Economic Revitalization

Economic Revitalization Tools

The City of Madison encourages neighborhood associations to learn more about economic revitalization, inform City staff of neighborhood revitalization goals, and work with local business associations, non-profit groups, and City agencies to develop revitalization strategies at the neighborhood level. Several City resources may be appropriate for your economic revitalization goals.

Community Development Block Grant

1998 CDBG

Funding Objectives

To improve the quality of the owner-occupied housing stock in CDBG target neighborhoods.
To stabilize or increase the number and rate of owner-occupied dwellings in CDBG target neighborhoods.
To strengthen the quality of rental management and rental housing in neighborhoods which are part of a City-recognized strategy for revitalization.
To create or expand for-profit small businesses in CDBG target neighborhoods.
To increase the “self-help” skills of neighborhood residents or groups.
To stabilize or improve the delivery and coordination of services in neighborhood, branch, or community centers.
To create or improve the physical environment of neighborhood and community centers.
To assist neighborhoods and residents in identifying and addressing revitalization opportunities.
To increase homeownership opportunities for lower-income households.
To expand the diversity and supply of rental housing in identified scattered site areas.
To increase or improve the supply of service-enriched housing for special needs populations.
To create jobs for lower income persons.
To stabilize or improve the housing situation of individuals with special needs.
To create or improve the facilities of agencies which provide human and recreational services.
To improve linkages of low and moderate income individuals to housing and business opportunities.
To assist community agencies in identifying and addressing short-lived revitalization opportunities.

The Community Development Block Grant (CDBG) Office annually invites non-profit groups, including neighborhood associations with 501(c)(3) tax-exempt status, to request funding for community development projects or programs. The CDBG Office’s three priority funding areas are housing development, economic development, and neighborhood-based services. A project or program is eligible for funds administered by the CDBG Office if it would directly benefit: 1) individuals or households with annual incomes at or below 80 percent of Madison’s area median income; or 2) a CDBG target neighborhood. Proposals to help neighborhood associations provide leadership and serve resident needs are eligible for funds administered by the CDBG Office. The CDBG Office establishes specific funding criteria annually.

There are two ways for neighborhood associations to submit funding proposals during the CDBG Office’s annual funding process. First, neighborhood associations with 501(c)(3) status can request funding to administer a program or project. Second, neighborhood associations may work with a non-profit agency to submit a joint proposal for a program/project to be administered by the non-profit agency. Working in partnership with non-profit agencies may be prudent because many non-profits have experience preparing funding proposals and operating specific kinds of programs or projects. In addition to the annual funding process, a small pool of funds is available on a first-come, first-serve basis throughout the year to meet specific CDBG objectives.

In recent years, the CDBG Office has funded a variety of neighborhood-focused projects which support economic revitalization goals, such as the purchase and rehabilitation of a building for a small business incubator, loans to businesses for expansion, loans to businesses for building improvements, grants for target area business district improvements, grants for the development of new small businesses, and grants for business feasibility studies and development. The CDBG Office has also funded neighborhood-focused improvements such as conversion of an aging industrial building to housing and improving or establishing space for neighborhood centers.

How to Get Started:

v Obtain funding guidelines from the CDBG Office. Proposal request letters and funding guidelines are mailed to registered neighborhood associations in May. Funding guidelines are also available upon request beginning in early May.

v Contact the CDBG Office to discuss proposal strategies. Before preparing a formal proposal, discuss funding feasibility and proposal strategies with CDBG staff. CDBG staff can help you decide if your proposal would be eligible for funds administered by the CDBG Office and if your neighborhood association or another non-profit group may be the most appropriate group to submit a proposal. Staff can also refer you to appropriate non-profit groups and/or additional funding sources.

v Discuss proposal with appropriate non-profit organizations. Contact the non-profit groups suggested by CDBG staff as appropriate agencies to potentially submit a joint proposal with your neighborhood association.

v Submit proposals by June deadline. The CDBG Office holds several open-invitation workshops on proposal requirements. Proposals are usually due in the CDBG Office by mid-June.

v Attend CDBG Commission meeting(s). After CDBG staff review proposals, the CDBG Commission invites non-profit groups to provide brief presentations and answer questions on their proposals. The Commission makes funding recommendations in accordance with the overall goals and objectives established by the CDBG Office. The Commission sends funding recommendations to the Mayor by August.

v Prepare for future funding processes. Even if funding is not recommended for your proposal, comments from CDBG staff and the CDBG Commission may help you prepare for next year’s funding process.

Commonly Asked Question:

Q: How can neighborhood associations find out about CDBG target neighborhoods and projects/programs that have received CDBG funding?

A: Contact the CDBG Office at 267-0740.

Contact:

Community Development Block Grant Office

Municipal Building, Rm. 280

215 Martin Luther King, Jr. Blvd.

Madison, WI 53703

Phone: 267-0740 Fax: 267-8739

e-mail: cdbg@cityofmadison.com

Capital Revolving Fund

The City’s Capital Revolving Fund (CRF) provides low-interest loans to owners or potential buyers of Target Area properties that are vacant or in need of substantial rehabilitation. The CRF Target Area includes primarily older neighborhoods close to the City’s center. CRF loans encourage property improvements that enhance the economic vitality of individual properties. The CRF provides lower interest rates and more flexible repayment terms than are generally available through private financial institutions. The CRF is constantly being replenished by loan repayments from past CRF loan recipients. Loans can range from $50,000 to $250,000 per project. Eligible loan uses include acquisition, rehabilitation, new construction, and development fees. Loans are typically repaid in monthly payments over ten years based on a 25-30 year schedule with a balloon payment by the end of the ten years. Loan terms are flexible depending on the degree to which: 1) the project meets CRF funding objectives and 2) favorable loan terms are required in order to make the project financially feasible.

The Community and Economic Development (CED) Unit assists property owners and potential property buyers in determining if specific site/building improvement projects are appropriate for CRF assistance. Neighborhood associations can encourage property owners who are interested in property rehabilitation to contact the CED Unit for more CRF information.

How To Get Started:

v Contact the CED Unit for CRF information. Contact the CED Unit at any time to discuss CRF loans, eligible kinds of property improvements, and site identification criteria. By request, neighborhood associations will be placed on a CRF mailing list.

v Identify sites/buildings that are vacant or in need of substantial rehabilitation. Are there sites or buildings in your neighborhood that are vacant or underutilized? Are there occupied sites or buildings that are in need of substantial rehabilitation? Contact local business associations and other neighborhood-based groups to solicit site suggestions.

v Provide CRF information to property owners. Many property owners in your neighborhood may not know about the CRF and its benefits. Use neighborhood publications to expand general knowledge about the CRF. By encouraging property owners to contact the CED Unit for more information, you may encourage owners of neighborhood sites/ buildings that are vacant and/or in need of substantial rehabilitation to find the resources they need to improve your neighborhood.

Contact:

Sharon Armstrong

Community and Economic Dev. Unit

Municipal Building, Rm. LL-100

215 Martin Luther King, Jr. Blvd.

Madison, WI, 53703

Phone: 266-6505 Fax: 267-8739

e-mail: sarmstrong@cityofmadison.com

Successful Implementation: Transformation of Building Use

“It was a mess,” remembers Tenney Nursery and Parent Center co-founder Nancy Daly, describing how the deteriorated building on East Mifflin Street looked before it became the nursery’s home in 1993. Daly credits Alan Crossley, Tenney-Lapham neighborhood resident and nursery board member, for leading the campaign to find a new nursery location when the nursery’s first home, Lapham Elementary School, required the nursery’s space. The nursery hired Roger Bowden, a neighborhood real estate professional whose children attended the nursery, to provide advice as they began searching for a site. The blighted manufacturing building on East Mifflin was identified as an ideal nursery site because renovating the building for the nursery would meet two goals at once: eliminating a neighborhood eyesore while keeping the nursery in the neighborhood. Daly recalls that she had to “look through rose-colored glasses” to envision a nursery in the “big, damp, dirty, cement cave” scattered with old equipment, trash, and debris. But project organizers believed that vision was the key. They began meeting with local financial institutions and City staff to explore the feasibility of purchasing and rehabilitating the building and land, which would cost about $600,000. The combined total of a preliminary bank loan commitment and over $100,000 in private donations fell about $200,000 short of project cost. Project organizers met with Community and Economic Development (CED) Unit staff to discuss a low-interest Capital Revolving Fund (CRF) loan to bridge the financing gap. Jerry Tucker of the CED Unit recalls that the nursery project impressed him immediately as the kind of project that the CRF is intended to promote. “The project met the CRF’s primary goal of rehabilitating run-down properties into uses that benefit neighborhoods and the City as a whole,” says Tucker. “We hope that other neighborhood-based projects like Tenney Nursery can benefit from CRF assistance.” To provide revenue to retire the nursery’s debts, organizers searched for an organization to lease space in the building. The nursery now shares its building with two non-profit groups, Centro Hispano and Community Shares of Wisconsin, making Daly proud that the former Mifflin Street eyesore is now home to three community assets. Four, that is, if you consider the rehabilitated building itself, a project accomplished with the help of neighborhood residents who contributed not only funds but over 5,000 hours of volunteer labor to help with project planning, clean-up, repairs, and landscaping. The nursery has paid off its CRF loan, in turn making CRF resources available for other projects.

Tax Incremental Finance

Tax Incremental Finance (TIF) is a financing tool that the City of Madison uses in special circumstances to help promote economic development or redevelopment in City areas that meet strict TIF planning criteria. The creation of TIF Districts is limited primarily to: 1) downtown revitalization in and around the Capitol Square and 2) industrial development in undeveloped areas located mostly at the City’s periphery. The City of Madison encourages neighborhood associations to contact City staff to learn about TIF Districts.

How To Get Started:

v Identify potential neighborhood redevelopment areas. Neighborhoods adjacent to the Capitol Square or large industrial areas are potentially appropriate areas for the creation of TIF Districts. Neighborhood associations and business associations in these areas may find it beneficial to canvass their neighborhood to identify potential sites for housing, commercial, or industrial redevelopment.

v Identify neighborhood redevelopment goals. Identify redevelopment goals in the identified area. What kind of development does your neighborhood association wish to promote in the area? What kind of neighborhood businesses do neighborhood residents desire?

v Contact the Community and Economic Development (CED) Unit. Contact CED Unit staff to discuss your redevelopment goals. CED staff can explain TIF District criteria and whether your neighborhood is appropriate for TIF. CED staff can also help you identify other potential economic revitalization tools, such as Community Development Block Grant funding and Capital Revolving Fund loans.

v Provide TIF information in your neighborhood. Neighborhood associations can provide a valuable service to their neighborhoods by providing TIF information in neighborhood publications. Ask CED Unit staff to help you develop neighborhood newsletter articles to explain the use of TIF in appropriate redevelopment areas.

Commonly Asked Question:

Q: How do TIF Districts work?

A: TIF Districts encourage economic development that would not otherwise occur under existing market conditions. In designated TIF Districts, the City of Madison encourages redevelopment in the district by providing up-front funding for infrastructure improvements (such as roads, sidewalks, and drainage systems) and/or financial assistance to private entities. As redevelopment occurs and property values increase in the district, the City recovers up-front expenditures through future property taxes. Because the recovery of City TIF expenditures is contingent upon future development, TIF Districts are only created when an extensive advanced City redevelopment planning process has taken place.

Contact:

Joe Gromacki

Community and Economic Dev. Unit

Municipal Building, Rm. LL-100

215 Martin Luther King, Jr. Blvd.

Madison, WI 53703

Phone: 267-8724 Fax:267-8739

e-mail: jgromacki@cityofmadison.com

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