HomeMy WebLinkAbout11-500
NOVEMBER 8, 2011 11-500 RESOLUTION
(CARRIED________LOST________LAID OVER________WITHDRAWN________)
TABLE UNTIL FURTHER NOTICE (6-1)
PURPOSE: APPROVE TAX INCREMENT DISTRICT NO. 25 PROJECT
PLAN; DESIGNATE TAX INCREMENT DISTRICT NO. 25
BOUNDARIES; CREATE TAX INCREMENT DISTRICT NO. 25
CITY CENTER HOTEL REHABILITATION
INITIATED BY: CITY ADMINISTRATION
PLAN COMMISSION RECOMMENDATION: Approved
WHEREAS, pursuant to Section 66.1105, Wisconsin Statutes, the City of Oshkosh
proposes to create Tax Increment District No. 25 City Center Hotel Rehabilitation; and
WHEREAS, the City of Oshkosh Plan Commission has prepared and adopted a
project plan for Tax Increment District No. 25 City Center Hotel Rehabilitation, which:
1) Includes a statement listing the kind, number and location of all proposed public
works or improvements within such District.
2) Contains an economic feasibility study.
3) Contains a detailed list of estimated project costs.
4) Contains a description of the methods of financing all estimated project costs and
the time when such costs or monetary obligations related thereto are to be incurred.
5) Includes a map showing existing uses and conditions of real property in such
District.
6) Includes a map showing proposed improvements and uses therein.
7) Contains a list of estimated non-project costs.
8) Contains a statement of a proposed method for the relocation of any person to be
displaced.
9) Indicates how the creation of TID No. 25 promotes the orderly development of the
City.
10) Contains an opinion of the City Attorney that the Plan complies with Section
66.1105(4)(f), Wis. Stats.
and
WHEREAS, the Plan Commission has held a public hearing on the creation of TID
No. 25 and the proposed boundaries thereof and has notified the Chief Executive Officers
of all local government entities having the power to levy taxes on property within the
District, including the School Board of any school district which includes property within the
NOVEMBER 8, 2011 11-500 RESOLUTION
CONT'D
WHEREAS, the City of Oshkosh Plan Commission affirms the following per the TID
No. 25 Project Plan:
• The district is a blighted area TID.
• The district is a rehabilitation area TID.
• Not less than 50% of the real property within the district is blighted under the meaning
of Section 66.1105(2)(ae)1.a. or 1.b., Wisconsin Statutes;
• Not less than 50% of the structures within the TID are in need of rehabilitation within
the meaning of Section 66.1137(2m)(a), Wisconsin Statutes;
• Development of the area will have a significant positive impact on the value of all real
property in the district;
• Were it not for the financing mechanisms provided through Tax Increment Law,
planned redevelopment of this district would in all likelihood not occur;
• The Project Plan is feasible and is in conformity with the City's Comprehensive Plan;
• The project costs identified in the Project Plan relate directly to eliminating blight and
rehabilitating the area;
• The equalized value of taxable property in TID 25 plus all existing Districts does not
exceed 12% of the total equalized value of taxable property within the city.
NOW, THEREFORE, BE IT RESOLVED that the Common Council of the City of
Oshkosh approves said Project Plan, on file at the City Clerk's office, for Tax Incremental
District No. 25 City Center Hotel Rehabilitation, pursuant to the provisions of Section
66.1105, Wisconsin Statutes.
BE IT FURTHER RESOLVED that the Common Council of the City of Oshkosh
hereby designates the boundaries of TID No. 25 as described in "Exhibit A".
BE IT FURTHER RESOLVED that the Common Council of the City of Oshkosh
hereby approves creation of Tax Incremental Financing District No. 25 City Center Hotel
Rehabilitation.
BE IT FURTHER RESOLVED that the improvements contemplated in TID No. 25
City Center Hotel Rehabilitation are likely to significantly enhance the value of all real
property in TID No. 25.
BE IT FURTHER RESOLVED that the value of equalized, taxable property in TID
No. 25, together with all other established Tax Incremental Districts, does not exceed 12%
of the total equalized value of taxable property within the City of Oshkosh.
BE IT FURTHER RESOLVED that the project costs are consistent with the
purposes for which the Tax Incremental District is created with the primary objectives being
the rehabilitation and redevelopment of a blighted area.
"EXHIBIT A"
TIF #25 CITY CENTER HOTEL REHABILITATION
LEGAL DESCRIPTION
That part of lots 1 through 11 in Moore's Subdivision and vacated Marion Street, all part of
the Northwest'/4 of the Southwest 1/4 of Section 24, Town 18 North, Range 16 East, City of
Oshkosh, Winnebago County, Wisconsin which is bounded and described as follows:
commencing at a point North 00-50-59 East of the N.E. corner of Lot 1 of Moore's
Subdivision 28.00 ft., thence North 89-25-39 West 153.00 ft to a point, thence South 49-
02-31 West 42.23 ft. to a point, thence North 89-25-39 West 10.00 ft. to a point, thence
South 00-26-46 West 69.17 ft. to a point, thence South 06-56-46 West 73.85 ft. to a point
on a meander line on the northerly shoreline of the Fox River, thence South 68-14-29 East
along said meander line 216.06 ft to a point on the east right-of-way line of Main Street,
thence North 00-50-59 East along said right-of-way line 303.66 ft to the point of beginning.
Said parcel contains approximately acres 1.03 more or less.
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OJHKOJH
ON THE WATER
TO: Honorable Mayor and Members of the Common Council
FROM: Darryn Buri
Director of Planning Services
DATE: February 18, 2010
RE: Approve Tax Increment District No. 25 Project Plan; Designate Tax Increment District No.25
Boundaries; Create Tax Increment District No. 25 City Center Hotel Rehabilitation(Plan
Commission and Downtown Oshkosh Business Improvement District Recommend Approval)
BACKGROUND
TID No. 25 is being proposed to support renovation of the 179 room 128,000 square foot downtown City Center
Hotel located at 1 N. Main Street. The overall community goal in creating the TID is to rejuvenate the large
convention and conference industry in the community through renovation of the City Center Hotel into a mid-to-
upper price full-service hotel operating as one unit with the recently renovated conference center. The goal is to
increase the number and size of conferences and conventions coming into the community and thereby increase
overall tourist dollars into the local economy. Secondarily the renovated hotel will fill the University's lodging
and conference needs with a hotel and conference center proximate to campus and not require them to construct
a competing downtown hotel on campus. In order to facilitate the community goal, creation of a Tax Increment
District is proposed.
The primary purpose of the TID is to provide a$2,000,000 development assistance grant(DAG)that will be
used for the overall project that is estimated at approximately$9.5 million. Project costs of another$1.8 million
have also been included for public improvements involving the riverwalk, parking ramp, and skywalk as well
administrative costs to implement the project plan.
Provision of the DAG will help to provide a high enough equity level for the development group to obtain
traditional bank financing. The estimated sources of project funds are:
Developer Equity $1,000,000 11%
Investor Equity $4,000,000 42%
Bank Loan $2,500,000 26%
(finance gap to complete project)
TIF $2,000,000 21%
Total $9,500,000 100%
The private equity level into the project is at 53% and with the City's proposed 21%raises the equity level high
enough that the banks are willing to lend the remaining$2.5 million.
The renovation project would be anticipated to start in late November after financing is approved with
occupancy desired by May, 2012.
Please refer to the TID#25 Project Plan for more detailed information regarding the project. The developer has
also submitted an application utilizing the City's draft TID policies and guidelines for additional project
information which has been included.
ANALYSIS
The premise behind TIF is that improvements on the property after the TID's creation will generate enough
increment to offset the annual debt service costs to implement the project plan. In this case the development
group is proposing a$9.5 million project to renovate the hotel that will allow it to operate as one unit with the
Convention Center. The developer has submitted a project proforma that illustrates the financial expectations
that the group expects the property to achieve operating in concert with the convention center and after
stabilization. The proforma expectations are based on a report prepared by Hospitality Marketers International
(HMI) in October 2010 and has been included as part of the reference materials. The report was prepared when
the University was also considering construction of an 80 room hotel and conference center on campus.
The proforma was reviewed by the City Assessor to develop the estimated value for the property after
renovation,which based on the proforma will be about$10.6 million and would produce an estimated $9.6
million increment that would be utilized to pay district costs. The City's financial consultant, Ehlers and
Associates, utilized the estimated increment to generate the"Tax Increment Projection Worksheet"that shows
the tax revenue expected to be generated over the 27 year max life of the district using relatively conservative
assumptions regarding tax rate and inflationary value of the hotel. The worksheet shows that the City can
expect to receive approximately $5.7 million in tax increments over the life district which has a net present
value of approximately $2.8 million at 5% interest. Again,this is a conservative figure as the City can borrow at
lesser rates which would increase the net present value of the future increment. However, even at the 5%figure,
the DAG can be repaid with an expected revenue cushion of upwards of$1 million to pay for other project costs
identified in the project plan.
The anticipated TID value after stabilization in the first year of operation will generate enough tax increment to
offset the DAG with revenues left over to pay for the other primary project identified in the project plan being
the riverwalk.
FISCAL IMPACT
Other than the borrowing associated with implementing the project plan,fiscal impact to city services due to the
renovated hotel should be minimal and should not require increased service delivery costs beyond which is
already being provided to the area by the City.
With regard to the overlying taxing jurisdictions that are part of the Joint Review Board,the Oshkosh Area
School District should not be impacted because the project will not directly result in additional dwelling units
being constructed in the TID and therefore will not add children to the school system within the TID. The
County and Technical College should not be impacted by creation of the TID because the project should not
generate any demand on those services.
The school district and technical college may benefit by the project through UW-O as a partner in the project
which has discussed creating scholarship and curriculum enhancement opportunities related to hotel and
restaurant management.
RECOMMENDATION
The Plan Commission approved of this request at its October 18,2011 meeting. The Downtown Oshkosh
Business Improvement District also endorsed creation of the TID in a resolution approved at an October 25,
2011 meeting.
Approved,
City Manager
Oshkosh Investors,LLC
City of Oshkosh
Office of the City Manager
Attention: Mark Rohloff
P. O. Box 1130
Oshkosh WI 54903-1130
Re: Oshkosh Investors, LLC Application for Tax Incremental Financing
Dear Mr. Rohlof:
This letter accompanies Oshkosh Investors, LLC's application requesting $2,000,000 of up-front
Tax Incremental Financing(TIF) for the renovation of the City Center Hotel. The partners in the
Oshkosh Investors, LLC purchasing the hotel have prepared the TIF application to be responsive
to TIF guidelines and questions from your staff.
Summary:
The City Center Hotel was built in 1985-86, is centrally located in downtown
Oshkosh, and is the City's largest hotel with the most meeting space. The site is
currently in use as a stand-alone hotel. With proposed purchase and renovation,
the site will he operated by WHG (Wogemese Hotel Group Inc.) as a full-service
hotel. In addition, hotel management will enter a contract to direct the Convention
Center for the City. End-users of the hotel and its restaurant will include
participants in events at the Convention Center and participants in other events in
and around Oshkosh, persons residing in or visiting Oshkosh for business or
employment purposes, and tourists to the Fox River Valley area. Additional end-
users include UW Oshkosh alumni and others attending an estimated 300 events
annually offered by the University,prospective University students and their
parents touring campus, various UW System administrators and other community
members on campus for business meetings, and general visitors to campus. After
financing approval, plans include renovation to begin in November, 2011. Hotel
occupancy will begin in May, 2012, with final renovation and landscaping
completed in May-June, 2012.
Developing and owning the property are the partners in Oshkosh Investors, LLC:
UW Oshkosh Foundation Hotel Property, LLC; Brian Wogernese, WHG; and
Mark C. Pomerenke, WHG. Total development costs are$9,500,000. Planned
negotiations to secure local investors and bank financing have begun. TIF
assistance in the amount of$2,000,000 is requested. For successful renovation
and use of the hotel, together with successful management of the Convention
Center, the TIF is essential because bank financing will require a 60%to 70%
equity position and the TIF will support that position. After renovation the tax
increment projection is$10,900 in 2012. Over the next 26 years the valuation
increment projection continues to increase annually to a total in 2038 of$12,553.
Profitability after debt service is estimated in the first year to be 16%of gross
revenue, with continued healthy profitability in each succeeding year of the five-
year pro forma. From 40 to 50 permanent jobs will be available to area citizens
with the successful operation of the renovated hotel. Moreover, Oshkosh will
enjoy a significantly enhanced reputation as"Wisconsin's Event City"with the
availability of this high-quality, full-service lodging and restaurant facility
connected to the Convention Center.
Oshkosh Investors. LLC partners are confident that up-front TIF funding will assist in a refit of
the City Center Hotel's 128,000 square feet to an upscale, quality hotel with"conference hotel
room"services,resulting in a financially successful hotel and an eagerly sought destination along
the City's riverwalk. It is a critical component to restoring a high-quality, go-to business and
convention hub in downtown Oshkosh. For detailed information, please refer to the enclosed TIF
application, the HMI report and the pro forma.
We are mindful of the sense of pride the community envisioned when the City first supported
this project. We will implement the renovation in a manner so as to respect and preserve this
position and way of thinking. As quoted in an October 6,2011, news release,"The renovated
property will be an attractive, full-service,quiet and connected business hotel for its clients while
also serving as an economic development epicenter for the community, showcasing and
advancing the city's initiatives."
Thank you for your time and consideration.
Sincerely,
Oshkosh Investors, LLC
Byp,r
Arthur H.'Rathjc n, Primary Contact for Oshkosh Investors, LLC
President, IJW Oshkosh,Foundation, Inc.
Enclosures
C: Mark C. Pomerenke, President of Development& Co-Founder,WHG Companies, LLC
Brian Wogemese, Brand President &Co-Founder, WHG Companies, LLC
City of Oshkosh
Tax Incremental Financing (TIF)
Application
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 four 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 infoimation.
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 Increment Financing Guidelines, Policies &
Procedures" document.
Applicant Information:
Legal Name: Oshkosh Investors,LLC
Mailing Address: 842 Algoma Blvd, Oshkosh WI 54901
Primary Contact: Arthur H. Rathjen Telephone: (920) 424-2178
E-mail: rathjena @uwosh.edu FAX: (920) 424-7116
Attorney: Russ Reff
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 X
Page 1 of 16
Principals of existing or proposed corporation/partnership/LLC and extent of ownership interest.
Name Address Title Interest
1. Brian Wogernese 920 American Dr, Neenah WI 54956 Partner 25%
2. Mark C. 920 American Dr,Neenah WI 54956 Partner 25%
Pomerenke
3. UWO Foundation 842 Algoma Blvd., Oshkosh WI 54901 Partner 50%
Hotel Property, LLC
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 X 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 X
If yes, please furnish details:
Project/Property Summary:
Overall Project Summary and Objectives:
Two partners in the Oshkosh Community plan to collaborate in owning and managing the downtown
hotel. The UW Oshkosh Foundation and the owners of WHG (Wogernese Hotel Group Inc.)
Companies have entered into said partnership, signing an agreement to purchase the downtown hotel.
Current and Proposed Uses:
The pro forma assumes the 179-room, full service City Center Hotel will be renovated as a mid-priced
to upscale hotel operated as one unit with the newly renovated Convention Center and establishes a
flexible group meeting space in a relative central portion of the state. The hotel will provide a visible
downtown presence for UW Oshkosh, enhancing image and loyalty to the University by providing
high-quality, nearby lodging for alumni and guests visiting campus for events, job interviews, and
other visits. The hotel operation may be used as a site for University internships.
Description of End Users:
Pro forma projections assume the hotel will generate 55% of its Lodging Demand from the Group
market and 45% from transient corporate, commercial and leisure.
Page 2 of 16
Property Summary:
Parcel/Land Area SF
Building Area SF
# of Dwelling Units 179 overnight units (appx. 20% of the current shortage)
# of Stories 7 Stories
# of Parking Spaces Adjacent downtown parking structure
Describe any zoning changes that will be needed: None
Identify any other approvals, penuits or licenses (i.e. Liquor License, Health Department, etc):
City of Oshkosh Health Services Division—Restaurant, Hotel, Pool, Whirlpool
City of Oshkosh Operating License—Combination "Class B" License, Mechanical Device, Dance and
Entertainment
State of Wisconsin Department of Commerce— Unfired Pressure Vessel, Boilers 3 year PTO cycle
State of Wisconsin Dept of Safety and Professional Services—Elevator
Describe briefly what the project will do for the property and neighborhood:
"City Manager Mark Rohloff has been consistent in his belief that reversing the slide of the
downtown hotel connected to the city-owned convention center is a key objective to continue the
rebirth of downtown and boost the tourism industry for all of Oshkosh. The center has suffered from a
lack of synergy with the neighboring hotel. Unified management and marketing of the hotel and
renovated convention center make the long-term health of both more viable. In addition, the riverwalk
and boat slip projects on the north side of the Fox River are integral pieces of infrastructure that will
aid the hotel." The Oshkosh Convention and Visitors Bureau has branded Oshkosh as "Wisconsin's
Event City" and UW Oshkosh plays a major role in hosting a variety of workshops, meetings,
seminars and conferences. A high-quality hotel will enhance the ability to host such events.
Page 3 of 16
Project Timetable:
Final Plan/Specification Preparation November 2011 (after financing approved)
Bidding and Contracting November 2011 (after financing approved)
Firm Financing Approval October 25,2011
Construction/Rehabilitation November 26, 2011-May 1, 2012
Landscaping/Site Work November 26, 2011- May 1, 2012
Occupancy/Lease Up May 2,2012
Page 4 of 16
Development Team:
Developer: Principals in LLC, Oshkosh Investors
Architect: Currently not under contract
Surveyor: N/A
Contractor: Currently not under contract
Other Members:
Describe Team expertise and experience in developing similar projects:
The staff of WHG has a combined history in the hospitality industry of over 75 years. Beginning
as an independent owner/operator,WHG has grown due to its success implementing creative
marketing strategies and combining them with exceptional customer service programs.
Fusing development services with operational support,WHG is positioned to contribute to
every aspect of a hotel. From a conceptual idea to an existing mature property,WHG can assist
with any facet specific to clients'needs.
Headquartered in Neenah,WI,WHG has built and managed projects in several states
throughout the Midwest. The company has been able to translate its success into many
different markets and to expand its properties exponentially,while maintaining a hands-on
approach to each project.
The company credits its success and growth to its market-driven approach to each project.
Whether it is a new brand, a new market, or a new property,WHG remains actively involved at
the property level,giving the direction and support necessary to make a property thrive.
Other Current Team Projects in development:
Cobblestone Hotel & Suites Wayne, NE Spring 2012
Cobblestone Inn & Suites Carrington, ND Spring 2012
Cobblestone Inn & Suites Langdon, ND Spring 2012
Financial ability of the applicant to complete the project:
Please see Pro forma --Financial viability reflects $5 million of equity investors.
Page 5 of 16
Project Narrative
Oshkosh Investors, LLC plans to own and manage the City Center Hotel. A $9.5 million
redevelopment project is proposed, with a TIF request for $2.0 million. Hoffman LLC conducted
a site evaluation on October 14, 2011, finding the building structurally sound. It is situated on
approximately 1.03 acres along the north side of the Fox River at 1 N. Main Street. The hotel is a
larger, single-level building with a partial mezzanine surrounding an eight-story, reinforced
concrete tower. The entire structure is built on piles including specific piles for the whirlpool and
swimming pool. A series of hotel brands have occupied the building since its construction in
1985-86. We are not aware of any environmental conditions affecting redevelopment or
renovation.
The renovated facility will become a high-quality, full-service hotel, meeting the lodging,
meeting and dining needs of a variety of guests, including but not limited to, participants in
events at the Convention Center and other events in and around Oshkosh, persons residing in or
visiting Oshkosh for business or employment purposes, and tourists to the Fox River Valley area.
Additional guests will include UW Oshkosh alumni and others attending an estimated 300 events
annually offered by the University, prospective University students and their parents touring
campus, various UW System administrators and other community members on campus for
business meetings, and general visitors to campus. Hotel management will also enter into a
contract with the City of Oshkosh to direct the Convention Center. We estimate 40 to 50
permanent jobs will be available to area citizens with the successful operation of the renovated
hotel. Moreover, Oshkosh will enjoy a significantly enhanced reputation as "Wisconsin's Event
City" with the availability of this high-quality, full-service lodging and restaurant facility
connected to the Convention Center. Successful operation of the renovated hotel, together with
the Convention Center, will enhance downtown economic development and nurture tourism in
Oshkosh. This helps meet the goals in the City's Comprehensive Plan land use recommendation.
No structures will be demolished during this redevelopment project, nor there any new
construction. Renovation will be internal to the structure (external solely in landscaping). The
finishes of the hotel lobby and public meeting spaces will be renovated to reflect current trends
in hospitality. Accommodations are being revamped to reflect the needs of today's traveler
including upgrade to the fixtures and finishes to promote healthy and comfortable
accommodations which make the traveler feel at home. The overall hotel structure offers
128,000 square feet of lodging, banquet, meeting, and operational areas. Guests will enjoy a
choice of lodging in 179 rental rooms and suites. With the operation of the Convention Center,
an additional 18,000 square feet of flexible meeting and exhibit space will be available to hotel
guests. Parking is adjacent to the existing hotel structure.
Plans call for hotel occupancy to begin in May, 2012, with final renovation and landscaping
completed in May-June, 2012. The hotel renovation project was approved by the City of
Oshkosh Plan commission as TID #25 on October 18, 2011. "WHEREAS, the Plan Commission
finds adoption of TID #25 is consistent with the City of Oshkosh Comprehensive Plan...." Plans
for"green features" include, but are not limited to, use of energy-efficient windows and light
bulbs, installation of low-consumption toilets, and close examination of existing boilers and
Page 6 of 16
chillers which may have exceeded expected service life. Criteria for replacement of any boilers
and chillers will include energy-efficiency.
Page 7 of 16
Project Budget/Financial Information:
Sources and Uses of Funds
Identify the sources of funds uses 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
Hotel Acquisition/Soft&Hard Renovation Costs $9,500,000
Demolition
Environmental Remediation
Site Clearance and Preparation
Soft Costs/Fees
Soft Cost Contingency
Hard Construction Costs/Renovation
Total Project Costs $9,500,000
Sources of Funds:
Equity % of total project costs
Developer Equity/UWO $1,000,000
Foundation/WHG
Other Equity(Investors) $4,000,000 53%
Total Equity $5,000,000 53%
Loans Rate Term
Construction Financing $ % mos.
Permanent Financing/Bond and/or Bank $2,500,000 4% 20yrs. 26%
TIF Assistance $2,000,000 21%
Other( ) $
Total Sources of Funds $9,500,000 100%
Page 8 of 16
Financing:
Source Amount Terms: Contact Information
Years/Interest
Equity: (Investors— Common) $5,000,000
Loans: (4% for 20 years) $2,500,000
TIF $2,000,000
Page 9 of 16
Detailed Pro Forma (must correspond to line items for Uses of Funds on previous page):
Land Acquisition (Hotel) $
Acquisition/Renovation $7,365,000
Site Clearance and Preparation
Infrastructure $
Utilities/removal $
Utilities/relocation $
Utilities/installation $
Hazardous Materials Removal $
Other( ) $
Total Site Clearance and Preparation $
Soft Costs/Fees
Project Management( %) $
General Contractor (appx. 6.8%) $500,000
Architect/Engineer (appx. 2.7%) $200,000
Developer Fee (appx. 6.8%) $500,000
Appraisal $5,000
Surveys/Environmental $10,000
Market Study $
Legal/Accounting $100,000
Insurance $
Title/Recording/Transfer $
Building Permit $
Mortgage Fees/Closing $70,000
Construction Interest $
Commissions $
Marketing $
Real Estate Taxes $
Other Taxes $
Other( ) $
Other(Working Capital) $500,000
Sub-total Soft Costs/Fees $1,885,000
Page 10 of 16
Soft Cost Contingency $250,000
Revenue Projections — Rental Project: Year 1, Year 2 >>>Year 11
Income SF Rent per SF(or avg) $ $ $
Rooms-65,335 annual rooms occupied $90.36 per room yr.
1, $96.33 yr. 2 $5,903,679 $6,293,737 $
Food and Beverage $2,097,943 $2,867,572 $
Telephone $40,167 $47,858 $
Other Operating Departments $313,305 $373,289 $
Gross Potential Income $8,355,094 $9,582,455 $
Commercial Vacancy-unoccupied $2,747,577 $2,401,700 $
rooms
Residential Vacancy % $ $ $
Effective Gross Income (EGI) $5,607,517 $7,180,757 $
Expenses
Department Expenses-Room $830,055 $1,023,606 $
Department Expenses—Food and Bev. $1,562,967 $2,136,341
Department Expenses-Telephone $98,410 $117,251
Depatlinent Expenses-Other Depts. $10,966 $13,066
Administrative&General $540,677 $646,268
Sales and Marketing $476,639 $556,509
Property Operations&Maint. $224,301 $323,134
Energy $263,553 $337,495
Franchise Fees
Insurance $61,683 $78,988
Property Taxes $185,048 $236,965
Reserve for Replacement $112,150 $215,423 $
Base Management Fee $179,441 $229,784 $
Total Expenses $4,509,890 $5,914,830 $
Net Operating Income (NOI) $1,097,627 $1,265,927 $
Page 11 of 16
Capital Expenses(reserves,tenant
improvements, commissions)
Debt Service $181,794 $181,794 $
Net Cash Flow
$915,833 $1,084,133 $
(before depreciation)
Reversion in Year 10
Year 11 NOI before Debt&Capital Expenses $
Capitalization Rate
Gross Reversion $
Page 12 of 16
Revenue Projections — For-Sale Project:
Gross Sales Revenue
Unit Type* Number Price/Unit
$ S
S $
$ $
Housing Units
S $
S $
S $
S $
Total Housing Sales:
*affordable units if any
Housing Unit
Upgrades:
Unit Type Size-sf Price per sf
S
Commercial Space
S
Total Commercial Sales: $
Total Gross Sales Revenue $
Cost of Sales
Commissions % $
Marketing % $
Closing % $
Other Costs(
Total Costs of Sales % $
Net Sales Revenue $
Page 13 of 16
Pro Forma Income and Expense Schedule:
Applicants whose projects involve the rental of commercial, retail, industrial, or living units must submit pro
formas that identify income and expense projections on an annual basis for an eleven-year period. A
hypothetical property reversion is to be assumed. Clearly identify all assumptions (such as absorption,
vacancies, debt service, operational costs, etc.) that serve as the basis for the pro formas. Two sets of pro
formas are to be submitted. The first set should show the project without TIF assistance and the second set
with TIF assistance.
For owner-occupied industrial and commercial projects, detailed financial information must be presented that
supports the need for financial assistance (see below).
Analysis of Financial Need:
Each application must include financial analyses that demonstrate the need for TIF assistance. Two analyses
must be submitted: one without TIF assistance and one with TIF assistance. The applicant must indicate
the minimum return or profit the applicant needs to proceed with the project and rationale for this minimum
return or profit. The analyses will necessarily differ according to the type of project that is being developed.
Rental Property For projects involving rental of space by the developer to tenants (tenants include offices,
retail stores, industrial companies, and households), an internal rate of return on equity must be computed
with and without TIF assistance based on the pro forma of income and expense prepared for the Income and
Expense Schedule above. The reversion at the end of the ten-year holding period must be based on the
capitalized 11th year net operating income. The reversionary value is then added to the 10th year cash flow
before discounting to present value. State all assumptions to the analyses.
For Sale Residential Show profit as a percent of project cost (minus developer fee and overhead and minus
sales commissions and closing costs, which should be subtracted from gross sales revenue). Other measures
of profitability may be submitted, such as profit as a percent of sales revenue.
Mixed Use Commercial/For-Sale Residential Provide either separate analyses for each component of the
project or include in the revenue sources for the for-sale portion, the sale value of the commercial component
based on the net operating income of the commercial space at stabilization. Indicate how the sale value was
derived.
Owner-Occupied Commercial For projects such as "big-box" retail projects, provide copies of the analyses
that the company to meet or exceed the company's minimum investment threshold(s) for proceeding with the
project.
Competitive Projects In instances where the City is competing with other jurisdictions for the project (e.g.,
corporate headquarters, new manufacturing plant), present detailed analyses that demonstrate the capital and
operating cost differential between the proposed location(s) in Oshkosh and locations that are seriously being
considered by the applicant.
Page 14 of 16
Professional Studies:
Market Studies Applications for commercial and residential projects must include a comprehensive market
study. The market must identify target markets, analysis of competition, demographics, market rents, letters
of intent/interest from prospective tenants, or for housing developments sale prices or rental rates of
comparable properties.
Appraisal All projects that involve the transfer of land must include a recent appraisal. Projects that include
land as a Rhin of equity or collateral must also submit a recent appraisal. The appraisal must value the
property"as is," and the impact on value must be considered for such items as demolition, environmental
remediation, relocation of utilities, lease buy-outs, and other work necessary to make the site developable.
The property must be valued assuming that the highest and best use it the proposed use.
Narrative Attachments:
1. 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:
• Description of site or building • Overview of private-sector financing
• Current and proposed uses • Amount of TIF assistance requested
• Description of end users • Statement regarding why TIF is essential and
why the but for provision will be met
• Project start and end dates • Summary of increment projections
• Name of developer and owner • Profitability
• Total development costs
• Description of public benefits, including job
creation
2. 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.
Page 15 of 16
ITEM: TAX INCREMENT DISTRICT #25 CITY CENTER HOTEL REHABILITATION
Plan Commission meeting of October 18, 2011
Applicant: Oshkosh Investors, LLC
Property Owner: Nashco Hospitality Group
PROPOSAL
The UW Oshkosh Foundation and the owners of WHG Companies have entered into a partnership identified
as Oshkosh Investors LLC and plan to collaborate in owning and managing the property currently known as
City Center Hotel. Plan Commission is being asked to approve the project plan and boundaries for Tax
Increment District#25 City Center Hotel Rehabilitation per the attached resolution. As part of the TID
creation process, a public hearing must be held before the Plan Commission where interested parties may
express their views on the proposed TID.
The partnership is proposing a$9.5 million redevelopment project and is requesting the City to create a tax
increment financing district to provide a development assistance grant to help offset overall development
costs. The amount of requested city TIF equity participation in the project is $2 million and is further
requested as an up front development assistance grant(DAG). In addition to the DAG, public improvements
involving construction of the riverwalk with boat docks and improving public access to the hotel from the
skywalk and parking ramp are included as well as administrative costs to the City for implementing the
project plan. Total anticipated TIF project costs (see Table 1 in TID plan) are identified at $11,150,000 with
TIF contributing $3,000,000. Please see the attached TID #25 Project Plan for more detailed information.
The following summary from the Plan provides overview of the proposed TID.
District Name: City of Oshkosh Tax Increment District#25 City Center Hotel Rehabilitation
TID Type: Blighted Area
Purpose: Renovation of the 179-room hotel to a mid-priced to upscale, full-service hotel and
convention center. Additionally, complete a section of riverwalk system and improve
public access to area.
Max. Life
of TID: 27 Years
Location: 1 N. Main Street generally located west of Main Street, south of Ceape Avenue, and
north of Fox River.
Size: Approximately 1.03 acres
Parcels: 1
Estimated District
Base Value: $1,000,000
Estimated District
Value at Closure: $12,500,000
Proposed Costs: $3 million total in private and public project costs. $2 million that will be provided as
an up front development assistance grant or as paygo financing. $1 million for
development of a riverwalk system with associated boat docking facilities. Costs will
also include administrative costs related to the creation and implementation of this
project plan.
Project Financing: General obligation exempt notes for public improvement costs and taxable note for
private development costs.
Economic
Feasibility: Economic feasibility is based on rehabilitation of the hotel into a mid-priced to
upscale, full service hotel with convention center.
DISCUSSION
Historically, in reviewing TID's, the Plan Commission has focused primarily on land use and
Comprehensive Plan related matters and whether the project costs appear in keeping with implementing the
proposed project plan and that the proposed boundaries are reasonable. As such, community development
related questions such as the following should be considered:
• Is the Project Plan consistent and in conformity with the Comprehensive Plan?
o A renovated hotel use in the subject district is consistent with the Comprehensive Plan's land
use recommendation for the area and furthers implementation of the economic development
element by helping to enhance and sustain tourism in the community.
o The construction of a riverwalk system is consistent with the City's adopted riverwalk plan
and enhances the transportation and park elements of the Comprehensive Plan.
• Will implementing the Project Plan help promote orderly development in the community?
o The current hotel operation with estimated single to low digit occupancies is retarding the
sound economic growth of the community through loss of tourism opportunities that will help
sustain the convention center, Leach Amphitheater, downtown businesses, and retail
operations in general in the community. A renovated full service hotel, including its own bar
and restaurant operations will enhance the economic capabilities of downtown and result in
additional visitors to the community or more people visiting downtown.
o Creation of the TID helps support public investments that have been made by the community
that have improved the physical and social environment of the downtown that include such
things as reconstructed N. Main Street, Opera House Square, Leach Amphitheater, Grand
Opera House renovations, riverwalk construction, facade renovation program, farmers market,
etc.
• Do project costs relate directly to eliminating blight and in rehabilitating the area?
o TIF participation will allow the rehabilitation of the structure to occur that will modernize the
facility and make it competitive as a full service hotel and convention center.
TID 425 2
• Will the implementing the Project Plan harm the area or adjacent properties?
o A renovated hotel will enhance the area and adjacent properties. The adjacent convention
center will primarily benefit by operating as a single unit as will the adjacent former Park
Plaza Mall (now City Center) that has become a business and corporate center that will now
have a full service operating hotel where business clients could stay in close proximity to the
business locations.
• Will implementing the Project Plan increase property values in the district or area?
o A renovated hotel generating additional income per the anticipated proforma will significantly
increase the value of property in the district to almost $12 million.
• Is the plan feasible and are the expectations for development reasonable?
o The market study and proforma prepared by Hospitality Marketers International (HMI)
anticipates a market shift in the convention and conference business with a renovated hotel.
Further, the Plan Commission affirmed the following findings:
1) Not less than 50 percent of the real property within the TID is blighted within the meaning of
Section 66.1105(2)(a), Wis. Stats; and
2) Not less than 50 percent of the structures within the TID are in need of rehabilitation within
the meaning of Section 66.1337(2m)(a), Wis. Stats; and
3) The project costs relate directly to eliminating blight and in rehabilitating the area; and
4) Improvement of the area is likely to significantly enhance the value of substantially all of the
other real property in the district; and
5) The project plan is feasible and in conformity with the City's Comprehensive Plan; and
6) The equalized value of taxable property in TID #25 plus all existing Districts does not exceed
12% of the total equalized value of taxable property within the City.
RECOMMENDATION
The Department of Community Development requests approval of the boundaries of TID #25 and the TID
#25 Project Plan, and recommends approval of the TID boundaries and Project Plan to the Common Council.
The Plan Commission approved of the boundaries and Project Plan for TID #25 as requested. The following
is the Plan Commission's discussion on this item.
Mr. Burich presented the item and reviewed the site and proposed boundaries for TID #25 as well as the
surrounding area, the land use in said area, the proposed improvements, and the project plan summary
including various costs, financing, purpose and feasibility of the proposed TID. He also reviewed the
findings to be affirmed by the Plan Commission when considering approval of a TID and described the
definition of blight in various forms.
Chairperson Fojtik opened the public hearing on TID #25 for comments. There was no one present to
comment therefore the public hearing was closed.
Ms. Propp questioned when the existing TID closed on this property.
Mr. Burich responded that the previous TID closed in 2006 or 2007.
TID#25 3
Mr. Hinz inquired about the estimated fair market value decreasing from 1.9 million to 1 million by next
year, if the parking ramp was included in the TIF district, and the impact on other businesses in the area since
the last TIF was created.
Mr. Bunch replied that the drop in fair market value was anticipated due to its current condition and the
potential for that condition to change as of January 1, of 2012. The parking ramp was not included as part of
the TIF district however costs could be included in the surrounding area. As far as the impact on other
businesses, since the bank took back possession of the property and sold it a few years ago, it has not been
operating to full capacity creating a negative impact on the Convention Center and the downtown in general.
There are currently significant costs associated with the renovation of the property.
Mr. Cummings added that the hotel has been consistently mismanaged and not properly marketed for many
years.
Wendy Hielsberg of the Convention and Visitors Bureau stated that the hotel was a Radisson in 1991 and
changed to the Park Plaza Hotel in 1999 at which time it lost its flag and removed the quality standards it
possessed when it was a Radisson establishment which was the beginning of the demise of the property.
Mr. Cummings added that in 1987 or 1988, the hotel hired an out of state manager who had a lack of
resources to properly manage the property.
Mr. McHugh commented that the hotel owner used to provide $40,000 per year toward the maintenance of
the Convention Center and questioned what component was in this plan to address this arrangement.
Mr. Bunch responded that this component was not part of the TID #25 project plan.
Lynn Lorenson, City Attorney, added that the cost of the Convention Center will be dealt with through an
operations agreement with the hotel owner at a later time and is not part of the approval of the TID plan.
Mr. Thorns questioned if the TIF was based on incremental values, if the property value would go up before
January, 2012, how it affects the project. He also inquired if the costs to improve the skywalk and parking
ramp would be an amendment to the proposed TIF or if the funding would come out of the Capital
Improvement Program.
Mr. Bunch replied that there is room to account for it in the Developers Assistance Grant and would like to
have funds available to help offset the riverwalk expenses but would at least have enough to cover the
developer's improvement costs. The skywalk and parking ramp would be considered public access
improvement costs which could be supported by the TIF or other funding sources.
Ms. Lohry inquired if the building was structurally sound and if it required inspection prior to the approval of
the TIF.
Mr. Bunch indicated that the interior and finishes require renovation however the foundation and building
appear to be structurally sound. Building permits will be required to be issued when renovations commence
but no initial inspection was necessary at this point as the city is well aware of its current condition.
Mr. Fojtik questioned who determines what is considered the definitions of blight.
TID#25 4
Mr. Burich responded that it is determined by the community and varies from one community to another.
There is not a set standard or format of blight conditions for all communities.
Mr. Nollenberger inquired if a definition of blight has been set in Oshkosh in the past.
Mr. Burich replied that the city has not adopted an official blight definition but has followed the general
standards in the statute in determining blight.
Mr. Cummings stated that he felt the property qualified as blighted as he had contacted the city twice in the
past year regarding the condition of the property.
Mr. Thoms questioned if state statutes include these types of indicators in their definitions of a blighted area.
Mr. Nollenberger requested an opinion from the City Attorney on the matter.
Ms. Lorenson explained that state statutes do not define specific tests for the definition of a blighted property
but rather require the Commission to apply their experience and understanding to the terms used in the
context of the community. To assure that the City was reasonably interpreting the definitions related to
blight, the City looked at the past decisions related to blight within the City and to the application of these
terms in other municipalities.
Mr. McHugh commented that the 100 block of Main Street TIF that was created had to be absorbed by
taxpayers due to the devaluation of the property and questioned what guarantees that this does not happen
again with this proposed TIF.
Mr. Burich responded that there could be a minimum assessment agreement included in the developer's
agreement for this proposal and that mechanism was not present in the 100 block TIF nor was there a
provision to prevent the property owner from appealing the assessment.
Mr. Thorns asked to clarify#4 in the affirmations of the Plan Commission regarding enhancing the value of
all the real property in the district.
Mr. Burich confirmed that the only parcel affected by this affirmation would be the hotel property so the
value will increase.
Motion by Nollenberger to approve the boundaries for Tax Increment District #25 City Center Hotel
Rehabilitation and TID #25 Project Plan.
Seconded by Bowen.
Ms. Propp commented that she felt this was one of the most important things done in many years and its
impact was very relevant to the downtown area.
Mr. Bowen stated that the Plan Commission's responsibility was to consider what is presented is case in fact
and that it meets the #6 criteria listed in the affirmations and past TIF projects should not be considered as
part of this decision.
TID#25 5
Mr. Thorns commented that the property is a viable working hotel and the Convention Center is vital to the
community and he felt that the definitions of a blighted property were adequately satisfied as the property
was having a negative impact on the city.
Mr. McHugh stated that the original intention of TIF districts was for infrastructure and the remodeling of
the interior of the hotel was moving in the wrong direction. He felt that is was a two million dollar gift to the
developers and should not be approved.
Mr. Hinz commented that it was a tough balancing act and he was rather torn on a decision as the Plan
Commission was to look at it from a planning perspective only.
Mr. Thorns stated that TIF district's were not for infrastructure only but were also utilized for business
development. This project is an investment in the city as it is a partnership with the hotel and Convention
Center and would assist in raising equity for the developer to secure financing which would help the project
move forward. He considered the hotel and Convention Center a package that worked together.
Mr. Cummings commented that the community at large was in favor of this project and he felt a proactive
move was necessary in this case.
Ms. Lohry stated that she was troubled by the fact that money could be found to support this project however
funding was not available to maintain the swimming area at County Park.
Mr. McHugh commented that millions of dollars were spent in the past for TIF projects that resulted in the
creation of low income housing.
Mr. Hinz inquired if the last TIF for the hotel area was considered successful.
Mr. Burich indicated that it was successful at one time prior to the changes in ownership and subsequent lack
of investment into the property.
Motion carried 8-1. Ayes-Botiven/Thoms/Fojtik/Cummings/Propp/Lohry/Vajgrt/Nollenberger. Nays-
Hinz.
TID#25 6