VERONA — The city of Verona will forge ahead with plans to close a special tax district that includes most of Epic Systems Corp.’s sprawling headquarters ahead of schedule.
The City Council voted unanimously Monday night to close tax increment financing (TIF) District No. 7 at the end of the year. The district was originally slated to close in 2025, but an analysis completed last month by city financial consultant Ehlers Inc. recommended early closure because the company’s growth has generated enough tax increment to pay off city debt ahead of schedule.
A full picture of Epic’s tax effect won’t be available until after the district is audited at year’s end, but the closure is expected to provide an estimated $21.2 million in one-time cash to the district’s taxing entities and return more than $393 million in equalized value to the tax rolls.
Council members and Verona Mayor Jon Hochkammer lauded the chance to end the district ahead of schedule and the possibilities the cash injections provides to the city and other taxing entities.
Hochkammer said the money will be available around March 2017 and should be used to help the city in the long term, a sentiment several council members shared.
“We’ll continue to move forward and do the responsible thing. It certainly opens up a lot of doors for us,” Hochkammer said.
The district was created in 2002 to facilitate Epic’s move from Madison to Verona.
Under tax incremental financing, a base value for all of the properties in the district is established at the time the TIF district is created. Taxing entities continue to collect their share of the base value while the additional tax revenue generated by construction in the district, called “increment,” is collected in a fund to pay eligible expenses such as infrastructure improvements, environmental remediation or direct contributions to developers.
Since construction on the campus began in 2003, the electronic medical records giant has completed 17 office buildings and the 11,400-seat Deep Space auditorium.
But Verona, which spent $31.4 million on infrastructure improvements and development incentives in the TIF district through the end of last year, has yet to see the full tax benefit of Epic’s campus because only a handful of the company’s newest buildings are located outside the district.
Eleven office buildings and part of the Deep Space auditorium are inside the TIF district, where tax revenue generated by new construction is siphoned into a fund to pay for those expenses. Meanwhile the equalized value of property in the district has skyrocketed from $320,400 when it was created to $393.14 million in 2015.
The Ehlers analysis projects the district’s fund will contain $21.2 million in surplus cash by the end of 2016. That includes an estimated $11.23 million for the Verona School District, $6.15 million for the city, $2.95 million for Dane County and $868,664 for Madison Area Technical College that would be paid in one-time lump sums.
“This is just really good news for our area, not only for the city of Verona, but for the entire region, for the technical college, for the school district, for Dane County,” Hochkammer said.