After delays and much negotiations, the stalled Royster Corners development on Madison's east side can kick into gear following critical financing approvals from the City Council Tuesday.
The city of Madison has agreed to use $820,000 in public support, funded through a tax incremental financing loan, for Ruedebusch Development and Construction’s next phase of the project at the corner of Cottage Grove and Dempsey roads, to total $18 million.
Under the development agreement, the city will acquire 20,000 square feet of space on the first floor of a mixed-use building that will be located at 516 Cottage Grove Rd. for $3 million. The space will also house a new Pinney Library branch and replace its current location at 204 Cottage Grove Rd., the third-busiest building in the Madison Public Library system.
The mixed-use building will also include 86 residential units, 96 underground parking stalls, 141 surface parking stalls, 16,600 square feet of commercial space and an atrium.
Ald. Denise DeMarb, District 16, said the neighborhood is counting on the library, expected to open in the fall of 2018. She is optimistic the development will begin to revitalize the area.
“I can think of no other way for the city to invest in neighborhoods than to invest in economic development,” DeMarb said. “When this goes up, there’s no doubt in my mind that the rest of that from Monona Drive to Stoughton Road will redevelop. It will.”
The council approved the $820,000 TIF loan despite conflicting messages from city staff about whether a financing gap between the project cost and the amount of capital it can attract given its estimated value exists for this phase of the project.
City TIF coordinator Joe Gromacki concluded that no gap exists and the council’s decision to provide TIF assistance would be guided by policy instead of the gap analysis. However, Planning, Community and Economic Director Natalie Erdman said in a follow up memo that a financial gap of $820,000 is “reasonable and supportable.”
Erdman also said state law does not require a funding gap to warrant a city using TIF and that a community can find “sufficient public benefit” to warrant using public funding. She noted the public benefits include growth in the tax base, reusing an obsolete or deteriorated property and making a neighborhood more complete.
Ald. David Ahrens, District 15, who represents the development location, acknowledge this is not a “standard TIF project” and somewhat of a “high risk venture.”
“I don’t think this is a reach. I think this is something that has merit,” Ahrens said. “I think this would have an appreciable effect.”