The City plans changes to TID 3
The City of Middleton is planning a large subtraction from, and a small addition to, Tax Increment Financing District 3 (TID 3).
A subtraction means that properties that have fulfilled their TIF obligations, i.e. paid off the loans they received through TIF assistance, will be returned to the general tax roll and all of their property taxes will now go to the taxing jurisdictions (city, school district, county, ...). Previously, only the property taxes levied on the assessed base value, i.e. before TIF-assisted improvements were made, went to the taxing jurisdictions, while the taxes on the growth due to the improvements (the 'increment' in tax increment financing) were for the most part used to repay the TIF loans (the rest went to the so-called TID fund to pay for public infrastructure and improvements in the TIF district and within half a mile outside it).
TID 3 was established in 1993, and has been amended several times since then (a change to a TID is called an amendment). Property has been added, and the State legislature extended its lifespan to 2030. Property worth $340 million has been subtracted from TID 3 in four previous amendments (2006, 2009, 2011 and 2015), adding $6.6 million annually in tax revenue to the different taxing jurisdictions (about a third of that went to the City of Middleton).
Under approved plans, just over $178 million from TID 3 can be spent on public improvements, and by the end of 2019 about $118 of that had been used. Some of this spending goes towards creating infrastructure to encourage more development (roads, for instance), while some goes towards projects that might otherwise not happen at all (the planned northeast bike path along Century Avenue, for instance).
The proposed tenth amendment would subtract 33 parcels from TID 3 while adding six (see map); it would subtract $130 million in value increment (and $4.6 million in base value) and add $2.5 million annually to the taxing jurisdictions' property tax revenues. It would also allow $63.7 million in additional spending in order to create $98 in additional revenue. The fact that the rate of return on these public investments is slowing is not surprising, considering that all the low-hanging fruit has been picked, and that the district is approaching the end of its life, which means that there is less and less time for TIF loans to be repaid and development investments to become profitable.
In contrast to earlier subtractions, this new one would allow the City to adjust its levy limit. Under State law, a municipality can only adjust (i.e. raise) its property-tax levy limit based on net growth in its taxable property (adjusting for inflation is not allowed, which is a constant source of frustration for local finance departments). As anything to do with taxes, the rules are a lot more complicated, but that is the gist of it. Under the old rules, properties from tax increment financing districts could only be taken into account after the districts in question had been closed, no matter whether or not these properties had been removed (subtracted) from the districts earlier. A change in State law a couple of years ago, however, now allows subtracted properties to figure into the levy limit calculations right away. Middleton's finance director Bill Burns was instrumental in getting the law changed.
After the planned subtraction, $508 million in value increment will remain in TID 3. TID 3, by the way, is one of the most successful TIF districts in the state. While that is good for Middleton, it also means that it is not typical for TIF districts, as sputtering TID 5 shows.
If, or rather, when, the tenth amendment is approved, the total spending plans for TID 3 will amount to just under $127 million (see chart; items marked with an asterisk are located outside the TID itself, but within the half-mile limit where TIF investments are allowed). As was pointed out during the August 25 Plan Commission meeting, it is a plan and not a budget: All projects have to follow the City's approval process, and some of them are currently little more than vague ideas, so there is no need to get one's jockstrap in a knot over unspilled milk (feel free to add your own metaphor to the mix).
It is currently estimated that at the end of its life, TID 3 will still have a positive fund balance of more than $15 million. This money will then be divided up among the different taxing jurisdiction according to their fiscal weight, so to speak (about a third to the City, over half to the School District, the rest to the County and Madison College).
The Plan Commission unanimously approved amendment ten on August 25. The Common Council will (most likely) approve it on September, and it will be before the Joint Review Board (representatives of all the taxing jurisdictions) for final approval on September 21.
Preferential treatment
City Council member Kathy Olson, whose district includes the downtown area, and who also chairs the City's License and Ordinance Committee (L&O), is trying hard to find ways for the City to help Middleton's businesses during the coronavirus pandemic.
At its August 25 meeting, L&O members (besides Kathy Olson, also district 3 alderwoman Katy Nelson and district 7 alderman Dan Ramsey) voted unanimously to recommend to the Common Council to allow expanded outdoor seating for bars and restaurants on Hubbard Avenue in front of the Senior Center (opening hours would complement each other), and maybe even further, similar to Madison's 'streateries' initiative; to allow for alcohol in the green space next to City Hall; to allow a wine-walk-type event between the public spaces downtown; and to allow retail businesses to reserve one parking spot each in front of their stores for curbside pick-up during business hours (at least until March 31, 2021). Some of these measures will be referred to the Common Council via the Community Development Authority (CDA), assuming it meets early enough to still make a difference. A joint meeting between the CDA and the Downtown Middleton Business Association (DMBA) is still to be scheduled.
L&O also approved blocking off several on-street parking spots on Hubbard Avenue in front of the Public Library for a loading zone and curbside pick-up for Library users (also until March 31 next year). This has been requested by the Library for a while to improve its customer service while the building is closed during the pandemic, although why they can't just use the large, and largely empty, parking lot next to the Library for that is a bit of a mystery.
It seems that any earlier ideas of making downtown Middleton more pedestrian-friendly have been abandoned for good now. Instead, it looks like the City's and the DMBA's efforts are going in the opposite direction: turn downtown Middleton into one large drive-thru.
It is doubtful that encouraging automobile traffic will make outdoor dining more attractive, and it is sad, not to say pathetic, that the City has not had the courage to experiment with a tiny pedestrian zone by closing the west end of Hubbard Avenue at least on Fridays, Saturdays and Sundays.
While anecdotal evidence suggests that the public would welcome that pedestrian zone by a wide margin, the area businesses are split - some are in favor, others against it. So far the City has only been listening to the nay-sayers, and ignored those who would like to try it. By taking sides, the City is failing in its duty to act in the interest of all citizens - it should at least give the pedestrian zone idea a chance by trying it on a limited basis. As summer begins to end, time is running out for outdoor seating. If City officials are serious about helping local businesses, they should explore all options.
Unfortunately, for all her good intentions, Kathy Olson apparently only listens to those few business owners who seem to be completely opposed to any measures that would make downtown shopping and dining more pedestrian-friendly. The fact that she didn't even bring it up at the L&O meeting indicates that she only represents the interests of a few DMBA members at the expense of everybody else.
During a recent CDA meeting, some members expressed their support for the idea of creating a pedestrian zone, but then justified their non-action by saying that they don't want to 'ram it down the throat' of businesses that are opposed to it. Which of course means that they are ramming the current situation down the throat of those who would like a change.
For all the bombastic talk at the last Common Council meeting about wanting to find 'non-monetary ways' to help local businesses during the pandemic, Kathy Olson and her fellow Council-members have remarkably little to show for.
This small pedestrian area is something that has been requested by many people and some businesses (as well as the City's Planning staff) for several months now. The City has closed streets in the past for all kinds of events (sometimes ramming those closures down the throats of businesses), and its plans for the plaza include street closures in the future. It could be done quickly (AND CHEAPLY), and if it's a total disaster it could be reversed just as quickly (AND CHEAPLY).
As alderperson representing the downtown area, Kathy Olson should have an open mind and the courage to try new measures, especially under the current circumstances, rather than just be the official conduit for a select few constituents.
Or maybe one of her colleagues on the Council could stand up for the wider interests of Middleton’s citizens and businesses. Burck, Nelson, Ramsey - anyone?