The City of Verona will create an affordable housing fund through the extension of a southeast-side tax-increment financing district.
City staff told the council that by 2023, the increment will produce $1.6 million for the fund from the extension of TID 6, which encompasses Liberty Business Park and the Verona Technology Park.
By law, TID 6, which was created in 2000, would be required to close in May after all expenditures are paid. But the state legislature passed an exemption in 2009 that allows municipalities to keep TIDs open for a few more years to improve housing stock or affordable housing.
The Common Council voted 7-1 at its Monday, Feb. 22, meeting to collect tax payments in TID 6 for the next 12 months. Evan Touchett (Dist. 4) voted against the resolution, stating the city should invest its own taxes into affordable housing, rather than getting it from other jurisdictions that are involved in the TID process, such as the county and the state.
TID 6 must close by 2023, according to state law, which limits industrial districts to 23 years. TIF districts pool tax revenue from all underlying taxing jurisdictions (the city, county, state, technical college and the school district) of the newly developed property, to create projects for the public good and would not be financially feasible without TIF. When a district closes, tax revenue generated by the new development is then dispersed among the taxing jurisdictions.
The city must use 75% of the collected revenues for affordable housing, according to state statute. The rest can be used to improve housing stock, which means the city can provide grants or loans to improve existing housing.
The city has until April to decide what percentage of the funds will be used for affordable housing. City administrator Adam Sayre told the council the cities of Waunakee and Fitchburg are using the same statues to create affordable housing.
Two development projects along West Verona Avenue are planned to have apartment units that qualify as affordable housing. The Steve Brown and Alexander Company are preparing to build 110 units of workforce housing on the former Sugar Creek Elementary school site that sits west of downtown, and the Klassik development will have 50 units of affordable housing.
The city could use the fund to assist the developers in affordable housing projects, which is defined as tenants earning 30-60% of the county median income.
Both projects are waiting for state tax credits through the Wisconsin Housing and Economic
Development Authority (WHEDA), to potentially help finance the affordable housing portion of the projects. The state will award projects in April.