August 24, 2019

City asks county to be `big brother' on housing development - Daily Leader Extra : Top Stories

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City asks county to be `big brother' on housing development

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Posted: Wednesday, August 7, 2019 3:22 pm

On Tuesday morning, Toby Morris of Dougherty & Company, LLC, asked Lake County commissioners to support a new housing development in northeast Madison by approving a TIF.

"It's the request of the city: will you be the big brother?" Morris told commissioners.

The proposed development would lie east of Division Avenue on either side of 11th Street, which has not yet been constructed. It would include single-family homes, twin homes and four-plexes.

Nielson Construction of Harrisburg has been identified as the developer. Morris said the company has projects in Lennox and Harrisburg, and he handed around plans for the types of houses which would be constructed there.

"There's never been any problems selling them," he indicated. "There's always a waiting list."

Tax Increment Financing (TIF) is a tool used by local governments for community development. The cost of infrastructure improvements are financed and paid by a portion of the tax revenue generated from the "TIF district," the area where infrastructure improvements are made.

Property is taxed like other property, but the difference between the amount of revenue generated before improvements and the amount of revenue generated after improvements is applied to the TIF. Only after the costs of the infrastructure are paid off do local governmental entities begin sharing that revenue.

Morris indicated he has done due diligence on the company.

"I make sure it passes the smell test," he said, indicating Lake County taxpayers won't be left holding the bag, paying for infrastructure on a failed project.

He explained the city is asking the county to approve the TIF because it has the ability to borrow more. He said the city is currently concerned about costs related to the water and sewer upgrades as well as with the possible costs associated with construction of the Madison Bay Harbor.

On Tuesday, Morris was not asking for a vote, but was there to gauge county interest. He said the City of Madison would not approve a resolution to move forward if the county was unwilling to support the project with a TIF.

Morris stated and reiterated throughout his presentation that the homes would be affordable housing. He explained they would be for first-time homebuyers, which is necessary to get the TIF designation being requested.

"We always want to make sure we get it classified as economic development/affordable housing," he said.

He said the Nielson development in Harrisburg also led to another development with more costly homes, and he explained how this helped that community to grow.

"If we didn't have those step-up homes, those people would have moved to Sioux Falls or somewhere else," Morris said.

He also emphasized the "very solid reputation" that Kelly Nielson, the company's owner, has. Morris said the company was around during the 2008 economic downturn and survived that as well as 2009 and '10.

Morris reported the city is "still pinning down" the amount to be financed, but he indicated it will be less than $2 million, probably between $1 million and $1.5 million.

"You're in the driver's seat every step of the way," Morris told commissioners.

He also talked about the importance of moving quickly before another community woos the developer away. Commissioners Aaron Johnson and Dennis Slaughter both went on the record in support of the TIF.

"I'd be in favor of moving forward if it would get us more housing," Johnson said.

No action was taken.

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