$42.5 million.
That is how much the city of Madison is planning to invest in private portions of the Judge Doyle Square project. This project isn’t a regular TIF loan, where the city gets a return on its investment sometime in the distant future. A lot of these dollars are in the form of grants that taxpayers won’t get back.
Judge Doyle Square has a big public price tag on it and it comes at a time when the city and Madison Metropolitan School District are strapped for cash. It is important for people to understand exactly what this deal is and what is included.
Let’s start with the grant to Exact Sciences. If this deal goes through, Exact Sciences will get a $12 million grant from the city. In return, they have to retain or create 300 jobs by summer 2017 and an additional 100 jobs by the beginning of 2019.
Four hundred jobs is great, and it would be a real point of pride to have a company like Exact Sciences headquartered downtown. However, we are talking about $30,000 of public money per job. This is not a loan; this money that won’t be repaid. That is a high price tag.
These newly employed people will boost economic activity in Madison, but I don’t get what makes Exact Sciences singularly deserving of such public largess. A lot of employers could add jobs if they received 30 grand for each new employee. Is the city of Madison still so traumatized by the loss of Epic that we are willing to give away tens of millions to any biotech firm with a promising future? What kind of precedent does this set for future companies that negotiate with the city?
Madison is finally coming to terms with some of its inequities. Yet we still find ourselves subsidizing jobs that will go primarily to people with advanced degrees.
I don’t love the Exact Sciences giveaway, but I can see the long-term benefits of creating more private-sector jobs downtown. The Capitol Square area is extremely valuable, and smart investments could boost that value even further as long as the city doesn’t do something silly like give away a block of downtown land for next to nothing.
Except that’s exactly what the city is doing. The new deal calls for selling the land to JDS Development for $15 million and then giving them back $13.9 million. That’s a 93% rebate. That’s a generous benefit most people don’t get when they buy a parcel of land.
My wife and I love our house, but we both hate our bathroom. The tub is tiny and the sink is in a cramped spot. Over the last few years, I have regularly reminded my wife that this was the best house we could afford.
But now I realize I was a sucker, actually paying for the land that I own like some kind of rube. If the city had given me the JDS Development deal and provided me with a 93% rebate on the cost of my land, I would have hired some local contractors to remodel my bathroom. Heck, I would have had enough cash to add a second bathroom.
I’d be pumping extra money into local contractors. My newly enhanced home would raise my property tax bill, and I don’t live in a TIF district, so I actually pay my property taxes. I bet the city would see a higher rate of return on ATB (Alan Talaga’s Bathrooms) than on JDS.
Finally, let’s talk about the private parking lot we are building on the public dime. The city will pay $20.8 million to build 650 private parking spaces that it will then lease to JDS for $115,000 a year. That is $177 a parking spot.
I’m no parkologist — a term I just made up — but I feel that has to be significantly below market rate. How many businesses or private individuals can get a year-round downtown parking spot for $177 a year? This deal is good for 27 years, and, from what I can gather, it isn’t indexed for inflation. If a $177 parking spot is a great deal in 2015, imagine how good a deal it will be in 2040.
By the way, $115,000 over 27 years is only about $3.1 million. After 27 years, JDS can buy the parking lot for $4 million — in 2044 dollars. At best, the city is getting back a little over $7 million on a $20.8 million investment.
Even with all of these complaints, I really do think the Judge Doyle Square project will increase economic activity downtown. At least it makes more fiscal sense than a new basketball arena. But I wonder if it is a development that will generate the most money for a $42.5 million investment.
Editor's note: This column was edited to reflect that as part of the jobs TIF grant, Exact Sciences agrees to retain or create 300 jobs in the city, not create 300 new jobs.
