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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
Case Study: Village of Shorewood Hills
Insert Arbor Crossing Pics
10 Tips for Downtown & Infill TIDs
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.
Case Study: Village of Shorewood Hills
• 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
10 Tips for Downtown & Infill TIDs
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)
10 Tips for Downtown & Infill TIDs
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
10 Tips for Downtown & Infill TIDs
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.
Case Study: City of Stoughton
• Development agreement plus all
appendices and attachments was . . .
87 PAGES!
10 Tips for Downtown & Infill TIDs
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.
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.
Case Study: City of Stoughton
Case Study: City of Stoughton
• Old gas station site clearance: $30,000
DNR grant; TID #4 matching funds.
Case Study: Village of Shorewood Hills
• $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
Case Study: Village of Shorewood Hills
University Avenue
Case Study: Village of Shorewood Hills
Case Study: Village of Shorewood Hills
10 Tips for Downtown & Infill TIDs
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.
Case Study: City of Stoughton
• 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.
Case Study: City of Stoughton
• 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.
Case Study – City of Madison
• 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%)
Case Study – City of Madison
10 Tips for Downtown & Infill TIDs
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.
10 Tips for Downtown & Infill TIDs
• 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?!?!
10 Tips for Downtown & Infill TIDs
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.
Case Study: Village of Shorewood Hills
Case Study: Village of Shorewood Hills
• 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.
Case Study: Village of Shorewood Hills
Case Study: Village of Shorewood Hills
Case Study: Village of Shorewood Hills
4 3
2
Locust
Ave.
University Ave.
10 Tips for Downtown & Infill TIDs
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.
Case Study: City of Monona
• “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.
Case Study: City of Monona
• 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