A blight on downtown?

Council will weigh whether to designate a larger area for redevelopment
Mark Ignatowski

Loan fund survey
The Redevelopment Authority is looking to property owners for input on how to use the $250,000 in revolving loan funds.

Vierbicher Associates, which is working with the city to create a revolving loan fund in an expanded redevelopment area, plans to administer an online survey to downtown property owners, residents and business owners.

Gary Becker of Vierbicher said the survey will help the company guide the loan application and review process.

The survey will ask questions to help determine the level of demand for the revolving loan fund, which is funded by TID No. 4 money, and what types of projects residents and owners would like to do with the funds.

The survey can be found at stoughtonDT.questionpro.com.

The Common Council will review and possibly approve an amended boundary for the city’s downtown redevelopment district. Part of the approval process involves finding blight in more than 50 percent of the redevelopment area. The proposed area has about 78 percent blight. [Map courtesy Vierbicher Associates]

Council will weigh whether to designate a larger area for redevelopment

Calling an area of the city run-down doesn’t make it so. But it might make it easier to improve.

On Tuesday, the Common Council plans to discuss a blight determination study that could pave the way for the Redevelopment Authority to establish a revolving loan fund usable throughout much of the downtown area. The RDA last week recommended approval of the study, prepared by Vierbicher Associates, which proposed a greatly expanded redevelopment area.

The study is a necessary step in expanding the RDA’s authority to a larger portion of downtown, but it is only the first of three required actions over the course of at least two months by the city. If the council approves the change, the RDA will be able to administer a revolving loan fund to properties in almost the entire downtown area, not just a few small properties in the existing redevelopment area.

State statutes allow the RDA only to administer loan funds within a redevelopment area. The expanded redevelopment area would include many areas in the current Tax Incremental District (TID) 4, which covers much of Main Street in downtown Stoughton.

Vierbicher’s study determined that about 78 percent of the properties in the proposed area met the definition of blighted, well above the state-mandated 50 percent threshold needed for a redevelopment district.

RDA members reiterated last week that the blight determination doesn’t negatively affect a property.

If the council concurs with the RDA’s vote, property owners in the redevelopment area will be getting a letter from the city explaining what the blight determination means. The letter will explain the purpose of the study, the findings and what the next steps in the process are for property owners and the city.

Vierbicher economic developer Gary Becker told the RDA that the letter has some statutory language that must be included that could be intimidating to some property owners. However, the city and Vierbicher plan to explain that nothing extreme like “taking property for urban renewal,” will occur with the blight determination, Becker told the RDA.

Becker said that while many buildings on Main Street have a facade that looks good, the interior and other parts of the building are often not as structurally sound or usable.

State statues define a blighted area an area with the “presence of a substantial number of substandard … deteriorated structures (that) substantially impairs or arrests the sound growth of a city … or constitutes an economic or social liability.”

Becker explained to the RDA last week why property values should not be hurt by the label.

“I believe it benefits the property owner,” he said. “By making a finding of blight, it means the local government is targeting that area for reinvestment. That can only help improve the prospects of the property.”

A blighted property could be eligible for additional grants and improvement money through the revolving loan fund the RDA hopes to establish.

The revolving loan fund will be another tool property owners can use to improve their buildings and lots. For example, Becker previously told the Hub, a downtown property owner might have trouble getting a loan to renovate a second floor of a commercial building into an apartment because such “mixed-use” projects are often difficult to finance. The city could provide a portion of a down payment through the revolving loan fund in order to make the project more attractive to a lending institution.

Other area municipalities, including Fitchburg, Verona, Sun Prairie and Middleton, have established similar revolving loan funds. A typical use would provide 10 percent of the value of the project, leaving the owner to come up with 10 percent and finance the loan at 80 percent loan-to-value.

If the Council approves the blight determination study Tuesday, a letter will be mailed to property owners March 4 inviting them to review the determination and comment at a public hearing on April 10. The council could then decide in late April whether to amend the redevelopment area.

The blight process may be familiar to some downtown property owners. The city went through a similar process in 1999 when the TID was created, Becker said.

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