Madison Public Market delayed; Funding setback threatens the project | local government

The city told the nonprofit Madison Public Market Foundation, which will operate the facility on the east side of the city, that it had to withdraw an application for a $3.4 million federal grant that was a key part of the market’s funding package, and that rising construction costs would add $1.8 million to the project. .

The market price is now $20 million, including a $5.2 million underfunding. While the city was relying on $3.4 million in federal pandemic relief funding to cover most of that, it had no plan to cover the inflationary surge. Because the federal aid was conditional on fully funding the project, the city was forced to withdraw the application, according to a memo from the city’s director of economic development Matt Mikolaevsky.

“I’m disappointed,” said Ann Reynolds, board member of the Public Market Corporation and chair of the city’s Public Market Development Committee. “It puts the market in a very vulnerable position. I think there is still a tremendous amount of support for it. It’s going to the next stage of decision making by the city council.”

Mayor Satya Rhodes Conway did not say whether she would seek additional market funding in her proposed 2023 capital budget, which she will present on Tuesday.

The city intends to form the market from a two-story, 45,000-square-foot city-owned building at 200 N. First St. Which formerly occupied the Fleet Services Division and has been used as a temporary shelter for homeless men since December 2020 Fleet Services operations have moved to a new 105,000 square foot building at 4151 Nakosa Trail, on the Far East Side. The city and county are preparing new and permanent men’s shelters.

To fund the market, the city intended to use $7 million in additional city tax funding (TIF), $849,000 in city funds, $3 million in private donations and a $3.4 million Federal Economic Development Agency grant. In February, Governor Tony Evers announced $4 million to market from a government program that uses federal COVID-19 relief funds, which city officials then said was the last needed piece of funding.

The city’s project team estimates that roughly $800,000 to $1 million could be cut from the project without a “profound negative impact” on the market’s overall operations, Mikolajowski said in his Wednesday note to the Public Market Development Committee.

But Reynolds said the implications of any cuts should be fully examined.

The memo says more substantial cuts have been explored but they come with greater implications for market sustainability. Meanwhile, the Public Market Foundation says, it doesn’t think big gifts will materialize in the coming months.

The memo says the city is exploring a new source of federal funding, but at most, it could only provide $1 million to the market.

On Tuesday, Rhodes-Conway will present its 2023 capital budget. The mayor may propose borrowing money or using money from the highly successful TIF district of the East Washington Avenue corridor to help fill the funding gap. The latter option would require approval by the TIF Multi-Disciplinary Review Board. It is unclear whether the mayor will do so.

City Chief Financial Officer David Schmidke said the city had a “rainy day” fund of $56.4 million on December 31, 2021, but that money would not be used for a project like this. The fund represents the city’s reserves to continue services in the event of a drastic change in revenue or costs, he said, and maintaining them is critical to the city’s rating of Aaa bonds and less expensive to borrow.

Rhodes-Conway did not respond directly to questions via email about whether it would propose additional market funding, if it would support a budget adjustment, or if the situation threatens the market.

“I look forward to consulting with the Finance Committee on this matter,” she said in a written response. Mikolajewski declined to comment.

“If the mayor doesn’t put the funding into the budget, I’m going to be disappointed,” Reynolds said. “But I am very grateful that the Finance Committee will have the opportunity to do so.”

The Public Market Development Committee will discuss the situation during an online meeting at 5 p.m. Thursday. City employees will brief the Finance Committee on the matter on September 12.

If funding is approved, Reynolds said, depending on the source, the start of construction planned in November would be delayed by at least four months. If the funds are not approved, she said, “Yes, the project is definitely under threat.”

Under current plans, the city will transform the 3.4-acre former Fleet Services building into a year-round community destination that houses a diverse group of entrepreneurs offering fresh produce, culturally diverse prepared foods, locally made foods, and arts and crafts. The city will continue to own the property, while the foundation will operate the market.

The market is set to include a food innovation hub that will be a flexible venue for micro-manufacturing with services and equipment to foster micro-entrepreneurs and minority-owned businesses.

Reynolds said development plans are complete, and the project is about to go live. “It’s a ready-made shovel,” she said.

Once opened, the market will also have operating costs, with revenue coming from renting space to vendors and leasing facilities for special events. The city will not provide an ongoing operating subsidy.