait for further recommendations before making a decision. But he said renegotiating the agreement is a dangerous move for Madison.
“It opens a Pandora’s Box,” he said. “And the taxpayer takes the hit.”