Fiscal Note
The proposed resolution amends the Economic Development Division's (EDD) 2026 Adopted Capital Budget to add $2.8 million in TID-supported GO Borrowing in TID 54 (Pennsylvania Ave). It further authorizes a $2.8 million loan to Realta Fusion, Inc., or its assigns ("Employer").
The Project consists of redeveloping 205,000 square feet in the former Oscar Mayer building, including office, research & development, and manufacturing spaces with the goal of creating and retaining jobs at the site ("Project"). The TIF Loan would be repaid through incremental taxes generated by the Project and represents 40% of the present value of all incremental taxes anticipated from the Project over the TID’s remaining life. The TIF Loan would be repaid through incremental taxes generated by the Project. The amount of the loan represents 40% of the present value of all incremental taxes anticipated from the Project over the TID’s life.
Payment of the Loan to the Employer will be divided into 6 payments that correspond to specific milestones in the project. The payment schedule and conditions of payment are outlined in section 3. of the attached Term Sheet. Furthermore, the Employer must create and/or retain for a period of not less than 5 years at least the number of Full-Time Equivalent (FTE) jobs as outlined in section 4. of the Term Sheet. The Employer will submit a certified statement to the City's Office of Business Resources to verify this condition is met. If the jobs guaranty is not met, the Employer will be required to pay a penalty of $34,000 per job below the required number for the last payment made by the City (requirement for payment 6 is 200 jobs).
While it is anticipated that the incremental taxes generated by the Project will be sufficient to repay the loan within approximately 8 years, the Employer is required to guarantee a minimum payment if sufficient future tax increment is not available. The increment guaranty is secured by a subordinated mortgage on the property. The TIF Loan also requires that Employer be prohibited from selling or transferring the Property prior to repayment of the TIF Loan. If Employer sells or transfers the Property to a tax-exempt entity, Buyer shall pay an annual payment in lieu of taxes (PILOT) in the amount of the property tax paid as of the date of sale, frozen, until 2050. See the attached TIF Memo from TIF staff for additional information about TID condition and compliance with the City's TIF Goals, Objectives, and Process policy and the TIF Underwriting Policy.
The City providing TIF assistance for the Project is contingent upon the Council's adoption of a resolution authorizing an amednment to the TID 54 (Pennsylvania Ave) Project Plan and approval of the Project Plan amendment by the TIF Joint Review Board.
Title
SUBSTITUTE Amending the 2026 Economic Development Division Capital Budget and authorizing the Mayor and City Clerk to execute a development agreement to fund a $2,800,000 Tax Incremental Finance Loan to assist in the renovation and development of office, manufacturing, and research and development space for Realta Fusion, Inc. at 910 Mayer Avenue in the Project Plan area of TID 54 (Pennsylvania Ave). (District 12)
Body
WHEREAS, the Common Council adopted the current TIF Policy on February 25, 2014; and,
WHEREAS, this TIF Policy contemplates “Jobs Projects” that foster the retention and creation of new employment opportunities throughout the community; and,
WHEREAS employers in the Manufacturing and Alternative Energy sectors are identified as eligible for “Jobs Projects”; and,
WHEREAS, Realta Fusion, Inc is an existing Madison employer involved in the research and development of compact, scalable, modular fusion generation systems; and,
WHEREAS Realta Fusion, Inc., or its assigns, (“Employer”) desires to renovate approximately 205,000 gross square feet for office, manufacturing, and research and development use (the “Project”) at 910 Mayer Ave (the “Existing Building”), which is owned by OM Station, LLC, or its assigns, (“Developer”) and will be leased to Employer; and,
WHEREAS, the Employer will retain 43 full time equivalent (“FTE”) jobs within the Project for five years beginning upon occupancy; and,
WHEREAS, the Employer will create 157 FTE jobs within the Project for five years beginning upon occupancy of each respective phase; and,
WHEREAS, the Existing Building has been primarily vacant since Oscar Mayer closed operations there in 2017 and requires significant capital investment to reposition the facility to another employment use; and,
WHEREAS, the Employer is considering other locations outside of the State of Wisconsin; and,
WHEREAS, the Employer submitted a TIF Application to the City of Madison and the project qualifies for TIF assistance under the “Jobs Project” category of the City’s TIF Policy; and,
WHEREAS, a Jobs TIF loan of $2,800,000 (the “TIF Loan”) represents approximately 40% of the net present value of tax increment generated by the Project; and,
NOW, THEREFORE, BE IT RESOLVED that the City hereby finds and determines that the Project is consistent with the public purposes of the Tax Increment Finance Law and plans and objectives set forth in the City of Madison TIF Policy; and,
BE IT FURTHER RESOLVED that the City finds that given the financial investment required to reposition this long-vacant facility to a new employment use, along with competition with locations outside of the State of Wisconsin, but for this investment of TIF, this Project would not occur; and,
BE IT FURTHER RESOLVED that the 2026 EDD Capital Budget (TID 54) is amended to authorize funding of $2,800,000 in additional TIF-supported GO borrowing for the TIF Loan to the Project; and,
BE IT FURTHER RESOLVED, that the TIF Loan is hereby approved shall be provided to the Project on substantially the same terms as provided in the term sheet attached as Exhibit A; and,
BE IT FINALLY RESOLVED that the Mayor and Clerk are hereby authorized to sign, accept, and record a loan agreement, and any and all other documents and legal instruments required to complete the transactions contemplated in this resolution, on a form and in a manner that has been approved by the City Attorney.