Madison, WI – This is the update for the 3rd and 4th quarters of 2019. It goes into detail on the capital financing plan, ownership structure, design, bidding and construction process and land use and construction approvals. It’s getting closer to being real after all these years! But there is a lot to be done before March 2020.Here’s the full report. Like many projects in the city that have been dragging on for years and years, I thought more of this was nailed down. I’m surprised to see all the loose ends of things that still need to happen. I put some of these items in orange to indicate that these are things that still need to happen, plus see the timeline at the end. Seems very ambitious!!!
SNEAK PEEK
On Saturday December 14, the Public Market Foundation will be hosting an event at the Fleet Building featuring several potential vendors and providing the community with an opportunity to see the Public Market’s future home.
http://madisonpublicmarket.org/2019/11/holiday-market-december-14th/
BACKGROUND
The Madison Public Market is multi-year effort that has engaged thousands of community members. The Madison Public Market is included within the City’s 2020 Capital Budget, and is identified in several city plans including the Capital Gateway Corridor Plan, the Emmerson East/Eken Park/Yahara Neighborhood Plan, and the City’s Comprehensive Plan. The City completed the City’s Racial Equity Impact Analysis of the project in 2015 and is updating that analysis this year. A combination of City Staff, appointed members of the City’s Public Market Development Committee, and community leaders with the Public Market Foundation are collaborating on the efforts to complete the project.
The vison for the Madison Public Market is a year-round destination featuring a diverse mix of merchants offering fresh local food, culturally eclectic prepared food, and locally made handcrafted goods. The project aims to lower barriers to entry for diverse entrepreneurs launching new business. Additionally, the market will be a community gathering space that highlights local artists, hosts community events, and supports a range of activities for residents and visitors alike. The location for the project is the soon-to-be-vacated Fleet Services Garage located at 200 N. First Street. For more background information about the project, please visit the following links:
CAPITAL FINANCING
The total cost to complete the Public Market will be $13 million. The capital cost project will be funded through several sources. The following chart and the subsequent sections of this report summarize each source of funding for the project and the next steps to secure these funds.
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City of Madison Capital Budget / TID #36 |
$7 million |
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Private Donations to the Public Market Foundation |
$3 million in capital and $1 million in operating reserve Goal: $4M |
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New Markets Tax Credits Equity |
$3 million |
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Potential Additional State/Federal Grants – Monitor potential grant opportunities and prepare applications when appropriate.
TOTAL =$13 million in capital plus $1 million in working capita
City of Madison Capital Budget / TID #36
The City’s 2020 capital budget commits $7 million in city funding to the Madison Public Market. The source of this funding is proceeds from Tax Increment District #36 (TID 36). The Public Market project is located within the TID 36 boundary, which includes portions of both sides of East Washington Avenue between Blair Street and First Street. The City created TID 36 in 2005 and it is set to expire in 2032 with the ability to make expenditures until 2027.
When the TID was established in 2005, its total taxable value (base value) was $97,652,400. The current value of the district is $424,702,800 resulting in an increment value of $327,050,400. The tax revenue generated by this incremental increase in tax value is currently being expended on debt payments for various investments the City has made in this district since 2005. This past investments included public infrastructure projects like improvements to Breese Stevens Field and the construction of the Livingston Street Parking Garage, as well as private investments in projects including the “Constellation” building, the “Galaxy” building, and StartingBlock Madison. With the large amount of tax increment that has been created within TID 36, the district is projected to pay off its current obligations as well as the $7 million cost of the Public Market within the next 3 years. As such the entirety of the City’s financial commitment to the Public Market will be funded by previous tax base generated in the East Washington Avenue corridor using cash flow into the district.
Next Steps
The City’s 2020 Capital Budget, including the Public Market, has been approved. The City will be required to amend the TID 36 Project Plan to create the authority to use the TID as a source funding for the project. The TID Project Plan is an official document that describes the projects the TID will be used to fund. Amending the Project Plan requires a series of public notices and hearings with approval by the Joint Review Board (JRB), the City’s Finance Committee, Plan Commission, and the Common Council. The City’s Office of Real Estate Services Staff will manage this process.
Public Market Foundation Contribution
The Madison Public Market Foundation is a partner with the City of Madison on the Public Market project. The City selected the Foundation to be the fundraising entity for the Public Market and to become the market’s operator. The City and the Foundation formalized their partnership with a “Collaboration Agreement” that was created and approved by the Common Council in 2018. The Foundation is leading a campaign to raise $4 million for the Public Market. Of this, $3 million will be provided to the project as a capital grant to the City contributing to the construction cost. The remaining $1 million will be held by the Foundation as a reserve fund to cover working capital costs during the Market’s first years of operations.
The Foundation is a 501c3 non-profit that is led by a volunteer Board of Directors and an Advisory Council. The Foundation has staff support from a fundraising consultant and a part- time project coordinator. The organization expects to hire a permanent Executive Director in 2020.
Next Steps
The Public Market Foundation has raised approximately $1.2 million towards its $4 million goal. The Foundation has a plan in place to secure the remaining funds over the next six to nine months. Several of the donations to the capital campaign will be in the form of multi- year pledges. As such, the Foundation is in the process of securing a “bridge loan” to cover the Foundation’s grant to the project. This is typical for non-profit capital campaigns for physical buildings.
New Markets Tax Credits
New Markets Tax Credits is a federal program that uses tax credits to encourage investment in lower income communities. The Public Market is located within an area that is eligible for this program. The City has been executing a plan to secure these credits for the Public Market. The project is well positioned to secure a tax credit allocation in 2020. Organizations called Community Development Entities (CDEs) are the conduits to these tax credits. CDEs apply for an allocation of credits from the US Department of Treasury through and annual competitive process. Once Treasure awards an allocation, the CDEs work with specific projects to deploy their credits to financially support projects.
Next Steps
Several CDEs have expressed support for the Public Market and have identified the project as a priority in their applications for credits. The allocation awards will be announced in spring of 2020, at which point the City will follow up with awarded CDEs to begin the process of closing on the financing. That closing will take place in the third quarter of 2020. At the closing, the NMTC equity will be blended with the other sources of capital to create the overall project fund that will be used for construction. NMTC transactions are complicated structures. The City is currently working with outside counsel and a consultant to assist this process. Approvals from the Finance Committee, Community Development Authoriy, and Common Council will be needed to approve the final NMTC transaction.
OWNERSHIP STRUCTURE
The Public Market will be created by repurposing the City’s existing Fleet Services garage located at 200 N. First Street. Fleet Operations will vacate this building when they relocate in 2020. The site and building will remain in public ownership during and after its transformation into the Public Market. The Madison Public Market Foundation will be the entity that manages the operations of the Public Market. As noted previously, the Foundation is a 501c3 non-profit that was formed to lead the private fundraising for the project and become the operator, and the City is formally partnered with the Foundation on the project (Resolution Files #51091 and #54228).
After Fleet Operations relocate from 200 N. First Street, ownership of the property will transfer to the City’s Community Development Authority (CDA). CDA ownership of the property is necessary to facilitating the New Markets Tax Credits financing structure for the project. The CDA is a public body that is independent from the City but overseen by a commission that is appointed by the Mayor. CDA staff is housed within the City’s Planning & Community & Economic Development Department. Ownership by the CDA is a means to maintain public control of the site and building, but transfer ownership to an independent public body equipped to own commercial property with private sector tenants. The Village on Park property on South Park Street is another example of a CDA-owned property with various third party private sector and non-profit tenants.
In order for the CDA to own the property, it is required to be located with a defined redevelopment district with an associated redevelopment plan. The City and the CDA will develop and approve that plan over the next several months.
DESIGN, BIDDING AND CONSTRUCTION
The final design process for the Madison Public Market is underway. In 2018, the Common Council approved engaging Minneapolis-based architect MSR along with local firms Ken
Saiki Design and Vierbicher to be the project’s design team (Resolution File #54211). MSR is now working with the City’s Economic Development Division and Engineering’s Facilities Management team to finalize design work. The Public Market Development Committee in collaboration with the Public Market Foundation, the MarketReady Program, and other stakeholders, are overseeing this design process work. The City conducted several public meetings to gather input on the Public Market’s design.
The design team has completed the design of the Public Market. The architecture and engineering documents have been submitted to the City’s Engineering Facilities group. Engineering is in the process of gathering final analysis and feedback on the technical design. Once that feedback has been collected, the architect/engineering team will shift to creating Construction Documents, which will be completed in Q1 of 2020. Once the Construction Document are completed, City Engineering will develop bid documents and seek approval from the City’s Board of Public Works and Common Council to put the project out to bid. The project will follow the City’s state-regulated public works bidding process and ultimately award the bid to a contractor. City Engineering, working with MSR and the contractor, will manage the construction process.
LAND USE AND BUILDING APPROVALS
The Madison Public Market project will go through all the required city approval processes to ensure compliance with all site and building requirements and appropriateness with the City’s design standards and plans.
In terms of zoning, the City intends to pursue a Planned Development zoning for the project. Given the unique nature of the building and the mix of uses that will take place at the market, this approach is most appropriate and will provide maximum flexibility to the operator.
The City will submit the land use application for the project on December 18. The project will go before the Urban Design Commission on February 12, the Plan Commission on February 24, and the Common on March 3.
Below is a summary and estimated timeline for all anticipated review and approval actions in 2020. The Public Market Project will commence construction once all the approvals are completed and financing secured. The City anticipates starting construction in late 2020 and opening the market in late 2021.
Land use approval process
Public Market Development Committee (PMDC)
- The PMDC meets monthly to discuss progress on the project. All resolutions will likely include a review or update to the PMDC
- Meets 1st Thursdays of the month
Urban Design Commission (UDC)
- The Urban Design Commission will review and approve the design of the building and the signage
- 2/12/20 (tentative)
Plan Commission
- As part of the rezoning process, the Plan Commission will review the project. Plan Commission will also approve the TID project Plan Amendment
- 2/24/20 (tentative)
Site Plan Verification Staff Team
- A multi-agency staff team will review the site plan to for public safety, stormwater management, traffic flow, etc.
- Q1 2020
Department of Safety and Professional Services (DSPS)
- The City will work with Wisconsin DSPS to review city facilities projects for building code compliance
- Q1 2020
Board of Public Works (BPW)
- The BPW will review and approve the release of the construction bid and the award of the contract
- Q2 2020
Joint Review Board (JRB)
- The JRB consists of representatives from all taxing jurisdictions (City, County, School District, Technical College) and approves all Tax Increment District Project Plan amendments
- Q1 2020
Finance Committee
- The Finance Committee will approve all actions involving expenditure of City funding include the TID amendment, acceptance of Public Market Foundation contribution, and New Markets Tax Credits structure
- Q1 2020
Community Development Authority Board (CDA)
- The CDA will approve the ownership structure of the project
- Q1 2020
Common Council
- The Common Council will take action on the rezoning, the bid release, the TID project plan amendment, and likely additional matters related to the funding of the project
Rezoning approval: 3/3/2020. Additional approval in throughout 2020 - Q1 2020
