- Acquisition of property and demolition: $45,000
- Approx. 660 feet of water, sewer, asphalt, curb & gutter: $214,000
- Engineering & construction admin fees: $24,000
- Contingency/miscellaneous: $4,000
- Capitalized interest (2 yrs): $40,000
- Attorney fees: $3,500
The big question: will this 63% increase in costs push the price of houses in the development out of the affordable range for the low- and middle-income buyers the TIF district was originally proposed to serve? Kerry Karlson asked that question at the Planning Commission meeting last Tuesday. Schaefer "hopes the construction bids come in lower and that in the end they keep lots under $20,000" [Madison Planning Commission Proceedings, 2008.05.13].
Resolution 2678, the authorization of the TIF on tonight's agenda, includes the following:
[Clause 6.2] It is in the best interests of the City to authorize the borrowing of funds to pay a portion of the costs of the Public Improvements and other costs associated therewith for the Project by authorizing and issuing its Tax Incremental Revenue Notes consistent with the terms approved hereby for an aggregate sum not in excess of the amount of $330,500.00....
[Clause 7] It is hereby determined to be necessary and in the best interests of the City and its inhabitants that this City Commission authorize the Note to be executed in order to finance a portion of the cost of the Project.
Necessary? The mayor, the LAIC, and others may want the TIF, but need is a different question. The need originally posited was for affordable housing. If our hopes for low bids are not fulfilled and lots end up out of a typical workingman's price range, will the city still back the project to build expensive homes for more well-to-do buyers? Or is the city going to impose some accountability and say, "We only provide public funding if the houses built will cost no more than $120,000" (or provide your own threshold for "affordable housing").
Absent from the planning commission proceedings or tonight's agenda packet is any mention of the vaunted Lake Area Improvement Corporation housing study. Director Dwaine Chapel was at last week's Planning Commission meeting, but if he mentioned anything about how the TIF District helps fulfill needs identified in the housing study, nothing went on the record.
I'd flip through the housing study myself, but I got confirmation from Dwaine Chapel himself this month that any citizen must pay $250 to even look at the study. (This confirmation from the top came two and a half months after my initial question, a full month after I e-mailed Chapel directly per his staff's recommendation that I contact him directly, and even then, only after I dropped by the office in person to follow up.) Chapel says there's no law that requires the LAIC to make the housing study public.
I contend otherwise. The city is about to go into 63% more debt than expected to support a private housing development, based on a claim of a need for more affordable housing. The supposedly reliable data we have is sitting in the LAIC office. Rather than making that supposedly reliable data available only to folks with $250 to throw away, the LAIC should make that study available to every taxpayer who will be affected by this TIF district. That would include everyone in the school district and county, which will have to make up for the tax revenue they can't access in the TIF by imposing higher taxes elsewhere or cutting their budgets.
Without access to the housing study (I still have the executive summary, but more detail would help!) we are left to conduct our own assessment of the housing market in Madison. HomeViewSiouxFalls.com lists 35 homes on the
Madison market right now under $120,500, the standard cited in the housing study executive summary as the benchmark for affordability in Lake County. Think they're all shacks? Check out the beauty in this picture: right by campus, within easy walking distance of the fitness center, Dairy Queen, and the grocery store, only $112,900 (call Paula Pearson, Madison Realty, 256-3888 -- and even though I get no commission, tell her the Madville Times sent you!)Let's consider this TIF district from a different abgle: In discussing the city's requirement that homeowners pay for their own sidewalks, some of my commenters said it wouldn't be fair for the city to help pay for that infrastructure now, since homeowners in the past have all been required to pay for their own sidewalks. I seem to recall newly minted city commissioner Dick Ericsson making the same point at the candidates forum on April 3. So has the city footed the bill for the installation of sewer, curb and gutter, or any of that other infrastructure for developers in the past? If not, what is the city's rationale for offering such assistance now?
Last winter, Randy Schaefer's assurance that TIF district would serve the purpose of creating more affordable working-class housing made me think the project might have some merit. But folks like John Hess and some local realtors have pointed out that Madison already has a pretty big market of decent affordable houses. The city and LAIC appear unwilling to share hard evidence to the contrary. And even if there is a need for more affordable housing, the 63% price jump calls into question whether this TIF district will be able to meet that need.
Will the city commission address these questions tonight? Or will we hear nothing but the great smooshy sound of the rubber stamp? Come to City Hall in Madison, 5:30 p.m. tonight, to find out.
No Madison developer has had the advantage that Mr. Schaefer's corporation will have, starting with $330,000 worth of streets, sewer, water and sidewalks all paid upfront and paid back by future tax proceeds over the next 20 years. Every other builder had to pay their costs out of pocket and take the risk themselves.
ReplyDeleteAdd to the $330,000 another $1.23 Million to build the homes and this becomes an expensive project. If the initial plan was for seven homes, how will they maintain an affordable housing price tag of $120,000 including the lots? It doesn't make sense to spend $1.55 Million on seven homes and sell them for $120,000 each, which would be a loss of $100,000 per home or $700,000.
While I admire Mr. Schaefer's vision for his land, I question how he can keep it "affordable" with the underlying costs. Perhaps if it is built all at once, there will be efficiencies of scale that will reduce costs and lock in lower materials costs.