For some time now, Madison officials have been looking for ways to meet one of the city’s core issues, housing. According to the 2022 Madison Housing Study, the city’s population decreased more than 4% in 2020 as opposed to ten years previous, which roughly equates to around 283 permanent residents.
This decrease in population is contrary to the city’s plan for growth and continued economic development, which has led them to attempt to address this problem through the creation of Tax Increment Financing (TIF) District #5.
City commissioners approved the district’s creation during their Monday meeting, with City Administrator Jameson Berreth stating that the TIF was requested for an addition to Trojan Village and would be located near Dakota State University’s new athletics fields that are currently under construction.
“It’s land that is about a half-mile wide going from Washington Ave. to just north of Division Ave,” Berreth explained. “The tax increment financing would go toward all the infrastructure for that development: streets, curb, gutter, sewer, electric…”
TIF Districts are utilized to raise property valuations and the corresponding tax revenues within the allotted area, with the increase in value, the tax increment, being used to fund the project.
A project plan provided by Colliers Securities’ Toby Morris states: “property taxes collected on the original valuation existing in the TIF at the time of its designation continue to be distributed to the city, school district, county and all other taxing districts in the same manner as if the TIF district did not exist. Only property taxes collected as a result of the incremental increase in the value of these properties after formation of the TIF district are available for use by the counties or cities to fund project costs in the TIF district.”
The plan later explains the planned contents of the district itself: “The proposed Trojan Village addition is located near future athletics fields for DSU sports and within walking distance from the college campus. The Proposed development will be comprised of a commercial/retail space and 35 single family lots, 48 multifamily apartment units and 20 twin home units.”
Morris, who also spoke at the meeting, commented that this TIF district would help alleviate Madison’s need for housing, as well as allow for new job opportunities and retention of business within the city. He also praised the project’s two local developers, Randy Schaefer and Eric Sinclair.
Schaefer has “extensive” experience in property development in Madison and is responsible for developing two commercial office/retail spaces within the city. Of note, he also played a significant role in the creation of Madison first-ever TIF district, which saw the creation of an 11-unit mix of single- and multi-family homes.
On the other hand, Sinclair is the vice president of land holding and development company Sinclair Land and Cattle Co. Collectively, the company holds around $50,000,000 in real estate assets under management in cities like Aberdeen, Waterson, Sioux Falls and of course, Madison. Through his work, Sinclair has played a role in the development of numerous building renovations projects throughout the city, with over 100 jobs being created in the process.
This TIF district is set to last for 20 years, which is standard in South Dakota. “The total TIF project costs are $5.8 to $5.9 million, the infrastructure/construction costs are $2.6 million, with an additional $500,000 allowance for future road development to connect to Washington and Division Avenue,” Berreth noted.
On top of this, the construction costs of single- and multi-family homes and apartments outside the TIF, yet still financed through the project, is around $25 million. Berreth added that a commercial lot on Washington Ave. will also be developed. Despite this large price tag, Morris commented that this TIF district would not affect Madison School District’s general fund or raise taxes for any Madison homeowners.
The district received positive feedback from commissioners as well as Mayor Roy Lindsay, and its creation was approved unanimously. “Housing is one of the things that Madison still really does need,” Lindsay said, “and this is going to be in a neighborhood that is going to benefit not only the college, but our workforce as well.”
