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HomeMy WebLinkAboutItem I PLAN COMMISSION STAFF REPORT SEPTEMBER 21, 2021 ITEM I: PUBLIC HEARING: PROPOSED CREATION OF TAX INCREMENT FINANCING DISTRICT NO. 41 SMITH SCHOOL REDEVELOPMENT DESIGNATION OF BOUNDARIES AND APPROVAL OF PROJECT PLAN Prior to taking action on proposed Tax Increment District (TID) No. 41 and the designation of boundaries for said TID, the Plan Commission is to hold a public hearing and take comments concerning proposed creation of TID No. 41. The public hearing is required as part of the formal review process the City must follow in the creation of any tax incremental financing district or amendment thereto. GENERAL INFORMATION Applicant: Northpointe Development Corporation Owner: Smith School Lofts LLC GENERAL DESCRIPTION/BACKGROUND Please see attached TID No. 41 Project Plan for more detailed information. Tax Incremental District No. 41 (the “TID” or “District”) is a proposed 2.66 acre in need of rehabilitation or conservation district comprising of the former Smith School property. The proposed district is comprised of one parcel. The City anticipates making total expenditures of approximately $1,647,000 to undertake project identified in the Project Plan. Project costs include an estimated $1,482,000 in “pay as you go” development incentives and an estimated $164,000 in administrative costs. The $1,482,000 development incentive has a present value of approximately $760,000 that the Developer will monetize through WHEDA at a 4.25% discount rate. The Project Plan includes a statement listing the kind, number and location of proposed improvements which starts on page 16. It contains an economic feasibility study, a detailed list of estimated project costs and timing of those costs as well as a method of financing starting on page 24. ANALYSIS The City is projecting an improvements value of approximately $2.05 million will result from redevelopment activity within the District. The applicants overall investment in the project is approximately $7,746,000. These key assumptions are identified in Section 9 of the Plan starting on page 25. The “expected” improvements will occur on the parcel located in the district and may entail the following: Use Page 1 Item I: Creation of TID #40 Miles Kimball Redevelopment The applicant is proposing an adaptive reuse of the former building to an affordable apartment building. Per the submitted narrative, 31 two and three bedroom units are planned to be constructed within the building and 44 garage spaces along with additional surface parking. Finding appropriate uses for buildings of this type can be challenging as they outlive their original intended use. Table 1 on page 26 shows the development assumptions when values will be added the site. The development assumption are anticipating being able to fully develop the district by sometime in 2022. District Life Based on the Municipal Revenue Obligation (MRO) for the development incentive identified on Table 3 on Page 29 of the Plan, the district is anticipated to pay off costs by 2050 which constitutes the entire statutorily allowed 27 years. At that point the full value of the properties would be added back to the overall tax rolls which current estimate is $2.4 million. Type of District The District is being created as an area “in need of rehabilitation or conservation” within the meaning of Wis. Stat. 66.1337 (2m)(a) based on a finding that over 50% of the area is need of rehabilitation. The parcels identified as “in need of rehabilitation or conservation” are shown on the Existing Conditions map on page 12 of the Plan. Example of the proposed improvements can be found on page 13. The subject property contained an aged structure that has outlived its originally intended use. The proposed development scored 70 points on the City’s Conservation and Rehabilitation scoring matrix, exceeding the minimum 50 points required. Consistency with Plans The property is zoned to Institutional with a Planned Development Overlay (I-PD) which is consistent with recommendations with the Comprehensive Plan for creating diverse housing options. The proposed Plan is also in line with the key discussion point of the ongoing Comprehensive Housing Study that is presently taking place. RECOMMENDATIONS/CONDITIONS Staff recommends approval of the Project Plan and Boundaries for TID #41 as proposed. Page 2 City Oshkosh Financing Policy and Application 8 Please complete and submit the following information to the City of Oshkosh for a more detailed review of the feasibility of your request for Tax Incremental Financing (TIF) assistance. The application is comprised of five parts: 1. Applicant Information 2. Project/Property Information 3. Project Narrative 4. Project Budget/Financial Information 5. Buyer Certification and Acknowledgement. Where there is not enough space for your response or additional information is requested, please use an attachment. Use attachments only when necessary and to provide clarifying or additional information. The Department of Community Development (DCD) reviews all applications for TIF assistance. Failure to provide all required information in a complete and accurate manner could delay processing of your application and DCD reserves the right to reject or halt processing the application for incomplete submittals. For further information please refer to the "City of Oshkosh Tax Incremental Financing Policy" document or call the Economic Development Division at 920.235.5055 LegaI Name: Mailing Address: Primary Contact #: Cell #: E-mail: FAX#: Attorney: Legal Entity: Individual(s) Joint Tenants Tenants in Common Corporation LLC Partnership Other If not a Wisconsin corporation/partnership/LLC, state where organized: Will a new entity be created for ownership? Yes No Principals of existing or proposed corporation/partnership/LLC and extent of ownership interest. Name: Address: Title: Interest: Is any owner, member, stockholder, partner, officer or director of any previously identified entities, or any member of the immediate family of any such person, an employee of the City of Oshkosh? Yes No If yes, give the name and relationship of the employee: Have any of the applicants (including the principals of the corporation/partnership/LLC) ever been charged or convicted of a misdemeanor or felony? Yes No If yes, please furnish details: Northpointe Development Corporation 420 S Koeller St, Suite 230, Oshkosh WI 920.303.9404 andy@alinacedevelopment.biz X X An equity investor will be sought will maintain 99.99% ownership through first 15-17 years. X X Andy Dumke 230 Ohio St Suite 200 Partner 50% of Development Co Cal Schultz 230 Ohio St Suite 200 Partner 50% of Development Co Unknown Investor will own 99.99% of the project for first 15-17 years of the project. Page 3 City Oshkosh Financing Policy and Application 9 Overall Project Summary and Objectives: Current and Proposed Uses: Description of End Users: Describe any zoning changes that will be needed: Identify any other approvals, permits or licenses (i.e. Liquor License, Health Department, etc): Describe briefly what the project will do for the property and neighborhood: Property Summary: Parcel/Land Area: SF Building Area: SF # of Dwelling Units: # of Stories: # of Parking Spaces: *Please attach additional pages if necessary We seek to turn the vacant Smith School into approximately 31 low-income family apartment units. The site will providesurface parking along with 31 single-car garage units. The most recent use was as an elementary school for the public school system. The property has been vacant for the past 2years. The proposed use is a 31 unit low-income family apartment facility. End users will be families that meet low-income qualification standards of at most 60% of the community median income. None This property has been sitting vacant for the past 2 years. This project will stabilize the property and unsure the building does not come under further disrepair. Moreover, the renovation will be conducted according to the secretary of the interior's standards for historic preservation. None Page 4 City Oshkosh Financing Policy and Application 10 Firm Financing Approval: Construction/Rehabilitation: Landscaping/Site Work: Occupancy/Lease Up: Other current Team projects in development: Financial ability of the applicant to complete the project: History of use of other city or government financial incentives: Professional Studies Applications for commercial and residential projects may at the option of the city be required to include a comprehensive market study. The study should identify target markets, of competition, demographics, market rents, letters of intent/interest from prospective tenants, or for housing developments, prices or rental rates of comparable Appraisal: projects that the transfer of land may at the option of the city include a recent appraisal. Projects that include land as a form of equity or collateral must also submit a recent appraisal. The appraisal must value the property and the impact on value must be considered for such items as demolition, environmental remediation, relocation of utilities, lease buy-outs, and other work make the site developable. The must be valued assuming that the highest and best use is the proposed use. Oct 2021 Date Sept 2021 Pr oject Timetable Final Plan/Specification Preparation: Bidding and Contracting Sept 2021 Oct 2021 - Oct 2022 Apr 2022 - Oct 2022 Oct 2022 - Feb 2023 Development Team Developer: Northpointe Development Architect: Wesenberg Architects Surveyor: Contractor: Wesenberg Architects Other Members: Wesenberg Architects (Historic Consulting) Describe Team expertise and experience in developing similar projects: Over the past decade Northpointe development has been responsible for the development of over 1,000 apartment units across the state including historic renovation, low-income, and other market rate apartments. Northpointe is presently working on 2 LIHTC projects including the Cabrini School in Oshkosh and another in Madison. With historic tax credits and low-income tax credits, the developers are confident that the project will have sufficient financing with the City's TIF participation to complete the project. The developers have had substantial experience using government incentives to complete development projects. Page 5 City Oshkosh Financing Policy and Application 11 Sources and Uses of Funds Identify the sources of funds used to finance the project. Typical sources include equity, lender financing, mezzanine financing, government financing, other anticipated types of public assistance, and any other types or methods of financing. Uses of Funds Amount ($) $ per SF of Building Area Land Acquisition: Demolition: Environmental Remediation: Site Clearance and Preparation: Soft Costs/ Fees: Soft Cost Contingency: Hard Construction Costs: Total Project Costs: % of total project costs $ % $ % $ % Rate Term $ % mos. % $ % yrs. % $ % $ % $ 100% Financing Source Amount Terms: Years/Interest Contact Information Equity: Loans 1: 2: 3: 4: Project Budget/Financial Information: 7,745,973 760,621 9.8 2,544,000 4.25 35 1,903,388 1,074,979 Sources of Funds Equity LIHTC Equity: HTC Equity: Total Equity: Loans Construction Financing: Permanent Financing: TIF Assistance Other: (DOA Home) Total Sources of Funds 200,000 2.6 32.8 24.5 13.9 $2,544,000 35 years @ 4.25% through WHEDA Total Tax Credit Equity = $2,978,367 See Attached Detailed Project Budget 2,978,367 38.4 $318,000 35 years @ 2.5% through WHEDA $684,559 27 years @ 4.25% through WHEDA - TIF Monetization Page 6 City Oshkosh Financing Policy and Application 16 Summary Letter Provide a summary of the project in the form of a letter addressed to the City Manager. The letter should not exceed two (2) pages in length and should include only the following essential information about the project: Note: In the "but for" discussion you must clearly describe why TIF is needed to help this project and why the project will not/cannot proceed without such support. Failure to clearly provide the "but for" explanation will delay action on your application. Project Narrative Provide an in-depth overview of the project in narrative format. The narrative must include a description of the following aspects of the project: Current condition of the site and historical overview that includes the size and condition of any existing structures, environmental conditions, and past uses of the site. Proposed use(s) of project (e.g. industrial, commercial, retail, office, residential for sale or for rental, senior housing, etc.) Construction information about the project including: size of any existing structure to be demolished or rehabbed; size of any new construction: types of construction materials (structural and finish); delineation of square foot allocation by use; total number and individual square footage of residential units: type of residential units (e.g. for-sale, rental, condominium, single-family, etc.); number of affordable residential units; number and type of parking spaces; and construction phasing. If in an existing TID or redevelopment area, confirm that this project is consistent with the goals and objectives in the Project or Redevelopment Plan. A summary of the proposed "green" features to be included in the project. All projects that receive TIF assistance are encouraged to include environmentally friendly features. Description of site or building Current and proposed uses Description of end users Project start and end dates Profitability Description of public benefits, including job creation. Overview of private-sector financing Amount of TIF assistance requested Summary of increment projections Name of developer and owner Total development costs Statement regarding why TIF is essential and why the "but for" provision will be met. Page 7 City Oshkosh Financing Policy and Application 17 Filing Notes, and Agreement: Filing Requirements You must provide all of the items with your signed application: 1. An application fee of of the requested TIF assistance or whichever is greater. This fee is to cover City costs associated with the TIF application and does not cover the use of outside consultants, which if required be paid for by the applicant. Make your check payable to the City of osh. 2.Site Maps: Provide a map that shows the location of the site. Also provide a map that on the project and its immediate surroundings. Both maps should be no larger inches. Larger maps be required for projects presented to the Commission, Redevelopment Authority, or Common Council. 3. Renderings: Provide preliminary architectural drawings, plans and renderings for the project. These drawings should be no larger than inches. Larger maps be required for projects presented to the Commission, Redevelopment Authority, or Common Council. The City retains an administrative fee of of the annual tax increment If the project requires planning and zoning approvals, you must make these applications concurrent with this Agreement I, by signing this application, agree to the following: 1. I have read and abide by all the requirements of the City for Tax Incremental Financing. 2.The information submitted is 3.I agree to pay all costs involved in developing Project Plan or Development Agreement. costs may include, but not be limited to, bond counsel, outside assistance, outside financial assistance, planning, engineering, etc. and all costs in issuance of the bonds or loans to finance the 4.I understand that the City the right to deny approval, regardless of preliminary approval or degree of construction completed before application for final approval. 5.The undersigned authorizes the City of Oshkosh to check credit references and financial and other inf 6.The undersigned also agrees to provide any additional information as may be requested by the City after of io 17 Aug 2021 Page 8 August 18, 2021 Kelly Nieforth Interim Director of Community Development City of Oshkosh 215 Church Avenue Oshkosh WI, 54901 Dear Ms Nieforth, Attached you will the investment analysis prepared by Invista Analytics for the Smith School redevelopment project being proposed by Northpointe Development. Our work appears to show that this project would meet the ‘but for’ standard. To be clear, however, the fact that the present equalized value ratio is estimated to be 0.81 for this year substantially inflates valuations. As you are aware, TIF, because it involves multiple taxing jurisdictions, is framed in terms of equalized value. A developer or investor must project out valuations to arrive at a value of any TIF incentive. While the Wisconsin Department of Revenue (DOR) might term the resultant value as ‘fair market value’, sales data from the past year clearly demonstrates that the ratio is highly dependent upon property class as well as age. However, the DOR provides a single aggregate number. The risk to a developer or investor is that one might project future TIF revenues based on equalized values, however, when the city assessor goes back to conduct a revaluation, any specific property may not realize the same increase in value as might be reflected by the present equalized value ratio. This could then make the actual revenues collected substantially less than what might be projected if the assumption that the equalized value ratio should be uniformly applied. As such, I have made the recommendation to the Northpointe Development team to use the conservative estimates of value. However, to be clear, our ask for this TIF is for 90% of the available increment over 27 years with no look-back clause. To be clear, should the equalized value ratio continue to remain low and the actual increased valuations be used throughout the course of the TIF, the investor does not then see any increased rate of return should the 90% increment be provided. This approach, rather than specifying a specific number, is an attempt to provide as uniform of a rate of return as possible. Similar to the Cabrini School project, the tax credit investor is likely to be a large investment fund that will combine this project with many other tax credits projects. The project entails a very specific legal structure that has been vetted to withstand IRS scrutiny. As part of the project budget, you will see that an accounting firm will provide a project cost certification, as well as securing appropriate tax opinions that this project is consistent with similar low-income tax credit projects and thus likely to pass IRS scrutiny. The possibility of losing any TIF support via a look-back mechanism could jeopardize this tested structure such that WHEDA and the tax credit investor would rather look elsewhere. As you may recall on the Cabrini project, we provided a letter from Cinnaire, the tax credit syndicator, that in effect stated that a look-back cause would jeopardize their inclusion of the Cabrini project in their fund, and then we also provided a letter from WHEDA suggesting that if Cinnaire backed out, then so too would WHEDA have to rescind their financing commitments. Given we are using the same funding mechanisms, the same logic would apply on this project, and thus we are again asking for no look-back provision. Again, we thank you for all the help both you and the many city staff have given us in working on this project. The entire development team is excited to get started on this project. Please feel free to contact me with any questions you may have about the proposed terms of the development agreement specified here or the logic behind this request. Best regards, Timothy Hess, PhD Principal Statistician Invista Analytics, LLC Page 9 256 248 246 240 23216551649 241243 183618241818225 1745221227 16761668302306164716531661 306 302 1747174117371731172717191715170917031825A303 1815182518331841165316571665167116751677164616562142182241664165816521648 17091705 17121702171817241728173417381742255 249 241 235 17101716172217261732173617421754234240246 1749174317391735172717231719203219 183218391835182718211807181318171803183718311823181718361832182618221816253257 17001720172417301734173817441752136150158144 113119129 173 163 151 145 18081812A1812181818221828183414615415816216816501658166134128122112 1101668A 1834A1701 1709A241A 1753302A 170 159 18071701A1701B 1833A206 ARIZONA STOREGON STW 18TH AV W 17TH AV MINNESOTA STBROCKWAY AV TID#41 Tax Increment District #41Smith School RedevelopmentDistrict Boundary Legend TID #41 Boundary 0 75 150 22537.5 Feet Date: Wednesday, September 01, 2021 ² Page 10 ALEXIS L SCORGIE 221 W 17TH AVE OSHKOSH WI 54902 AMY S NITZ 214 W 17TH AVE OSHKOSH WI 54902 ANGELA G MACHO 1724 ARIZONA ST OSHKOSH WI 54902 APOGEE PROPERTIES LLC 915 CHRISTIAN DR OSHKOSH WI 54901 APRIL M WESTPHAL 1742 MINNESOTA ST OSHKOSH WI 54902 BARBARA J SCHNEIDER 111 E RIPPLE AVE OSHKOSH WI 54902 BRIAN R KEENE 1712 ARIZONA ST OSHKOSH WI 54902 BRUCE A/MICHELLE A AHRENS 1824 ARIZONA ST OSHKOSH WI 54902 CHRISTINE L EMMER 1743 DOTY ST OSHKOSH WI 54902 CHRISTOPHER R MARSHALL 1728 ARIZONA ST OSHKOSH WI 54902 CHRISTOPHER R SCOTT 1817 OREGON ST OSHKOSH WI 54902 CYNTHIA A COATES 380 S WESTFIELD ST OSHKOSH WI 54902 DAN FEYEN 1716 ARIZONA ST OSHKOSH WI 54902 DANIEL J/STEPHANIE J MATAIC 629 MADISON AVE OMRO WI 54963 DAVID J/AMY A RESOP 1719 ARIZONA ST OSHKOSH WI 54902 DAVID J/SHANNON E PANEK 163 W 18TH AVE OSHKOSH WI 54902 DOMINIC A SHAFFER 134 W 17TH AVE OSHKOSH WI 54902 EDWARD H PIERCE 1725 DOTY ST OSHKOSH WI 54902 GENERAL CONTRACTING SERVICES LLC 2111 MINNESOTA ST OSHKOSH WI 54902 GREGORY G MORAN JR 234 W 18TH AVE OSHKOSH WI 54902 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For full disclaimer please go towww.ci.oshkosh.wi.us/GISdisclaimer Page 14 SR-9 TR-10 I HI UMU I HI UMU I UI UMU I NMU I-PD UMU MULTIPLE CMU-PD RMU-PD-RFO SR-9-PD SR-9 Oshkosh City LimitOshkosh City LimitSSMMAAIINNSSTTOREGON STOREGON STW 20TH AVW 20TH AVIOWA STIOWA STDDOOTTYYSSTTW 18TH AVW 18TH AV W 17TH AVW 17TH AV W 14TH AVW 14TH AV W 15TH AVW 15TH AV W 16TH AVW 16TH AV MINNESOTA STMINNESOTA STMICHIGAN STMICHIGAN STARIZONA STARIZONA STW 21ST AVW 21ST AVMONTANA STMONTANA STALASKA STALASKA STNEBRASKA STNEBRASKA STW 19TH AVW 19TH AV E 14TH AVE 14TH AV BROCKWAY AVBROCKWAY AVNEBRASKA STNEBRASKA STW 21ST AVW 21ST AV W 19TH AVW 19TH AV C:\Users\Public\Desktop\2020 Plan Commission Site Plan Map Template.mxd User: hannahs Prepared by: City of Oshkosh, WI Printing Date: 9/1/2021 1 in = 500 ft1 in = 0.09 mi¯1745 OREGON ST1745 OREGON ST City of Oshkosh maps and data are intended to be used for general identification purposes only, andthe City of Oshkosh assumes no liability for the accuracy of the information. 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