Fiscal Note
This resolution would authorize a $4,274,000 loan to The Alexander Company and its assigns ("Developer") for the construction of Phase I of a project to be located in the 300 block of (Block 51) of West Washington Avenue, namely a 159-unit condominium project, 10,000 square foot commercial space and 258 parking stalls ("Project"). This loan would be repaid through incremental taxes generated by the Project and represents approximately 51% of the present value of all incremental taxes anticipated from the Project throughout the maximum 27-year life of the TID. This funding level is slightly above the 50% policy established by Common Council and would require a Council exception to TIF Policy.
Sufficient funding for this loan was authorized in the 2005 Capital Budget to provide the initial capitalization for this loan. However, due to the timing of the certification of an amended boundary and project plan for TID #28 by the State of Wisconsin Department of Revenue, it is anticipated that funding for this loan would actually occur no earlier than the first quarter of 2006. Therefore, borrowing authority for this project will need to be reauthorized in the 2006 Capital Budget. Actual distribution of funds by the City of Madison is contingent upon State of Wisconsin certification of the amended TID boundary and project plan and Plan Commission approval of no fewer than 22 residential condominium units in the Broom Street element of the Project.
While it is anticipated that the incremental taxes generated by the Project will be sufficient to repay the loan, within approximately 7 years, the Developer is required to guarantee a minimum payment if sufficient future tax increment is not available. The Developer is also obligated to return a 50% share of any surplus net proceeds, upon the receipt of a final audit of the project cost and sales records. The increment guarantee and equity participation payment are secured by a subordinated mortgage on the...
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