Municipal Services Committee - meeting_joint_regular

Sorry, second time doing this, so I apologize. If you would please stand to say Pledge Allegiance to the Flag.

I pledge allegiance to the flag of the United States of America, and to the republic for which it stands, and to the republic for which it stands,

Roll call of membership.

Sure. Holly Burr, Appleton Area School District. Jennifer Messerschmitt, Chair.

What number is that? 10. Yeah, there you go.

Amy Van Stratton, Fox Valley Technical College.

Kevin Engelbert, Outagamie County.

Yeah, we don't have director four. District four, okay.

Should be on. Thank you. Are there any other members that are joining virtually? Okay, thank you.

All right, we'll approve the minutes from the previous meeting. Anyone want to make a motion? We have a motion. I'll move approval of those minutes. Second. Motion carried.

Oh, I'm sorry, we didn't vote. Nope, that's okay. So now do we have any corrections or any modifications anybody would like made? If not, you can move ahead and take a vote.

Okay, we'll go ahead and take a vote. All those in favor say aye.

Aye.

Motion passes. All right. We will open up the public participation for anybody that would like to speak on behalf of their concerns.

The items today will be limited to those items that appear on the agenda before you.

So we've got three emails that we received. First one is from Natalie Tenure. Second one is from Allison Kondoff. And the third one is from Brianna Motley. Is there anybody else that would wish to speak today during public comment?

We are signed up.

Do you have the sign-up sheet before you?

Or is it still out there?

CHAIR, IT APPEARS THAT THE SIGN-UP SHEET IS BEING PRESENTED TO YOU. IF YOU'D LIKE, YOU CAN GO AHEAD AND GO DOWN THE LIST AND CALL THEM FORWARD. IS THE PUBLIC PARTICIPATION MICROPHONE TURNED ON YET? IT IS NOW. OKAY, PERFECT.

ALL RIGHT, THANK YOU. YES. ALL RIGHT, CHERI, OUR TIME.

Good afternoon. My name is Sherry S. Hartzheim, and my address is 3929 East Bend Valley Drive here in Appleton. I am the District 13 Alderman in the City of Appleton, but I am not here in the capacity as an Alderman, and my statements here should not be taken as representative of the views of the City of Appleton Common Council. While it seems on the surface that you have an easy job today, I hope that you know that it's not. You five folks represent countless taxpayers in this city and the greater Fox Valley area, and you have a tough question to answer in your hearts and minds, not just as a check in the next checkbox on the list. Before you make this weighty decision, please forget about the machinations that a consulting firm paid for by a developer or the costs of the consultancy reimbursed to the city, the machinations they put this proposal through in order to make it technically qualify for TID financing. I found it off-putting that a representative of the consulting firm sat with city staff in front of this very room when the council debated and voted on whether to accept this TID formation and TIF financing for this development. It misrepresents who exactly this consultant is working for, despite the fact that the city states that the consultant takes only city staff direction. Appearances are everything, and it's important to follow the money. Please forget also about the claims from city staff that this type of development proposed in the TID-defined area is not occurring in the city and should. Because last I checked, we do not live in a socialist or communist country where the government claims to know more than the free market does and chooses for us, we the people, the kinds of products and construction that should be built and sold. Please forget about all the agreed-upon perks from this developer to the city in order to finagle this TID creation and tax incremental financing in the development agreement. This developer is a generous Fortune 500 company. A tagline on their website reads, Making a difference. We believe in giving back to our communities and helping others do the same. With, quote, generosity, faith, and service, end quote, at their core, this was a quote from their CEO, quote, They would certainly, for example, provide the city an inexpensive piece of land on which to build a new fire station without a trade-off for TID or TIF financing. Please forget about all these things and focus clearly on the one job you are tasked with today, deciding on whether or not this development would or could truly satisfy the but-for test. And think about whatever governmental entity you represent and how it will be able to adequately serve and service the development planned on this land for the next 20 years without the added taxes that would come from the improved property. You will be asked today to vote a yes or no on this statement. Quote, the development expected in the district would not occur without the use of tax incremental financing. Back in November of 2023, long before the TID or TIF talks in the city government, this developer held an open house and showed preliminary land use concept plans for the property, asking for community feedback. Not surprisingly, those preliminary plans from way back then look remarkably like the current proposal. So, I ask, how would it be possible to believe that without TID or TIF, this development would not occur without the use of tax incremental financing? They had the plan already in motion at the time. So should we assume that they knew something that we didn't know at the time and they were counting on TID assistance? No. We should know and understand the truth of the matter. This developer knew then and knows now that they can and will develop this property without taxpayer assistance. They would have been fools not to ask for assistance, so they did. and it looks like it may have paid off for them. But the fact remains, this land can and will be developed without TID-TIF. So vote yes if you truly believe the statement that this would not occur without TIF financing. But I ask you to please think critically and know that this development will occur and will bring the positive impacts on the community that are promised by this developer, but know that TID and TIF is not needed to make that happen. Thank you.

Walter Blank.

If you could give your name and address.

My name is Walter Blank.

NAME AND ADDRESS BEFORE YOU GET STARTED. I GOT A SCRIPT.

PERFECT. 2623 E. SUNDANCE DRIVE. AND I'M ALSO A MEMBER OF APPLETON CONCERN TAXPAYERS, WHICH IS ONE OF THE REASONS I'M HERE. I'D LIKE TO GIVE MYSELF AN AUGUST TITLE, BUT I'M JUST A MEMBER. FIRST OFF, I WANT TO TALK ABOUT YOUR DUTY, WHICH IS TO REVIEW THIS REQUEST. for adherence to the state statutes. And I think Alderperson Hartzheim pretty well said that might be a tough task. I also remind you, however, that you owe a duty to the taxpayers of not only Appleton, but also the municipalities and counties that will bear the additional tax burden due to the creation of this TIF district. The weight of this burden is clearly pointed out By the study of the cost of TIF districts by the Wisconsin Legislative Council, this study has not been refuted, who concluded without doubt that all TIF districts will cause additional tax burden on the non-district residents, 20 years. Using their formula, we can anticipate an additional burden of about $60 per $100,000 of assessment. to assess value. Wisconsin policy wisely does provide that at the close of the TIF district, Appleton would give 50% of its excess tax revenue as tax relief to the county, to the school district, and the technical school. No tax relief or compensation is guaranteed to the taxpayer. Thriven is a Fortune 500 company with more than enough resources to cover the development of this property. Arrangements with the city to reimburse money for the purchase of additional land from the Department of Transportation for the Evergreen Ballard intersection, arrangements for land to be given for a dollar for a fire station, and a provision of an $11 million line of credit have the appearance of a questionable quid pro quo, resulting in Appleton providing a form of corporate welfare. The state cautions that financial arrangements should not have the appearance of impropriety. Now let's discuss but for. The city would have you believe that this development will not occur but for APPLETON'S PARTICIPATION IN THE TIF DISTRICT. THE MAJOR ARGUMENT IS THAT THE WILDLAND PLAN WILL PROVIDE HIGH DENSITY HOUSING AS WELL AS LOW INCOME AND AFFORDABLE HOUSING THAT CURRENT DEVELOPERS DO NOT PROVIDE. REALLY? APPLETON HAS THE ABILITY TO CRAFT PERMITTING LEGISLATION TO REQUIRE DEVELOPERS TO DO MANY THINGS. They require green space, finance infrastructure, trails, park space, access points. It is in their power to get these types of housing units included in any development. In fact, when TIF districts 11, 12, and 13 were put into place, ACT actually suggested to Appleton to include this type of housing, these types, specifically in every TID district that was given assistance or project that was given assistance. The council declined that, but now it's imperative. If Appleton is indeed so concerned about this type of housing, why not only create small TIF districts to support this type of development? IN FACT, IF YOU LOOK AT THE DEVELOPMENT PLAN, PHASE ONE IS MAJORITY BUSINESS AND INCLUDES THE LOW INCOME AND HIGH DENSITY HOUSING THAT I JUST ADMITTED TO RIGHT ALONG THE INTERSTATE 41. WE WOULD ASK THAT THE JOINT REVIEW BOARD STAND UP FOR THE TAXPAYER, NOT CORPORATE WELFARE. that you reject this request or at least send it back to be reworked on a smaller scale, perhaps only phase one. As we see it, this board has no real choice but to reject this TIF district in its present form. Thank you.

Next request is Mike. Mike Thomas. Thomas, sorry.

Thank you very much.

Can you hear me pretty well?

Yes.

Yeah, just a little bit of my background. One hillock court, Appleton, Wisconsin, barely escaped the tornado on Monday. It was just scary. It was just south of me and east of me on Richmond, so trees all down, and I just had a few little leaves down, which is unbelievable. I'm also president of Appleton Concerned Taxpayers, We've been around for seven or eight years. We've worked on budget issues, as the mayor would know and the council would know, and so we represent the taxpayer in our position, and I think we're one of the few, if only, in Appleton that's doing so. A little bit about my background and why I'm talking here about TIF districts. I was on the county board for 26 years. I was chairman of finance, also on the finance committee, and many, many issues and meetings were on TIF districts. Towns and villages, I don't think villages have to I don't remember Appleton ever coming before the county board, would have to come in and give us a draft of their TIF district, and we would say, no, I don't think this is right. Go back and come back and do it again. So I have a lot of experience on TIF districts over the last 30 years as far as that's concerned. So a lot of people don't understand TIF districts. In fact, it used to be called TIF, now they're TID. That's how far back it goes. It basically is for blighted areas. The but for, as Sherry had mentioned and Bert had mentioned, is why it was put in place. To me, it's now become a developer's piggy bank. Yeah, I'm going to go tap into this. If I was the CEO of that company, I would do the same thing. I'm going to get the money. A couple of things that concern me, and I'll talk about two things. One is what's actually in the TIF, $74 million TIF, the biggest TIF I can remember in this whole area. I mean, that's huge, including incentives, including the requirement that we borrow money as a city at a certain percent interest, even though it was a line of credit when we met with the mayor, which we meet with him once a month on issues in the budget, especially stuff coming up. One of the things that bother me is what's in that piggy bank. Right now, you've got a $4.3 million park.

Why?

That should be the developer. That should not be a TIF district that we pay for. I remember Littleshoot coming before the Finance Committee and saying, we want to park, we want trails, we want lakes. We said, no. That's not what we're here for. We're not your piggy bank. Go back, and they did. They took it out. So I think, and I'm not sure what the protocol is, that you have some leeway to reject this and then basically let them come back with a revised, this is like the first draft, Hopefully you just don't vote it in and we go down the pike. But a lot of people don't have that background that I have of what municipalities and developers try to do. The other thing that comes up with a lot of people is, especially promoting this TIF, well, it'll benefit the taxpayer. The taxpayer has no basically negative to the whole situation. That's not wrong. For 20 years, if it lasts 20, now a few member Richmond Terrace that lasted 31 years, and the Appleton finally had to eat it because it was a wrong project. The taxpayer for 20 years now, which includes the county, the schools, and the actual Appaloo taxpayer, will pay for budget increases every year on their tax base. People in that area will not because it's frozen at that level. Now, I don't think that's fair to the taxpayer, especially when you've put so much into this TIF district that doesn't really belong there, and you haven't satisfied the but-for question. Now, it sounds good. Thriving's a great plus to the community. In fact, before they moved to Minneapolis, they did a lot more as far as that concerned. But they're a very wealthy corporation, and that land is very, very likable as far as developers, and I agree with some people saying we should maybe parcel this out if that's what you want. But I'm urging you not to just blindly vote this in without further discussion. At least bounce it back once. That's all I'm asking. So, again, we're representing the taxpayers of Appleton. We're the only one. I know Brown County and Green Bay have a huge taxpayer organization that works. But we're a small group, but I think we've done a lot of positive things with the county. And we wanted to get involved with this because this has major ramifications to taxpayers. So, anyway, appreciate your time. Appreciate your listening, and I'm hoping I persuaded you to do at least kick this back one more time. Thank you.

Next speaker is George Barker. You can state your name and address, please.

My name's George Barker, and my address is 1601 South Seminole Road. It's in the Arrowhead subdivision that was hit by the tornado, so if my head still spins, so if my notes seem scattered, without power or internet, it was a little harder. A little about me, I am a retired professional engineer, civil engineering. I worked on construction all across this part of Wisconsin, including contracts with the city of Appleton over the years. I'm also a member of the Concerned Taxpayers. For those of you that don't know, we're a group that includes Republicans, Democrats, Independents. We have significant disagreement outside the meetings, but inside the meetings, we have one common goal, and that's good stewardship of taxpayer funds. I SUPPORT GROWTH REDEVELOPMENT AND PRIVATE INVESTMENT. MY CONCERN IS NOT WHETHER THE PROPERTY SHOULD BE DEVELOPED. MY CONCERN IS WHETHER THE PUBLIC'S FINANCIAL PARTICIPATION IS LIMITED TO WHAT IS TRULY NECESSARY. BACK IN EARLY JULY, CAROL HOLLMAN AND THE Community Development graciously hosted a meeting with our taxpayer group, concerned taxpayer group. Thank you, Kara, wherever you are. And answered a lot of our questions. And one of the top takeaways for me was that the Ehlers report did not examine alternatives. In my opinion, my takeaway was the city said, here's a piece of property, can you make it legal for us to make a TIF or to district out of it? And I don't think, as a concerned taxpayer, I think it should have been reversed, that what's the least we can do to get this kick-started until the developer can get money going into it. There are phases, two phases, but they really are one project. As an engineer, I also have another concern, and that is I see our city streets deteriorating and our public works budget isn't as big as it used to be. And my concern is we are going to send money to this TID district that could be used for other purposes today instead of betting on taxes to do this 20 years from now. So it was my understanding that today your group could only vote yes or no. I don't know if that's true or not. This is the first time I ever spoke publicly at a public event. But I'm asking you to vote no, and if possible, stick a Post-it on the file or something to reconsider smaller options. And though we may still have taxpayer funds, they're smaller and may not need as much in the future. And my final thought, as taxpayers, we all benefit from successful redevelopment, but we have a responsibility to ensure that public dollars are used only when necessary and only to the extent necessary. Thank you for your time.

Thank you. Next speaker is Becky Rostec. Probably murdered that, sorry.

So, as you mentioned, I'm Becky Bartosuk, the President and CEO of the Fox Cities Chamber. While we are highly in support of this project, we were asked to sign in, surely showing our attendance only, not to speak.

Okay. Thank you. Jack Jakowski? Same thing? Okay. Eric Rotten? Same? Okay. And then Jed? Engel? Nothing? Okay. Thank you. All right. Anybody else wish to speak on behalf of the public? I'll ask one more time. Anybody wish to speak on behalf of the public? Hearing none, we'll move on. Excuse me. We are going to appoint Cammie Lynch as our public member as Tony Saucerman has resigned Because he has moved out of the city so we will go ahead and Do a recommendation for the appointment of Cammie Lynch, so we'll take up that item twenty six zero nine nine four Do we have a motion?

Yep? I'll make that motion. Okay. We have a motion. Do we have a second second? We have a motion and a second If the chair would like, we can move forward with the vote. Yes, please. Okay. All in favor, please signal by saying aye. Aye.

Aye.

That vote carries. All right, welcome, Tammy. Thank you. We are gonna skip over action item 260995, the consideration of the resolution to create tax incremental district 14, and we're gonna move into the information item of 260996, which would be to review public record planning documents and approved plan commission and common council resolutions for the creation of Tax Incremental District Number 14. We will have a speaker. Dave will take it, and also we will have others speaking as well. Should be good. Oh, hold on. There we go.

Thank you, Chair. So I just wanted to start by acknowledging that Director Holman is participating virtually. She is a resident of Anasha in one of the harder hit areas and is working through the cleanup and recovery efforts. So thoughts and prayers with her and her community at this time, but she is available to jump in if necessary and is participating virtually here. I will give just a very quick introduction in terms of where we're at in the process and then turn it over to our consultants at Ehlers to get into a deeper explanation of what is before you today. You may recall that back in mid-May, the proposed project plan and proposed TID 14 boundary was presented to JRB as an information item, included a lot of information at that time, including in-depth analysis and discussion from our consultants at Ehlers. Since then, the items have gone formally through the approval process with Planning Commission and Common Council with Council taking action about two weeks ago. It is now back to JRB for action on the resolution. But before we get to that, we'll be turning it over to our consultants at Ehlers. Greg and Shane will take it away and provide a deeper explanation of what's before you.

Thanks, Dave. Shane Rudlang with Ehlers. Just give me a head nod if you guys can hear me.

We can hear you, Shane.

Great, thank you. So again, Shane Redland with Ellers. I'm joined by my colleague Greg Johnson with Ellers. I have a short PowerPoint slide that I can show today that goes through the process we did for this project. And it's more of what we do for many other projects here in the state. So I'm going to share that. Just one second. All right, is everybody seeing that okay? Yes. Great, thank you. All right, so for any TIF application that we receive, we generally walk through this process where we get the TIF application, go through a process to understand project financials. We start to work on estimating the TIF that could be generated from the TID and the project, working with the assessor, working with the community development folks and so on. From then, we do our own financial modeling So the developer pro formas come in lots of different flavors across the state, experienced developers, not-so-experienced developers. We LRs have standard pro forma models that we use to equalize things across projects. After that, once you understand things and you know where the money is coming in and out and what the assumptions are, you enter into a period of negotiations. That was... I'll say it lasted a few months for this project, and it came to agreeable terms, at least at the staff and developer level. Obviously, the council and other boards are the ones that get to make decisions. We make recommendations, they make decisions. And where we're here today and with the Common Council currently is the TIF agreement and the TIF plan. After that, you would have construction of the project, and then I'll talk about a look back here in just a moment. We look at TIF at Ehlers and recommend to the communities that we work for is TIF is to fill a development financial gap and help to nudge the market to do what it won't do on its own. For this project, it's about a $63 million infrastructure project on the front end. This is not the cost of the homes or the apartments or the office buildings or anything like that. This is public infrastructure that needs to be financed some way. It's roads, obviously, that connect across the site itself, sort of the site, but also across the site. This does not account for many, many smaller roads and parking lots and things like that, that will be built along with the project. But this is the main stuff, if you will, to get it built and the site created in order to get the site ready for development. You know, relatively standard construction on grant, then it won't go through the detail unless you'd like me to. So again, we do a detailed review of all those revenues and expenses on the front end, sources and uses, and then the operating pro forma into the future, land sales, et cetera. There's 14 different types of real estate, so it was a very complicated model for this large project. There's two main infrastructure phases with, again, as I mentioned, many sub phases with public infrastructure that's built in on the smaller streets that is not part of the main costing, if you will. And then we do an internal rate of return analysis. With and without TIF, an internal rate of return is a metric that you can liken to your 401k or a CD or something like that, where you're asking to invest money and you're getting money back. One of the things that we do a lot of is we talk to a lot of developers and a lot of communities and understanding the developer's perspective is important. And it's really important for this particular project because Thrivent is a big company, obviously. However, when you're looking to invest money, you're expecting a return. And that's how you have to look at it is, you know, will they invest the money and what kind of return can they get? And their partners, frankly, and the bank. that they'd be using to finance this project. So they need to make an investment return and the analysis through the pro forma is the way to right-size the public assistance. And again, that's what we do all across the state representing communities We work on behalf of those communities, representing them. Yes, ultimately the money that goes to fund that work is paid for by the developer, but that's to hold the cities harmless. We definitely represent communities and Ehlers as a company only represents communities. We don't represent private interests. So again, this project has a look back in the development agreement where we measure actual costs and actual financial performance. It's a 10-year look back. At that moment in time, we'll look backwards, and then we'll look forwards and calculate the internal rate of return. And if it exceeds 15%, that internal rate of return, the municipal revenue obligation portion of the project will be adjusted downwards. It does not include an adjustment upwards or anything like that. We don't do that. So 15% is generally what we see in the market as what it takes to get projects done. And that's relatively homogenous across different development types, be it single family, apartment buildings, other types of things. 15% is kind of the number right now. It used to be higher, frankly, even though regular interest rates have creeped up. the internal rate of return interest rates or rate of returns rates have gone down so that gap between you know the fed rate and other interest rates has shortened making projects harder to get done and we've seen that across again all different real estate types and so the real estate world is kind of operating at a 15% IRR these days of course they're hoping for more but again we have to look back in this project to help control those returns if it does meet that threshold And with that, I'll turn it over to my colleague Greg, who will talk a little bit more. Greg, you're on mute.

Sorry about that. I will share my screen and go through the summary document that was provided as part of your packet in terms of the overall TIF district. This hasn't changed from what was presented initially to the Joint Review Board at your initial meeting, but I'll summarize it again so it's top of mind. Really, the primary purpose, as Shane mentioned, for the TIF district and the TIP participation is to pay for the costs of public infrastructure that are necessary to kind of bring the development to fruition. So we'll talk about how that public infrastructure is being funded and kind of the financial provisions that have been put in place to help mitigate the city's financial exposure in this transaction. This is a proposed mixed use TIP district. Mixed use is one of several types of TIP districts that can be created under state law. To create a mixed-use TIP district, at least 50% of the area has to be suitable for a combination of mixed-use development, which could be any combination of commercial, industrial, or residential development. But not more than 35% of the area can be for newly-planted residential. And all of the residential development in this particular district beats the definition of newly-planted residential. So that's a consideration in terms of the type of district that is being created. One of the legal requirements that has to be satisfied to create a TID district is satisfying the 12% test. What that means is the incremental value of the city's existing TID districts plus the base value of this proposed district. Those two numbers combined cannot exceed 12% of the city's total equalized valuation. Taking the current incremental value of existing TIDs and the estimated current value of the property within this proposed district, the city is at 4.15% under that 12% limit. In the project plan was the detailed future land use map that kind of depicted the types of development that's anticipated within the district, you know, to be constructed over, you know, a phase period of time really falls into kind of two categories, commercial or business development, and then duly planted residential. A newly-planted residential consists of any single-family development or any multi-family development. So this chart shows that at least 50% of the area is suitable for that type of development, and we are under the 35% gross acreage for newly-planted residential, which satisfies the mixed-use test criteria. Within the project plan, we put two Financial scenarios, just to kind of illustrate the potential financial performance of the district. Really, we're focusing primarily on phase one as part of this initial build out of the district. The estimated incremental value is $211 million. The total tax increment, if that $211 million of incremental value is achieved, is $57.2 million. The project costs identified for Phase 1 can be supported, which is again primarily infrastructure and incentives to reimburse those infrastructure costs. The projected closure just for Phase 1 would be in 2047. If Phase 1 and Phase 2 is built, we show how that incremental value could increase to about $607 million. The total tax increment estimated at $117.4 million, and all project costs COULD BE SUPPORTED FOR BOTH PHASE ONE AND PHASE TWO IF THAT INCREMENTAL VALUE AND TAX INCREMENT REVENUE IS REALIZED. WITHIN THE PROJECT PLAN WE IDENTIFIED ELIGIBLE PROJECT COSTS THAT COULD BE TID ELIGIBLE EXPENSES. KIND OF THE PRIMARY FOCUS AGAIN IS ON INFRASTRUCTURE. BY APPROVING A PROJECT PLAN THE CITY IS NOT COMMITTING TO UNDERTAKING ANY OF THESE PROJECTS. SPECIFICALLY ANY APPROVALS ARE FORMALLY MEMORIALIZED THROUGH EITHER ACTION BY THE CITY TO APPROVE OFFICIAL INFRASTRUCTURE PROJECTS OR COMMITMENTS THAT ARE AGREED TO THROUGH A DEVELOPMENT AGREEMENT. SO THIS ESTIMATES THE TYPES OF ELIGIBLE COSTS THAT COULD BE FUNDED THROUGH THE TIF DISTRICT, BUT REALLY FOR THE FINANCIAL PERFORMANCE OF THE TIF DISTRICT TO BE SUCCESSFUL, IT'S IMPORTANT THAT THE CITY MATCH THE PACE OF INVESTMENT, INCUR COSTS AS INCREMENTAL VALUE IS GENERATED TO HELP SUPPORT THAT PARTICULAR INVESTMENT. THERE'S A MAP THAT JUST KIND OF SHOWS THE GENERAL LOCATION OF THE PROPOSED INFRASTRUCTURE FOR THE PHASES WHICH TIED BACK TO THE PROJECT LIST. FOR THE INCREMENTAL VALUE PROJECTIONS, THIS IS KIND OF AN ESTIMATE OF THE BUILDOUT. INPUT WAS RECEIVED FROM THIS FROM THE CITY ASSESSOR'S OFFICE IN TERMS OF THE EVALUATION METRICS USED FOR EACH TYPE OF DEVELOPMENT, WHETHER IT BE COMMERCIAL OR WHETHER IT BE RESIDENTIAL. And then the phasing was taken into account with also input from the developer in terms of how they're anticipating certain phases and certain types of development being built out. So this is really focusing again on phase one, which shows that the development would be built out over a multi-year period. So that generates tax increment revenue through the TIP district. So that was what was summarized on the prior chart. And then we have a cash flow model that kind of shows the projected performance just for phase one of the district only. So there's tax increment revenue that's coming into the district from that new value. And then there would be financing for infrastructure projects for phase one, potentially future financing for other projects if increment will support it. And then a pay as you go developer incentive to reimburse the developer for additional infrastructure costs. And I'll speak to how the financial securities provisions in the development agreement interplay with these financing mechanisms. So the development agreement included several security provisions to help mitigate the city's financial exposure in this particular district. So the $11 million of infrastructure that's proposed to be financed by the city would reimburse the developer for infrastructure as that is constructed. So the developer is initially paying for those costs. The city is borrowing to reimburse those costs with tax exempt debt. And then the development agreement requires that the increment generated from phase one first goes to pay all debt service issued by the city. If the increment would be insufficient to cover the debt service, there are several additional protections within the development agreement. THERE'S A REQUIREMENT FOR SHORT FALL PAYMENTS THAT THE DEVELOPER WOULD MAKE TO MAKE UP THE GAP BETWEEN THE TAX INCREMENT AND THE DEBT SERVICE PAYMENTS. THERE'S ALSO A LETTER OF CREDIT THAT CAN BE DRAWN UPON AS ADDITIONAL SECURITY IF A SHORT FALL PAYMENT IS NOT MADE. AND THEN THE CITY ALSO HAS THE ABILITY TO LEVY SPECIAL ASSESSMENTS TO PROTECT AND COVER THOSE COSTS AS WELL. And then the development agreement also includes construction milestones and other requirements of the development. So while the city would be issuing debt to finance 11 million of infrastructure that would reimburse the developer for those expenses, there are specific security provisions in the development agreement that require the city to be made whole for those debt service payments before any additional payments are made back to the developer. for additional infrastructure payments. So that's the pay-as-you-go incentive that is also capped under the development agreement. If the developer does not generate sufficient increment to repay that incentive in full, the city is under no financial obligation to make up that difference. So for the financial performance of the district, the developer is really required to generate sufficient increment to cover the debt and only gets additional reimbursements for infrastructure if they generate sufficient INCREMENT TO DO SO. SO THIS SUMMARIZES, AGAIN, KIND OF THAT PHASE ONE OF THE INFRASTRUCTURE, THE INCENTIVE, WHICH IS ALSO A CAP FOR ADDITIONAL INFRASTRUCTURE COSTS, AGAIN, ONLY PAID OUT ANNUALLY AS INCREMENT IS GENERATED, AND THE MAJORITY OF THE REMAINING PROJECT COSTS THAT HAVE BEEN IDENTIFIED COULD BE FINANCED AT A LATER POINT IF THERE'S SUFFICIENT INCREMENT TO DO SO, BUT I THINK THE INITIAL EMPHASIS IS ON THE INFRASTRUCTURE INVESTMENT. SO THE SECOND SCENARIO KIND OF INCLUDES THE PHASE ONE AND THE PHASE TWO OF THE SHOW KIND OF THE FULL BUILDOUT OF THE WHOLE AREA SHOULD THAT MATERIALIZE. AND SO THE CASH FLOW MODEL AGAIN JUST KIND OF SHOWS AGAIN FINANCING OF INFRASTRUCTURE, OTHER IMPROVEMENTS, THE CITY COULD TAKE ON OTHER PROJECTS OR OTHER COMMITMENTS AS IDENTIFIED IN THE PROJECT PLAN SHOULD THERE BE INCREMENT TO SUPPORT IT. BUT REALLY THE INITIAL COMMITMENTS ARE ALL FOCUSED ON PHASE ONE. SO IN TERMS OF, AGAIN, KIND OF SATISFYING CRITERIA IN TERMS OF WHAT WAS IDENTIFIED IN THE PROJECT PLAN, THE BUT-FOR TEST, KIND OF SEVERAL FINDINGS MADE. FIRST, AS SHANE TOUCHED ON IN TERMS OF THE DETAILED REVIEW OF THE SOURCES AND USES FOR THE DEVELOPER. that the rate of return of projected investment on 10 years without TIF assistance was at 5.7%, which would not generate sufficient return for the development to proceed financially. So the development assistance that was signed determined to reimburse future infrastructure costs is capped under the development agreement, but paid out only as increment is available after city debt service has been established. As was mentioned, there's a provision in the development agreement that if the rate of return would exceed 15%, that there's a look back provision that would essentially reduce that TIF assistance based on that rate of return being capped. We feel that the amount of assistance being offered provides a rate of return that is reasonable and meets that requirement of kind of filling that financing gap that's necessary for the development to proceed before without that assistance. And then second is really the substantial infrastructure investment that's really needed to kind of support that investment. The area lacks the infrastructure that's needed to kind of be built out. Certainly the TIF district provides kind of a mechanism for that public financing infrastructure to be constructed. TO FULFILL KIND OF THE OBJECTIVES OF THE DISTRICT, BUT THAT'S A KEY COMPONENT TO MAKING THIS WORK FINANCIALLY IN TERMS OF THE CITY'S FEASIBILITY TO PAY THOSE COSTS. AND AGAIN, THE DEVELOPER UNDER THE TERMS OF THE DEVELOPMENT AGREEMENT IS REALLY PROVIDING ALL THE TAX REVENUE TO PAY FOR THE INFRASTRUCTURE. IF THE CITY FOR SOME REASON DID DECIDE IT WOULD FUND THIS INFRASTRUCTURE ON ITS OWN, THE CITY AT LARGE WOULD BE RESPONSIBLE FOR FULLY FUNDING THE TAX REVENUE. debt service for the infrastructure absent use of the TIF. And then some of the other broader economic benefits include some of the estimated construction jobs and permanent operational jobs that have been estimated from the developer. So that's how we've identified the but-for criteria being satisfied in terms of the benefits to the taxpayers at large in terms of generating this incremental value to ultimately see the development come to fruition. So that's the overview of the district and our findings.

Thank you, Greg. All right, we will go back to the action item then, 260995, consideration of the joint review board resolution approving the creation of tax incremental district number 14.

Do we have a motion?

I'll move to approve resolution creating tax incremental district number 14.

I'll second that motion.

OK, now it's on the table. And the committee can discuss. The board can discuss, rather.

Is there any discussion?

The school district would like to make a statement. And I don't know how many of you follow the school board meetings either please know this was not taken lightly. We've discussed it at length at the past three board meetings. It was a point of discussion, not a voting item for our board. The Appleton Area School District recognizes the significant economic development opportunities presented by the proposed taxed incremental district and the positive impact this project could have on job creation, business growth, and long-term viability of the Appleton community. The district also recognizes the potential future tax impacts for our current taxpayers of the district. The district further recognizes the city's desire to guide development through a comprehensive master planned approach that promotes coordinated infrastructure, responsible growth, and long-term community benefit. The school district believes it is important that if this development moves forward, consideration be given to a diverse housing strategy that includes affordable and workforce housing opportunities. Providing attainable housing options for employees and families supports workforce recruitment and retention, strengthens the local economy, and contributes to the long-term stability of the community and its schools. From the school district's perspective, a development of this scale presents an opportunity not only to encourage economic growth, but also to promote thoughtful community planning that supports residents across a range of income levels. Balancing these priorities will help ensure that the long-term benefits of this development extend throughout the community, the entire community, and balancing that with the potential of the future tax implications.

Any other discussion?

As the public member of this board, I obviously hear the sentiments of nobody wants their taxes to go up, but I think it's important to invest in the future of our community, and we have to do that now. It's just like saving for the future. You have to put away a little bit of money now to be able to benefit from it later on, and I think a tax incremental district is a safe way of doing that, and some of the concerns that the public has addressed can be worked out in the development agreement. And that's kind of the purpose of having this twofold and holding the developer accountable.

Any other discussion? Kevin, are you still with us?

He is. I think because he hasn't spoken recently, he's not displaying much. I am still with you.

Okay. All right. Hearing no other discussion, we'll go ahead and take a vote. All those in favor say by saying aye. Aye. All those opposed, nay. Hearing none, motion passes. And then we will go back to item 26-0997. It's the review of the 2025 annual reports for the tax incremental financing districts for 3, 8, 9, 10, 11, and 12, all within Outagamie County.

Thank you, Chair. I will just kick us off here and then turn it over to Stephanie Lina, our economic development specialist. Wanted to begin by acknowledging that when we brought forward the annual reports last year, we received really quality feedback from the Joint Review Board. that in future years they would appreciate seeing additional content or maps, updates, explanations. So the presentation that Stephanie will use to facilitate the dialogue on this info item is us recognizing and hearing that feedback and coming with you all today with some additional content to share. I will also point out that if there are questions particularly pertaining to the Department of Revenue forms that Director Messerschmidt is prepared to speak to those. So I will turn it over to Steph and we'll begin the dialogue on the various districts within Outagamie County.

Thank you.

OK, we're good. No, that's OK. Thank you, Dave, for that introduction. And I just wanted to add that the annual report is something that's required statutorily to come before the joint review board. Usually that comes later on in the fall, but we figured since we're already having a meeting, why not have it at this meeting instead? So here's a map of overall all the tax increment districts that we have in the city. We have the past and present tax increment districts. We have a number that have been closed. And we have two of the districts that are currently open that are in other counties. So we won't be covering that in the discussions today. Just wanted to make note that TID 7 is in Winnebago and TID 13 is in Calumet. All others are in Outagamie. So TID 3 includes the area roughly bounded by Richmond and Superior streets from the county courthouse through parts of the downtown. This generally shows the yellow is really the areas that are covered by tax increment number 3. This was created in 92 as a blighted district slash distressed district. With the distress designation, that was able to have the life extended for that tax increment district. So the termination of this district will happen in 2029. The expenditure period has been closed since 2014. So essentially the life was extended to try to get a little bit more return during the life of that TID. The 2025 net new construction number was $157,700. And the key highlights, past projects include the green and yellow parking ramps, the Paper Valley Hotel expansion, Copper Leaf Hotel, and others. As I mentioned already, the district was scheduled to close in 2021, but in 2011, it was designated as a stress, which allowed the district's life to be extended to 2029. And annual TIF payments are being used to repay the parking utility until the closure of the tax increment district. The next district is TID number eight. Oh, go ahead.

If I can just jump in for a moment, Steph. So it'll be sort of arranged by similar content for each of the districts. But if you have any questions, this is meant to be more of an informal dialogue. If you have questions on a particular TID, feel free to jump in with questions at any time.

Thank you, Dave. Appreciate that. The next district is TID number eight. So this is really along the Fox River corridor in the area just north and south of College Avenue Bridge, as well as land near Law Street. This was created in 2009 as a blighted district. The expenditure period closes in 2031, and the termination of the TID is in 2036. I just wanted to add that the expenditure period is basically when we can add additional expenses to that TID. After the expenditure period ends, we're just basically continuing payments as previously established. In 2025, there was around $57,000 of net new construction. The key highlights here include past projects with River Heath, Eagle Flats, and Eagle Point. These riverfront projects featured residential development, neighborhood commercial development, and public access to the river. Any questions on that one? Seeing none. All right. Tid number nine provides for redevelopment of the business and industrial corridor along West Wisconsin Avenue from Meade Street to Viola Street. It's kind of hard to see, but it's this light green boundary here. This was created in 2013 as a blighted district. Expenditure period ends in 2035, and the termination is in 2040. In 2025, there was net new construction of just under $800,000. And then the key highlights. Previously funded projects include the Union Square Apartments, Plan Appleton was adopted in 2025 and includes a sub-area plan for the Wisconsin Avenue corridor, which envisions additional infill and redevelopment in the surrounding area. Next district is TID number 10. This is really our West College Avenue district. There's an odd kind of little stub that the city boundaries kind of cover along that street. And this really encompasses that little leg. Again, it's kind of this like dark, this light green area here. This district was created in 2013 as a blighted district. The expenditure period ends in 2035 and the termination is in 2040. In 2025, there was $256,000 in new construction. And then some projects are occurring organically within this district. Oak North Brewing Company is viewed as a potential catalyst for additional development in this area. Multi-jurisdictional planning efforts are also in place to improve West College Avenue. Transportation infrastructure has been dubbed the new avenue, which will increase pedestrian safety and spur new development in this area. TID 11 provides for redevelopment of East College Avenue from Durkee Street to just west of Superior Street, south of Water Street, and areas north of Packard Street, essentially the east end of downtown. And I just want to highlight that both tax increment districts number 11 and 12 do have a business enhancement grant program that has essentially been fully utilized. We're at the end of those funds, but that's been a very helpful investment for businesses in those districts for facade improvements. Title 11 was created in 2017 as a blighted district. EXPENDITURE PERIOD ENDS IN 2039 AND THE TERMINATION IS 2044. 2025, THE NET NEW CONSTRUCTION WAS $26.5 MILLION. AS MENTIONED, THE BUSINESS ENHANCEMENT GRANTS HAVE BEEN A SUCCESSFUL WAY TO PROVIDE INCENTIVES TO EXISTING BUSINESSES. The previously TIF-funded projects in this area include the Avant Apartments, Gabriel Lofts 320 East College, Zecal Flats, Urbane 115, and Rise Apartments, or Zulke Flats, sorry. And then TID 12 is kind of in the more middle area of College Avenue, kind of going, or not middle, It goes along Richmond Street and College Avenue up to Badger and then Walnut Street. And then this was created in 2017 as a rehabilitation district. Expenditure period ends in 2039. Termination is in 2044. 2025, the net new construction was $230,000. The highlights in this area, commercial redevelopment and rehabilitation, continued investment through the business enhancement grant program, and previously TIF-funded projects include McFleshman's Brewery, Block 800, and 513 West College Avenue. Overall, tax income financing has been highly successful in catalyzing redevelopment, particularly in downtown along the Fox River and within strategic commercial corridors. There's been $28 million in total TID net new construction in Outagamie County with TIDs. Downtown revitalization, leveraging private investment, significant private investments with the public investment. We're typically seeing more private investment than public investment when tax increment districts are used. Infrastructure improvements, brownfield and blight redevelopment, and economic development. Some of the challenges are just difficult redevelopment sites in general, long development timelines, market conditions, financial risk, and managing older tax increment districts. Some economic cycles have affected redevelopment. Such conditions have delayed some planning projects and required adjustments to the development agreements. And then overall, the conclusion is that the key themes from the past year, downtown investment remains strong with continued implementation of mixed-use housing and commercial redevelopment projects, commercial corridor revitalization continued in tax increment districts 11 and 12, focusing on rehabilitation of older commercial properties and redevelopment of underutilized sites. The city has continued to use development agreement amendments as projects adapt to higher construction costs, financing challenges, and evolving market conditions while maintaining redevelopment momentum. And overall, Appleton's experience illustrates how TIF can be an effective long-term economic development tool when applied strategically. And that's the report.

Thank you. All right. Any questions, concerns?

Just could someone please speak about the dates? So I noticed that there are several TIDs where the financing portion ends in the 20 years, but yet it is not actually closing for another seven?

So statutorily, the expenditure period ends about five years prior to the ending of the TID. That's just an established rule that there is. We can't have the expenditure period go until the closure of the TID.

I don't know that that's Holly's question. That is not my question.

Okay. Historically, as I've seen these, the closure of the TID, barring extenuating circumstances or, like you say, having to redo agreements and things like that, that they generally run the 20 years that they're supposed to run and then they close. So my question is, why is that not happening? I think Dave would be a better person to answer that.

Yeah. Thank you, Kara.

Go for it, Kara. Yep.

It depends on the type of district that's created. So the one that you voted on with regards to Thriven and Wilden development, that was a mixed use TID. So in that case, the total life of that TID was 20 years. In the case of the one that you're referring to, that's likely a redevelopment TID. Those have longer... LIFES PER STATE STATUTE, I BELIEVE 27 YEARS IS REDEVELOPMENT OR BLIGHTED TID, IF ANYONE WANTS TO CORRECT ME ON THAT. SO EACH TYPE OF TID, WHETHER IT'S INDUSTRIAL, MIXED USE, BLIGHTED OR REDEVELOPMENT, THERE'S AN ENVIRONMENTAL TID OPTION, THERE'S A NEW AFFORDABLE HOUSING OPTION THAT JUST HIT THE BOOKS. THEY ALL HAVE SLIGHTLY DIFFERENT TIMELINES THAT ARE ALLOWED, WITH MIXED USE, I BELIEVE, BEING ONE OF, IF NOT THE SHORTEST, LIFESPAN.

And maybe another version of Holly's question, if I may, is are you actively closing tits versus leaving them open for the full eligible life?

What I can say is, and I know Jennifer is sitting there with you, we have Jennifer as our new finance director. And I've been community development director for just over three years. With Jennifer in her new position, it is my intention that I work strategically with her. And if we are at a point in a TID where either obligations are paid off or could be paid off earlier and we have no needed improvements, that every year we would evaluate whether a TID could close before the life, the maximum years that state statute allows.

Thank you.

I didn't mean to interrupt.

Interrupt Holly I but I thought maybe that was no that was a great addition to my question Thank You Kara for the explanation I guess I have had much more experience with the mixed use and some of the others so I appreciate the clarification on that No problem Any other questions It's not hearing nothing we will go ahead and adjourn the meeting Need a motion to adjourn

So moved.

We have a second? Second. Great. All in favor, please signal by saying aye. Aye. All right. Hearing no abstentions or nays, we are adjourned. Thank you.

Thanks.

Thank you, Kevin.