HomeMy WebLinkAboutItem VI - Project Plan E H L E RS
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July 2, 2019
Project Plan for the Creation of
Tax Incremental District No. 37
(Aviation Plaza Redevelopment)
Oshkosh
Organizational Joint Review Board Meeting: Scheduled for June 28, 2019
Public Hearing: Scheduled for July 2, 2019
Approval by Plan Commission: Scheduled for July 2, 2019
Adoption by Common Council: Scheduled for July 23, 2019
Approval by the Joint Review Board: Scheduled for July 24, 2019
BUILDING COMMUNITIES, IT'S WHIAT WE DO. 1""�g In . IhIIem -linc, m )t, 1(SOO) -1171 Q100 .chillers-inc.com
Tax Incremental District No. 37 Creation
Project Plan
City of Oshkosh Officials
Common Council
Lori Palmeri Mayor
Steve Herman Deputy Mayor
Debra L. Allison-Aasby Council Member
Jake Krause Council Member
William Miller Council Member
Matt Mugerauer Council Member
Bob Poeschl Council Member
City Staff
Mark Rohloff City Manager
Allen Davis Community Development Director
Lynn Lorenson City Attorney
Mark Lyons Acting Planning Manager
Kelly Nieforth Economic Development Services Manager
Trena Larson Finance Director
Pamela Ubrig City Clerk
Plan Commission
Thomas Fojtik, Chair John Kiefer
Kathleen Propp,Vice-Chair Justin Mitchell
Lynnsey Erickson Lori Palmeri,Mayor
Mike Ford Thomas Perry
Derek Groth
John Hinz
Joint Review Board
Mark Rohloff, City Manager City Representative
Mark Harris, County Executive Winnebago County
Amy Van Straten, Chief Financial Officer Fox Valley Technical College District
Barbara Herzog, School Board President Oshkosh School District
Burk Tower Public Member
Table of Contents
EXECUTIVESUMMARY...........................................................................................................................................4
TYPE AND GENERAL DESCRIPTION OF DISTRICT........................................................................................7
PRELIMINARY MAPS OF PROPOSED DISTRICT BOUNDARY......................................................................8
MAPS SHOWING EXISTING USES AND CONDITIONS.................................................................................10
PRELIMINARY PARCEL LIST AND ANALYSIS.................................................................................................12
EQUALIZEDVALUE TEST.....................................................................................................................................13
STATEMENT OF KIND, NUMBER AND LOCATION OF PROPOSED PUBLIC WORKS AND OTHER
PROJECTS................................................................................................................................................................14
MAP SHOWING PROPOSED IMPROVEMENTS AND USES.........................................................................16
DETAILED LIST OF PROJECT COSTS ..............................................................................................................18
ECONOMIC FEASIBILITY STUDY, FINANCING METHODS, AND THE TIME WHEN COSTS OR
MONETARY OBLIGATIONS RELATED ARE TO BE INCURRED..................................................................20
ANNEXEDPROPERTY...........................................................................................................................................25
ESTIMATE OF PROPERTY TO BE DEVOTED TO RETAIL BUSINESS......................................................25
PROPOSED ZONING ORDINANCE CHANGES................................................................................................25
PROPOSED CHANGES IN MASTER PLAN, MAP, BUILDING CODES AND CITY OF OSHKOSH
ORDINANCES..........................................................................................................................................................25
RELOCATION...........................................................................................................................................................25
ORDERLY DEVELOPMENT OF THE CITY OF OSHKOSH.............................................................................26
LIST OF ESTIMATED NON-PROJECT COSTS.................................................................................................26
OPINION OF ATTORNEY FOR THE CITY OF OSHKOSH ADVISING WHETHER THE PLAN IS
COMPLETE AND COMPLIES WITH WISCONSIN STATUTES 66.1105......................................................27
CALCULATION OF THE SHARE OF PROJECTED TAX INCREMENTS ESTIMATED TO BE PAID BY
THE OWNERS OF PROPERTY IN THE OVERLYING TAXING JURISDICTIONS......................................28
APPENDIX A-DEVELOPER'S TAX INCREMENTAL FINANCING APPLICATION.................................................29
APPENDIX B- MARKET STUDY AND INVESTMENT ANALYSIS REPORT.............................................43
PLAN COMMISSION PUBLIC HEARING/MINUTES OF JULY 2, 2019....................................................
COMMON COUNCIL CREATION RESOLUTION OF JULY 23, 2019.....................................................
JOINT REVIEW BOARD RESOLUTION JULY 24, 2019............................................................................
SECTION 1 :
Executive Summary
Description of District
Tax Incremental District ("TID") No. 37 ("District") is a proposed district in need of rehabilitation or
conservation consisting of five parcels and approximately 27 acres collectively referred to as the Aviation
Plaza center located northwest of the intersection of W. South Park Ave. and S. Koeller Street and
abutting Interstate 41. The existing commercial building in the District contains approximately 117,000
sq. ft. of retail space with Rogan's Shoes as the only current occupant following the closure of the J.C.
Penny store in 2015. Mineshaft Oshkosh LLC, Extreme Customs LLC, and Rogan's Shoes Inc.
(collectively, "Developer") have submitted a plan to redevelop the properties located within the District.
The Developer's plan includes construction of a new 35,600 sq. ft. building that will operate as a
Mineshaft restaurant and family entertainment facility, and renovation of the existing commercial
building ("Project"). A portion of the renovated building would continue to be occupied by Rogan's
Shoes with most of the remaining space to be occupied by Extreme Customs, a technology and
automotive firm specializing in online sales of custom rims and tires. The Extreme Customs facilities will
include retail, office, product installation, and warehousing space. General Development Plans and
Specific Implementation Plans were approved for Extreme Customs on February 12, 2019 (Resolution
19-91) and Mineshaft on May 28, 2019 (Resolution 19-319). The District will be created to pay
incentives to reimburse the Developer for costs incurred related to the rehabilitation of public and private
infrastructure and improvements. The Project represents an estimated $22.8 million investment in the site
with approximately $500,000 to be funded with a WEDC Idle Sites Grant, $1.89 million with a
development incentive funded by the District, and the balance from private investment.
Authority
The City is creating the District under the provisions of Wis. Stat. § 66.1105.
Estimated Total Project Cost Expenditures
The City anticipates making total expenditures of approximately $4.84 million ("Project Costs") to
undertake the projects listed in this Project Plan ("Plan"). Project Costs include an estimated $1.89
million in development incentives, $2.75 million for additional public infrastructure improvements, and
an estimated$200,000 in District administrative expense.
Incremental Valuation
The City projects that an incremental increase in land and improvements value of approximately $12.4
million will result from the Project. Creation of this additional value will be made possible by the Project
Costs made within the District. Assumptions as to the development timing and associated values are
included in Section 10 of this Plan.
Expected Termination of District
Based on the Economic Feasibility Study located within Section 10 of this Plan, the City anticipates that
the District will generate enough tax increment to pay all Project Costs by the year 2036, reflecting 16
years of tax increment collections, and 18 years of total elapsed time. A total of 7 years of tax increment
collections would be needed to repay the development incentive amount included in the Plan, with the
remaining years funding potential City infrastructure projects. If necessary, the District would be
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permitted to remain open for up to 29 years, allowing for up to a total of 27 years of tax increment
collection.
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:
l. 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 that the commercial building in the District has remained largely vacant and
underutilized since 2015 with current occupancy of 17%. Deterioration of the building and site
improvements, as well as the need to rehabilitate public infrastructure serving the site, have
presented an impediment to leasing and redevelopment. The City does not have funds available to
pay for the costs of rehabilitating the public infrastructure and will require the Developer to
provide the funding less that portion expected to be paid from a WEDC Idle Sites Grant. The
requirement to fund the public infrastructure rehabilitation as well as the additional costs the
Developer will incur to address the on-site costs related to deteriorating site and building
improvements make it unlikely that the Project will proceed as proposed with the use of tax
incremental financing. The City therefore finds it to be reasonable and necessary to use tax
incremental financing to reimburse the Developer for the cost of the public infrastructure
rehabilitation and certain other on-site costs that will need to be made to allow the Project to
proceed.
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 provide increased employment
opportunities and space to accommodate retail and service businesses that will support residents
and workers in the area.
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
Appendix A of 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 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. Not less than 50% by area of the real property within the District is in need or rehabilitation or
conservation as defined by Wis. Stat. § 66.1337(2m)(a) and as further detailed in Section 5 of the
Plan.
5. Based on the foregoing finding, the District is designated as a district in need of rehabilitation or
conservation.
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6. The Project Costs relate directly to the rehabilitation or conservation of property 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. That there are no parcels to be included within the District that were annexed by the City within
the three-year period preceding adoption of this Resolution.
10. That approximately 75% of the territory within the District will be devoted to retail business at
the end of the District's maximum expenditure period, pursuant to Wisconsin Statutes Section
66.1105(5)(b).
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:
Type and General Description of District
The District is a proposed district in need of rehabilitation or conservation consisting of five parcels and
approximately 27 acres collectively referred to as the Aviation Plaza center located northwest of the
intersection of W. South Park Ave. and S. Koeller Street and abutting Interstate 41. The existing
commercial building in the District contains approximately 117,000 sq. ft. of retail space with Rogan's
Shoes as the only current occupant following the closure of the J.C. Penny store in 2015. The Developer
has submitted a plan to redevelop the properties located within the District. The Developer's plan includes
construction of a new 35,600 sq. ft. building that will operate as a Mineshaft restaurant and family
entertainment facility, and renovation of the existing commercial building. A portion of the renovated
building would continue to be occupied by Rogan's Shoes with most of the remaining space to be
occupied by Extreme Customs, a technology and automotive firm specializing in online sales of custom
rims and tires. The Extreme Customs facilities will include retail, office, product installation, and
warehousing space. General Development Plans and Specific Implementation Plans were approved for
Extreme Customs on February 12, 2019 (Resolution 19-91) and Mineshaft on May 28, 2019 (Resolution
19-319). The District will be created to pay incentives to reimburse the Developer for costs incurred
related to the rehabilitation of public and private infrastructure and improvements. The Project represents
an estimated $22.8 million investment in the site with approximately $500,000 to be funded with a
WEDC Idle Sites Grant, $1.89 million with a development incentive funded by the District, and the
balance from private investment.
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SECTION 3:
Preliminary Maps of Proposed District Boundary
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District Boundary Oshkosh
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Parcel Identification Oshkosh
Tax Increment District#37-Aviation Plaza R development Parcel Identification
Map Force I# owner Local Addlress Land Value Improv, Total Value Equalized Class Dwelling Census Zoning
ID Value Value Units Tract
1 13-3422-2034 MA%I1:RS0S1,1Y,0,Mi11C ;M41%KOI I 11:R SI $1 j4f,5�100 $ 5�"V,M)j$2,2/5,(XX) $2,4:A,396 b (") 1:3 SMIJ-11)
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SECTION 4:
Maps Showing Existing Uses and Conditions
Tax Increment District #37
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SECTION 5:
Preliminary Parcel List and Analysis
The following table identifies the parcels to be included in the District. The entirety of the District is an
area in need of rehabilitation or conservation as defined in Wis. Stat. § 66.1337(2m)(e). Specifically, the
District consists of land where:
1. Plans for a program of voluntary repair and rehabilitation of buildings or other improvements will
be carried out. As part of the Project, the existing commercial building located in the District,
which is deteriorating and has a 17% occupancy rate, will be rehabilitated to accommodate the
relocation of Extreme Customs LLC's operations to the building.
2. Installation, construction or reconstruction of utilities and other improvements is necessary for
carrying out the objectives of an urban renewal project. As part of the Project, deteriorating
public infrastructure and private site improvements, which have presented an impediment to
leasing and redevelopment, will be rehabilitated.
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Map Equalized In Need of
10# Parcel Number Street Address Owner Acreage Land Imp Total Value Land Imp Total Rehabilitation/
Ratio Conservation
1 13-3422-2034 2041 S WELLER ST MASTERS OSHKOSH LLC 16.43 1,745,700 529,300 2,275,000 92.54% 1,886,427 571,969 2,459,396 16.43
2 13-2310-0404 2145 S WELLER ST ROGAN STORES OSHKOSH LLC 3.53 625,900 639,700 1,265,600 92.54% 676,356 691,269 1,367,625 3.53
3 13-2310-0401 2175 S KOELLER ST PHOENIX REALTY LLC 2.38 399,100 1,275,700 1,674,800 92.54% 431,273 1,378,539 1,809,812 2.38
4 13-2310-0402 2185 S KOELLER ST PHOENIX REALTY LLC 0.45 75,200 367,300 442,500 92.54% 81,262 396,909 478,172 0.45
5 13-2310-0403 0 S KOELLER ST PHOENIX REALTY LLC 3.79 569,000 54,500 623,500 92.54% 614,869 58,893 673,763 3.79
3,414,900 2,866,500 6,281,400 3,690,188 3,097,579 6,787,767 26.58
100.00
Estimated Base Value 6,787,767
Notes:
Assessed values as of 1-1-2019 per City Assessor.Equalization ratio reflects estimated 1-1-2019 ratio as provided by City Assessor.
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SECTION 6:
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 $154,498,067. This value is less than the maximum of$488,841,912
in equalized value that is permitted for the City.
e s e s
District Creation Date 7/23/2019
Valuation Data
Currently Available
2018
Total EV(TID In)
12%Test 488,841,912
Increment of Existing TI Ds 1,4 7110 t1
Projected Base of New or Amended District 6,; 6 1,",
Total Value Subject to 12%Test 154,498,067
Compliance °
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SECTION 7:
Statement of Kind, Number and Location of Proposed
Public Works and Other Projects
Project Costs are any expenditure made, estimated to be made, or monetary obligations 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 9 provide additional information as to the kind, number and
location of potential Project Costs.
Public Improvements
Sanitary Sewer,Water System and Stormwater Management Improvements
The Project may require that the City make improvements to its sanitary sewer collection system, water
distribution system and stormwater management system. To the extent that improvements are necessitated
by, or provide a benefit to, the Project the City may allocate the cost, or a portion of the costs, to the
District. Any costs incurred by the City for improving the its utility systems that benefit the Project are
eligible Project Costs. Costs for such improvements may be made within the District, or outside the
District as permitted under Wis. Stat. § 66.1105(2)(f)l.k.
Sidewalks and Multi-Use Trails
The Project may require the City to install or improve sidewalks or multi-use trails to promote
connectivity to the District and to improve pedestrian safety. To the extent that improvements are
necessitated by, or provide a benefit to, the Project the City may allocate the cost, or a portion of the
costs, to the District. Any costs incurred by the City for installing improving sidewalks or multi-use trails
that benefit the Project are eligible Project Costs. Costs for such improvements may be made within the
District, or outside of but within '/2 mile of the District's boundary as permitted under Wis. Stat. §
66.1105(2)(f)l.n.
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.
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Miscellaneous
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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SECTION 8:
Map Showing Proposed Improvements and Uses
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1111) o. 3 7 PirojectIr"n Jity of Oshkosh
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SECTION 9:
Detailed List of 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 7 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.
City of Oshkosh, Wisconsin
Tax Increment District#37
Detailed List of Project
General
Extreme District
Project Name/Type Mineshaft Customs Rogan's Costs Total
2022-2027 2022-2027 2022-2027 2019-2047
Development Incentives'
Sewer&Water Reimbursement 62,998 169,320 136,876 369,194
Stormwater Reimbursement 147,392 105,697 85,445 338,534
Other On-Site Improvements Reimbursement 227,232 227,232
Drive Apron&Curb Reimbursement 171,240 171,240
Building Improvements Reimbursement 87,724 87,724
Development Wide Stormwater Reimbursement 515,616 515,616
Estimated Interest on Incentive 63,595 37,888 23,221 178,559
Public Infrastructure 2,750,000 2,750,000
TIF Administrative Expenses 200,256 200,256
Total Projects 672,457 400,629 245,542 3,465,872 4,838,355
Notes:
'Incentive amount shown for purposes of establishing economic feasibility only.The City has not agreed to terms or conditions with the
proposed Developer as to any public participation in the project.
The Development Incentives noted on the above table consist of payments that will be made to reimburse
the Developer for the following specific work items:
• Sewer and Water Reimbursement—Upgrading the water and sanitary laterals on site that are currently
not in compliance with City or State code.
• Stormwater Reimbursement Upgrading the entire 26 acre site's stormwater management system to
meet City and State code.
• Other On-Site Improvements Reimbursements Engineering, geotechnical testing, relocating and
installing utilities, and restoration related to the utility improvements.
. o, 2 7 Pirojectinn .Ity of Osh osh
Pirepaired Ilby I Millers Page 18 Jli.dy 2, 2019
• Drive Apron and Curb Reimbursement—Reconstructing the drive apron and curb in the right of way
to meet City code.
• Building Improvements Reimbursement—Building renovations include replacing the HVAC system,
replacing interior and exterior concrete and masonry that is beyond repair, replacing part of the fire
protection piping for the system, updating the plumbing fixtures and equipment, and ensuring the
electrical service meets the needs of the business.
• Development-Wide Stormwater Reimbursement — The required stormwater management facility for
the entire Aviation Plaza site will be located on the Mineshaft property due to the topography of the
site. Funds may be reimbursed for constructing a stormwater management facility that provides the
quality and quantity stormwater requirements that Extreme Customs, Rogan's, and the Mineshaft are
required to provide per City and State code.
. o. 3 7 PirojectPlain Jity of Os flkos u
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SECTION 10:
Economic Feasibility Study, Financing Methods, and the
Time When Costs or Monetary Obligations Related 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 $12.4 million in incremental value by
January 1, 2021. The development Project estimated valuations and timing are included in Table 1.
Assuming the City's current equalized TTD Interim tax rate of$25.11 per thousand of equalized value,
and no economic appreciation or depreciation, the Project would generate $8,307,870 in incremental tax
revenue over the 27-year term of the District as shown in Table 2.
. o, 3 7 Pirojectinn Jity of .D; flko n
�Pir�epaired Ilby I Ih leii,-,p Page 20 Jk.dy 2, ;019
City of Oshkosh
Tax Increment District No. 37
Development
Base value Construction Year Mineshaft Extreme Customs Ro an's Annual Total Construction Year
Improvementsis
1 2019 (3,097,579) 5,500,000 4,300,000 1,750,000 8,452,421 2019 1
2 2020 3,950,000 3,950,000 2020 2
3 2021 0 2021 3
4 2022 0 2022 4
5 2023 0 2023 5
6 2024 0 2024 6
7 2025 0 2025 7
8 2026 0 2026 8
9 2027 0 2027 9
10 2028 0 2028 10
11 2029 0 2029 11
12 2030 0 2030 12
13 2031 0 2031 13
14 2032 0 2032 14
15 2033 0 2033 15
16 2034 0 2034 16
17 2035 0 2035 17
18 2036 0 2036 18
19 2037 0 2037 19
20 2038 0 2038 20
21 2039 0 2039 21
22 2040 0 2040 22
23 2041 0 2041 23
24 2042 0 2042 24
25 2043 0 2043 25
26 2044 0 2044 26
27 2045 0 2045 27
Totals (3,097,579) 9,450,000 4,300,000 1,750,000 12,402,421
Notes:
'Estimate of valuation increase within District resulting from construction of restaurant building and renovations to be made to existing commercial
building.Assumptions as to value and timing taken from information received from Developer dated 6-6-2019.
2Reflects existing valuation of land and improvements within the District as of January 1,2019.This value is subtracted to calculate the projected
incremental value.(The numbers shown to the right of this column reflect total value).
Table 1—Development Assumptions
Pre:paired Ilby I Ilhlleil-„ Page 21 Jlj.dy 2, 2019
City of Oshkosh
Tax Increment District No. 37
Tax Increment Projection Worksheet
Type of District Base Value
District Creation Date Appreciation Factor
Valuation Date Base Tax Rate
Max Life(Years) Rate Adjustment Factor
Expenditure Period/Termination III
Revenue Periods/Final Year
Extension Eligibility/Years Tax Exempt Discount Rate
Recipient District 11111 Taxable Discount Rate
Construction Inflation Total
Year Value Added Valuation Year Increment Increment Revenue Year Tax Rate' Tax Increment
1 2019 8,452,421 2020 0 8,452,421 2021 $25.11
2 2020 3,950,000 2021 0 12,402,421 2022 $25.11
3 2021 0 2022 0 12,402,421 2023 $25.11
4 2022 0 2023 0 12,402,421 2024 $25.11
5 2023 0 2024 0 12,402,421 2025 $25.11
6 2024 0 2025 0 12,402,421 2026 $25.11
7 2025 0 2026 0 12,402,421 2027 $25.11
8 2026 0 2027 0 12,402,421 2028 $25.11
9 2027 0 2028 0 12,402,421 2029 $25.11
10 2028 0 2029 0 12,402,421 2030 $25.11
11 2029 0 2030 0 12,402,421 2031 $25.11
12 2030 0 2031 0 12,402,421 2032 $25.11
13 2031 0 2032 0 12,402,421 2033 $25.11
14 2032 0 2033 0 12,402,421 2034 $25.11
15 2033 0 2034 0 12,402,421 2035 $25.11
16 2034 0 2035 0 12,402,421 2036 $25.11
17 2035 0 2036 0 12,402,421 2037 $25.11
18 2036 0 2037 0 12,402,421 2038 $25.11
19 2037 0 2038 0 12,402,421 2039 $25.11
20 2038 0 2039 0 12,402,421 2040 $25.11
21 2039 0 2040 0 12,402,421 2041 $25.11
22 2040 0 2041 0 12,402,421 2042 $25.11
23 2041 0 2042 0 12,402,421 2043 $25.11
24 2042 0 2043 0 12,402,421 2044 $25.11
25 2043 0 2044 0 12,402,421 2045 $25.11
26 2044 0 2045 0 12,402,421 2046 $25.11
27 2045 0 2046 0 12,4p02,421 2047 $25.11
Notes:
Tax rate shown is actual rate for 2018/19 levy taken from DOR Form PC-202(Tax Increment Collection Worksheet).
Table 2—Tax Increment Projection Worksheet
o, 3 7 Pirojecifinn Jify of Oshkosh
Piro:paired Ilby I IhlIeil-s Page 22 jk.dy 2, 2019
Financing and Implementation
Expected District Project Costs consist of development incentives in an estimated amount of $1.89
million, $2.75 million for additional public infrastructure improvements and an estimated $200,000 in
District administrative expense. Project Costs will be paid from tax increment as it is received, and the
City's obligation to make development incentive payments will be limited to tax increment generated by
the Project and subject to annual appropriation. The City will advance funds as needed to pay District
administrative expenses prior to the availability of tax increments. To the extent public infrastructure
improvements are required prior to the availability of tax increment to cash fund them, the City may
advance funds to the District, or may issue debt to finance the costs.
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 2036, reflecting 16 years of tax increment collections, and
18 years of total elapsed time. A total of 7 years of tax increment collections would be needed to repay
the development incentive amount included in the Plan, with the remaining years funding potential City
infrastructure projects. 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 early 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.
. o. 2 7 Pirojectir"n Jity of .D; n o n
Pry:paired Ilby I Ililleii,-,p Page 23 Jk.dy 2, ;019
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SECTION 11 :
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 12:
Estimate of Property to be Devoted to Retail Business
Pursuant to Wis. Stat. § 66.1105(5)(b),the City estimates that 75% of the territory within the District will
be devoted to retail business at the end of the District's maximum expenditure period.
SECTION 13:
Proposed Zoning Ordinance Changes
The proposed Plan is in general conformance with the City's current zoning ordinances. Individual
properties may require rezoning at the time of development.
SECTION 14:
Proposed Changes in Master Plan, Map, Building Codes
and City of Oshkosh Ordinances
The proposed Plan is in general conformance with the City's Comprehensive Plan identifying the area as
appropriate for commercial land uses. 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.
SECTION 15:
Relocation
Implementation of this Plan will not require relocation of individuals or business operations. 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.
) o. 2 7 Pirojecifirr Jify of Oshkosh
�Pir�epaired Ilby I Ili1eii,-s Page 25 Jk.dy 2, ;019
SECTION 16:
Orderly Development of the City of Oshkosh
Creation of the District and the implementation of the projects in its Plan will promote the orderly
development of the City through elimination of blight and the provision of appropriate financial
incentives that will create opportunities for mixed use development. 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 increased employment opportunities and space to
accommodate retail and service businesses that will support residents and workers in the area.
SECTION 17:
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.
At present, the City has not identified any non-project costs other than those costs expected to be paid
from the WEDC Idle Sites grant which are not included within this Plan. To the extent: 1) improvements
are made within the District that benefit property outside the District; or 2) improvements are made
outside the District that will only partially benefit the District; the City will apportion those costs based on
a reasonable allocation of the benefit. The costs related to benefit received by properties outside the
District are non-project costs.
) o. 2 7 Pirojectinn Jity of Os flkos n
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SECTION 18:
Opinion of Attorney for the City of Oshkosh Advising
Whether the Plan is Complete and Complies with
Wisconsin Statutes 66. 1105
I^A
GEOf
Oshkosh
June 26,2019
H.Allen Davis
Director of Community Development
City of Oshkosh
215 Church Avenue
Oshkosh,WI54903-1130
Dear Mr.Davis:
I reviewed the project plan for, City of Oshkosh Tax Increment District #37 Aviation Plaza
Redevelopment,pursuant to Section 66.1105(4)(f)of the Wisconsin Statutes.I find that the plan includes
a statement listing the kind,number,and location of proposed public improvements within and outside
the District. It includes an economic feasibility study, a detailed list of estimated project costs, and a
description of the method of financing all estimated project costs, the time when the costs are to be
incurred, and a list of estimated non-project costs. The plan contains maps of existing uses and
conditions of real property, as well as, proposed improvements and uses. The plan identifies any
proposed changes in zoning of the real property in the district,and any proposed changes in the City's
master plan, map or other municipal codes required or proposed as part of the district. The plan
includes a statement of the proposed method for relocation of any persons to be displaced. The plan
further specifies that the district will promote the orderly development within the City, which is
consistent with the City's Comprehensive Plan(Master Plan),building codes,and other city ordinances
in relation to project elements.
Upon adoption of the project plan by the Plan Commission and their submission to the City Council,all
requirements of Section 66.1105(4)(f), Wisconsin Statutes, will be complete and it is, therefore, my
opinion that the project plan attached hereto is complete and complies with Wis.Stat.§66.1105.
Sincerely,
C OF OSHKOSH
Lynn .Lorenson
City Attorney
LL/tw
City Attorney
City Hall,215 Church Avenue P.O.Box l l30 Oshkosh,WI 54903-1130 920.236.5115 http://www.cl.oshkosh.wl,us
o, 3 7 PirojectPlain Jty of Oshkosh
Pirepaired Ilby Ehlers Page 27 Jluly 2, 2019
Exhibit A:
Calculation of the Share of Projected Tax Increments
Estimated to be Paid by the Owners of Property in the
Overlying Taxing Jurisdictions
Estimated Portion of Taxes that Owners of Taxable Property in Each Taxing Jurisdiction
Overlaying District Would Pay by • •
DOR Form PC-202 Percentage
Winnebago County 20.22%
City of Oshkosh 39.98%
Oshkosh Area School District 35.60%
Fox Valley Techncial College iiiiiiiiiiiiiiiiiiiiiillillillillillillilliillillillillillillilliillillillilliillillillillillillillI iiiiiiiiiiiiiiiiiiiiiillillillillillillilliillillillilI 4.21%
Fox Valley
Winnebago Oshkosh Area Techncial
Revenue Year County City of Oshkosh School District College Total Revenue Year
2021 42,900 84,830 75,547 8,928 212,204 2021
2022 62,948 124,472 110,851 13,100 311,372 2022
2023 62,948 124,472 110,851 13,100 311,372 2023
2024 62,948 124,472 110,851 13,100 311,372 2024
2025 62,948 124,472 110,851 13,100 311,372 2025
2026 62,948 124,472 110,851 13,100 311,372 2026
2027 62,948 124,472 110,851 13,100 311,372 2027
2028 62,948 124,472 110,851 13,100 311,372 2028
2029 62,948 124,472 110,851 13,100 311,372 2029
2030 62,948 124,472 110,851 13,100 311,372 2030
2031 62,948 124,472 110,851 13,100 311,372 2031
2032 62,948 124,472 110,851 13,100 311,372 2032
2033 62,948 124,472 110,851 13,100 311,372 2033
2034 62,948 124,472 110,851 13,100 311,372 2034
2035 62,948 124,472 110,851 13,100 311,372 2035
2036 62,948 124,472 110,851 13,100 311,372 2036
2037 62,948 124,472 110,851 13,100 311,372 2037
2038 62,948 124,472 110,851 13,100 311,372 2038
2039 62,948 124,472 110,851 13,100 311,372 2039
2040 62,948 124,472 110,851 13,100 311,372 2040
2041 62,948 124,472 110,851 13,100 311,372 2041
2042 62,948 124,472 110,851 13,100 311,372 2042
2043 62,948 124,472 110,851 13,100 311,372 2043
2044 62,948 124,472 110,851 13,100 311,372 2044
2045 62,948 124,472 110,851 13,100 311,372 2045
2046 62,948 124,472 110,851 13,100 311,372 2046
2047 62,948 124,472 110,851 13,100 311,372 2047
Total 1,679,537 3,321,112 2,957,681 349,541 8,307,870
Notes:
The projection shown above is provided to meet the requirements of Wis. Stat. §66.1105(4)(i)4.
If llll:) No. 3"7 IPir*ct IPlain (Jity of Oshkosh
P'irepaired Idy Ehlers ''age 28 July 2, 2019
TIF APPLICATION
May 2, 2O19 R� I El VE 1)
K&c Mark Ruh8off
Oshkosh City Manager
215 Church Ave �umuVm|Y� nxv VA,Op^»1:Nr
Oshkosh,VV| 549�U1
Dear Mr Rohloff,
On behalf of the property owners of the Aviation Plaza center, please accept this request for tax
increment assistance that we believe to be needed in order to bring the overall project to fruition. As
you well know, the aviation plaza sits mostly vacant today. |m201S,]C Penny closed down their store
leaving Rogan's shoes the only operation to remain open. In total the site has approximately 116,668
square feet of retail space available, however with only Rogan's in operatio,n, only 16.7%of the space is
being utilized.
Our plan includes the construction of a new 35,600 sf building that will house a new Mineshaft
restaurant and family enturLaimnmemtfadUity. We anticipate this venture will bring in 10,000- 12,000
customers per week. |n addition, the JC Penny/Miles Kimball site will be substantially renovated to
house Extreme Customs, a growing techno|og«/automotive firm that specializes in online sales mf
custom rims and tires.The new facility will house a retail space, a fair amount of office space, a shop for
|mco| installation of products, and substantial warehouse space.
As you are aware, the redevelopment of this site is made difficult by several factors, First, the site has
zoning restrictions due to the proximity to the adjacent airport limiting the potential uses. Next,the site
was originally developed as one singie parcel. A single water and sewer lateral comes in off of Koeller St
and served the original Walmart facility, the adjacent strip malil, what now serves as the Rogan's shoes
store, and the old JC Penny/Miles Kimball buildings. Public Service Commission rules no longer allow a
shared water lateral. Should the proposed development occur, or any other development for that
matter,the non-conforming laterals must he corrected, such that each building or separate parceK will
need its own water laterals. We will also have to address stormwater for the site, however, the
department of public works have also requested of us to provide increased capacity than minimally
required in an effort to aid in the overall Stringha:m Creek water management.
We anticipate the projects starting mid-June. The Extreme Customs renovation and the Rogan's Shoes
water laterals should be completed by November of th,is year. We further anticipate the construction of
the Minevhaft facility tobecornp�Uetedby April of202U.
The total development investment in the Mineshaft facifity and associated site improvements is
approximately$16.1 Million.The Mineshaft team has$8 million in financing committed.They are
contributing just short uf$3.8 million, in |emd and equity and bringing$2.75 million, on cash. Extreme
customs will make an overall investment of approximately$5.75 miflion and has arranged financing
through Hometown bank, while Rngan's will invest approximately$262K in! site infrastructure
improvements. Overall, we have identified $2,359,290 in public and site improvement costs. We have
applied for$50[\U00 of assistance through the VVED[ Idle Sites grant, leaving$1,8S9,29UinT|Feligible
expenses. VVn are requesting$1,7O4,7GQimTUF assistance, in part to keep the total payback within 10
years.
Page 29
An investment analysis was conducted on the Mineshaft development plan and found that the 10 year
internal rate uf return without T|F was 12.52%. With TlFitis1S.11Y6. While the |Kk in part, paints the
picture of need, more importantly the TIF assistance reduces the amount of cash needed to com,plete
the project. Given the banks limitation of$8 million in financing, the development team, must bring in
roughly 50% in equity to make thiis happen without TIF. In contrast, more typical development scenarios
like apartments or commercial office space mightonly require 20%-30% equity.
The overall redevelopment of this site will provide substantial public benefit. As a major gateway entry
point to the city,this site was listed as a goal for redevelopment in the Oiy"s Central Corridors plan, The
M[nesha|t facility will bea major draw bringing in18,W00 12,0OO patrons weekly. Experience from the
Hartford locations suggests that many of these patrons will draw from the surrounding region. The
K0inenhaft facility may add well over 18O new jobs. Extreme Customs will retain @2 existing jobs in
Oshkosh and add an addition 10 in the next year which include full benefits. Also, the increased
stormwater capacity above the site requirements w0l benefit neighboring site and those downstream of
the Stdmghamn creek basin.
VVe project this development will add roughly$14 million |nincrement and that the requested incentive
can be paid back ln18years.
In order to make this overall site redevelopment work TIF assistance will be needed. For the Mineshaft
project, the extreme, additional site cost would require the development team to bring in 5096equity
stake without assistance. Moreover, without T|Fthe 10year rate mfreturn is 12.5%. Consistent with the
presentation given to the Common Council by Ehlers in the June 2017T|F workshop,the required return
should reflect the risk proposed. Given the equity position requirements and the risk associated with
restauraot/emterteinmentfaci||des, we find I2.59&in insufficient to proceed. For Extreme Customs, the
redevelopment costs surpass 90%of the fair market value of the existing land and buildings.These
extraordinary costs make the redevelopment financially prohibitive without the TIF assistance.
We greatly appreciate the support and assistance your staff has provided in helping us understand the
site issues and putting together the requisite materials for requesting T|F assistance. We strongly believe
that the redevelopment we are proposing will be a substantial benefit to the city and again affirm that
without TlFassistance these projects would not move forward. Please feel free to contact any o{muwith
any questions you may have. We look forward to working together with the city to return this site back
to,the economic center w,e know it can be.
Sincerely,
-------------- —~-- — ----��-n -�_---
M|neshaft {)xhkmsh Extreme Customs
Page 30
udlJ`a4kv;w:/a'LAµUU4+Ye1a^°�rY
}
NI'S S
ROGAN SHOES, INC.
1750 Ohio Street
Racine, Wisconsin 53405,
22-637-3613
April 29, 2019
Mr. Mark Rohloff
Oshkosh City Manager
215 Church Avenue
Oshkosh, Wisconsin 54901
Re: Aviation Plaza
Dear Mr. Rohloff:
As you are aware, Rogan's Shoes is the owner of one of the parcels at
Aviation Plaza. Our property is between the parcels proposed for the
Mineshaft and Extreme Rims redevelopments..
We are writing to request tax increment assistance for the Aviation Plaza
developments. We fully support the redevelopments proposed by Mineshaft
and Extreme Rims,.
Rogan's Shoes is willing to invest approximately$262,0�00 for installation of
a new water fine, shared sanitary sewer line with Custom Rims and a shared
storm water infrastructure at Aviation Plaza provided that we receive TIF
assistance.
We understand that both Mineshaft and Custom rims have indicated that
TIF assistance is necessary for their respective redevelopments to occur..
Through the years, Rogan's Shoes has witnessed the death of Aviation
Plaza as a shopping destination. This occurred despite the fact that
Aviation Plaza is in a highly visible location. Except for our store„ Aviation
P'laza's buildings are either empty or have been torn down. That, together
with the appearance of the empty and vacant portions of Aviation Plaza,
unequivocally sends a message of deterioration and blight.
Page 31
Furthermore, there has not been any conventionally financed
redevelopment at Aviation Plaza over the many years that vast portions of
Aviation Plaza have been empty. In our view, the marketplace has clearly
indicated that TIF financing is necessary for redevelopment to take place
at Aviation Plaza, as we believe that a non-TI'F financed redevelopment
would have already occurred at Aviation Plaza if such a redevelopment was,
viable.
We appreciate the consideration of this request.
Very truly yours,
S0 Shoes, Inc.
Patric A. Rogan
Presi ent
Page 32
Tax Incremental Finoncing
P M,ic lication
111111 Jill lg!l
-k 1111111V=1A 0 RON
Sources and Uses of Funds
Identify the sources of funds used to finance the project. Typical sources include equity,
lender financing, mezzanine financing, government financing, other anticipated types
of public assistance, and any other types or methods of financing.
Uses of Funds Amount ($) $ per SF of Building Area
Land Acquisition, $3,250,000
Demolition:
Environmental Remediation:
Site Clearance and Preparation:
Soft Costs/ Fees-, $1.082422
Soft Cost Contingency: $140,000
Hard Construction Costs: $8,,055,786
Total Project Costs: $16,101,413.._
Sources of Funds % of total project costs
Equity
Developer Equity: $ 3,894,463 24
Other Equity:( cash $ 21752,403 17
Total Equity: 6,646,866 41 %
Loans Rate Term
Construction Financing: $ 8,000,000 5.3Z5 12 MOS, 50
Permanent Financing, a,ann,ana 5.25 % 20 yrs. 50
TIF Assistance $ 112371710 8
Other: ( 181EDC -ISG.) $ 216837 1 ...... _.-
Total Sources of Funds $16,101,413 100%
FlInancing
Source Amount Terms: Years/interest Contact Information
www"M
Equity:
MINOWNSOMMUMEM
Loans I BMO Harris Bank (262) 783 1094
2:
31
4:
Page 33
iaXe Incremental ina i ireg
Policy and Appli-cation
Project Timetable Date
Final Plan/Specification Preparation: May 2019
Bidding and Contracting May 2019
Firm Financing Approval: April 2019
Construction/RehabliltafIon: July 2019 -April 2020
Landscaping/Site Work: j_u1j 2019 -April 2020.................
Occupancy/Lease Up: April 2020
Development Team
Developer:
Architect., Keller 61ruclur-ea
Surveyor:
Contractor:
Other Members:
Describe Team expertise and' experience in developing similar projects:
Mr Most= bal 5e @cal degodea of ext)eri.ee--o-o-e-r,at�na the Hartford Minesbaft Igggiflgal along 3&ilb
the Fox and Hgwod% Kgllgr Efructurog has slanificaot @xPerlmgo building:)LacIQw a mm[ngrdal buildingS.
Other current Team projects in development:
None
Financial ability of the applicant to complete the project:
Ownership team has cash and equity required to bring project to completion after financing commitment.
BMO Harris bank has provided a letter of commiltment for financing,
History of use of: other city or government financial incentives:
Idla I ia team a5slat ace throuQb J hij
nt oroaram.
Professional Studies
Market Studies: Applications for commercial and residential projects may at the option
of the city be required to Include a comprehensive market study, The market study
should 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 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 "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 is the proposed use,.
Page 34
• Tax Incremental, FI n in
Policy and Application
Overall Pro ect Summary qn " 'bf,6ctives:
We s 160-aggane-f of-m uyrant and entertainment facility, address storm wager management
Issues as part of the Aviation Plaza group redo the surface parking, address PSQ requirements for laterals
and generally redevelop the northern most parcel of Aviation Plaza.
Current and Proposed Uses;
----j3.urraALy-a-single_c mercl ullding that Ig appmA tsJyr-24, ,feet sits vacant ThLs building-ham ts`
We intend to use the larger unit as a support facility for the new 35,600 restaurant/gaming restaurant/gamIng facility, The
remaining unit we Intend snake into a condominium and sell„ or possibly lease.
Descriptlon of End Users:
The Mineshaft restaurant and family entertainment center will _
environment, In addition, approximately half of the facility will be used for a large game room and private party
room%
Property Summary: Describe any zoning changes that will be needed:
Parcel/Land Area: Sr No zoning changes
Building Area; SF —
of Dwelling Units;
## of Stories:
## of Parking Spaces;
Identify any other approvals permits or licenses (Le, Liquor license, Health Department, etc):
Will need liquor license and health department approval to open the restaurant,
Describe briefly what the project will do for the property and neighborhood.
Construction of the new building and updating the parking lot and landscaping will substantially improve,the
appearance of the site, The storm water management capabilities will Improve the overall management of
the Stringharn creek water shed„ We anticipate the entertainment facility to draw approximately 10 to
12,000 visitors to the site substantially Improving the viability of other commercial enterprises with the
Increased traffic __.._._.__...._
Page 35
I�� II IIIII � ul� ,�
uTax Incremental Financing
Policy and Applic n
Prase 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 (TIFj assistance.The application Is comprised of
five parts:
1, Applicant Information
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 addltional Information is requested, please use an
attachment, Use attachments only when necessary and to provide clarifying or addl'tlona4 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 G CD 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 Develo went Division at 920,235,5055
Applicant Infr a w
Legal Name: Mineshaft Oshkosh, LLC
Mailing Address: PO Box 270422 ...r._
Primary Contact . 262 224 0652 Cell
E-mail: heidl0minesha#tres aurant,corn FAX :'
Attorney:
Legal Entity: Individual(s) ,point Tenants Tenants In Common
Corporation X 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 corporatlon/partnership/LLC and extent of ownership Interest.
Name: Address: Title. Interest:
Tarn Masters 5488 Pleasant Hill Road'. Hartford WI Managingi member 100%
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 princlpals of the corporation/partnership/LLC) ever
been charged or convicted of a misdemeanor or felony's Yes X No
If yes, please furnish details:
Forty seven years age Mr Masters was convicted of a felon sslo a. The charge was suhsequently
pardoned by the Governor of the State of Wisconsin,
Page 36
�i Tax Incremental
Policy Application
imn I
Filing Requirements
You must provide all of the following items with your signed application:
1. Fee: An application fee of 1%of the requested TiF assistance or 10,000,whichever i
greater.This fee is to cover City costs associated with evaluating the TIF application
and does not cover the use of outside consultants, which If required will be paid for
by the applicant. Make your check payable to the City of Oshkosh,
2. Site Mains: Provide a map that shows the location of the site. Also provide a map
that focuses on the project and its immediate surroundings. Both maps should be no
larger than 11i xl 7 inches„ Larger maps will be required for projects presented to the
Plan Commission, Redevelopment,Authority, or Common Council,
3. Project Renderings: Provide preliminary architectural drawings: plans and renderings
for the project„ These drawings should be no larger than 11xI7 inches, Larger maps
will be required for projects presented to the Plan Commission, Redevelopment
Authority, or Common Council.
Notes
• The City retains an administrative fee of of the annual tax Increment revenue.
• if the project requires planning and zoning approvals,you must make these applications
concurrent with this request.
Agreement
I, by signing this application, agree to the following:
1. I have read and will abide by all the requirements of the City for Tax Incremental
Financing.
2. The Information submitted is correct.
3. l agree to pay all casts Involved In developing Project Plan or Development
Agreement. These costs may include, but not be limited to, bond counsel,outside
legal assistance,outside financial assistance, planning, engineering, etc, and all
costs involved in the issuance of the bonds or loans to finance the project.
4. 1 understand that the City reserves the right to deny final approval,regardless of
preliminary approval or the degree of construction completed before application
for final approval,
5. The undersigned authorizes the City of Oshkosh to check credit references and verify
financial and other Information.
6. The undersigned also agrees to provide any additional Information as may be
requested by the City after filing of:this application,
Applicant Name �� � late
Page 37
0 0
Tax Incremental Financing
Policy a �nd Application
li i:i i ii MISSOURI:;;
Please complete and submit the following information to the City of Oshkosh for a more detailecl 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
atfachment. 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 half processing the application for incomplete
submittals.
For further information please refer to the "'City of Oshkosh Tax Incremental Financing Policy" document or
call the Fconomic Development Division at 920.235.5055
Comm, IME! i:
Legal Name: Extreme Customs, LLC ................
Mailing Address. 3420 Jackson St Oshkosh WI 54901 ........... .......... - —--------
Primary Contact #: 866 680 7467 Cell #: —
E-mail- -tyler�r illy extr custorns.com FAX#:
Attorney:
Legal Entity: Individual(s) Joint Tenants Tenants in Common
—" Corporation X LLC Partnership Other
If not a Wisconsin corporation/partnership/LLC, state where organized:
Will a new entity be created for ownership? -- Y e s X No
Principais of existing or proposed corporation/partnership/LLC and extent of ownership interest,
Name: Address: Title: Interest:
-
Ty—lerReilly 3420, Jackson St Oshkosh WI 54901 Managing member 10!0% ..........
. ....... .........
.............
....................
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 cor—porat-io—n/por—tners-h-i"p-/LLC)—ever'
been charged or convicted of a misdemeanor or felony? Yes No X
If yes, please furnish details:
................... 1rrrr-rrr-----.............
................ ...........
Page 38
0
Tax fincremental Financing
P Por
ic
olicy and Application
mom I
Overall Project.Summary and Objectives:
We will purchase and renovate the existing JC Penny and Miles Kirnbal retail buildings l enovatuons indude
m --extensive facade improvements, an interior reconfiguration to include a retail space office space ,qn auto
shop, and warehousing space. We will being the site laterals into compliance in addition to aiding in the overall
site stormwater management.
Current and Proposed Uses:
... ......_..........—_ .........._........ _ .... _..........._......
Presently the two retail buildings sit vacant an unused on the site. We propose to operate a custom rims and
tires facility that does substantial online sales.
Description of End Users:
Extreme Customs is an existing business that has operated on Jackson St in Oshkosh for the past decade.
We sell custom rims and tires and associated products and services. Locally we provide installation of our
products. However, the majority of our revenue comes from online retail sales. Our team has expertise
with automotive products along with technology and marketing skill sets.
Property Summary: Describe any zoning changes that will be needed:
Parcel/Land Area: 288,089 SF No coning changes
Building Area, 60,485 SF _..
# of Dwelling Units: 6
# of Stories:
tf of Parking Spaces:
Identify any other approvals, permits or licenses (i.e. Liquor License, Health Department, etc):
None
Describe briefly what the project will do for the property and neighborhood:
Renovation of the existing su_bsk�nti�lly improve th.g aesthetic_a_ppeal_�at the..overall..wsite.
.
The storm water management capabilities will improve the overall management of
the Stringham creek water shed..
Page 39
40 40
Tax Incremental Financing
Policy and Application
Ims,
Project Timetable Date
Final Plan/Specification Preparation: May 2019
Bidding and Contracting May 2019
Firm Financing Approval: May 2019
Constru:cfion/Rehabilifafion: June 2019 - Sept 2019
Landscaping/Site Work: June 2019 - Sept 2019
Occupancy/Lease Up: Oct 2019
Development Team
Developer: Tyler Reilly
Architect: Vision Architecture
Surveyor:
Contractor: CR Structures
Other Members:
Describe Team expertise and experience in developing similar projects:
Mr Reilly has operated his present location since 2011. CR Structures has significant experience,
building and renovating commercial space.
Other current Team projects in development:
None
Financial ability of the applicant to complete the project:
Between the cash reserves, equity, and anticipated financing through Hometown Bank, Mr, Reilly
has the financial resources to complete the project.
History of use of other city or government financial incentives:
A paft of this pro.'ect the Aviation plaza team has requested assiataoce th[Quqb The WEDC Idle
&tes Grant program.
Professional Studies
Market Studies: Applications for commercial and residential projects may at the option
of the city be required to include a comprehensive market study. The market study
should identify target markets, analysis of competition, demographics, market rents,
letters of infent/interesf from prospective tenants, or for housing developments, sale
prices or rental rates of comparable properties.
Appraisal: All projects that involve 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 "as is", and
the impact on value must be considered for such items as demolition, en*onmenfal
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 is the proposed use.
Page 40
0 0
III
Tax Incremental Financing
Policy and Application
0
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: $3,250,000
Demolition:
Environmental Remedia-tion:
Site Clearance and Preparation:
Soft Costs/ Fees:
Soft Cost Contingency,
Hard Construction Costs: $2,106,896
Total Project Costs: $5,356,896
Sources of Funds % of total project costs
Equity
Developer Equity: $ %
Other Equity:( Cash J $ 900,000 17 %
Total Equity: $ 900,000 17 %
Loans Rate Term
Construction Financing: $ —% mos. %
Permanent Financing: $ 4,240,059 5.25 % 20 yrs. __Zq__%
TIE Assistance operationalize 0 %
Other: ( \AtFD(- - isG ) $ 216,837 - 4 %
Total Sources of Funds $5,356,896 - 100%
Financing
Source Amount Terms: Years/interest Contact Information
Equity:
Loans I Hometown Bank Nate Kok nkok@_htbwi.com
2:
3:
4:
Page 41
0 0
Tax Incremental Financmg
Policy and Application
SEEM! 111�
Filing Requirements
You must provide all of the following items with your signed application:
I Fee: An application fee of 1%of the requested TIF assistance or$10,000, whichever is
greater.This fee is to cover City costs associated with evaluating the TIF application
and does not cover the use of outside consultants, which it required will be paid for
by-the applicant. Make your check payable to the City of Oshkosh.
2. Site Maps: Provide a map that shows the location of the site. Also provide a map
that focuses on the project and its immediate surroundings. Both maps should be no
larger than 11 x1 7 inches. Larger maps will be required for projects presented to file
Plan Commission, Redevelopment AUthori[y, or Common Council,
3. Project Renderings: Provide preliminary architectural drawings, plans and renderings
for the project. These drawings should be no larger than I I xI 7 inches, Lorger maps
will be required for projects presented to the Plan Commission, Redevelopment
Authority, or Common Council.
Notes
• The City retains an administrative fee of 5% of the annual fax increment revenue.
• If the project requires planning and zoning approvals,you must make these applications
concurrent with this request.
Agreement
1,by signing this application, agree to the following:
1 . I have read and will abide by all the requirements of f he City for Tax Incremental
Financing.
2. The information submitted is correct.
3. 1 agree to pay all costs involved in developing Project Plan or Development
Agreement, These costs may include, but not be limited to, bond counsel, outside
legal assistance,outside financial assistance, planning, engineering, of(-, and all
costs involved in the issuance of the bonds or,loans to finance the project.
4. 1 understand that the City reserves the right to deny final approval, regardless of
preliminary approval or the degree of construction completed before application
for final approval.
5. The undersigned ciuthorizes the City of Oshkosh to check credit references and verify
financial and other information.
6. The undersigned also agrees to provide any additional information as may be
requested by the City after filing of this apicHcofion,
Applicant N Date
Page 42
APPENDIX B
INVISTA
ANALYTICS
MI HAFT OSHKOSH
MARKET TU Y are
INVESTMENT ANALYSIS T
April 26, 2019
(Updated June 25, 2019)
Prepared Exclusively For.-
Thomas Masters
Masters Oshkosh LL
Prepared y:
Timothy M Hess, Ph
Invista Analytics, LLC
1 member of
1 ale inf
AMERICAN STATISTICAL I
ASSOCIATION
Page 43
CONTENTS:
Introduction / Objective .........................................................................1
MarketStudy .........................................................................................2
Methodsand Data.............................................................................2
Results ..............................................................................................3
Overall Investment Analysis ................................................................3
Budgetand Funding ........................................................................3
TIF Payment Schedule......................................................................4
Operational Proforma ....................................................................6
Business Valuation on Reversion .................................................. 8
Return On Investment ..................................................................... 9
Page 44
.
INTRODUCTION / OBJECTIVE
| I nvista Analytics, LLC (IA) has been engaged to conduct a market study and investment analy-
sisbropmpoaedMinoahaftrestaumntondfomi|yentertoinmen\foci|dyhobeconotmctedwith-
intheAuiaUonP|ozaCenterinOshkosh. N8.TheMin*ohoMombaunant. undarthenwnemhip
of Thomas Masters, is a 25,000 square foot facility located in the downtown of Hartford, WI.
This facility offers approximately 14.400 square feet of restaurant and dining apace, along with
approximately 5,500 square feet of game room and entertainment space and serves roughly
8.000' 1U.00O guests per week.
Mr. Masters is proposing to open a second mineshaft location within the Aviation Plaza center.
This new facility,will be approximately 35,600 square feet,with roughly half of the space dedi-
cated0oihediningandfoodoomionoparn\inne. andtheNNerholfdedicatedhothogamomom
and entertainment space.
Plans call for the new facility to be located on the old Walmart site that was vacated ill 2003.
Mr. Masters presently owns the site. However, the development of this site, has a fair number
of hindrances to include issues with storm water management, unstable soils, and non-con-
forming water and sewer laterals that are shared with neighboring pun:a|o. In addition to the
site conditions, the financing for this project also poses some unique challenges. Total estimat-
edinvootmantnoededtocomp|eteLhepnojeu1ia$18.25mi||ion. VVhi|ethofeci|i1yinHurtfond
has a long history, obtaining financing for a new endeavor in a new market makes it such that
financial institutions are hesitant to borrow anything more that$8 million.This makes any addi-
tional site costs especially burdensome requiring the investment tearn to bring in a 50% equity
position.
Given the extraordinary costs associated with this site, Mr. Masters, along with the neighboring
parcel owners, have approached the City of Oshkosh about the possibility of utilizing Tax Incre-
ment Financing to make the redevelopment feasible. While the location of the proposed district
ieoutaidetheoity'ointendedT|Ffbcuanfdmwntmwnnnd/oruen1ru| cit8otoffhasuuknow|mdged
the existence of the extraordinary site conditions and noted that the redevelopment of this site
accomplishes a specific goal in the City Center Corridors Plan'. In addition, the department
of public works has requested that the stormwater plan address more capacity than might
be required of the Aviation Plaza site alone in an effort to aid in the overall Stringham Creek
watershed management. City staff invited the development team to present these findings to
the Oshkosh Common Council on February 12, 2019.At this public meeting members of the
council suggested that they would be willing to accept and review a formal TIF application for
consideration.
Given this ask for financial assistance, |nvidaAna|y(ico has conducted significant quantitative
market research to determine the likely potential increment generated through a bayesian
transitional market factor analysis study. We then docurnent the anticipated costs of the project
and potential increment generated,A discounted cash flow analysis is conducted to determine
a probable valuation of the business. Finally, return on investment rnetrics were calculated on
the with T|F and without T|F investment scenarios.
Figure 1'Overhead view w site and rendering*front entryway m proposed Mm."o°nfacility.
44
/ mw,:x=^v"w,xkosti.wiomrunn/^onervic°moO(�omommonxpronxumxovxwomxo.f)d/vagozo.occmsev«pm/.zoe
Page IJINESHAFT[)SHKOSH INVESTMENT ANALYSIS � 1
K0ARKETSTUDYSUKUMARY
To deterrnine tile likely potential income to be generated by the proposed entertainment facility
we employed a boyosian transitional market factor analysis.The idea of this approach is to
utilize the market factors of both all existing location and the new location to predict the likely
impact ofbringing o commercial operation into a new market. |n this case, the original Mine-
shaft location in Hartford appears to have achieved maturity as evidenced by its fairly stabilized
revenue strearn. Specifically over the past three years revenue growth has averaged 1.3%.
Thus applying this method,we anticipate finding the stabilized revenue of the new facility.
Methods and Data
To conduct the analysis Invista Analytics first acquired a relative performance index (RPI) data
set frorn FRANdata,The RPI is a semi-blinded metric in that the interpretation of each value is
the relative performance of each location relative to the performance of the average location.
The description of the franchise from which the data was sampled iaaafollows:
"National high-volume entertainment and dining venues offering customers fun upbeat
atmosphere with interactive video and gaming options for families while serving high quality
food and beverages"
The data set included 66 locations across 32 states, One of the locations contained in the data
set subsequently closed,Thus for the 65 remaining locations, A staff collected tile following
market factor variables.
Expunanbah*dpmhab0ty 50 Mile Population: For each location, concentric rings with 1Umile
radii were determined. Eori data was then used to determine the population within each ring.
These populations were then weighted using an exponential density function.This method
reflects the likelihood that potential customers are more likely to visit the closer they live and/or
work to o commercial enterprise. Figure 2 shows the concentric rings applied io the Oshkosh
and Hartford locations with shading representing the exponential weights.
Figure,'Concentric 10 mile radius rings around existing Mm°,h"x location and proposed location m Aviation Plaza.
Relative Retail Ranking: For each location, |A staff contacted either a communiiy development
staff member of the municipality or the local economic development entity and asked them to
rate the location relative to other retail locations within their respective geographic regions on
a scale nf1 to 10.with 1 being the lowest or least desirable retail location, and 1U being the
highest nr most desirable retail location.
Facility Size:Qate|he imagery using Goog|o KAupn and/or Bing Maps with respective eoa|eo
were used to ascertain approximate facility footprint. Goog|e street view, or Bing'o Bird's Eye
views were used to determine if a facility might in fact have more than one floor, or if the facility
was co-located in u strip mail or other mu|U-tenantfacility. In these ceoos. IA staff
2 |NV|STA-ANALYT|CS C(}M Page 46
I
conducted a brief phone interview with facility staff to ascertain approximate size of the facility.
In one case, the facility had apparently been closed since the RPI data set was assembled.
This record was thus dropped from the analysis data set.
i
Indirect/Direct Competitor Count(3 mile radius):The Google search engine was employed
using the search term"restaurants near<address>". Data was sorted by distance and a count
of the number of restaurants within 3 miles was recorded. Staff reviewed the list and identified
any facility that appeared to market substantial entertainment offerings that might include a
substantial gaming component. These facilities were recorded as direct competitors,while the
remaining restaurants were recorded as indirect competitors.
A subset of four facilities were randomly selected from the 65 usable records in the RPI data-
set.Two different staff members reviewed all 98 total restaurants located within 3 miles using
the Google search results and independently rated each facility as either a direct or indirect
competitor. We found an inter-rater reliability of 99%finding agreement on all but one facility.
We then used a bayesian quantile regression analysis to predict the log of the RPI metric given
the market factor variables utilizing the bayesQR library2 in the R statistical computing envi-
ronment version 3.5.3. Our model allowed for up to 3 way interactions.The pior mean vector
of parameters were all set to zero. We employed 1,000 burn-in iterations and 10,000 MCMC
runs.The expected value of the posterior distributions of the model parameters were then used
along with the market factor data from both the Hartford and Oshkosh locations to predict the
RPI for each location.
Results
The resultant predicted RPI values were 1.131 for the Hartford facility and 1.942 for the
Oshkosh facility. Given the Hartford location had a total revenue of$6.061 million dollars, the
bayesian estimation would suggest the Oshkosh location would achieve$10.407 million dollars
in revenue after maturity and achieving full market penetration.To assess the potential range
of variability of potential revenue,we conducted 1,000 simulations bootstrapping the RPI data
locations with replacement. For each simulation we proceeded as before with the bayesian
quantile estimation only using 100 burn-in iterations and 1,000 MCMC runs.A 95%prediction
interval for the revenue ranged from$7.25 million dollars up to$13.22 million dollars.
For context, the average revenue per store for Dave and Buster's Entertainment this past
year reported in their April 2, 2019 annual report to the SEC was$10.457 million'whereas the
average for a Chuck E Cheese franchise location was$1.167 million'.Additionally, underwrit-
ers with a local bank independently arrived at revenue threshold intervals of$8, $10, and$12
million when considering potentially financing the projects.
OVERALL INVESTMENT ANALYSIS
Budget and Funding
We first consider the detailed budget and sources of income.The table on the next page lists
all expected expenses. Specifically we have identified$1,934,994 total expenses related to site
improvement costs including storm water management with additional capacity requested by
the city's department of public works,water and sewer laterals, costs associated with poor soil
conditions, and curb and gutter and driveway aprons. The total development costs identified
surpass$16.1 million.
On the funding side,we note that the proposed project brings its own unique challenges. While
several financial institutions have committed to financing the project, all of them have set their
limits at approximately$8 million.At present, BMO Harris bank has committed to financing $8
million during the construction phase so long as WBD commits to financing $4 million through
the SBA 504 program upon completion of the project leaving each with $4 million in loan com-
mitments. Several bankers have noted that this is likely one of the largest, privately financed
new market restaurant/entertainment facilities being opened in Wisconsin. Given this limitation
in financing,the extra site improvement costs become especially cumbersome.
2.D Benoit,D Van den Peel'bayesQR:A Bayesian-Approach-to-Quarjtile Regression'J Stat Software76(7),20f7
3,http://ir.daveandbusters.com/annual-reports Annual Report dated April 2,2019 page 31.Accessed April 18,2019
4.https://cecentertainment.gcs-web.com/sec-filings Annual Report dated April 8,2019 page 25.Accessed April 18,2019
5.Personal conversation with loan officer on April 19,2019
Page M41YESHAFT OSHKOSH INVESTMENT ANALYSIS 3
Detailed'ProjecY'Budget
Amount Notes 7
Ac uisition&Site Pre
Land Acquisition 3,250,000
Subtotal $3,250,000
Soft Costs Fees
Developer Fee(5%) 610,348
Appraisal 5,000
Professional Services 32,000
Insurance 6,000 Construction Insurance
Building Permit In Keller Bid
Mortgage Fees 30,000 BMO&WBD Fees
Construction Interest 134,167 10 Build-loan @ 4.75 for 6 mo
Marketing 35,000
Real Estate Taxes 56,193 Jan-20
Contingency 140,000
Subtotal $1,048,707
Hard Costs
Building 8,238,760 Keller($1,934,994 site/TIF Eligible)
Kitchen Equipment 750,000 Edward Don
Bar Equip/Dishes 100,000
Furniture 400,000
Electronics/Networking/AV 112,000
Start up Inventory 200,000
Decorating 150,000
Signage 300,000
Gaming Equipment 1,700,805 Drouillard Int Sales
Subtotal $11,951,565
Total Project Costs $16 250 272
Source of Funding,
Permanent Financing 8,000,000 BMO&WBD
Land&Equity 3,860,348
WEDC Idle Sites Grant 210,086
TIF Monetization 1,124,478
Other Cash Funds 3,055,360 cash from developers)
Total Source of Funds 16 250 272
The investment team is contributing the land and the development fee as equity. Further,the
city has applied for an Idle Sites Grant through the Wisconsin Economic Development Cor-
porationration to help offset the site improvement costs across the entire aviation plaza site.
While the total grant award might be$500,000, the three individual owners have agreed to al-
locate the proceeds roughly in proportion to the amount of eligible costs each owner will have.
The Mineshaft team anticipates$210,086 in proceeds from the WEDC grant.
The development team anticipated bringing roughly$3 million in cash to the project.The devel-
oper is seeking$1,124 million in development assistance, of which the details of payback will
be discussed in the next section.
TIF Payment Schedule
Invista staff has met with the city assessor on several occations to discuss the present and
future assessed values of the proposed Minshaft and other Aviation Plaza parcels.The base
assessed value of the site as it sits today is$2,275,000,The new building is likely to add an
additional $201.50 of value per square foot.At 35,600 square feet,we anticipate that the over-
all site assessment will increase$7.175 million to a total assessed value of$9,450,000.
The development incentive payback schedule appears on the following page.We anticipate
that approximately$3.225 million of increment will be added to the site by January 1, 2020,
4 INVISTA-ANALYTICS.COM Page 48
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Page MNSHAFT OSHKOSH INVESTMENT ANALYSIS 5
We calculate the increment available to pay back the note as 90%of the increment generated.
Further,we allocate$4,000 annually for the city for administrative expenses.The remaining
increment we propose be allocated to the Rogan's TIF payback (labeled as`Inc to Rogans' in
table).Assuming a 5.25%interest rate on the municipal revenue obligation note,we find the
increment generated is sufficient to pay back the note in 10 years.
Operational Proforma
The operational proforma, both with and without TIF assistance can be found on the following
two pages.As noted previously,the estimation method predicted an'as stabilized'revenue of
the new location of$10,407,000.We anticipate this taking 3 years to achieve full market pene-
tration.We anticipate 70% of the full revenue in year 1 and 90% in year 2.We used the relative
proportion of revenues seen in the Hartford facility,that being food and beverage accounting
for 75%of the total revenue while the game room comprising approximately 25%of revenue.
After year 3 we assume a 1.3%annual increase in revenues as seen in the Hartford facility.
For cost of goods sold we used the ratio of cost to revenue found at the Hartford facility.We
note the food and beverage cost are slightly higher than industry averages.This is consistent,
however,with the strategic plan to offer low priced food to bring customers in knowing that the
majority of profitability comes from the gaming operations.
The operating expenses were estimated from actual bids, direct calculations with known rates,
or approximate estimates based off of expenses realized at the Hartford location. One expense
that might be materially different is the advertising expense. Mr Masters has expressed the de-
sire to substantially increase the marketing budget for the new operation in an effort to achieve
market penetration and stabilization.To achieve this, the new operation is proposing a budget
of$400K annually,which is 3.8% of revenue.While this is a meaningful increase from the
3.3% presently spent at the Hartford location, in part this can be attributed to the fact that the
operation has already achieved market penetration and maturity. For comparison, Dave and
Busters reports a 3.2% expenditures while Chuck E Cheese reports advertising expenditures of
5.3% of revenue7.
The City of Oshkosh TIF policy and application suggests that in the case of Owner-Occupied
Commercial projects that the analysis of financial need be based on the company's minimurn
threshold needed.Through further discussions with city staff, it was determined that this
benchmark is rather arbitrary. Rather we will attempt to frame the need based on a 10-year
Internal Rate of Return (IRR). In the case of residential or commercial development where the
intended approach is to lease out the project, the IRR accurately reflects the return on the pas-
sive investment. In this case, given the owner intends to operate an active business, the IRR
calculation will reflect both the return on the initial investment of money to start the business,
but also the return on the owner's efforts to operate the business. One approach to accurately
reflect just the return on initial investment is to agree upon a compensation for the owner's
efforts in operating the business. Proceeding forward,we will count this as an expense to the
business for the IRR calculation.We anticipate Mr Masters, and his partner,William Masters,
each spend roughly 75% effort, or 1.5 total FTE operating this new endeavor. In return,they
will be paid 1.7%of the total revenue as a salary.The first year this would work out to a total
annual 1.0 FTE salary of$82,562 and increasing to$117,946 by year 3 once the operation has
achieved operational maturity.
In general, unless based off a direct calculation, it is assumed that operational expenses will in-
crease by 1%annually. Note year 5 we anticipate an additional expense in accounting to assist
in the likely look-back clause we anticipate to be included in the development agreement with
the city.
We assume the primary financing will be subject to a 5.25% interest rate amortized over 20
years. Further, our experience with lending institutions is that they prefer an amortization
schedule to start immediately upon delivery of the TIF note funds despite the likelihood that the
TIF district not produce any increment till year two or later.Thus for the TIF monetization we
assume a straight 10 year amortization again with a 5.25% interest rate.
6.http://ir.daveandbusters.com/annual-reports Annual Report dated April 2,2019 page 9.Accessed April 18,2019
7.https..//cecentertainment.gcs-web.com/sec-filings Annual Report dated April 8,2019 page 33.Accessed April 18,2019
6 ( INVISTA-ANALYTICS.COM Page 50
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The net cash flow upon stabilization at year 3 start is roughly$921 K and $903K in the TIF and
without TIF scenarios respectively, and increase steadily to roughly$1,178K and$1,155K by
year 10. During the subsequent years the difference between the 2 projections is roughly$17K
that results from the disparity in how the bank finances the TIF note verses how it is likely paid
out through the TIF funding mechanism.
MINESHAFT OSHKOSH INVESTMENT ANALYSIS 7
Page 51
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Business Valuation on Reversion
In order to calculate the Internal Rate of Return (IRR)we first need to calculate an assumed
reversion at the end of year ten.We performed a 6 year discounted cash flow method with a 20
year residual valuation. It is typical when conducting a valuation on a business to do so based
off of projected future revenues after income taxes.Thus we adjust the net operating income
from year 11 to include depreciation and interest expenses so that an estimate of income taxes
can be calculated.We assume a straight line depreciation of 39 years on the building.The
technology, furniture, and food prep equipment have a 5 year depreciation and so will have
already been taken.
8 INVISTA-ANALYTICS.COM page 52
i
Discounted Cash Flow Business Valuation
Year R+1 Year R+2 Year R+3 Year R+4 Year R+5 Year R+6
( Growth Rate 2 2% 2 2% 2 2% 2 2% 2 2%
Net Operating Income 51,867,756 $1,908,847 $1,950,841 $1,993,760 $2,037,623 $2,082,450
Other Expenses
Depreciation and Amortization Expense (205,123) (205,128) (205,128) (205,128) (205,128) (205,128)
Interest Expense (254,426) (233,319) (211,076) (187,637) (162,938) (136,910)
(459,554) (438,447) (416,204) (392765) (368,066) (342,038)
Pre-Tax Net Income 1,408,202 1,470,400 1,534,637 1,600,995 1,669,557 1,740,413
Income Taxes(21%Fed,7.9%State) (406,970) (424,946) (443,510) (462,688) (482,502) (502,979)
After-Tax Net Income 1,001,232 1,045,454 1,091,127 1,138,307 1,187,055 1,237,433
Adjustments to Determine Cash Flow
Depreciation and Amortization Expense 205,128 205,128 205,128 205,128 205,128 205,128
Change in Debt 392,464 413,572 435,814 q59,253 483,953 509,981
Net Cash Flow to Equity 1,598,824 1,664,154 1,732,070 1,802,689 1,876,136 1,952,542
Present value factor(@12.5%) 0.8889 0.7901 0.7023 0.6243 0.5549 0.4933
Present Value Net Cash Flow $1,421,177 $1,314,887 $1,216,488 $1,125,410 $1,041,122 $963,131
Residual Value
Summary ----
Cash Flow 1,952,542
Sum of PV Net Cash Flows $7,082,215 CF Growth rate q�
Residual Value $8,298,304 Direct Resid Factor(20 yr) 4.25
Indicated Value $15,380,519 $8,298,304
We assume the new corporate tax rate of 21%for federal and 7.9%for state income taxes.
Typically, unless a company is publicly traded,the discount rate, or the return a prospective
buyer anticipates is likely to be within the 10 to 25%range. Starting at the minimum, of 10%
and then adding premiums for a small business and the risk associated with running a restau-
rant, a 12.5%Weighted Average Cost of Capital would seem to be a conservative estimate for
use resulting in possibly an over estimate of value. Proceeding across time,we use the growth
rate from year 10 to year 11 of 2.2% in NOI.
We employed a direct 20 year residual valuation using the 4% growth rate in net cash flow to
equity.The formula for the Direct Residual Factor at 20 years is given by
zo
= 1.04`
DRF
1.1Z5'+6
i=1
which resulted in a direct residual factor of 4.25. The sum of the present values of the cash
flows totaled$7,082,215,while the residual value totaled $8,298,304, resulting in a total indi-
cated value of$15,380,519.
Return on Investment
Assuming that the aviation plaza group is awarded the idle sites grant through the WEDC, and
that the city council and joint review board would approve the TIF incentive,the development
team would need to contribute in cash and equity$6,915,708 to finish the project. If TIF were
not used,the team would have to contribute$8,040,186.
There exists an approximately 20,000 square foot building on the parcel owned by the devel-
opment team that is split into two units. The team plans to use the 11,500 square foot space
to serve as a support facility for the Mineshaft operations. We assume that after the site gets
substantially redeveloped, the remaining 8,500 square foot unit could be partitioned and sold.
The assessor has valued the building at$800K as it sits today. We assume a sale with $500K
in proceeds at the end of year 1.
We assume a 5%commission on a business broker. Further, at the end of year 10, the$8 mil-
lion note would still have$5,024,390 left in principal to pay off.Thus after the sale the develop-
ment team would stand to get$9,587,103 in proceeds on the sale of the business. Including
MINESHAFT OSHKOSH INVESTMENT ANALYSIS 9
Page 53
Return on Investment Metrics
With TIF With79,587,10310,742,83S
Net Cash Flow Reversion Total Net Cash Flow Total
Initial Cash Outlay -6,915,708 -6,915,708 -8,040,18640,186
Year 1 53,126 500,000 553,126 197,90697,906
Year 2 640,840 640,840 712,75012,750
Year 3 920,821 920,821 903,47903,479
Year4 954,993 954,993 937,65137,651
Year5 987,768 987,768 970,426970,426
Year 6 1,025,158 1,025,158 1,007,816007,816
Year 7 1,061,173 1,061,173 1,043,831043,831
Year 8 1,097,823 1,097,823 1,080,481080,481
Year 9 1,135,120 1,135,120 1,117,778117,778
Year 10 1,173,074 9,597,103 10,760,177 1,155,732 742,835
Business Valuation 15,380,519 15,380,519
Broker Commission 769,026 769,026
Mortgage Payoff 5,024,390 5,024,390
Net Reversion 9,587,103 9,587,103
10yr IRR=> 14.69% 10yr IRR=> 12.44%
this amount in the year 10 reversion results in a 10 year internal rate of return of 14.69%with
the proposed TIF assistance, and 12.44%without TIF assistance.
Given the relatively high equity position required to complete this project in addition to the
overall risk associated with a restaurant and entertainment facility, it would seem reasonable
to require a rate of return higher than 12.44% in this case before proceeding with the proj-
ect. Maybe more importantly from the developers'perspective than the rate of return, is the
lowering of the extreme amount of cash required to implement this project. Our opinion would
be that these two factors, in combination, are sufficient to make the`but for'finding required for
TIF assistance.
10 INVISTA-ANALYTICS.COM Page 54
The findings presented herein are based upon the information available and received at
the time this report was compiled. Invista Analytics(IA) has taken every possible precau-
tion to evaluate this information for its completeness, accuracy and reliability.To the best
of its knowledge, IA feels the information and conclusions presented herein are sound and
reliable.
It should also be understood that normal economic and marketplace conditions change con-
stantly. IA assumes no responsibility for information that becomes outdated once this report
is written; nor is it responsible for keeping this information current after June 25, 2019.
The results presented in this report are the professional opinion of IA and are based on the
information available at this time.These opinions infer proper and professional management
of the business operation.The opinions also infer that market conditions do not change the
information received upon which these opinions are based. IA assumes no responsibility for
changes in market conditions.
Furthermore, it is assumed that the reader of this report completely understands its contents,
assumptions and recommendations. If the reader does not fully understand the contents
contained herein, clarification should be sought from Invista Analytics.
Finally, IA assumes no responsibility should the management of the proposed business ven-
ture deviate from any recommendations that may have been provided in this report.
Any further questions about this report should be directed to IA.
Sincerely,
Timothy Hess, PhD
INVISTA
A NJAUYTICS
240 Algoma Blvd-Suite A
Oshkosh,WI 54901
920.203.2177
www.invista-analytics.com
11 INVISTA-ANALYTICS.COM
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