Fiscal Note
The proposed resolution authorizes the execution of a development agreement with Starkweather, LLC to assist in the development and sale of 13 shovel-ready lots at the former Voit Farm property. The agreement between Starkweather, LLC and the City establishes Starkweather’s responsibilities in construction and delivery of saleable housing lots as well as the City’s level of TIF financial assistance to said housing developers. The purchase of the property and the costs of installing infrastructure on the property will be the responsibility of the Starkweather, LLC (approximately $18.8 million). The agreement further establishes a sales price and infrastructure cost framework to be used by both parties to determine whether such housing developers require TIF assistance, such that, but for TIF assistance, the project(s) would not occur.
The Common Council will receive an authorizing resolution for the creation of a proposed TID 55 (Voit Farm) Project Plan and Boundary later in 2025. TID 55 would qualify under TIF Law as a mixed-use TID, which allows a maximum of 20 years to collect tax increments to pay for project costs. The Project Plan will outline the eligible TIF project costs that may be paid with tax increments, including approximately $3,887,000 of TIF loan assistance for development projects and approximately $4,165,000 of City land banking for Lots 6, 9, 10 and 13 within the Starkweather, LLC project. Additional resolutions will be proposed at a future date for any TIF development loans and/or for the City’s purchase of the aforementioned lots. If additional budget authority is required for those proposed resolutions, it will be requested at that time or requested in future Capital Budgets.
The City providing any TIF assistance is contingent upon the Council adoption of a resolution authorizing the creation of a TID 55 (Voit Farm) Project Plan and Boundary and approval of the TID creation by the TIF Joint Review Board. Future amendments of the TID 55 Project Plan may occur over time in the event that the TID performs beyond financial expectations and additional TIF assistance is required for future housing development or infrastructure improvements.
No additional City appropriation is required at this time.
Title
Authorizing the Mayor and City Clerk to execute a development agreement with Starkweather, LLC to create a 20-year, mixed-use, Tax Incremental District #55 (Voit Farm), to assist in the development of the former Voit Farm property into 13 lots that may be sold to developers of both market-rate and affordable housing. (District 15)
Body
WHEREAS the City of Madison is in the process of creating a Project Plan and Boundary for Tax Incremental District (TID) #55 (Voit Farm) during 2025; and
WHEREAS the intent and purpose of the Project Plan, among other things, is to encourage development of a wide range of commercial and housing options and attract and retain business and employment in the City of Madison; and
WHEREAS Starkweather Group LLC, (“Developer”) has proposed to develop 25 acres of the former Voit Farm property, located at the northeast quadrant of the intersection of Milwaukee Street and North Fair Oaks Avenue in the City of Madison (the “Property”) and within the boundary of a proposed TID# 55 (Voit Farm), for housing and mixed-use development, including implementing required public improvements to 13 platted lots with infrastructure at a total estimated development cost of approximately $21,000,000 (“Project”); and
WHEREAS The City and Developer have negotiated terms for a development agreement (the “Development Agreement”) that will memorialize the City’s commitment to creating TID 55, commitments by the Developer regarding development of the Project, and how the City will allocate land acquisition and infrastructure costs for purposes of future TIF applications for individual housing development projects located on the Property; and
WHEREAS the customary TIF Report does not apply to this Development Agreement, City staff has conducted a rough preliminary analysis (See Attached Memorandum) of the Project and has determined that the cost of constructing infrastructure may cause a gap for future affordable housing development projects, such that, but for TIF assistance, said projects could not occur; and
WHEREAS the TID 55 Project Plan shall set aside $3,887,000 of funding that may be provided as TIF loan assistance to development projects that demonstrate that “but for” TIF, said projects could not be constructed; and
WHEREAS the TID 55 Project Plan shall also set aside $4,165,000 for City land banking to purchase low-density Lots 6, 9, 10 and 13 for the purposes of developing affordable housing; and
WHEREAS said TIF loan assistance to said future housing development projects shall not exceed 55% of the present value of the estimated tax incremental revenues generated by said projects, in conformance to TIF Policy that no more than 55% be made available to a project (“55% Gateway”) without Finance Committee prior authorization; and
WHEREAS in addition to any other powers conferred by law, the City may exercise any power necessary and convenient to carry out the purpose of the TIF law, including the power to cause project plans to be prepared, to approve such plans and to implement the provisions that effectuate the purpose of such plans; and
NOW, THEREFORE, BE IT RESOLVED that the City hereby finds and determines that the Project is consistent with the public purposes of Tax Increment Finance Law and the plans and objectives set forth in City of Madison TIF Policy, the Development Agreement demonstrates the potential to and encourage development of a wide range of housing options in the proposed TID #55, thereby making more likely an accomplishment of the public purpose objectives set forth in the TIF Law and City TIF Policy.
BE IT FURTHER RESOLVED that the Mayor and City Clerk are authorized to execute the Development Agreement with the Developer, or its assigns, on substantially, though not exclusively, on the terms reflected in the Term Sheet attached as Exhibit A, in a form approved by the City Attorney.