Fiscal Note
The proposed ordinance repeal and recreation allows for an increase to the Tax Incremental Financing (TIF) application fee from 0.5% of the amount of the TIF assistance requested to 1.5% of the amount of TIF assistance requested. Application fees are deposited as revenue in the relevant Tax Increment District (TID). As an example, if an applicant requests $1.0 million in TIF assistance, the current application fee is $5,000. The proposed ordinance change would increase the application fee to $15,000. The ordinance change also makes the distinction between preliminary review of a draft TIF application and a formal TIF application and when the application fee will be assessed.
Title
Repealing and recreating Section 4.28 of the Madison General Ordinances related to TIF Applications to update TIF application fee and application process.
Body
DRAFTER’S ANALYSIS: This ordinance revision codifies the existing practice of City TIF staff providing a free preliminary review of a TIF application from a developer before requiring payment of the TIF application fee required by ordinance. The revision also specifies that developers will receive one free preliminary review of a TIF application for a project, and subsequent applications for the same project require payment of the TIF application fee. Finally, the revision increases the TIF application fee from half a percent (0.5%) of the TIF assistance requested to one and one-half percent (1.5%) of the TIF assistance requested.
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The Common Council of the City of Madison do hereby ordain as follows:
1. Section 4.28 entitled “TIF Application Fee” of the Madison General Ordinances is repealed and recreated as follows:
“4.28 - TIF Application Fee.
(1) Definitions. For purposes of this Section, the following terms have the following meanings:
“Applicant” means a person, group of people, or entity seeking tax increment financing (“TIF”) assistance from the City of Madison for development on a parcel or parcels within the City of Madison.
“Draft TIF Application” means a TIF application submitted by an Applicant for a preliminary review by the TIF Coordinator, which does not require a TIF Application Fee.
“Gap analysis” means an analysis, conducted by the TIF Coordinator, of a project’s projections included in a draft TIF Application, or a formal TIF Application, to determine whether a financial gap exists between the sources of capital and the total cost of a proposed project, as well as how much TIF assistance the project can support based on the projected value of the project and the tax increment district’s existing or projected finances.
“Gap finding” means the amount of TIF assistance the TIF Coordinator determines is financially necessary and feasible for the project after the preliminary review, based upon the City’s underwriting standards and practices.
“Preliminary review” means a review conducted by the TIF coordinator of a draft TIF Application to determine whether the proposed project conforms to the City’s adopted TIF policy and underwriting financial feasibility standards, including, but not limited to, the City’s adopted TIF Goals, Objectives and Process, the TIF Loan Underwriting Process, and a gap analysis.
“Formal TIF Application” is the application referred to in the City’s TIF Goals, Objectives and Process Policy document adopted by the Common Council, and means a signed application for TIF assistance, along with the TIF Application Fee, submitted by the applicant to the TIF Coordinator,
“TIF Application Fee” means a nonrefundable fee TIF that an applicant must submit with a Formal TIF application and is calculated as one and one-half percent (1.5%) of the TIF assistance requested by the applicant.
(2) Preliminary Review of Draft TIF Application..
(a) An applicant for TIF may request one (1) preliminary review of a draft TIF Application for a given project site. No TIF Application Fee shall be required for such preliminary review.
(b) Upon receipt of a draft TIF Application for preliminary review, the TIF Coordinator shall conduct a gap analysis and provide Applicant with a gap finding that demonstrates whether the City has found that a gap exists and how much TIF loan assistance is feasible to assist the proposed project. This may include a determination that no TIF assistance is required, or that TIF is not feasible.
(3) Formal TIF Application.
(a) If the City determines that a gap exists and the applicant wishes to proceed, the applicant shall submit a formal TIF Application, including the TIF Application Fee, to the TIF Coordinator.
(b) If an applicant declines the City’s gap finding, which includes the applicant not accepting the City’s gap finding within 60 days, the City shall consider the project as closed and shall take no further action.
(4) Subsequent TIF Applications for Same Project.
(a) After declining the City’s gap finding, an applicant may submit a subsequent formal TIF Application for the same project site. However, any subsequent application is not eligible for another preliminary review and applicant shall be required to pay a TIF Application Fee as outlined in this ordinance prior to any staff review, unless the TIF Coordinator determines that the land use of the project has changed from the previous TIF Application. Review of any subsequent application may result in a finding that there is a financing gap that is eligible for TIF assistance, that there is no gap in financing, or that TIF assistance is not feasible.
(b) Such subsequent formal TIF Application must be accompanied by a TIF Application Fee that is calculated based on the amount of TIF requested in said subsequent TIF Application. Such subsequent formal TIF Application will be accepted in the order that it was received by the TIF Coordinator and given subordinate priority to any other pre-existing applications under review. The applicant shall undergo the same process with a new TIF Application as set forth in Subsection (3) of this ordinance and each time applicant declines any subsequent gap findings, Subsections (3)-(4) shall apply.
(5) City and CDA Projects. This Ordinance shall not apply to projects where the City or the Community Development Authority of the City of Madison (“CDA”), uses TIF to finance City or CDA owned TIF eligible public facilities, such as parking ramps or infrastructure as part of a public infrastructure redevelopment project.
(6) Gap Caused by Infrastructure Costs for Private Development. This Ordinance shall apply where, consistent with the adopted City of Madison Policy for the Assessment of Sanitary Sewer Improvements or City of Madison Policy for the Assessment of Street Improvements, TIF is used to pay for a gap caused by infrastructure required by a private development project.”
EDITOR’S NOTE:
Section 4.28 entitled “TIF Application Fee” of the Madison General Ordinances currently reads as follows:
“4.28 - TIF APPLICATION FEE.
Upon submission of an initial TIF application or initial spreadsheets supporting a request for TIF assistance, each applicant shall pay to the City a non-refundable TIF application fee equal to one-half of one percent of the amount of TIF assistance requested.”