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Mequon shuffles TIF dollars to spur development

$1.8 million repurposed for developer incentives

Jan. 15, 2013

Mequon - City officials plan to divert money toward incentives to entice developers and breathe life into the city's underperforming Town Center tax incremental financing district.

The Planning Commission on Monday adopted amendments to the TIF district plan and boundaries, adding two parcels near the corner of Mequon and Wauwatosa roads to the district, and repurposing $1.8 million of the city's investment in the district for developer incentives. The Common Council will need to review and approve the amended district plan and boundaries at an upcoming meeting.

Community Development Director Kim Tollefson said after the meeting that although the Common Council "didn't buy into the concept of developer incentives" when the district was created in 2008, upfront grants to developers, and "pay-as-you-go" grants which divert some money back to developers as they create additional tax revenue, have been successful in other city TIF districts. With an estimated $12 million proposed development by Wired Properties in the works - which will likely be supported by a portion of the $1.8 million - Tollefson estimated the district has generated an estimated $15 million in added value since 2008.

However, she estimates the district will require $45 million more in developments before there is enough additional tax revenue to pay off the city's investment, which is just north of $7 million.

"We can't pinpoint the year that's going to happen," Tollefson told the commission. "It's going to depend on what projects come forward at what time."

Another project on the way

It was the intent of the city and Common Council to include the two parcels at the intersection of Wauwatosa and Mequon roads within the district, Tollefson said, and the amendment corrects a mistake which left the properties out when the district was created.

"We've always talked about that area as being part of the Town Center and part of the (district)," she said.

By adding the two parcels, the commission brought the entirety of a proposed Outpost Natural Foods development - being developed by MSI General - into the district. That project will also depend on a yet-undetermined amount of the $1.8 million of developer incentives.

"We are in negotiations with the developer of that project in regards to incentives," Tollefson told the commission. "In staff's opinion, (a lack of incentive) would not allow that project to complete."

The value of the proposed Outpost, and the district's overall value after its completion, are unknown at this point.

More growth still required

Mayor Curt Gielow pointed out that the city needs additional developments to bring the Town Center district into the black.

"The development on the corner (Outpost) is not enough for (the district) to pay for itself," Gielow said. "We need more."

Alderman Dan Abendroth asked whether the $1.8 million is necessary to encourage development, and if it is the total amount the city will commit for incentives in the district.

Financial adviser Dawn Gunderson of public finance firm Ehlers said, by creating an incentive category within the district, funding could again be shifted.

"Once the category is there, the council has the authority to move money between line items," Gunderson told the commission. "You have the ability to in the future … to move money at any time."

Whether or not city officials choose to do that, Abendroth noted that the Common Council will need to find ways to keep the developments coming in order to pay of the public's investment in the Town Center.

"The job of the council is going to be to see where the money will come from to pay that debt," he said.

BY THE NUMBERS

Below are the city's original and amended investments in the Town Center district, by category.

Original 2008 Plan/Amended 2013 Plan (percent change)

$813,250/$713,250 (-12.3)

road improvements

$4,753,700/$3,825,000 (-19.5)

utility improvements

$874,011/$524,511 (-40)

landscaping and street amenities

$406,800/$85,000 (-79.1)

parking facilities, paths and sidewalks

$212,640/$112,640 (-47)

miscellaneous design, development and improvements

$0/$1,800,000 (+100)

developer incentives

$7,060,401

Total public investment in Town Center TIF district

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