The economic fallout from COVID-19 is creating uncertainties for the timing and even development of the long-planned, $13.2 million Madison Public Market on the East Side, Mayor Satya Rhodes-Conway said.
But the nonprofit Madison Public Market Foundation, which would run the market in a city-owned building, is imploring policymakers to stay the course, saying adjustments can be made and the market is just what the city needs in coming years to support a diverse mix of entrepreneurs and boost a recovery.
In mid-May, Rhodes-Conway, facing projections for a $30 million budget shortfall in 2020 and a $20 million gap in 2021, quietly informed the foundation that city staff had stopped working on the project, at least for now, and to brace for potential changes in city support.
Asked if the project could stall or die, the mayor this week said, “That’s certainly a possibility. I don’t think that’s anyone’s first choice. The landscape has shifted. There’s a lot of things in flux right now. I think everything is on the table at this point.”
In a written response to questions from the Wisconsin State Journal, the foundation board called any possible withdrawal of city support “very short-sighted.”
“Our Madison Public Market is a shovel-ready project that’s been in the making for nearly 20 years,” the board said. “Two years from now a Public Market will be exactly what our recovering local businesses and economy needs. Small businesses will need an affordable, supportive place to do business where they are stronger together. And our community will need a place like the market where we can once again come together and celebrate overcoming this pandemic.
“We look forward to working with the city on adjustments to the funding sources and timeline, if needed,” it said. “We are ready to be flexible as the city navigates the financial impact of COVID, but we cannot bring this important project to the final stages of completion without the city’s support.”
The project would convert the two-story, 45,000-square-foot city Fleet Services Building on 3.4 acres at 200 N. First St. into a year-round community destination featuring a diverse group of entrepreneurs offering fresh produce, culturally diverse prepared food, locally made food, and arts and crafts. The city would continue to own the property while the foundation would operate the market.
To finance the market, current plans call for $7 million in city Tax Incremental Financing (TIF), $3 million in private donations, and $3 million in private equity funded through federal New Markets Tax Credits, city economic development director Matt Mikolajewski said. Construction is supposed to start next year with an opening in 2022.
Once open, the market would cost about $1 million annually to operate, with revenue coming from renting space to vendors and renting facilities for special events, Mikolajewski said. The city would not provide an ongoing operating subsidy, he stressed.
“It’s important to note the city’s $7 million in funding for the project is coming from TIF, not the General Fund or borrowing,” the foundation board told the State Journal.
Meanwhile, the foundation has fulfilled its commitment of raising $3 million in private donations and pledges, the board said, adding, “we continue to see additional donor interest, even during the pandemic, and have a pathway to raising up to a total of $4 million.”
From the beginning, interest in the project from potential tax credit investors has been very strong, but the price investors are paying today is lower than it was when the project started four years ago, and the award announcement has been delayed by 30 to 60 days, said Carrie Sanders, the city’s New Markets Tax Credit consultant for the project.
The city may also have access to $3 million in federal COVID-19 recovery funds for the project, the foundation board said.
The foundation has developed a five-year budget projection that it continues to update as COVID-19 impacts are better understood, the board said. Just before the virus hit, the board and the city began formal negotiations on an operating contract, it said.
“It’s too early to understand the potential financial impact COVID-19 may have on the operating plan and budget,” the board said. “The foundation is monitoring the crisis closely and has created flexible financial projections that will evolve as the pandemic unfolds. Public Markets across the country, including the Milwaukee Public Market, have reopened and are providing important economic activity for small businesses hit hard by the pandemic.”
So far, the foundation has identified two main options for moving ahead: a strong preference for staying the course and continuing the partnership with the city; or restructuring the ownership and operating model, which would mean the city transferring ownership of the building to the foundation and working through a host of issues.
Meet the entrepreneurs being groomed for the public market
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