Council Advances North Mendota Trail

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Cameron Bren

MIDDLETON–The North Mendota Trail connection to Allen Boulevard will move ahead despite considerable debate among city council members on how to fund it. An item to approve increased funding of about $30,000 for design work with a total cost not to exceed  $294,313 was ultimately approved by the council in a six to two vote.

At the council meeting District 8 Alder Mark Sullivan stated that the finance committee had a two to two split vote so there was no recommendation to the common council. 

Sullivan said the council should reject item because it is funded by TIF (Tax Incremental Financing) District #5 which has a deficit balance. 

“TIF projects are required to pay for themselves through the increment they provide, this project does not provide any increment,” Sullivan said. “The second gate is that there needs to be fund balance available for infrastructure projects and in this particular project TIF #5 does not have a fund balance to pay for this, so regardless if you think this an appropriate project, the timing is not ripe for this to move forward.”

Council President Dan Ramsey said TID (Tax Incremental District) #5 has donation clause in its plan.

“The argument could be made that this infrastructure will help develop that side of town and then it will be a strong part of TID #5,” Ramsey said. “So I think it is an appropriate project.”

Sullivan asked planning director Abby Attoun how much increment the project will generate. 

Attoun responded by saying public infrastructure projects funded by TIF are generally hard to estimate in terms of how much direct increment they generate.

Sullivan asked if it would create development and if there is land to develop near the trail. 

Attoun said it was hard to estimate but that there is land identified to be redeveloped near the trail.

Sullivan then asked Attoun if she viewed this as a higher priority than reconstruction of Lisa Lane.

Attoun said both projects are important but because a significant amount of the design work has already been done, budgeted and paid for on the trail it made sense to move forward.

Sullivan noted that the project was not funded until the council approves it.

District 6 Alder Susan West pointed out that the planned downtown plaza, Stone Horse Green, was funded by TIF and will not generate revenue on its own either.

“I think this one is a bigger project in terms of trying to be a sustainable city and using alternative forms of transportation, bike and pedestrian, this is really crucial for getting people from the east side of the city down onto Allen Blvd. and further,” West said. “And it is going to be helping businesses at the end of the trail head.”

West said she felt like the project actually would generate increment.

Ramsey restated that in the TID #3 plan there is an option to donate $8.7 million to TID #5.

Sullivan pointed out that while TID #3 may be funding the plaza that TIF district has a large fund balance while there is a negative balance in TID #5.

Sullivan said before spending money on new infrastructure, funding should be put toward maintenance on existing infrastructure. 

“Having just completed the last budget exercise we find ourselves in a situation again where there are members that are reaching for this bright shiny star when we don’t have the funds to take care of the things we have already,” Sullivan said.

West asked finance director Bill Burns how much money will go into the city’s budget when the TID #3 closes. Burns said when a TIF district closes the residual cash balance will be distributed among different taxing jurisdictions based on their share of the total tax bill. The city would receive approximately a third. The largest share goes to the school district and smaller pieces to the technical school and county.

Burns said increment generated is also linked to how much the city can raise its levy limit. 

Burns said there could be about $10 million in the residual cash balance so about $3.3 million would go to the city. 

Sullivan pointed out that would require waiting till 2030.

Burns said the council approved the project in the TID #3 budget already and TID #5 has cash but is in deficit position because it has received advances from TID #3. He said 2019 will have a deficit of $1.3 million with advances just under $4.7 million from TID #3 to TID #5. The projected available funds are about $1.3 million. 

The projection for 2020 is that the project would use up most available cash on hand, but he added that it is part of the five year plan for TID #5 to continue to be receive advances.

Burns pointed out that the TIF #3 plan includes the options to donate $8.7 million to TIF #5, which has never been done. 

Mayor Gurdip Brar said the city could still choose to raise or lower the $8.7 million.

City Administrator Mike Davis said historically TIF districts don’t start off building a lot of increment but with investment over time tend to grow.

Davis said the council opted about 10 years ago to use TID #3 as a funding mechanism for TIF #5 because projects could be internally financed. 

Motion to reject the funding increase was voted “no” six to two with Sullivan and District 5 Alder Luke Fuszard voting “yes.”

“When is this council going to get some financial restraint?” Sullivan asked. “There are broader issues here than just wanting this bike trail, you are setting a bad precedent for spending money that doesn’t exist.”

The motion to approve the funding passed six to two with Sullivan and Fuszard opposed.

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