Funding For BioAg Gateway and BioLink

Why does this facility need more money? And why do they need to take it from Community Services? Good questions!

Here’s the link to why Community Services got linked to this project in the first place, its a budget amendment by Clear and Compton.

Here’s a bit of the history on it. Kind of smells like the Edgewater.

March 2006 – Authorizing the Mayor and City Clerk to enter into a Purchase Of Services contract with Madison Development Corporation for an amount not to exceed $40,000 to assist in the preparation of a concept development plan, marketing development plan for the Wisconsin BioAg Gateway, and as match for the first phase of the State-funded market feasibility analysis of the Wisconsin BioAg Gateway. This regional economic development initiative will be located in Tax Incremental Finance District 24 in the Southeast Industrial Area. $40,000

April 2006 – We enter into an option to purchase land.

This Resolution would authorize the Mayor and Clerk to execute option agreements and purchase several parcels of land with a total price of approximately $3.5 million. The 2006 Adopted Capital Budget for the Department of Planning and Development authorizes up to $2,000,000 in available TIF proceeds for land acquisition costs in TID 24 (Project# 10, “TID 24-Southeast Industrial Development”). Expenditures beyond the authorized $2,000,000 will require additional Common Council approval in the form of an amendment to the capital budget.

October 2006 – We extend the option for four more parcels.

The City is currently exercising its option to purchase four industrial lots costing approximately $2 million in the World Dairy Center. This resolution would extend the time period during which the City could purchase the remaining four lots under option, at a cost of approximately $1.5 million, until after the adoption of the 2007 budget. This resolution has no direct fiscal impact but would preserve the current option price should the funding needed to purchase the remaining four lots be approved in the 2007 budget.

January 2008 – Authorizing hiring of The Hiebing Group Inc./Vandewalle & Associates for consultation services to develop and implement a marketing plan for Southeast Madison Business Centers and the Wisconsin BioAg Gateway.

The proposed cost to complete Phase # 1 of the project (development of the marketing plan) is $85,000. The proposed cost to complete Phase # 2 of the project (implementation of the marketing plan) is up to $250,000, with recognition that a final budget can not be completed and agreed upon by the City until after the completion of Phase # 1. The 2007 adopted capital budget of the Department of Planning and Community and Economic Development includes $100,000 for marketing and outreach (Project #10, “TID 24 – Southeast Industrial Development), of which $15,000 has been previously committed, leaving a balance of $85,000. The 2008 adopted PCED capital budget includes a total of $284,000 in Project #8, “TID 24 – Southeast Industrial Development,” for loans to businesses and for marketing.

February 2009 – Authorizing hiring of The Hiebing Group Inc./Vandewalle & Associates for consultation services to implement the marketing plan for the BioAg Gateway.

Funding for the contract is not to exceed $120,000 and is authorized in the 2009 Adopted Capital Budget of the Planning, Community and Economic Development agency, Project No. 15, “TID 39 – Stoughton Road,” Acc’t No. 823901.”

April 2009 – For the Midwest BioLink Commercialization and Business Center to commit to providing the local community match to MDC, or its assigns, through an investment of $2,049,250 through TID # 39, and a contribution of a 2.63 acre property within the BioAg Gateway (World Dairy Campus – Lot # 10) valued at approximately $573,000; and, to amend the Department of Planning & Community & Economic Development Capital Budget, Project # 15, “TID # 39 – Stoughton Road” by up to $2,049,250 with debt to be supported by TID # 39 proceeds; and, to authorize the execution of a development agreement with MDC, or its assigns, for the construction and management of BioLink, including any and all required TIF loan and property conveyance (World Dairy Campus – Lot # 10) documents; and, to authorize the execution of any and all agreements with the EDA regarding this grant.

This resolution would amend the 2009 Capital Budget to authorize the expenditure of $2,049,250 from TIF District #39 to provide a City contribution towards the construction of a bioagricultural business incubator facility owned by the Madison Development Corporation. The City’s total contribution to this project would be $2,622,250, funded with additional general obligation debt of $2,049,250 and a contribution of City-owned land valued at $573,000. The debt incurred for this project would be eligible for reimbursement from newly created TIF District #39. The remainder of the facility’s $6,200,000 construction cost and the operating deficit predicted during the first two years of operation would be funded with a $4,500,000 grant from the U.S. Economic Development Agency.

This proposed project does not meet several of the minimum thresholds or standards contained in the City’s current policy related to TIF investments in private developments. The proposed terms of the project would not require an equity contribution or increment guarantee from the developer, two exceptions to current TIF policies that normally would help secure the City’s interest in successful project completion. In addition, preliminary estimates of the TIF increment generated by the new facility during the full remaining life of the TIF district would be sufficient to repay an initial investment of only $300,000 to $500,000. Thus, the City’s proposed initial TIF investment of $2,049,250 far exceeds the 50% rule contained in the current TIF policy. It should be noted that, although the tax increment generated by this project would be insufficient to recoup the City’s investment, it is likely that growth in the base value of other property within this large district would be sufficient to pay back the City’s $2,049,250 debt in TID #39 prior to the end of the district’s life.

Here’s an article on the “bending rules” for the project.

May 2010 – $4.5M grant awarded. $4.5M in Federal money.

June 2010 – Amending RES-09-00309, in reference to the Midwest BioLink Commercialization and Business Center, by removing the 50% pre-lease requirement. Here’s an article on that item. More on the “risky business.”

Currently under consideration – sponsors Clear and Compton. – Authorizing a loan up to $650,000 from the general fund to Madison Development Corporation, or its assigns, for the purpose of paying eligible expenses related to architecture/engineering, construction management, Madison Development Corporation project management, and construction of BioLink. $650,000 loan.

Do you hear a giant sucking sound? I think its the city vacuuming out the taxpayer wallet.