David Michael Miller
Here’s one way to look at the choices surrounding Judge Doyle Square: Do you want to spend public resources on educating kids or on parking cars?
The issue is whether to keep a tax incremental district alive and use the proceeds to pay for a parking ramp associated with the redevelopment of a couple of blocks downtown or close the district and distribute the money to the Madison public schools and other jurisdictions.
In a letter to the city, school board members asked for just that. They estimate that the schools would get about $12 million.
In response, Mayor Paul Soglin, with his trademark drama, has said that suggestion is “insulting” to the city.
No it’s not. The letter from the board was really very reasonable. They point out that the current district could be closed, the balance distributed and a new district formed that could support one of the development proposals.
But that would require that much of the parking to serve the development be aboveground, where it is cheaper to build. So, it might not be the best thing to do in the long run, but it’s not insulting to raise as a legitimate issue. And the money in question doesn’t belong to the mayor or to the city. It’s essentially the school district’s money that is being held with payment deferred until whenever the district is shut down.
Tax incremental financing can be as complicated as delegate selection in Colorado, but at base it’s fairly straightforward. The tax base in a given area is frozen. Public investments are made in that area. The increased revenues resulting from those investments go back to the city to pay off the debt it incurred for the improvements. When the debt is paid off, all the new value goes back on the tax rolls.
In theory — and, in Madison, almost always in practice — the school district wins in the end. That’s because the added value more than compensates for the foregone tax revenues while the borrowing was being paid off.
But there’s two problems with that. The first is that you have to believe the projections. In development, as in life, stuff happens. And if there’s anything we’ve learned about the long, twisting and turning saga of Judge Doyle Square, it’s that all kinds of stuff can happen. Remember that only a few months ago the city was falling all over itself because it looked like high-tech startup Exact Sciences was going to establish its headquarters there. Then stuff happened to Exact Sciences, and the city had to start over.
The other thing to think about is the “bird in the hand” theory. If the TIF district were closed today, the school district would get $12 million in cash that it could use for immediate needs. But if the district closes a decade or so in the future, what will that $12 million be worth then, and how long will it take for the district to realize the value that it could have had now? Will the school district still be laboring under the same state revenue limits, or will things have eased somewhat? In other words, $12 million might be worth more today than even an inflation-adjusted $12 million would be worth 10 years from now.
And here’s the deepest question of all to contemplate: Should we be using TIF to pay for parking? In fact, parking is by far the main thing that TIF is used for in Madison. Of course, parking could be built without the subsidy, but developers believe that what they’d have to charge for it would be above-market rates. So, essentially, the leading use of TIF right now in the city of Madison is to socialize the cost of parking. There’s a whole lot of urban theory out there to suggest that is exactly the wrong thing to do and that just letting the market work in the realm of car parking would be better.
It would mean that less parking would be built, and the parking that did get built would be more expensive. It would mean that developers who believe that they need a lot of parking would have to figure out how to make their projects work with less of it. It would mean a shake-out period.
But in the end, you’d get a city that had less dead space, more vibrant places, more people on foot and on bikes and more tax base because parking is just about the least valuable use possible in an urban area.
Ending the use of TIF for parking, closing the Judge Doyle TIF district and giving the money back to the schools would create a revolution. There would be howling. Developers would walk away. But I’ll bet they’d come back. The project would get built, the schools would get the money and the urban environment would improve by a lot.
