Tuesday’s Madison City Council meeting included another step toward making the city’s multi-million-dollar match to two developers planning major economic development projects. The small step was the second reading of a proposed bond ordinance and an opportunity for public comment and questions following a short presentation.
One project is a more than $21 million investment to transform the Cotton Mill property on Madison’s riverfront into an 85-room boutique hotel. The plans are being undertaken by Riverton LLC, in collaboration with the City of Madison and the Indiana Economic Development Corp. The plans, with an initial commitment from Marriott, feature a conference center, guest amenities, restaurant and enhanced outdoor spaces with views of the Ohio River. Construction is expected to be complete in summer 2020, the initial announcement said.
The other project is with Armor Plastics, a new plastic coating company specializing in aftermarket ATV parts and other hard coating and plastic-related products. Armor Plastics said it plans to invest $13.4 million to purchase, redevelop and equip a more than 145,000-square-foot building at 1200 Clifty Drive along State Road 7 in Madison. The facility, which was built by Williamson Metal Works in 1946 and then acquired by the Armor Group in 1999, has remained vacant since closing in 2009. Armor Plastics, which will designate the 28.5-acre site as its corporate headquarters, plans to repurpose the property into a state-of-the-art manufacturing campus, allowing the company to use its patented coating technology to produce door panels, windows and windshields for UTVs, ATVs and other recreational and terrain vehicles.
An initial 30 jobs will be created by the Armor Plastics project, with future total of 90 positions with competitive wages, said Harold Hunt, owner of SuperATV and partner in Armor Plastics.
Representatives from each of the projects’ developers, legal counsel and a bond expert were at the meeting to help answer questions about the projects and the Tax Increment Financing Bonds the city will use to help match its part of funds promised to the developers as state tax credits from Indiana’s DINO program.
The city’s proposed bond resolution will allow the city to issue a maximum of $8 million dollars in TIF-backed bonds. Madison’s Redevelopment Commission oversees the city’s TIF funds, and only those funds will be used to pay back the bonds.
Heidi Amspaugh, a representative from Baker Tilly, which is working with the city on issuing the bonds, told the council that the ordinance was worded with a maximum amount above what they expected to bond to cover all fees and charges. She said it’s a common practice to write ordinances with a maximum amount to help municipalities avoid falling short then having to go through all of the legal red tape again to meet the rest of their financial need.
Thomas A. Pitman, an attorney with Barnes and Thornburg, explained that the city has to use the TIF funds and the redevelopment commission to issue and pay out the bonds because of the lack of a legal tool to pay the developers directly with monies already available in the TIF fund. He told the room that legislators in the past have tried to make the path between municipalities and developers more direct, but haven’t succeeded yet.
Amspaugh told the council, after a question from the council about the payback schedule, that they would negotiate with banks during the bond-issuing process to allow the redevelopment commission to pay a large lump sum of about $2.6 million toward the bonds later this year. This amount would cover the city’s match for the Armor Plastics project planned for the former Armor Metals building. Amspaugh said this is a common practice and isn’t expected to be an issue during the bond-issuing process.
Pitman explained that the projects will generate funds for the city after completion through more money coming into the TIF fund because of increased values for properties, but that the increase may not quite meet the city’s investment.
Welch said he felt that the city’s partnership with the developers of the two now-dilapidated properties is necessary to make change happen and that the Cotton Mill and Armor Metals buildings might be vacant for more decades if the city had not started making moves to match the state-awarded tax credits.
“I just want to make an important distinction,” said Council Member David Alcorn. “This city is not going to be on the hook, the residents of Madison are not going to be on the hook, the taxpayers of Madison are not going to be on the hook for this. It is strictly the TIF board, the TIF account that is going to be on the hook for this.”
“That’s 100 percent accurate,” said Pitman to Alcorn.
The TIF fund brings in around $1 million each year, Amspaugh said. The only debt now being paid from the TIF funds is for a sewer project bond. The rest are available to help finance future projects included in the city’s economic development plan. A TIF district collects funds from commercial and industrial properties to use for improvements within the redevelopment zone or areas directly affecting the zone. No TIF funds are collected on homestead or personal property, which makes up a large part of the expanded downtown zone.
Greg Sekula, the southern regional director of Indiana Landmarks, a statewide nonprofit and historic preservation organization, told the gathering that “On behalf of Indiana Landmarks, I just want to voice my support for the projects — both projects — particularly the Cotton Mill project. As some of you may know the Cotton Mill was listed on Indiana Landmark’s 10 most endangered back in 2013 and 2014, so this is a significant historic resource that we think has statewide significance...one that we believe that will be transformative for the city once it is developed. …”
The next step in the city’s process regarding the bond ordinance will take place during the redevelopment commission’s March 19 meeting where that board will vote to move forward with the bond process and make a recommendation to the city council. The last step will be a third reading before the council.
“This Cotton Mill project has been a major concern of our organization, quite frankly since 1986. There have been various efforts over the years by developers and potential owners to put a project together down there to do something with that building. This is the best effort by far of anybody who has put any kind of idea together,” said John Stacier, president and executive director of Historic Madison Inc. “It’s been thoroughly researched, thoroughly vetted and worked very closely through a number of public programs, and I am very thankful for (the developers) for coming into town and trying to put this together.”
Stacier encouraged the council to approve the ordinance and commented that he thought combining the bond process with that for the funds for Hunt’s Armor Plastics project “is a very smart idea.”