Fiscal Note
This resolution would amend the 2009 Capital Budget to authorize the expenditure of $2,049,250 from TIF District #39 to provide a City contribution towards the construction of a bio-agricultural business incubator facility owned by the Madison Development Corporation. The City's total contribution to this project would be $2,622,250, funded with additional general obligation debt of $2,049,250 and a contribution of City-owned land valued at $573,000. The debt incurred for this project would be eligible for reimbursement from newly created TIF District #39. The remainder of the facility's $6,200,000 construction cost and the operating deficit predicted during the first two years of operation would be funded with a $4,500,000 grant from the U.S. Economic Development Agency.
This proposed project does not meet several of the minimum thresholds or standards contained in the City's current policy related to TIF investments in private developments. The proposed terms of the project would not require an equity contribution or increment guarantee from the developer, two exceptions to current TIF policies that normally would help secure the City's interest in successful project completion. In addition, preliminary estimates of the TIF increment generated by the new facility during the full remaining life of the TIF district would be sufficient to repay an initial investment of only $300,000 to $500,000. Thus, the City's proposed initial TIF investment of $2,049,250 far exceeds the 50% rule contained in the current TIF policy. It should be noted that, although the tax increment generated by this project would be insufficient to recoup the City's investment, it is likely that growth in the base value of other property within this large district would be sufficient to pay back the City's $2,049,250 debt in TID #39 prior to the end of the district's life.
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AMENDED SECOND SUBSTITUTE - For the Midwest BioLink Commercialization and Business Center Tto c...
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