In recent years, few issues in the city of Madison have polarized as many people as the proposed expansion of the Edgewater Hotel at 666 S. Wisconsin Ave. Now, as the proposal seems to be in the end game phase, it is worth it to take a look at the issue and dissect some of the wonkier characteristics that might have led many students and area residents to ignore the seemingly endless deliberations over the years.

Last May, shortly after classes wrapped up, the Madison City Council ended an epic eight-hour meeting by approving Hammes Co.’s $98 million proposal to expand the 1940’s era Edgewater Hotel. In short, the Council approved a plan that included the construction of a terrace atop a cut-down 1970’s renovation, a staircase to the lake and the mounting of a nine-story hotel tower overlooking it all.

Those for the expansion, Hammes Co., as well as elected allies including Mayor Dave Cieslewicz and District 2 Alder Bridget Maniaci, argued the project would add hundreds of temporary construction jobs and nearly 400 permanent (though mostly low-paying) service jobs as well as increases in property tax revenue over the coming years. On the surface, the proposal looks like a positive thing for Madison, but as dissenters have proved, it is not all roses.

Developers have at times had difficulty finding approval for projects in Madison, largely due to the value Madisonians place on the city’s historical architecture and quiet, accommodating atmosphere. In anticipation of this, Hammes Co. formed a heavy hitting lobbying group called Landmark X to pick up the support from elected officials early on. This effort seemed to have paid off in 2009 when Cieslewicz and Maniaci signaled their support before serious deliberations had taken place. However, some residents found Maniaci’s support to be premature and even troubling as the proposed renovation falls within her aldermanic district. Mansion Hill resident and vocal project opponent Fred Mohs lamented, “She was 100 percent on the development team, period. It was very disappointing.”

In fact, Maniaci was the only member of the Landmarks Commission, the city committee charged with protecting Madison’s historical sites, to vote in favor of the proposal. The Landmarks Commission ultimately decided against the proposal arguing that the intended project was too big for the area. Nonetheless, the City Council in May made an unprecedented move, overturning the Landmarks Commission’s recommendation in a 14-4 vote.

Now, one might ask, besides the conflicting opinions over whether the project is too big, what else is there to argue about? If you guessed money, you are correct. Hammes Co. wants $16 million in taxpayer dollars to help offset the cost of the project. The decision was made by the Council to approve the request at the same May meeting they OK’d the proposal, passing barely in a 12-6 vote.

The taxpayer funding is planned to come out of an interesting tool called Tax Increment Financing or TIF. There are a number of Tax Increment Districts (TIDs) in Madison that each have carefully designed boundaries around areas considered to be “blighted”. The goal of the program is to redevelop areas that wouldn’t be able to develop any other way by funneling property tax revenue back into the district, and not toward the services and governmental bodies to which they are normally addressed. These funds are meant to develop the blighted area and increase property taxes over time so that when the TIF district sunsets (usually after about 12 years) the community can recoup the tax revenue lost by the increased property tax revenue the new development creates.

There are two tests that must be passed to create or expand a TIF district. First the area must be determined to be “blighted” or “to impair growth, wither hopes and ambitions, or impede progress and prosperity.” Secondly, the development intended for a TIF district must be incapable of proceeding without TIF financing. It is far from clear whether the Edgewater proposal passes either.

One of the big problems with creating and expanding TIF districts, especially during a recession, is that they temporarily cut off substantial property tax revenue to fund social services and education, including Madison Public Schools and MATC.

Currently, the Edgewater does not exist within a TID, and the city has yet to decide if it will include it in one. However, on Monday evening Mayor Dave cast the deciding vote allowing the TID expansion to proceed. The deliberations were described as “suboptimal” by City Council President and Edgewater supporter Mark Clear. The TID expansion will be voted on three more times by the Council, School Board and Joint Review Committee over the coming weeks before a consensus is reached.

This process will set a powerful precedent. Will taxpayers be increasingly asked to subsidize luxury hotels and other big developments, or will our elected officials decide that the character of our communities and the strength of our schools and services trump developer prerogatives?

Without support from area neighborhoods and with so much money at stake, the taxpayer subsidy of the Edgewater expansion must be scrutinized thoroughly, not approved as a forgone conclusion.

Sam Stevenson ([email protected]) is a graduate student in public health.

Correction: This story’s original headline said $18 million would come from taxpayers, but the actual number is $16 million, which was correctly stated within the body text. We regret the error.