The critical question for any TIF project is “Will it be a good investment for the City and for the taxing jurisdictions in the District?”
The $16 million TIF assistance for the Edgewater was far too expensive when measured by the public cost and the return to the taxpayers in terms of project value and its beneficial impact to the surrounding area. In addition, the Edgewater TIF compared poorly to other major city TIF projects designed to revitalize the Capitol Square and the downtown.
- City policy adopted in 2009 supports giving a project up to 50% of the incremental property taxes that the project generates during the life of the tax increment district. Based on this formula, a TIF of $3.3 million is justified, not the $16 million of tax incremental financing approved by the city council in 2010 to pay for Edgewater project costs. The $16 million approved for the Edgewater is almost five times the amount of TIF recommended by City policy.
- The city of Madison does make exceptions to the “50% rule” when the project demonstrates added value to the community. Two such projects were Capitol Square Block 89 and the Hilton Hotel on Wilson Street. Both projects spurred additional development, including 100’s of units of owner occupied housing that did not receive TIF assistance, and that changed the face of the downtown as well as the revitalization of the Main-King area, once plagued with crime and prostitution.
- Not only did the Edgewater demand a very high amount of TIF assistance, it was not consistent with City plans for the Mansion Hill historic residential neighborhood, and was unlikely to generate additional development in the Mansion Hill Historic District. To the east is Mansion Hill, to the west Langdon Street with student and Greek housing, to the south is a well developed area with churches, recently renovated buildings, and historic homes, and to the north is Lake Mendota. There is only one signiifcant property in the area that might benefit from the Edgewater TIF, and that is the adjacent Lake Mendota lot owned by National Guardian Life Insurance.
- The full tax increment to be derived from the Edgewater Hotel is $6.6 million, not the $16 million of TIF funds approved by the Common Council. That means the remaining $9.4 million must come from other property tax growth in the District, including the new University Square building on the 700 block of University Ave. There is no TIF in the history of the city where the majority of the payback came from other properties in the district, not from the development getting the TIF assistance.
- The Edgewater developer cited creation of public access as a major reason for the $16 million TIF. In fact, the public has had access rights at the Edgewater since 1965 and the public access rights required for the 2010 Edgewater project were very limited. The so-called ‘public space’ was subject to these restrictions:
-The hotel had the right to close and restrict access to the majority of the usable rooftop space 365 days a year.
-Public access rights were not required to be posted so the public would know these rights existed.
-The public access agreement says the use of food and beverages in the public access areas shall be limited to reasonable personal and individual use and shall not be allowed for group or multi-person consumption. Carry in of alcoholic beverages by the public was prohibited.