The loan is expected to be repaid by 2026, and Gasper said the tax money paid by the development, an estimated $87,000 to $90,000, will then be used to pay off the TIF district debt, something that will help the city come out ahead.
Otherwise, Smith said he would put the second and third phases of the project on hold, and the taxable value of the land with only phase one completed would be roughly $20,000.
"The best thing right now seems to be to encourage them to build out the project faster," Gasper said.
"It's a gift to the developer," she said. The developer doesn't pay it back, the taxpayer pays it back.
City Administrator Mark Grams disagreed, noting the loan will be repaid using increased tax money, not funds from taxpayers.
The developer's agreement will specify that if the taxes from the development don't cover the TIF loan repayment, the developer will have to make up the difference, Grams added.
"You're not putting anything on the taxpayers," he said. "To me, this makes economic sense to do it.
Smith told the Common Council that when he proposed the 11-unit development, he had no intention of seeking TIF funding but that the cost of building materials, labor and dealing with soil issues caused the budget to skyrocket.
To help deal with that, he said, he has increased the asking price for the townhouses.
He's only seeking TIF money to deal with the soil issues, he said, adding that the $365,000 is a maximum.
"We think the amount we're asking for will cover it," Smith said, adding that if the cost exceeds that, he will absorb it.
Smith said he knew when he bought the land that it had some soil issues, but soil borings did not reveal the extent of the problem — something Grams acknowledged.
Sigwart questioned why Smith didn't expect some issues, considering the property used to be home to a Wisconsin Chair Co. building.
"You don't know the extent until you open everything up," Ald. Mike Ehrlich said.
The city would obtain the funds for the TIF loan through a State Trust Fund loan, with funds released to Smith in three installments — about $220,000 when occupancy permits are issued for the first phase of the project and $70,000 each when foundations are in for the second and third phases, Grams said.
The developer would have to back up the requests with receipts and invoices proving the payments are going toward the soils issues, he added.
Sigwart also asked whether Smith should wait until he has enough presales for the townhouses to do the rest of the project at one time, noting it would lead to economies of scale and ensure the development would provide the taxes the city needs to repay the TIF.
"We think the delay would compromise the momentum we have now," Smith said.