The City Must Ensure Food Access for South Madison

Truman Olson Update

I was recently informed that Luna's Groceries was not able to secure their financing to purchase the condo by the developer's financial closing deadline.

In order for the deal to be financeable, the Grocer's lenders required that the grocer have all of their financing in place.  This means Luna's had to have their financing in place to both purchase the condo for the constructed building shell ($4.6M), and to build out the interior of the store itself (another $4.3M).  

It is important to note that while Luna's will not actually be able to build out the grocery condo until 2022, they needed to come up with the financing now.  Luna's intent was to close on the grocery condo and commence build out of the constructed grocery shell at roughly the same time.  However, this timing did not work for the financing partners.

At my request, the City is proposing to fill this gap by purchasing the condominium unit, so construction can commence. WHEDA is providing an extension on the tax credits to allow for this transaction.

This approach also buys time to complete any necessary value engineering for the project, and to secure other financing options / grants for the grocery store to ensure its long-term operational success.

Food access is a public good that has been prioritized by the City in the past, and the proposed path of action for Truman Olson is not unusual. The City has financially supported past grocery developments through landlord/tenant arrangements (Asian Midway and Yue-Wah Oriental Foods) and through TIF loans to incentivize grocery development (Trader Joe's at Monroe Commons and Festival Foods at The Galaxie).

Staff have been working overtime with the Mayor's office, Alder Carter and myself to resolve this situation. A resolution will be introduced from the floor tonight to authorize this transaction. 

This has been a complicated endeavor from the start. The stakes are too high to give up now. When there is market failure, it's the appropriate role of government to provide for the common good.

That's what we're doing.

Take care and stay safe.

Tag