Throughout the building, there is debris from the building itself and from visitors — human and animal. Some of the windows and walls are covered in different forms of graffiti. The northern section of the building has sustained more damage from aging, the elements and vacancy than the south section that can be seen from the riverfront.
Throughout the building, there is debris from the building itself and from visitors — human and animal. Some of the windows and walls are covered in different forms of graffiti. The northern section of the building has sustained more damage from aging, the elements and vacancy than the south section that can be seen from the riverfront.
City of Madison officials took several steps this week down the required path to match the $7.35 million in state credits for two recently announced projects totaling more than $34 million.

For the projects to advance, the city must match $4.75 million in conditional state DINO credits for one project — the Cotton Mill at Vaughn and St. Michaels on the riverfront — and $2.6 million for Armor Plastics, a new plastic coating company specializing in aftermarket ATV parts, whose plans became public Thursday afternoon.

A news release from the state economic development group said Armor Plastics 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.

“It’s the best of both worlds, improving the hilltop and downtown,” said Matt Wirth, director of the Jefferson County Industrial Development Commission.

The Madison Redevelopment Commission — commonly referred to as the TIF board — approved a resolution Thursday that states the commission approves of the city beginning the process to issue $6.6 million worth of bonds to help the developers of the two projects. The Cotton Mill was expected; Armor was a quick addition after state approval came through.

“This is the very, very first step, the initial step that must be taken to authorize the sale of bonds — TIF-backed bonds — to be able to make this happen,” said Wirth, referring to Tax Increment Financing bonds.

The more than $21 million investment to transform the Cotton Mill property on Madison’s riverfront into an 80-room boutique hotel was announced Jan. 23.

The plans are being undertaken by Riverton LLC, in collaboration with the City of Madison and the Indiana Economic Development Corporation. The plans, with an initial commitment from Marriott, feature a conference center, restaurant and enhanced outdoor spaces with views of the Ohio River. Construction is expected to be complete in summer 2020, the announcement said. The city plans to use a combination of three things — bonds through the Tax Increment Financing (TIF) district, tax abatements and infrastructure projects — to make up the funds to match the state tax credits — known at DINO credits — the Cotton Mill developers were awarded.

Legal counsel for the city and developers have worked out a tentative schedule to move the bonding process along in the next few months.

First, the city expects to match $4 million through bonds against the city’s redevelopment funds, known as tax increment financing or TIF, for the Cotton Mill.

Mayor Damon Welch, Bob Cooke, the city’s human resources and purchasing director, and Wirth, say the ability to repay the bond money is not an issue. The money is there, they say.

What has to happen, though, is a process of approval that involves more than one public board before the city council has a chance to vote.

Welch said he expects the remaining $750,000 needed to match the DINO grant for the Cotton Mill will be made through tax abatements on the investment and through infrastructure projects completed near the property.

After negotiations with Armor Plastics, the city agreed to match the state’s award of $2.6 million wholely with the remaining bond funds.

The first step in this process requires the TIF board to officially agree to move forward with the bonding process, the action that was taken Thursday afternoon. Now the board has communicated its agreement to the city council and economic development commission, the council will draft an ordinance. The ordinance, if approved, will allow the city to receive and release the monies to the developer after the bonds have been sold.

Cooke said the bonds will be against the TIF zone, which brings in money biannually from the county tax settlement, based on assessed property values. The TIF board is the first to OK the release of funds to the developers and will manage making payments on the bonds.

As of Thursday, Feb. 7, the TIF funds stood at approximately $4.7 million. Cooke said the TIF has enough funds now to make the match, but by using bonds, instead, will enable the financing district to continue contributing funds to other local projects and causes as the bonds are paid off.

The city’s redevelopment commission expanded Madison’s tax increment financing district Nov. 9, 2017, to include the downtown area. The former TIF district and redevelopment zone encompassed much of the hilltop area along and north of Clifty Drive.

Go to madisoncourier.com for a map of the TIF zone.

The expansion followed the path of the railroad tracks on the west end of downtown to the new downtown historic district area, which includes the areas between the city limits along Main Street to the river and areas north of Main Street.

A TIF district collects funds from commercial and industrial properties to be used 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.

Before the council can vote on issuing bonds through the TIF, it must have three public readings, which take place during council meetings.

Cooke said the city expects to have a public presentation during the second reading to provide the public more information about the project.

“There are a lot of checks and balances in place to protect the taxpayer’s money,” said Welch.

Residential property taxes will not be affected by this project, according to Welch, Cooke and Wirth.

Welch said the tax abatements will be on the investment only and that the developer will not pay taxes on the first year with the abatement. After that first year, the payments will incrementally rise until they they reach the full amount expected for the property’s new assessed value with completed renovations. The city could provide tax abatements for a maximum of a 10-year period, but the decision on how long has not been made. This increase in property value also will increase the amount of funds coming into the TIF budget for the commercial property in the Cotton Mill project.

The city will collect a 5 percent innkeeper’s tax on each of the 80 planned hotel rooms.

The Armor Plastics project will not receive any tax abatements from the city, so once the project is complete the city will immediately begin collecting property taxes. The value of the property will increase, so it will also bring more funds into the TIF zone.

The conference center that is to be attached to the hotel is expected to be able to host 350 to 400 people, Wirth said. This is more than the hotel will be able to house, so guests will have to turn to other local hotels for lodging and to other local businesses for meals and entertainment.

“Where are they going to eat dinner?” asked Wirth. “We hope they walk right up to Main Street.”

Cooke said the city already has infrastructure projects planned in the area, which will help to make the match. Road and sewer improvements on Vaughn Drive, St. Michaels Avenue and other nearby streets will count toward the match because the new commercial property will see benefit from those improvements. Cooke said potential future projects at the nearby Jaycee Park might even qualify toward the match.

The mayor also said there will not be any negative impact on schools financially from the project because he expects the TIF board will continue to provide financial support to local school programming, like they have in recent years to Cubs Manufacturing and Engineering, a work-based learning program at Madison Consolidated High School.

“They need the assurance that they have the funding coming from us (before they request bids),” said Cooke of the Cotton Mill project. He explained the funding from the city will likely go to the developer in four increments, so the city will have proof of progress as it provides funding to pay the developers as they move along with the project.

Welch and Cooke said Friday that the city’s goal is to use current TIF funds to pay off the $2.6 million in bonds for the Armor Plastics projects “very quickly.” Legal counsel for the city and Armor Plastics are still ironing out the final details, but the city hopes to pay off the $2.6 million in a 90-day period. Welch said the bonding process is the easiest way to use TIF funds to make the city’s required match.

Welch, Cooke and Wirth stressed that all official decisions will take place during public sessions and public comment will be taken during public meetings and through other means such as phone calls and emails to city and elected officials during the process.

There will be time dedicated to public comment during the city council meeting after the proposed bond ordinance’s second reading, which is expected to take place on March 5.

“We are trying to, if we can make it happen, do both of these bonds in one to save some money,” said Welch to the TIF board. “...I think these are two very important projects for our community and this by no means says it’s a done deal, but this is the start of it....”

Welch explained that bonding for a larger amount one time instead of the two smaller amounts separately will save the city money in administrative fees that must be paid each time a bond process takes place.

“It’s something that the city really needs,” said John Grote, a member of the TIF board. “I think it’s a great job by you and your team to get this opportunity in front of us and I think it will go a long way improving the overall economic development of the downtown area of Madison as a whole, so we’re very supportive of it.”

The council, TIF board and economic development commission will meet jointly in an executive session Tuesday, Feb. 19. The two projects are a likely topic for discussion during the closed meeting.