Redevelopment Authority - Regular Meeting

Are we ready

to go? Yeah. Good to go.

So, this is, the 06:00 meeting of the Redevelopment Authority. I'd like to call up to order. We have Nina, Jerry, Jeff, Rick, and Daniel. So we have a quorum. I don't see anybody here from the public. Can we get a approval of the minutes? Anybody have any objections? I second it. Any objection to the minutes? Seeing none, it's been approved by unanimous consent. That gets us into item number four, our business items, update on redevelopment authority loan programs.

They call you Speedy Rick. I'm following

Joe Piper. So in front of me,

you have a monthly loan and grant report since April. Since that has happened, we've been paid back three of our Habitat for Humanities construction loans under the affordable housing development fund. So that's kind of replenished that that fund a little bit. They still have some up one or two outstanding loans with us. But one thing of note, of those three loans, we've most of them couple of them were about a year a year long ago. It was almost two years. And with that, we received almost $9,000 in interest, and we paid it back. So just adding more money to that fund. Otherwise, I'm looking at the the whole day rental rehab. We've got about 337,000 in that.

For all the rehab program, was replenished when 02/22 opened for affordable housing. That's replenished with some money we've had some repayments. So about 170,000 there for those loans. And then for storefront activation and when we kinda maxed that program out, but with the repayments coming in, it's got since the inception, got $84,000 in repayments. So we've got about 36,000. And then we committed a new loan after that, so we got about 36,000 left in that. It can be done for new storefront loans.

Yep. Jeff, I have a question for you. Yeah. Obviously, we put a lot of money out from the affordable housing. We let Habitat a million heard from our grant to them for a million dollars under the COVID relief funds. Is there any idea if you could give the committee obviously, the goal of all of this is to get better housing stock and to increase, in my opinion, net new construction. Can you give us a ballpark figure of what some of these have done? You know, for example, Habitat for Humanity, what is their net new construction so far?

So I guess we have to the values on those are coming in.

Around four.

400,000.

For the single families.

How many are built now so far for the Seven.

Yeah. Built.

I think we have about seven that are complete. I can kinda figure out for the next meeting so I can

kinda Yeah.

Yeah. We can do

a presentation on that for you. Know, so that when we go back to counsel, we can say, here's why we do what we do. Yeah. Because this is what it's doing for our overall tax days.

It'd be pretty easy for us to just look up the current values of those right now.

Yeah. I know I know when somebody puts a nice porch on it, it it it may not be a lot under the affordable housing rehab.

Yeah.

But it it it does, You know? What are some of these things doing for the city? And and I think if you get a report back to the full council, I mean, I know what it does, but it's nice to you know, when we ask for a kid extension for a year, what does this do for the overall community? Yeah.

Yeah. That's gonna be and it also might be kinda nice after January 1, as we get all the assessments and look at the storefront activation to see what these improvements have done. And I've looked at a few just just kinda skimming around to see, like, the North Pillar Brewing one, how much that property value is. There's now there's a ten minute improvements inside of that.

I know that when I redid my basement, the plumber spent two minutes there. Electrical guy spent two minutes. But when the city assessor came through, he was there over half an hour. So that just tells you, you know, where that is. And so so I I just wanna let that know.

So thank you.

Yeah. We could do a presentation to this board and then at the following council meeting Yeah.

We haven't updated them on these programs in a while. So okay.

Any other questions on the redevelopment authority loan programs?

I would only add that Jeff has been talking to two developers for the development fund. And so we're hopeful that in the next couple months, we might have two new developments coming in requesting those funds.

Yeah. So that's the affordable housing development fund.

Separate from Habitat. So

yeah. Yeah.

And I guess Jeff took over kinda what these are. The rental re the Hodag rental rehab program that's been around for fifteen, fourteen years. That can be used to

improve rental properties marketed to

people at 18% or below.

The affordable housing rehab program and the and part of the a big chunk of the development fund, we're able to extend tax incremental finance districts for that additional year. So we've been able to do two districts. So that's kinda what prepunch that. And then the development fund also received some money from ARPA funds to the city when when we got those. And then storefront activation, fully funded through ARPA.

We came up with this program. Initially, I was just trying to get people to do, you know, be able to do lateral upsizing, fire protection, but then we stopped. Council had expanded just to reduce storefronts. We've had a lot of success here, like North Pillar Brewing, building these three, Edward Jones Building, we're obviously the transformation there that was use some of these funds to let it be the Beatles bar. So quite a few of these projects that are going on downtown received some assistance from this, which is kind of accomplishing its goal. A lot of these spaces were empty for quite a while, so it seems to be working fairly well.

And a lot of those were expensive things like kitchen kitchen sprinkler, you know, to make the building safer and such that are big expenses for somebody entering downtown because of the age of

the building. Loans on those range from one to 3%.

Mhmm.

Standard one is 1% up to, like, $60,000. Then when they come

to RDA, they have to

ask for anything more than that. RDA kinda negotiates either. We've doing, like, 1% for the first five years and then 2% for the second five on the balance. And another one, we just did 3% across the board. So kind of doing a case by case basis.

Okay. Thank you. Seeing no other questions, we can move on to number two. Discuss guidelines and ideas for the creation of a redevelopment authority policy for the purchase of property for development and redevelopment.

So I'm gonna take that one. We had a council retreat a few weeks ago, and this was a topic on the agenda that the city administrator and I wanted to bring forward to the council, this idea that allowing the redevelopment authority, the authority, to purchase property and make those decisions within the authority and then sell those properties for redevelopment. And so I gave this presentation as kind of like a stage setting. So I'm going to give it to you just so you can see what the council saw and then kind of have a discussion about their response and then ultimately, we wanted to get some feedback from you about a potential policy regarding, purchasing property. So, really, the city has been focused been focusing their development efforts kind of in these three buckets.

So net new construction is something we have to have by state law to increase our levy each year. And so, that's something that's really important. Otherwise, we aren't able to provide the services, that we currently provide. So we're very focused on that net new construction number and then adding housing units because as all of you know, we're short on housing. And then because we're landlocked, we're really focused on maximizing development potential on each piece of property.

So just tackling net new construction first, if you just focus on 2024, well, you can see we're generally around 1%. And so what that equates to is we can increase our budget by 1% each year, which is below the rate of inflation. So we're already constricting each year, but it's really important for us to try to build as much as we can in any given year because of that reason. So if we look at the 2024 number, we had 1.36% in net new construction, which in dollars is about $129,000,000 So because we and that's in a single year. So because we added 129,000,000 to the tax base, to get to that 1.36% this year, I actually need $145,000,000 so these things keep compounding.

And so it's that's really driving us to be very aggressive on development and trying to achieve some net new construction. Our goal is to try to keep it around 1%, higher if we can, but we're trying to stay at least at 1%. So just kind of stage setting, like, why we're so focused on development recently. And so here's just an example. So if I need $145,000,000 in 2025, what does that look like?

So that could be six Bridge Walk apartment projects built in one year or half of this Rivers Crossing neighborhood built all in one year. So it's substantial. And it's not just new projects. So if somebody is putting an addition on their house, that counts. So if they're building a new garage, they never had a garage, that counts.

What detracts from that number is any building we take down. So when the city took down those condos on West Avenue, that was over $1,000,000 that was taken off of our net new construction that year. But just to give you some perspective of how much we're trying to build each year to kind of reach our goal. And I'll go kind of quickly through these next slides. But one of the reasons, we focus on redevelopment and specifically commercial, land uses is for if we can increase the percentage that, commercial properties are paying in tax base, then that relieves puts some gives the one and two family homeowners some relief on the taxes.

So you can see in 2023, about 71% of the total bill for the government was paid by one and two family residential, 26% by what we consider commercial, which is office, commercial, and multifamily. So we're always trying to shift that burden away from one and two family by building more commercial and more multifamily, more industrial, those kind of things. And this is my projection. We just did a reevaluation last year. And so we actually think we've made some progress.

This is early numbers, but I think that we actually shifted that tax burden a little bit away from one in two families by some of the projects that we've been approving lately. And then just touching on the housing unit shortages, I know that you're very familiar with this. The orange numbers are what we were originally projecting to be short in those years in terms of housing units. The green number is adjusted to show what we've built since the study was done. So we're making good progress there, but you can see that we're still several 100 housing units short over the next couple of years.

And then lastly, just developing making development decisions with keeping in mind the value per acre. This is something we've talked about for several years, and so the council members are very aware. But this right in the middle, this is a three d map of every property in the city and its value per acre. And so right in the middle, have downtown. So those are our highest values because, of course, it's a very condensed development pattern.

And then you see a lot of blue and green. A lot of that's industrial land. This is all industrial land out here or vacant land. And so what we do, what Jeff does, is scour around on this map and try to determine where can we make an impact. Where is there a property that is maybe in the blue or the green that, maybe we could get more value out of?

And that's where we saw this, property across from City Hall where they're proposing, those apartments now. And so city took advantage of that, and we'll get into that more by purchasing that property. But here's another example. This is out in Rick's District. I've labeled the Springs Tallgrass Condos and UW Waukesha.

This is the value right now, but we have proposals for all three of those properties, and so I think it's gonna look like this in a couple years. So it's just and it doesn't mean we have to max out developments on every piece. So this is a good example. We did some apartments here, but then we have single family here. And so it's just trying to make sure that it fits in with the neighborhood but still kind of maximizing housing units and then return on investment.

So those are things that we're mindful of. This isn't really relevant to our discussion except for that the city's tax rate has fallen 15% since 2016, and that's going to continue to happen because of levy limits. Because we can only raise our levy that one percent each year, and so the values of properties are going up and so to even that out you're getting a drop in tax rate. So the revenue we made on $6,000,000 in 2016 was $64,000 and the revenue we made in 2023 is only 53,000. So there's a lot of things at play here.

And so what we're trying to offer the council were some solutions, like how can we increase revenue for the city, and and that part of that is through development. So I put together these two case studies, one you will be more familiar with than the other. This is across the street, referenced that before. As you know, it was that vacant strip center and then the auto repair building there. And we took that the city purchased those properties and combined it with our existing property at 200 Dellafield Street.

And this is the proposal for that property now. And I put this whole laundry list of kind of struggles we went through developing that property because redeveloping property is very difficult, and you're never quite sure what you're going to run into, you know, like a pandemic. So we the city's gone through quite a journey to try to get this developed, and it's taken six years. It'll probably be about seven years before we actually get a shovel in the ground over there. But the payoff is pretty big for us.

So this is assessed value for that property. When it was the strip mall and the car repair, you can see in 2008, was a $1,500,000 and it just kept losing, like, $500,000 in value, like, every five years. And so this is we bought it right in here in 2019. If we're successful in having it redevelop, as I showed you there, we'll be have an assessed value of $44,000,000 instead of what was there. So even in its heyday when it was say $2,000,000 worth, we're going to far eclipse that with this project.

And then this is what it looks like from a revenue perspective. So we'll get that bump from net new construction and then we have that ongoing revenue so this project would be classified in that commercial category that I showed you before, so it's offsetting some of the tax burden to the one and two families. And part of the reason for that is it's property type, but also it's on an existing road, it's on existing utilities, we already have a fire station, we already have parks in place, so we're not adding a lot of additional city services to provide service to this property. And that's really the beauty of redevelopment because we're not building new roads or new pipes, you know, or anything like that that we have to maintain. So, now this is one that you may be less familiar with.

These are two properties on St. Paul Avenue. They are owned by the same person they were. Jeff became aware that that property owner was thinking about selling them. They were not on the market, just through communication that Jeff had, that became apparent and we're always working with different developers trying to find pieces of property for them.

And so we've referred a developer over to them, a housing developer, before it even hit the market. Ultimately, these two pieces of property sold for $300,000 and so here was our discussion topic, like, should we have proactively purchased these properties to kind of guide what happened on them in the future? And so this is what we think is the missed opportunity over there. Those properties were purchased and they're going to the buildings will remain as is. I mean, they'll get tenants in them, but they're gonna remain as is.

Two small buildings on that property. Here's what our developer had was proposing, which was 24 affordable housing units, and he was shooting for an affordable rent of, like, $1,200. And so from a value perspective, same charts here. So this is the assessments. You can see small increases over the years all the way up to 03/21.

If that housing project would have been built, even though it was an affordable housing project, it would have assessed a little lower than, you know, a market rate project. It still would have been $7,000,000. And so our revenue would have been 64,000 every year instead of 2,800 every year. So this was where we led the council into discussion like, is there an appetite to maybe strategically purchasing some properties when we think we can have a big impact? And the outcome of that discussion was, yeah, they wanted the redevelopment authority to consider that and put together some policy around, like, what kinds of properties we would buy, what might trigger a purchase, how we would seek redevelopment for those properties, and things like that.

And so we we wanted to bring this idea forward with the idea that if we can have some discussion tonight, and next month or the month after, we'll bring back a draft policy to you along with some ideas about how we might fund actually purchasing property, which we're working on, and just kind of take those steps to achieve what the council charged us with bringing back to them in the future. So that's my spiel for tonight. So I think as a redevelopment authority, statutorily, you can have the ability to act independent of the council and there was a lot of support for that from the council, actually, in our council retreat. So not that it's a done deal, but they can see that you can act very nimbly. We can get together much quicker, make decisions much quicker than maybe the council can.

And you have bonding authority and all of those kind of things. So there's a lot of advantages to going down that route.

Rick? Yeah.

I think this is wonderful. I've been on the redevelopment committee over the years and this is one of the things that I wanted to see happen. And the beginning of this is great. When you're talking about boundaries, are you talking about boundaries within the city only? Let's say that somebody wants to access into the city, would we have the ability to say, let's bring that land, purchase that land with the idea of bringing it in because there's a lot of land around us.

Yeah. So the since the town of Waukesha incorporated, we can no longer bring in town land. But there is there are some

Even if they request?

Yes. The town of Waukesha or the I'm sorry. Village Of Waukesha would have to agree to detach the land, whereas before it used was the property owner's decision.

Right.

So but there's still the town of Brookfield, and there's is it Genesee? Genesee. Pewaukee is incorporated, so we could not

But they they could approve it, though. Correct?

They could. Yeah. Yeah. And so those were those could be discussions that we have with them or order agreements or something like that

in the future.

And then when you're looking at this with the idea, I think that we should incorporate in our bylaws if whatever you're saying that the interest rate shouldn't be so low. I think it should be at least the interest rate of the of society and maybe a half a point above it.

Okay.

Which is my view because I'd like to think about building this for the future with the idea that we have funds to make things happen.

Yeah. Yeah. And I think this will take a lot of different forms potentially. So we could purchase property and then sell it back outright or we could provide a sell to somebody but hold the loan on it and gather interest or I think there's different ways for us to do that.

Thank you. I

have a question. Any one of these four programs, can they be used to purchase speculative land?

Potentially, the development fund could be used. It's in

the policy that the council adopted that they can be used for acquisition.

For example, we have the affordable housing development fund. We have an uncommitted balance of $1,600,000. Mhmm. Had we bought that $300,000 property and put it in for out for proposals for affordable housing, and that unit would have gotten built Mhmm. While it may take two, three years or four years, you know, we would have control over over that. My my concern is this. If if we don't like, in this particular case, if you don't act quickly, it doesn't happen.

Yeah. And

We have Yeah. We and this is just a this is just a thought from the council. We had a property that we considered selling, but we didn't put it out for request for proposals to find out what the excess value of that land could have been and a better alternative. It sent seemed like a done deal before it was even done. And so I just think that it's a good idea to purchase small pieces of developable land that aren't too expensive that that you can purchase quickly.

Mhmm.

And then take the six months or the year to try to put together a proposal. You know, I I'm in favor of that. It's disappointing with COVID and everything that across the street took seven years. But I think from what I hear, that's moving along now, and it's on a much faster pace, you know, and it'll be very, very good for the city.

Yeah. And and to your point, we're not talking about always buying big pieces of land. It could be a single family lot, you know, because occasionally, the city has to or or I'm sorry, the county has to foreclose on a property for back taxes or something. Those are opportunities for us to maybe purchase smaller pieces of property. And also, to your point of acting quickly, the reason the property owners sold to who he did is because they could close quickly, and he wanted to be done. Right? And so that's something that the redevelopment authority could have accommodated, whereas the developer, he needed to get his financing in place and all that. It was gonna take him longer.

Yeah. But had we been able to say, you know, we have authority to spend up to so much for you know? Or even call it quick meeting. You know, like, we could all meet on a whenever we could get a quorum on a Sure. Three days notice to say, hey. This has gotta happen quick. Yes. Do

it. Mhmm.

You know, it makes sense. And then the developer would have had plenty of time, and the piece of property would have been.

Yeah. Some of these, they they tap into the tax credits, affordable housing tax credits. Yeah. And those are issued once a year, like, awarded once a year too. So that was this guy's gonna do that. So, mean, this thing probably wouldn't have

closed for quite a while. There's people out there that we buy ugly houses all the time, and and and we should be able to do that and and turn a house into something nice.

I agree.

You know, even even just the overdrawn parcel in in downtown that that the roof is falling in. Yeah. You know?

The redevelopment authority could also choose to partner with Habitat for Humanity to rehab some of those houses or, you know

The only thing I would caution against is buying a polluted property quickly. You don't wanna do

that. Right.

You know? For example, I I'm just saying this, would be the one that's over by the Moreland Bridge that hold. You know, you wouldn't wanna purchase that quickly or or the Hopson plant because of the the environmental concerns. You know, you could really saddle the city and and being a loser.

I mean, that's part of the policy is that it requires a phase one on it, a phase one

or two.

Right.

Do you see your work as being more focused on central city, and maybe the ring of development just outside the central city or anywhere in in

the city? Anywhere that

you I mean, agreeing with you, Rick. I think it's the community. Yeah. Great.

Yeah. In in in Waukesha City, we're landlocked. And for example and I'm just gonna use this as an example. Next to the church.

Mhmm.

I don't it it saddens me that we lost a perfect opportunity there because the planning commission chopped it so badly that they wanted to move on. You know? I mean, it was like a perfect project to begin with. And for six neighbors to dictate policy for the entire city, that was just sad. We listened to them, and they shot it down and, you know, cut this out.

And you had an architect saying, well, you could do this, or you could do that, or you could do this. And it was like, what is this? You know, we gotta we gotta start taking some of it, and it's the mayor appoints, and and and it's only my opinion. But, you know, I was in favor of the project going in there because you turned tax exempt land into a $40,000,000 project. And now that $40,000,000 project is moving into a prime piece of real estate on the on the bypass.

It's still getting built, hopefully, you know, at tomorrow's planning meeting, but that's just where I am. You know? And and we all have to be on the same page. And I think the redevelopment authority should and the mayor should have some conversations with some of these people at the committee level to say, hey. Do you realize what you're doing for for fault of putting Brook in a in a on a on a side of a building to to increase the cost by $30,000 for what you know? It seems like in my six years here, we haven't been very developer friendly. It's just what I hear from the three or four developers I've dealt with, just in my district alone. You know?

Is there a price range you think that the redevelopment authority should be in? Or does that matter?

If you want my opinion, I'm gonna say 2,000,000 and under.

Okay. It it yeah. Yeah. Especially if we can get it done using the funds here, you know, bring it to us. Yes. You know, what what Are you thinking

that oh, I'm sorry.

Yeah. Go ahead.

Are you thinking that's enough?

Yeah. So if I go back to

let

me Let's just say that walk show engines comes up for purchase.

Yeah. No. No. But I mean Yeah.

There may be maybe it's a tiered thing where redevelopment authority acts on independently up to a certain level, and then it engages counsel past that or something like that. Maybe there's

That's good idea.

Maybe it's something that

A step.

A step.

Yeah. So like this is about, you know, from across the street. Right now, that second from bottom bullet point shows how much money we have in that property right now from acquisition and demolition and partial remediation. So we have about $6.06 and $50,000 in that property. And so for under $1,000,000 I think you can get quite a big return on your investment on the right property.

And $2,000,000 sounds reasonable.

Does everyone else feel about 2,000,000?

I think that's a good number.

Dan, you're quiet. I'm

you know, all of these for me is kind of a case by case basis. You know, this project, I've been supportive of since day one. But I also said this project needs to be a home run. Mhmm. And it's more like a 16 inning one to one game that has turned into, you know, a mess. Because, you know, nobody had a crystal ball. Nobody can you know, these this looked great on paper. We thought we, you know, had a great plan. We thought we had a great developer. You know, here we are on developer three, and it's been it's been a slog.

So I am not wild about doing massive real estate speculation. I'm not sure that's the best position for the city to be doing a lot of this. Mhmm. The again, this project made sense. I can't say that every project that we get involved in is gonna make sense, and I'm uncomfortable a little bit because, again, a lot of this has to do with speculation.

Mhmm. And speculation makes me uncomfortable when we're dealing with taxpayer dollars. So I I'm I'm not opposed to this, but I wanna see the guardrails be really tight. And I personally think, like, $2,000,000 is a big number to be doing without council approval.

And some of this might be driven by how much funding we can put our hands on too.

But the rest the rest of the council may have a different opinion Mhmm. And may be comfortable with that. You know, I don't wanna see us take on a ton of debt and have to finance a ton of debt because that's kind of Yeah. To me, kind of flies in the face of what we're trying to do in managing, you know, the budgets tighter. You know, that debt servicing has a cost, and that cost, you know, hits us where it hurts.

So, you know, I like I said, I like this project. I was on board with it. I voted in favor of everything we've had to do to keep it moving forward. I was invited to take part in the first selection process for the original RFP. So, you know, I'm but we haven't gotten there yet.

Mhmm.

So it's kinda hard for me to say, yeah. Let's do more of this when this big one that we was kind of our proof of concept, if you will, our first big one, hasn't even come to fruition.

Mhmm.

And so that's where I'm kind of resistant or kinda quiet about how to move forward because I'd like to see us have a success with the one we're involved in now before we jump in the pond even further.

Nina?

Go ahead, Nina.

I just had a question. So I would assume that we're doing feasibility studies on these things before we're doing them. And I may be a little I may not like the word speculative because I'm a commercial loan officer and I don't like when people throw out spec in committee and try to kill my deals. But, I think when we need so much housing and if we're getting a feasibility study that evidences the need, respectfully, I disagree with the assessment that it's back.

I I wanted to say, had we picked and I've only been on the council six years now and three months. But had we picked the small development by Bolinski with the tiny little townhome community in there for if I remember right, it was a $8,000,000 project. We wouldn't had the lawsuit. We wouldn't had the historic conversation, easement, and the victory of the the not in my backyard problem for the last two, three years from an unbeknown person. Okay?

So this would have been a lot farther down the road. But we saw the value by Mandel two or three years ago, and that's what I wanted to see immediately then. And I was willing and am still willing to go through every single hoop and cross every dot to make it happen, even if it takes another year. Hopefully, now we know that it's gonna go through, and and it's gonna be very successful for the city. Yeah.

Because I realized that the only way to keep our taxes down or or keep our five firehouses and our police fully staffed is to have a two to two and a half percent net new construction. So in my district, that's why I worked so hard on the springs. Mhmm. That's why I worked so hard on the Winterberry Reserve project. And and I'm working, you know, on the the two properties and will be working in the next year or two on the redevelopment of the university to make sure that it doesn't get to be a low value project.

Because not in my backyard is something that I've been fighting for years, my six years. Everybody's in favor of development except for if it's next door to me. And you can't let the people who are it's next to me, five or 10 surrounding homes, while you take their consideration in, you and make it the best project you can by borders, setbacks, and things like that. But you can't even myself, I didn't like the development going in in my basement and blasting and all of that. But twenty five years ago, I sat with the with the guy who sold me the land, and he laid out the plant.

This is what's going in down there. And when he comes to me twenty five years later and says, that's what's going in there now, even though my it affects me, you have to do what's good for the city. You know?

Yeah. I think to your point, so across the street, we did have an alternate, proposal that probably would have resulted in about half that value, so maybe around 20,000,000. And that would have been fine. Maybe we still would have made great strides there in value and tax value. So, yeah, you're right. We took the harder path on that. And so there may be opportunities in the future where we say, no. Let's just take the easier path and get it done quicker, depending on what's going on. And, you know, so yeah. I I think that's a fair point too.

I think that if I remember right, that the Bilinski development was half of what the second guy said. It was it was $1,012,000,000 versus 20,000,000. That fell through, and now we luckily, we get a 44,000,000 out of it, you know, which is even better. And I think

I think we owe it to the taxpayers to try to do what is gonna get the best ROI on that property. Sure. I mean

I mean, that that's really where the council's mind was.

So for yeah. I mean, that's where my mind was on every vote. And I think, you know, the majority proved that out. I think any policy we create, I'm curious about the feasibility of setting some kind of guardrail or expected ROI as a guideline of, you know, can we project? And again, it's all it's it's educated guesswork.

Mhmm. And I know there's people who are very good at what they do. I'm not a real estate guy, but I know there's there's people who are good at at evaluating what could potentially be there. But, again, it's still a guess, and a very educated guess, but still a guess. But I would like to see whatever policy we create, and whatever guidance we have to basically have a, you know, a target percentage of return on investment for the city in there because, you know, otherwise, why are we doing this?

There needs to be some, you know, significant return. I don't know what that number should be, if it should be 200%, 500%, whatever, you know, whatever's realistic. I'm probably not the best judge of what that should be, but I think that would be a reasonable thing to have in there so that we know that when we get into this, this is our target and this is what we're looking for to, you know to be accomplished by by getting into this. Rick, you got a

I know my industry projects what's gonna happen especially on properties. And I've always said they're wrong, they're wrong, they're wrong. And they prove me that I'm wrong, wrong, wrong. And they're projecting my industry in the next six years is projecting 48.1 of home values going up

Oh, yeah.

In the next six years. So if in fact that's going to I think we've got a plan so that we can help people get into this community and get going. That's I

I see.

Over the years and I see all the missed opportunities, and I'm like, holy John.

There's a lot. I see in my subdivision. There is no end in sight as to what somebody will pay per house in my subdivision. Mhmm. I mean, I just when I got my assessment, I was just floored.

And then I thought, there's no way my house will sell for this. And yet an identical house to mine sold for $40,000 more in two days after I got my assessment. And I thought, wait a minute, dollars 40,000 more than my assessment that is 100 more than what I think? Honest to god. And then now there's another one for sale in our subdivision that I'm sure that they're gonna take that number that was just there And last they're gonna get another $40,000 on that for And I'm thinking, when does this end?

I think the redevelopment authority would also be in the position to try to balance bringing affordable housing units forward and then also market rate units. What kind of balance we will have opportunities potentially to do both of those types of work and kind of decide what makes sense for the property and for the neighborhood and what the city needs at that time to maybe provide, in some cases, a little bit more incentive to get those affordable housing units built that maybe they're harder to get done. And in other cases, like the one across the street, we're just going to want market rate housing because we need both. But I think it provides you kind of that latitude to decide where you want to be on a

given property to,

what your priorities are at that time.

Obviously not opposed to us having guardrails as you're describing in place. I mean, I think that's just generally speaking good practice, and I don't disagree that we owe that taxpayers to make prudent decisions at all, like, totally on the same page with that. But I or do you guys have some of that in the proposal that you're developing? Or what what do you have in there as far as due diligence and what would be required and different types of due diligence at different levels, I guess, if this then

Yeah. I think what we're going to try to do is we're listening to all the different comments and then try to put together a draft for the next meeting that addresses some of what we've heard here and then let you react to that and maybe add or subtract. And have more discussion with our finance department about how we might fund it. I don't think they wanna do debt either, but I think they've got some creative ideas on how we might be able to fund something, like put some seed money into a fund for the redevelopment authority to get started. And I think that also might drive some decisions around policy too.

So we don't have anything tonight. It was more just wanted to have an open discussion, just hear everybody's different opinions so we can try to meld that all together in a draft policy. So I

guess this is probably a question of ignorance because I wasn't present on the committee at that time. But when you're talking about the project across the street from the city, were there things that came up? Help me understand how we got to the point in which we are today that we're six years down the road, because I think that's relevant information as Yeah.

So this is my short list. But basically, we bought that property in 2019 and did an RFP. And we selected a developer. And then early twenty twenty is when COVID hit. And the developer was a senior housing developer. And so a lot of seniors weren't moving. And so he was really delaying because he wasn't sure of the market at that point. So that was our first developer. And then we ended up parting ways with him because he just wasn't willing to get started. So we we went out again for an RP, selected a second developer, and they had trouble putting the the project together from a financing standpoint.

They couldn't get to the finish line financing. And so then we went for the third time, went out and found Mandel, who's and then we and then once we selected Mandel, there were a lot of things like this the lawsuit. That's from a neighbor that's opposing the project. Sure. Right. So there's some things here that, you know, if we, like, were kind of alluded to, if we would have picked the other proposal, we probably would have been in a lawsuit, you know, so that might have closed a lot quicker because

it

was the buildings were smaller and and it was less impactful. So I think and then one thing that we didn't realize at the time was the need for this conservation easement over the parking lot at the old annex across the street. Yes, it's a parking lot, but it still has a historic designation on it. It's a strange situation. So, like, we've been working through that process as well. And that's something we didn't realize going into it. So there's some, you know, some things that did come up after the fact that we were like, oh, we didn't know that.

But I'm assuming things have adjusted somewhat to, like, historical research prior to I mean, as regarding the environmental yeah. But the martinizing, like yeah. I mean, it could have figured that there were gonna be issues on that front. The grading, same thing. Well, you could kind of tell by looking at it. I understand I'm biased. I've lived here my whole life.

Yeah.

Yeah. Yeah. So I think How did that change? Yeah. The environmental, we knew right away about where we were going to be. I think we underestimated how difficult it was going to be to build on that property because of the great change. I mean, it's there. You see it. We understood that. But then when you get buildings this size, what that really means to make that happen, I think we underestimated that. And then, yeah, the historic designation,

yeah, we'll

just be better on that the next time.

Yeah. I think that was driven also by the lawsuit. It's last ditch attempt to do this, last ditch attempt to do that, dig here, dig there. And then that person is also on the landmarks committee. So they got the landmarks committee involved, and then they wrote letters to to to the the state of Wisconsin, you know, to get them. And it just kept snowballing and one person's last grasp. Itch effort to get it stopped.

Two additional follow-up questions, and then I'm finished, I'll take myself off the floor. What type of commitment do we get from a developer on the front end? Obviously, can't give us an absolute commitment, but I'd like to understand how somebody, you know, we put out an RFP, somebody accepts it. How are we binding ourselves to that developer to say, well, you've made the commitment to this project. You've got to

try to make some good faith effort to make it work. So we accept or we execute a sales agreement with the developer and they put cash down. So we're holding money that from the beginning with Mandel that they put down on the project. We had money from the previous developer as well that was not refunded because, you know, that's just how the agreement was worded. So that's usually how we try to make sure that upfront money is meaningful enough that they'll have to think twice if they really want to back out. So that's how we've secured it to date.

Okay, final item for me, and then I'm finished. Sorry, Jerry, I'm

going to disagree

with you a little bit on your financing with interest rates. Looking at it from a banking perspective, when we're doing a pretty leveraged deal for some of these developers, which tends to be the case today from developments that I've seen are less, cash. There's less cash equity today. That's just the the nature of the business and how that looks today. You know, when you're doing what we call a capital stack, meaning bank financing and then subordinate, whether that be the city or otherwise, I think it's important for us to consider a lower interest rate on some of the sub debt because cash flow may not work and it may not qualify as it sounds like you've experienced, and I don't think it's prudent for us to give the farm away, like, you know, 12%.

That I don't agree. You you know, I I agree that that shouldn't fly. That's really pretty low, but, to charge around or a little higher than what a bank is, I think that's a tough sell. No offense, Jerry.

Yeah, I think to your point, the reason some of these projects don't get done is because they're very complicated and they're very expensive. And so I think I envision it's probably going to be a case by case decision for the redevelopment authority to determine what terms make sense on a certain project and to try to incentivize meeting whatever goal we happen to be trying to meet at that time.

That's a place in which where we can have a direct impact to assist the developer.

Yeah.

So, that can be a make or break difference in getting a project financing, which ultimately, if they don't have financing and we're not able to carry the entirety of the debt, project falls apart and that's the way it is.

So on this deal, there's a sale price of about $2,500,000 for the land. The city is contributing TIF assistance. So the city will receive the $2,500,000 and then they're also doing TIF assistance. So it's a balancing act. Other proposals were give us the land for for free, and then we won't ask for TIF assistance.

So there's different combinations about how that might come together. I think for the redevelopment authority, it might be a good way to build that fund for purchasing property if you did get a sales price and the city contributed on the tip side because that provides you with additional funding then that you can revolve into the next purchase. So that'll be something that we'll wanna think about too. Developers always start with, can I get the land for free? And sometimes that makes sense and because they can move really quickly and get a project done really quickly, and and we give them the land for free and we're done.

Other times, like in this case, it didn't make sense. The way we structured it made a lot more sense for the city financially. So, yeah, I think it's probably going to be a case by case basis, kind of what you alluded to there. Okay.

Yes. Go ahead.

Just kind of what everyone alluded to, like, with Jennifer just started. I know I'm the newest person out here, but I don't really just looking at it from a new person, large global projects, like Bank Street, all the you Jerry, you what if walk a change and come Right. I don't really see, honestly, the redevelopment theory kind of in that role. That's it's to all the accounts around the thirty year for a reason. Those are, like, larger global projects that are gonna require up you know, a lot of due diligence, investment, staff time.

I don't know if the read of it, you know, the policy, but it should be crafted flexible enough. Maybe if we do entertain this, you know, maybe we could get into larger projects, but kinda like what Jeff put up those projects on Saint Paul. You know, something like that where we have the opportunity as the redevelopment authority to possibly work on combining two parcels together, do a buy hold or combine the parcels, look for a developer to partner with. Smaller projects like that, start small and incrementally build.

We're seems

they're getting hung up on these larger projects. So I don't really see that being this authority's role politically or just realistically with the way funding is nowadays. That's just my opinion.

My thought is can make a big impact with a small Yeah.

Yeah.

Property like this. You know? I mean, it

thought was exactly the same thing. That would be the size Mhmm. That I would be thinking about. Or, for example, the development across the street, Bob's Glass. You know, that strip mall that's in there.

Yeah. If you could buy that, you know, it's not too huge, then then we could float that maybe for a year or two till we could find a developer and go from there. But to have a million or $2,000,000 upfront holding, I mean, I would think that while that would be a good idea to maybe think about getting one of those, that would be something that would have to come to the council fairly quick, you know, to to go from there. But but I would think that, you know, something 300 to $500,000 taking two parcels like that that are downtrodden and putting them together, you know, in that range, I was thinking, you know, up to a half $1,000,000. You could buy maybe two or three downtown homes for $200,000 apiece that are run down and maybe, you know, take an area that that's on Main Street or something, two or three of those houses, and turn it into a nice commercial project, you know, that that could that that that would be what I would be thinking about.

You know?

So like, this, you know, a smaller project, but if I know you're all familiar with that area. I think it would have been a shot in the arm for the area, which might have driven other reinvestment in So the even smaller projects, I think, can make, you know, to your point, have a big impact. Yeah.

Just the other I think you hit it on the head, Jennifer. The other thing with and and Jerry, talking about the way the market is now, I mean, we're in this nobody can see the end until the end is here. You know? But it the other part of this really that excites me as a newer person is the option to to become a participant in, like, an affordable side of this, you know, because so much of what's going on here is, let's just be realistic too, developer driven, and it's there's there's a developers see things dip potentially differently than the redevelopment authority would. But to kinda have a policy in place to focus on that affordable component on projects that maybe wouldn't get done if the the authority didn't intervene or, you know, kinda offer their input.

Mhmm.

And young people today, they don't want a home. They wanna be so far away from ownership that, you know, affordable housing. I mean, the springs out there, those rents are 2,000 to over $3,000 And renting them as fast as they open them. It just boggles my mind that somebody wants to spend $2,000 to $3,000 so that they don't have to cut grass. I you know

JULIE Well, that's one of the strengths, I think, for the city. And I won't go into my whole housing spiel here. But we have a real diversity of housing types, right? So you can get a studio apartment, or you can there's a little lake on the South side of the city. You can build your new house on this you know, Quarry Lake.

And then everything in between. And I think that's a real strength for the city because every no matter what kind of housing you want, you know, for the most part, we have something in that of that type and we've got a lot of different price ranges too. And so I'd like us to, you know, kind of stay focused on that diversity aspect when it comes to types of housing and price points and things like that. Make sure that, you know, that provides, like Jeff was saying, a lot of workforce housing. You know, I visit a lot of manufacturers and they're just really struggling to get employees.

And part of it is people don't want to commute so far to work. So they'll hit they'll find a job closer to home. And so if we can provide those housing opportunities, I think that helps business be successful here too. They all feed off of each other.

Anybody else have any questions or comments? No?

Seeing none. Okay. I just wanna add one more thing, and it's just it's just my personal thing. But whatever guidelines we put in place or criteria or maybe project selection, I'd love to see these projects going forward and not every one of them being a TIF component.

Yeah. Yeah.

You know, I know these big projects, that's sometimes a necessity. But as we talk about smaller projects, I'd love to find some other creative way of financing them outside of creating TIF districts for every project the RDA might take on.

That's one of the things, Jeff is working with, those two developers I mentioned earlier. And, you know, we'll see how things shake out. But right now, we think that, we can make those projects work without TIF just with the development fund, know, and some funding through our existing loan program and not have to create a TIF district to make them happen. So yeah, I think especially in the smaller projects, we might be able to make that work a little easier.

And, you know, the reason, you know, I know everybody knows I'm not a big TIFF guy, but part of that goes back to that ROI thing. Mhmm. And it goes back to getting that ROI sooner. Mhmm. Part of my disappointment with the project across the street, again, I've been supportive of it, but that TIFF ended up coming in big. Mhmm. And it's got a long timeline. Mhmm. So that forty four million that we're gonna get is great, but we're not gonna see that big jump in tax increment for a while Right. For a long while.

Yeah. And and, you know, there's a time horizon there, and I think that, you know, again, when it comes back to selecting projects, if we can find them that don't involve that and don't have that long timeline that a TIF sometimes involves, that's a plus in my book.

Yeah. You're right. It is it is really long range planning in some cases. The one upside at least is we get that net new construction month right away. But you're right, the tax increment, it's going be twenty years.

Okay. I don't think we have any more questions.

We'll create a draft and bring it back. I you know, we see this as kind of a maybe it has to go through a few iterations. But once the redevelopment authority feels comfortable with it, then we'll advance it to counsel for their discussion and then we'll see where

I'd like to see, just as a communication and referral, on the next meeting, if you could just help us out with that net new construction that you see so far this year and what you're kinda projecting for next year based on the the things that are in the pipeline. I know that there's a lot in my pipeline, but I don't necessarily know what the pipeline is in everybody else's district. And it would be nice to know coming into finance season and and budgeting that we're gonna what what we're gonna have as far as net new construction so we can plan that way.

Try to pull out our crystal ball.

Thank you. Solid. Not crystal ball,

but yeah.

Yeah. No. We'll definitely give you that kind of feedback on your loan programs and then kinda tell you where we think we are with projects and what's coming up.

Thank you.

Yep. For sure.

And with that, if there's no objections, we're adjourned. We're adjourned.

Everybody. Two

one