HomeMy WebLinkAboutTID #42 Project Plan
City of Oshkosh, Wisconsin
Organizational Joint Review Board Meeting Held: Scheduled for April 1, 2022
Public Hearing Held: Scheduled for April 5, 2022
Approval by Plan Commission: Scheduled for April 5, 2022
Adoption by Common Council: Scheduled for April 26, 2022
Approval by the Joint Review Board: TBD
April 5, 2022
Project Plan
Tax Incremental District No. 42
Morgan Crossing Phase II
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Tax Incremental District No. 42 Project Plan City of Oshkosh
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Table of Contents
Executive Summary.................................................................................................................................. 3
Preliminary Maps of Proposed District Boundary ........................................................................ 6
Maps Showing Existing Uses and Conditions .............................................................................. 10
Preliminary Parcel List and Analysis ................................................................................................. 13
Equalized Value Test ............................................................................................................................. 14
Statement Listing the Kind, Number and Location of All Proposed Public Works or
Improvements Within the District ..................................................................................................... 15
Maps Showing Proposed Improvements and Uses ..................................................................... 21
Detailed List of Estimated Project Costs ...................................................................................... 24
Economic Feasibility Study, Description of the Methods of Financing Estimated
Project Costs and the Time When Related Costs or Monetary Obligations are to be
Incurred ....................................................................................................................................................... 25
Annexed Property .................................................................................................................................. 30
Estimate of Property to Be Devoted to Retail Business ......................................................... 30
Proposed Changes of Zoning Ordinances, Master Plan, Map, Building Codes and City
Ordinances ................................................................................................................................................ 30
Statement of the Proposed Method for the Relocation of any Persons to be Displaced
......................................................................................................................................................................... 31
How Creation of the Tax Incremental District Promotes the Orderly Development of
the City ......................................................................................................................................................... 31
List of Estimated Non-Project Costs ............................................................................................... 32
Legal Opinion Advising Whether the Plan is Complete and Complies with Wis. Stat. §
66.1105(4)(f) ..............................................................................................................................................33
Calculation of the Share of Projected Tax Increments Estimated to be Paid by the
Owners of Property in the Overlying Taxing Jurisdictions .....................................................35
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SECTION 1:
Executive Summary
Description of District
Tax Incremental District (“TID”) No. 42 (“District”) is a proposed 1.41-acre
Blighted Area district consisting of tax parcel 01-02440-200 located at the
southwest corner of Pearl Avenue and Riverway Drive. The District will be
created to pay the costs of development incentives, public infrastructure and
other related costs needed to facilitate construction of a 5-story 83-unit multi-
family building (“Project”) to be developed by Morgan Crossing 2, LLC
(“Developer”). In addition to the incremental property value that will be
created, the City expects the Project will result in the provision of housing units
geared towards young professionals, University of Wisconsin – Oshkosh staff,
co-living, and senior living residents. The Project will also result in the creation
of interim construction jobs, and an estimated five new permanent jobs related
to the operation of the Project.
Authority
The City is creating the District under the provisions of Wis. Stat. § 66.1105.
Estimated Total Project Cost Expenditure
The City anticipates making total expenditures of approximately $2,467,000
(“Project Costs”) to undertake the projects listed in this Project Plan (“Plan”).
Project Costs includes $2,250,000 in development incentives, $122,000 for
public infrastructure, $2,678 in interest expense related to projected advances,
and $92,060 for District administrative costs related to its creation and ongoing
administration.
Incremental Valuation
The City projects that new land and improvements value of approximately $10
million will result from the Project. Creation of this additional value will be made
possible by the Project Costs made within the District. A table detailing
assumptions as to the development timing and associated values is included in
the Economic Feasibility Study located within this Plan.
Expected Termination of District
Based on the Economic Feasibility Study located within Section 9 of this Plan,
the City anticipates that the District will generate sufficient tax increment to
pay all Project Costs within 13 of its allowable 27 years, representing 11 years of
actual tax increment collection.
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Summary of Findings
As required by Wis. Stat. § 66.1105, and as documented in this Plan and the
exhibits contained and referenced herein, the following findings are made:
1. That “but for” the creation of this District, the development projected to
occur as detailed in this Plan: 1) would not occur; or 2) would not occur
in the manner, at the values, or within the timeframe desired by the City.
In reaching this determination, the City has considered a review undertaken
by Ehlers in 2020 of the original Project’s sources and uses, and cash flow
proforma. (The originally proposed Project consisted of a 4-story 74-unit
multi-family building). Due to costs associated with environmental
remediation and provision of underground parking, the Project’s projected
returns on investment over 10 years without TIF assistance were negative.
The Developer initially requested that the City provide incentive payments
on a pay as you go basis with a future value of $1,850,000. With this level of
TIF assistance, cash on cash returns reached only 2% by the third year of
operations, and 6% in year ten with an adjusted internal rate of return slightly
less than breakeven. The Developer subsequently paused the Project due to
issues related to utilities and in 2022 submitted a revised assistance request
for $2,250,000 in future value incentive payments based on further
increases in cost. The size of the Project was also increased to a 5-story
building with a total of 83-units. Based on Ehlers original review, provision
of pay as you go incentives in the amount requested was necessary to
provide an acceptable return on investment for this Developer and indicated
that “but for” the incentives, the project would not likely proceed. Given the
additional costs now associated with the Project, the City concludes that the
“but for” test continues to be met.
2. The economic benefits of the District, as measured by increased
employment, business and personal income, and property value, are
sufficient to compensate for the cost of the improvements. In making this
determination, the City has considered that in addition to the incremental
value expected to be created, the Project will result in development of a
blighted area, remediation of contaminated soils, creation of market rate
multi-family housing to meet market demand, and provision of employment
and commercial opportunities related to the construction and operation of
the Project.
3. The benefits of the proposal outweigh the anticipated tax increments to
be paid by the owners of property in the overlying taxing jurisdictions. As
required by Wis. Stat. § 66.1105(4)(i)4., a calculation of the share of
projected tax increments estimated to be paid by the owners of property in
the overlying taxing jurisdictions has been prepared and can be found in this
Plan. However, because the Project would not occur without the use of tax
incremental financing, these tax increments would not be paid but for
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creation of the District. Accordingly, the City finds that the benefits
expected to be realized as set forth in this Plan outweigh the value of the
tax increments to be invested in the Project.
4. As detailed in Section 4 of this Plan, not less than 50% by area of the real
property within the District is a blighted area as defined by Wis. Stat. §
66.1105(2)(ae)1.
5. Based on the foregoing finding, the District is designated as a blighted area
district.
6. The Project Costs relate directly to the elimination of blight in the District,
consistent with the purpose for which the District is created.
7. Improvements to be made in the District are likely to significantly enhance
the value of substantially all of the other real property in the District.
8. The equalized value of taxable property in the District, plus the incremental
value of all existing tax incremental districts within the City does not exceed
12% of the total equalized value of taxable property within the City.
9. The City estimates that none of the territory within the District will be
devoted to retail business at the end of the District’s maximum expenditure
period, pursuant to Wis. Stat. § 66.1105(5)(b).
10. That there are no parcels to be included within the District that were
annexed by the City within the preceding three-year period.
11. The Plan for the District is feasible and is in conformity with the Master Plan
of the City.
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SECTION 2:
Preliminary Maps of Proposed District Boundary
Maps Found on Following Pages.
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SECTION 3:
Maps Showing Existing Uses and Conditions
Maps Found on Following Pages.
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SECTION 4:
Preliminary Parcel List and Analysis
The District will consist of a single tax parcel:
Parcel Number: 01-0244-02-00
Address: 0 Pearl Avenue
Owner: Morgan Crossing 2 LLC
The parcel is also presently located within the City’s Tax Incremental
Districts No. 13 and No. 21.
The parcel is a “blighted area” as defined in Wis. Stat. § 66.1105(2)(ae), as an
area which is predominantly open that consists of land upon which buildings or
structures have been demolished and which because of obsolete platting,
diversity of ownership, deterioration of structures or of site improvements, or
otherwise, substantially impairs or arrests the sound growth of the community.
In its current state, development of the property has not occurred as the land
contains soil contamination resulting from prior uses. Developer, working with
an environmental engineering consultant, has prepared a plan to remove or cap
all contaminated soils on the site. Costs associated with this remediation have
resulted in the property not developing under normal market conditions,
substantially impairing and arresting the sound growth of the community,
rendering the parcel blighted.
Details regarding the environmental conditions at the site are described within
Phase I and Phase II Environmental Site Assessments, and within a Remedial
Action Plan prepared for the site. These reports are on file with the City and
further support the finding that the site is a blighted area.
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SECTION 5:
Equalized Value Test
The following calculations demonstrate that the City expects to be in
compliance with Wis. Stat. § 66.1105(4)(gm)4.c., which requires that the
equalized value of the taxable property in the proposed District, plus the value
increment of all existing tax incremental districts, does not exceed 12% of the
total equalized value of taxable property within the City.
The equalized value of the increment of existing tax incremental districts within
the City, plus the base value of the proposed District, totals $258,409,200. This
value is less than the maximum of $578,533,500 in equalized value that is
permitted for the City.
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SECTION 6:
Statement Listing the Kind, Number and Location
of All Proposed Public Works or Improvements
Within the District
Project Costs are any expenditure made, estimated to be made, or monetary
obligation incurred or estimated to be incurred as outlined in this Plan. Project
Costs will be diminished by any income, special assessments or other revenues,
including user fees or charges, other than tax increments, received or
reasonably expected to be received in connection with the implementation of
the Plan. If Project Costs incurred benefit territory outside the District, a
proportionate share of the cost is not a Project Cost. Costs identified in this
Plan are preliminary estimates made prior to design considerations and are
subject to change after planning, design and construction is completed.
With all Project Costs, the costs of engineering, design, survey, inspection,
materials, construction, restoring property to its original condition, apparatus
necessary for public works, legal and other consultant fees, testing,
environmental studies, permits, updating City ordinances and plans, judgments
or claims for damages and other expenses are included as Project Costs.
The following is a list of public works and other tax incremental financing
eligible Project Costs that the City expects to make, or may need to make, in
conjunction with the implementation of the District’s Plan. The map found in
Section 7 of this Plan along with the Detailed List of Project Costs found in
Section 8 provide additional information as to the kind, number and location of
potential Project Costs.
Property, Right-of-Way and Easement Acquisition
Acquisition of Rights-of-Way
The City may need to acquire property to allow for installation of streets,
driveways, sidewalks, utilities, stormwater management practices and other
public infrastructure. Costs incurred by the City to identify, negotiate and
acquire rights-of-way are eligible Project Costs.
Acquisition of Easements
The City may need to acquire temporary or permanent easements to allow for
installation and maintenance of streets, driveways, sidewalks, utilities,
stormwater management practices and other public infrastructure. Costs
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incurred by the City to identify, negotiate and acquire easement rights are
eligible Project Costs.
Relocation Costs
If relocation expenses are incurred in conjunction with the acquisition of
property, those expenses are eligible Project Costs. These costs may include
but are not limited to preparation of a relocation plan; allocations of staff time;
legal fees; publication of notices; obtaining appraisals; and payment of
relocation benefits as required by Wis. Stat. Chapter 32 and Wis. Admin. Code
ADM 92.
Site Preparation Activities
Environmental Audits and Remediation
If it becomes necessary to evaluate any land or improvement within the District,
any cost incurred by the City related to environmental audits, testing, and
remediation are eligible Project Costs.
Utilities
Sanitary Sewer System Improvements
To allow development to occur, the City may need to construct, alter, rebuild
or expand sanitary sewer infrastructure within the District. Eligible Project
Costs include, but are not limited to, construction, alteration, rebuilding or
expansion of collection mains; manholes and cleanouts; service laterals; force
mains; interceptor sewers; pumping stations; lift stations; wastewater treatment
facilities; and all related appurtenances. To the extent sanitary sewer projects
undertaken within the District provide direct benefit to land outside of the
District, the City will make an allocation of costs based on such benefit. Those
costs corresponding to the benefit allocated to land within the District, and
necessitated by the implementation of the Project Plan, are eligible Project
Costs. Implementation of the Project Plan may also require that the City
construct, alter, rebuild or expand sanitary sewer infrastructure located outside
of the District. That portion of the costs of sanitary sewer system projects
undertaken outside the District which are necessitated by the implementation
of the Project Plan are eligible Project Costs. The improvements to the
wastewater treatment facilities, although not within the ½ mile radius, is an
eligible project cost under Wis. Stat. § 66.1105(2)(f)1 k.
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Water System Improvements
To allow development to occur, the City may need to construct, alter, rebuild
or expand water system infrastructure within the District. Eligible Project Costs
include, but are not limited to, construction, alteration, rebuilding or expansion
of distribution mains; manholes and valves; hydrants; service laterals; pumping
stations; wells; water treatment facilities; storage tanks and reservoirs; and all
related appurtenances. To the extent water system projects undertaken within
the District provide direct benefit to land outside of the District, the City will
make an allocation of costs based on such benefit. Those costs corresponding
to the benefit allocated to land within the District, and necessitated by the
implementation of the Project Plan, are eligible Project Costs. Implementation
of the Project Plan may also require that the City construct, alter, rebuild or
expand water system infrastructure located outside of the District. That
portion of the costs of water system projects undertaken outside the District
which are necessitated by the implementation of the Project Plan are eligible
Project Costs.
Stormwater Management System Improvements
Development within the District will cause stormwater runoff. To manage this
stormwater runoff, the City may need to construct, alter, rebuild or expand
stormwater management infrastructure within the District. Eligible Project
Costs include, but are not limited to, construction, alteration, rebuilding or
expansion of: stormwater collection mains; inlets, manholes and valves; service
laterals; ditches; culvert pipes; box culverts; bridges; stabilization of stream and
river banks; and infiltration, filtration and detention Best Management Practices
(BMP’s). To the extent stormwater management system projects undertaken
within the District provide direct benefit to land outside of the District, the City
will make an allocation of costs based on such benefit. Those costs
corresponding to the benefit allocated to land within the District, and
necessitated by the implementation of the Project Plan, are eligible Project
Costs. Implementation of the Project Plan may also require that the City
construct, alter, rebuild or expand stormwater management infrastructure
located outside of the District. That portion of the costs of stormwater
management system projects undertaken outside the District which are
necessitated by the implementation of the Project Plan are eligible Project
Costs.
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Electric Service
To create sites suitable for development, the City may incur costs to provide,
relocate or upgrade electric services. Relocation may require abandonment and
removal of existing poles or towers, installation of new poles or towers, or
burying of overhead electric lines. Costs incurred by the City to undertake this
work are eligible Project Costs.
Gas Service
To create sites suitable for development, the City may incur costs to provide,
relocate or upgrade gas mains and services. Costs incurred by the City to
undertake this work are eligible Project Costs.
Communications Infrastructure
To create sites suitable for development, the City may incur costs to provide,
relocate or upgrade infrastructure required for voice and data communications,
including, but not limited to telephone lines, cable lines and fiber optic cable.
Costs incurred by the City to undertake this work are eligible Project Costs.
Streets and Streetscape
Street Improvements
To allow development to occur, the City may need to construct or reconstruct
streets, highways, alleys, access drives and parking areas. Eligible Project Costs
include, but are not limited to: excavation; removal or placement of fill;
construction of road base; asphalt or concrete paving or repaving; installation
of curb and gutter; installation of sidewalks and bicycle lanes; installation of
culverts, box culverts and bridges; rail crossings and signals; utility relocation,
to include burying overhead utility lines; street lighting; installation of traffic
control signage and traffic signals; pavement marking; right-of-way restoration;
installation of retaining walls; and installation of fences, berms, and landscaping.
Streetscaping and Landscaping
To attract development consistent with the objectives of this Plan, the City may
install amenities to enhance development sites, rights-of-way and other public
spaces. These amenities include but are not limited to landscaping; lighting of
streets, sidewalks, parking areas and public areas; installation of planters,
benches, clocks, tree rings, trash receptacles and similar items; and installation
of brick or other decorative walks, terraces and street crossings. These and any
other similar amenities installed by the City are eligible Project Costs.
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Community Development
Cash Grants (Development Incentives)
The City may enter into agreements with property owners, lessees, or
developers of land located within the District for sharing costs to encourage
the desired kind of improvements and assure tax base is generated sufficient
to recover Project Costs. No cash grants will be provided until the City executes
a developer agreement with the recipient of the cash grant. Any payments of
cash grants made by the City are eligible Project Costs.
Miscellaneous
Projects Outside the Tax Increment District
Pursuant to Wis. Stat. § 66.1105(2)(f)1.n, the City may undertake projects within
territory located within one-half mile of the boundary of the District provided
that: 1) the project area is located within the City’s corporate boundaries; and
2) the projects are approved by the Joint Review Board. The cost of projects
completed outside the District pursuant to this section are eligible project costs
and may include any project cost that would otherwise be eligible if undertaken
within the District. The City intends to make the following project cost
expenditures outside the District: installation of cul-de-sacs at the present
terminations of Dawes Street and Riverway Drive.
Professional Service and Organizational Costs
The costs of professional services rendered, and other costs incurred, in relation
to the creation, administration and termination of the District, and the
undertaking of the projects contained within this Plan, are eligible Project Costs.
Professional services include but are not limited to architectural; environmental;
planning; engineering; legal; audit; financial; and the costs of informing the
public with respect to the creation of the District and the implementation of the
Plan.
Administrative Costs
The City may charge to the District as eligible Project Costs reasonable
allocations of administrative costs, including, but not limited to, employee
salaries. Costs allocated will bear a direct connection to the time spent by City
employees relating to the implementation of the Plan.
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Financing Costs
Interest expense, debt issuance expenses, redemption premiums, and any other
fees and costs incurred in conjunction with obtaining financing for projects
undertaken under this Plan are eligible Project Costs.
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SECTION 7:
Maps Showing Proposed Improvements and Uses
Maps Found on Following Pages.
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SECTION 8:
Detailed List of Estimated Project Costs
The following list identifies the Project Costs that the City currently expects to
incur in implementing the District’s Plan. All projects identified and related costs
reflect the best estimates available as of the date of preparation of this Plan. All
costs are preliminary estimates and may increase or decrease. Certain Project
Costs listed may become unnecessary, and other Project Costs not currently
identified may need to be made. (Section 6 details the general categories of
eligible Project Costs). Changes in Project Cost totals or the types of Project
Costs to be incurred will not require that this Plan be amended. This Plan is not
meant to be a budget nor an appropriation of funds for specific Project Costs,
but a framework within which to manage Project Costs.
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SECTION 9:
Economic Feasibility Study, Description of the
Methods of Financing Estimated Project Costs and
the Time When Related Costs or Monetary
Obligations are to be Incurred
This Section includes a forecast of the valuation increases expected within the
District, the associated tax increment collections, a summary of how Project
Costs would be financed, and a projected cash flow demonstrating that the
District is economically feasible.
Key Assumptions
The Project Costs the City plans to make are expected to create $10 million in
incremental value by January 1, 2024. Estimated valuations and timing for
construction of the Project are included in Table 1. Assuming the City’s current
equalized TID Interim tax rate of $24.41 per thousand of equalized value, and
no economic appreciation or depreciation, the Project would generate
$6,383,007 in incremental tax revenue over the 27-year term of the District as
shown in Table 2.
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Table 1 – Development Assumptions
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Table 2 – Tax Increment Projection Worksheet
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Financing and Implementation
The City anticipates making total expenditures of approximately $2,467,000
including $2,250,000 in development incentives, $122,000 for public
infrastructure, $2,678 in interest expense related to projected advances, and
$92,060 for District administrative costs related to its creation and ongoing
administration.
Development incentive payments will be paid from tax increments as they are
collected on a “pay as you go” basis. Infrastructure improvements will also be
paid from cash as it is available. Administrative expenses will be paid from tax
increments collected, or from advances from other funds to the extent those
costs exceed cash amounts available. The City will recover any amounts
advanced to the District as cash flows permit.
Based on the cash flow exhibit (Table 3), the City anticipates that the District
will generate enough tax increment to pay all Project Costs by the year 2034,
reflecting 11 years of tax increment collections, and 13 years of total elapsed
time. If necessary, the District would be permitted to remain open for up to 29
years, allowing for up to a total of 27 years of tax increment collection. The
projected closure is based on the various assumptions noted in this Plan and
will vary dependent on actual Project Costs incurred and the actual amount of
tax increments collected.
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SECTION 10:
Annexed Property
A tax incremental district cannot include annexed territory unless at least three
years have elapsed since the annexation, or certain other requirements are met.
None of the property within the proposed District boundary was annexed
during the past three years.
SECTION 11:
Estimate of Property to Be Devoted to Retail
Business
Pursuant to Wis. Stat. § 66.1105(5)(b), the City estimates that none of the
territory within the District will be devoted to retail business at the end of the
District’s maximum expenditure period.
SECTION 12:
Proposed Changes of Zoning Ordinances, Master
Plan, Map, Building Codes and City Ordinances
Zoning Ordinances
Current zoning is Urban Mixed Use with a Planned Development overlay (UMU-
PD). The proposed Plan is in general conformance with the City’s current zoning
ordinances.
Master (Comprehensive) Plan and Map
The proposed Plan is in general conformance with the City’s Comprehensive
Plan identifying the area as appropriate for multi-family development.
Building Codes and Ordinances
Development within the District will be required to conform to State Building
Codes and will be subject to the City's permitting and inspection procedures.
The proposed Plan conforms to all relevant State and local ordinances, plans,
and codes. No changes to the existing regulations are proposed or needed.
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SECTION 13:
Statement of the Proposed Method for the
Relocation of any Persons to be Displaced
Should implementation of this Plan require relocation of individuals or business
operations, relocations will be handled in compliance with Wis. Stat. Chapter
32 and Wis. Admin. Code ADM 92.
SECTION 14:
How Creation of the Tax Incremental District
Promotes the Orderly Development of the City
Creation of the District and the implementation of the projects in its Plan will
promote the orderly development of the City by eliminating blighted areas,
providing necessary public infrastructure improvements and providing
appropriate financial incentives for private development projects. Through use
of tax increment financing, the City can attract new investment that results in
increased tax base. Development will occur in an orderly fashion in accordance
with approved plans so that the Projects will be compatible with adjacent land
uses. Development of new uses in the District will add to the tax base and will
generate positive secondary impacts in the community such as creation of
market rate multi-family housing to meet market demand, and provision of
employment and commercial opportunities related to the construction and
operation of the Project
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SECTION 15:
List of Estimated Non-Project Costs
Non-project costs are public works projects which only partly benefit the
District. Costs incurred that do not benefit the District may not be paid with tax
increments. Examples of non-project costs are:
A public improvement made within the District that also benefits
property outside the District. That portion of the total Project Costs
allocable to properties outside of the District would be a non-project
cost.
A public improvement made outside the District that only partially
benefits property within the District. That portion of the total Project
Costs allocable to properties outside of the District would be a non-
project cost.
Projects undertaken within the District as part of the implementation of
this Project Plan, the costs of which are paid fully or in part by impact
fees, grants, special assessments, or revenues other than tax increments.
No improvements to be made within the District will benefit property outside
the District. Installation of the cul-de-sac on Dawes Street may provide benefit
to areas outside the District. The current estimate of that benefit is $30,500,
which is a Non-Project Cost. The total cost of the Dawes Street cul-de-sac is
included in this Plan as the City will make a final determination of the benefits
to areas outside the District at the time the cul-de-sac is completed, and the
allocation may vary.
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SECTION 16:
Legal Opinion Advising Whether the Plan is
Complete and Complies with Wis. Stat. §
66.1105(4)(f)
Legal Opinion Found on Following Page.
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SECTION 17:
Calculation of the Share of Projected Tax
Increments Estimated to be Paid by the Owners of
Property in the Overlying Taxing Jurisdictions
The following projection is provided to meet the requirements of Wis. Stat. §
66.1105(4)(i)4.
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