Downtown & Infill Tax Increment Districts: Strategies for Success

Downtown & Infill Tax Increment

Districts: Strategies for Success

WEDC Presentation

July 16, 2014

Presented By: Ben Zellers, AICP, CNU-A

Downtown & Infill TID Strategies

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).

• “Blight” controversy.

• 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: Brodhead, WI

Downtown

Brodhead

Redevelopment

Project

Case Study: Brodhead, WI

• Building

Improvement

Program

• $5,000 with

simple

application.

• Application

vs. dev.

agreement.

$

Strategies for Downtown & Infill TIDs

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

community’s TIDs and be ready to

adapt to changing circumstances.

• Successful TIDs can be amended to share

revenue with blight elimination TIDs;

boundaries can be amended up to four

times.

• Annual reports are required by WI DOR –

review reports to see how expenditures

compare with increment generated and

debt service payments.

Case Study: City of Monona

• Amended

successful TID #2 to

provide funds to

struggling TID #4.

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)

Case Study: City of Middleton

Subtraction #1

Subtraction #2

Downtown

Middleton


3. 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.

• Try to match planned public improvements with

private development projects to make sure

there is sufficient increment to pay back the

investment.

• Municipal investments vs. developer-financed.

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

underperforming TIDs.


4. 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.

Case Study: City of Stoughton

• 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.


5. 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 – 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.


6. 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?!?!


7. 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.

• Can use to capitalize an RLF.


• “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

[email protected]

Downtown & Infill Tax Increment Districts: Strategies for Success

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