I went on WSUM's "Landmine" the other week and discussed, among other city issues, the Edgewater. Brenda Konkel and Kristin Czubkowski, both of whom know much more about the issue than I do, weighed in on the prospects of the project's success. Kristin very professionally did not make a prediction and Brenda voiced skepticism, arguing that over the last month or so some Council members have become irritated by the process employed by Hammes and its supporters. For all it's worth, I thought the plan would pass. I suspect the developers have persevered because they sense the Council, despite some technical objections, is generally friendly to the project.
But Joe Tarr's article on the matter has got me thinking...maybe the numbers just aren't friendly enough to the Edgewater.
In its application, Hammes is asking for some big exceptions to the city's TIF policy. Exceptions are regularly granted for TIF applications, says Joe Gromacki, the city's TIF coordinator.
The first is the "50% rule," which states: "No more than 50% of the net present value of the tax increment generated by a private development project shall be made available to that project as gap financing."
In a memo (PDF) to the council, Gromacki wrote, "The incremental value of the Project, as estimated by the City Assessor's Office, would generate sufficient tax increment to support a TIF Loan of approximately $3,300,000 if the 50% Rule was applied. The proposed loan amount significantly exceeds the limit of this policy. Approval of an exception to policy that allows 100% of the tax increment generated by the Project would support approximately $6,600,000 of the $16,000,000 TIF Loan."
Hammes is also asking for an exception to the self-supporting rule, which "prohibits using tax increment from other property within a TID to supplement a particular project." Meaning, increased property tax gain from other properties in the district would be required to pay down the $16 million. In his memo, Gromacki writes the district "is currently generating sufficient tax increment, estimated at $1,500,000 per year. Combined with an estimated $900,000 of increment generated by the Project, staff forecasts that tax increments will be sufficient to repay the entire $16,000,000 TIF Loan by approximately 2019."
The big word is exception. Voters don't like exceptions, even when they make good policy. Without debating the wisdom of the GM bailout, the vast majority of the public opposed it. They're not fair.
But some of the numbers seem to suggest TIF funding may not be good policy. Ironically, TIF is supposed to be granted only if the project would not be possible "but for" the TIF funding. However, if a project appears too dependent on the loan, and threatens to require additional loans in the future, then TIF again is denied (I would hope). Policy makers should always be wary when developers demand that restrictions designed to keep the city out of bad investments be disregarded.
I guess I would still put my money on the project passing though.
