Downtown & Infill Tax Increment Districts

Downtown & Infill Tax Increment

Districts: Strategies for Success

APA-Wisconsin Conference

June 2014

Presented By: Ben Zellers, AICP, CNU-A

10 Tips for Downtown & Infill TIDs

1. Downtown & redevelopment TIDs typically

require longer timeframes and greater

resources than other types of TIDs. • Most downtown TIDs should be created as “Blight

Elimination” TIDs (27-year lifespan) and not

“Mixed-Use” TIDs (20-year lifespan).

• If possible, maximize your TID’s life by delaying the

formation of the district until you have an

increment-generating project ready to develop.

• Planning expenses can be incurred prior to the

formation of the TID.

Case Study: Village of Shorewood Hills

• Neighborhood Plan.

Before increment-

generating project

Raingarden

terrace

Pervious

pavers

LED Streetlights

Terrace

trees

Benches &

trash

receptacles

Bike

racks

After

• Surface

parking

• Very little

greenspace

• Green roof

• Solar panels

• Increased

greenspace


Insert Arbor Crossing Pics


2. Understand risks associated with the

timing of the TID’s expenditures. • Too much up-front investment with no solid

development prospects can quickly turn into

cash flow problems.

• Match planned public improvements with

private development projects to make sure

there is sufficient increment to pay back the

investment.

• Don’t count on changes to state law to bail out

underperforming TIDs.


• TID #3: created 2008

Streetscape: Spring 2010

Streetscape,

Water, Sewer:

Summer 2013

Add Lane & Bury Power

Lines: Summer 2012

Bike path extension,

stormwater improvements:

Spring 2014

Redevelopment

Assistance: Fall 2012


3. Evaluate all TIDs in your community to

determine how they can work

together to accomplish the

community’s development goals.

• Successful TIDs can be amended to

share revenue with blight elimination

TIDs.

Case Study: City of Monona

• Amended

successful TID #2

(along Beltline) to

provide funds to

struggling TID #4 (a

blight elimination

TID along Monona

Drive).

City of Monona: TID #2 and TID #4

Year

TID #2

Projected

Annual Surplus

TID #4

Projected

Annual Deficit

2011 $1,193,505 $(256,771)

2012 $1,213,247 $(269,728)

2013 $330,397 $(320,755)

2014 $429,733 $(306,464)

2015 $441,183 $(311,808)

2016 $789,134 $(315,629)

2017 $1,385,136 $(323,416)

2018 $1,556,406 $(1,280,619)

2019 $(1,164,586)

2020 $(228,539)

2021 $(280,455)

2022 $(253,845)

2023 $(208,855)

2024 $(216,802)

2025 $(191,443)

2026 $(215,020)

2027 $(125,439)

Total $7,422,537 $(4,690,512)


4. Stay up-to-date on the status of your

community’s TIDs and be ready to

adapt to changing circumstances. • Annual reports are required by WI DOR – review

reports to see how expenditures compare with

increment generated and debt service

payments.

• Boundaries can be amended up to four times;

project plans can be amended an unlimited

number of times.

• Know where you are with respect to 12% limit.

Case Study: City of Middleton

Subtraction #1

Subtraction #2

Downtown

Middleton


5. Allow sufficient time for development

agreements to be negotiated. • Agreements are required when providing

assistance to a developer.

• Agreements for redevelopment projects are

generally more complicated due to parcel

assembly, relocation, environmental

contamination, and other issues.

• Start early by developing a draft term sheet at

the beginning of a project.

Case Study: City of Stoughton

• Environmentally contaminated parcel.

• RDA acquired from private company, resold

to housing developer.

• Riverfront parcel.

• Grant funding for remediation.

• WHEDA funding for housing developer.

• Tax agreement.

• Public improvements.

• Prevailing wage rates.

• Park dedication fees/land.


• Development agreement plus all

appendices and attachments was . . .

87 PAGES!


6. Leverage the TID budget by applying

for brownfield, stewardship, and other

types of grants that support

redevelopment.

• TIF money can be used as matching

funds for other funding sources.


• Elven Sted project: $200,000 BEBR grant;

TID #5 used for matching funds.

• $568,000 TIF of assistance to project.



• Old gas station site clearance: $30,000

DNR grant; TID #4 matching funds.


• $364,000 stormwater management,

bike path extension, and park

improvement project:

– $53,000 Dane County Urban Water

Quality Grant

– $125,000 Dane County Partners for

Recreation and Conservation Grant

– $186,000 TID #3 Funds


University Avenue




7. Smaller projects can add up. • Don’t just go after/fund “home run” projects.

• Consider budgeting for a façade improvement

program and/or housing improvement program

when creating or amending a TID.

• While payback from smaller projects may not

be as immediately noticeable as larger

projects, the cumulative long-term effect will

have a positive impact on the community and

the TID.


• Downtown façade improvement

program.

– CDBG funds used for façade

improvements ($5,000 maximum grant

with required match).

– TIF funds used for local match for USH

51/Main Street reconstruction through

Downtown.


• 2002-2004:

– 16 projects.

– $55,500 of grants approved.

– $171,600 used for matching funds.

• Property values increased by 50% in

the Downtown from 2001-2005.

Case Study: Basset Neighborhood

• On isthmus

in Madison –

TID #28.

Case Study – City of Madison

• City of Madison “Small Cap TIF” loan program.

• City provides a forgivable second mortgage loan at 0% interest to finance acquisition/rehabilitation of property (up to a maximum of $60,000 or 15% of purchase price).

• Borrower and property eligibility requirements.


• Other uses of TIF in Basset

Neighborhood:

– Water main replacement

– Sanitary sewer replacement

– Street/sidewalk reconstruction

– Streetscape improvements

– Railroad right-of-way safety improvements

– Lake Monona shoreline stabilization

– Grants to private developers

• TID #28 created in 2000, closed in 2007.

• 2 TIF loans to developments totaling

$4,827,000.

• ~$12 million total expenditures.

• Value increased from $206m to $485m

(+135%)



8. CDAs and RDAs can be powerful

partners in pursuing downtown

revitalization and redevelopment

projects. • Consider pairing TID creation with creation of a

redevelopment district, which can give a CDA

or RDA more authority to carry out the goals of

the plan.

• CDAs and RDAs can remove some of the

politics of redevelopment; developers can

prefer working with a CDA/RDA over a Plan

Commission/Council.


• Staff with citizens with development

field related experience (realtors,

developers, engineers, planners, etc)

• Can dig into the details of

redevelopment & spend the time on

things like development agreements.

• Another committee?!?!


9. “Pay-as-you-go” (or “Developer-

Financed”) is a type of development

agreement, not a type of TID.

• The appropriateness of pay-as-you-go

depends upon a number of factors.

• Do not lock into a policy that all TIF

assistance to developers will be pay-as-

you-go.

• Weigh pros and cons before

proceeding.



• TID #4 – Walnut Grove

• Absentee landlord, largely vacant

building.

• Proposed redevelopment: 100

apartments; 10,000 sq. ft. of retail.

• Initial developer request ~$2m, 100%

Village-financed:

• Counter: ~$1.9m, 50% Village-

financed, 50% developer-financed.




4 3

2

Locust

Ave.

University Ave.


10.The closing of a TID can create an

opportunity to fund affordable

housing in the community. • A Village Board/City Council can adopt a

resolution specifying that up to a year’s worth of

increment will be applied to improving housing

stock and increasing the supply of affordable

housing anywhere in the community.

• Consider a housing stock improvement

program.


• “Renew Monona” program.

• Offers 0% interest loans, with principal

payments due upon the sale of the home

or after 10 years (whichever is first).

• Home value restrictions: ≤$120% of

median single family assessed value in

City.

• Maximum loan amount: $10,000.

• Minimum 50% match.


• Can use loan for electrical, plumbing,

mechanicals, window replacement,

insulation improvements, additions.

• Initial funding with money from final

year of increment from TID #3; 3

application rounds: – $120,000 available.

– $269,965 requested for . . .

– $684,699 of home improvement projects.

Questions?

Ben Zellers, AICP, CNU-A

999 Fourier Drive, #201

Madison, WI 53717

(608) 821-3967

Real Estate

Downtown & Infill Tax Increment Districts