City officials establish new TIF district for hotel

By Chuck Clement, Staff Reporter, courtesy of Madison Daily Leader

City officials gave their approval to plans that will help developers construct a new hotel and conference center on Madison's south side next to SD-34.

The Madison City Commission on Monday supported the creation of a new tax-increment finance (TIF) district that will help finance $1.2 million of infrastructure improvements to land where the hotel and conference center will stand. Tobin Morris of Dougherty and Company LLC, an investment bank and brokerage firm, led the city commissioners through an explanation of the written proposal for Madison's Tax Increment Finance District No. 2.

The new TIF would lead the way for developers to construct a Best Western Plus hotel and the Lakeview Conference Center in the Lakeview Industrial Park on the south side of Madison. The TIF will assist the developers of the new hotel and conference center -- located on the north side of the industrial park -- to finance the installation of about $1.2 million of utility mains, streets, curb-and-gutter and other infrastructure on the lots. An estimate included in the proposal listed the TIF-eligible costs for the construction project that included water and sewer at $480,500, site work at $330,000, parking and lighting at $89,500, and estimated interest at $300,000.

The establishment of the TIF district will allow the property developers to use the increase of property tax on the land after the hotel and convention center are built to pay for infrastructure improvements on the land. Eligible infrastructure improvements could include installation of water and sewer lines, streets, curb and gutter, and other items such as financing costs and professional fees.

The duration of the TIF plan is currently set at not more than 20 years after the creation of the TIF district.

Local governments will continue to receive the base property taxes that were paid on the lots before they were developed. The property -- two lots within the Lakeview Industrial Park -- currently has an estimated taxable value of $102,500.

Within the proposal that Morris presented to the planning commissioners, the estimated costs for the construction and equipping of the Best Western Plus hotel were calculated at $6 million. The TIF proposal indicated that developers plan to complete construction of the hotel during 2019. The hotel developers also plan to add a convention center to the site within the next two years.

In reviewing the TIF District No. 2 proposal, Morris noted two areas that needed correction. The first error was a reference in which the district was listed as Madison's No. 3 TIF district. The second was an addition to the proposal's legal descriptions for rights-of-way.

Earlier this month, Mayor Roy Lindsay said Madison would benefit from having additional hotel rooms for visitors and a convention center that local businesses, manufacturers and other entities could use for conferences and meetings. Lindsay said the proposed facility could serve events ranging from reunions to athletic competitions.

The commissioners also approved signing a contract between the city and the Madison Hospitality Group LLC for the private development of the property in TIF District No. 2. Morris told the commissioners that the agreement was not a financial obligation for Madison.

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